DIEGO ó Does a small San Diego startup stand a chance
in the mobile payment market competing against the likes
of Apple Pay and Samsung Pay?
Chief Executive David Fernandez thinks so, based on his
companyís success last year in Scandinavia, where
Netclearance partnered with Danske Bank to get its
mobile payment technology deployed in 30,000 retailers
ranging from grocery stores to Starbucks.
merchants love it because they get over a 50 percent
reduction in transaction fees, and they get their money
in milliseconds," said Fernandez, who formerly
worked at Qualcomm and Motorola Mobility. "Itís a
remains to be seen. Mobile payments have been slow to
take hold, particularly in the U.S., because most
payment machines here lack the wireless capabilities to
link cash registers to smartphones.
addition, current magnetic strip technology works. So
consumers in general havenít been clamoring to pay
with mobile devices.
track record for mobile payment services is not good.
Apple Pay and Android Pay have yet to become major
forces in the financial world, with only a small
percentage of iOS and Android users adopting them,"
said industry research firm CCS Insight in a recent
Pay and Samsung Pay use Near Field Communications
technology and security tokenization to let shoppers tap
smartphones on payment terminals to charge registered
credit or debit cards.
of mobile wallet apps, including a popular one from
Starbucks, do essentially the same thing but use a
scanable code instead of NFC.
makes Netclearance different is it removes the credit
card firms from the equation ó enabling banks and
retailers to set up their own private, direct mobile
allows a person with an app ó a bank app, a brand app
ó to completely bypass the credit card rails,"
said Fernandez. "So the payments that people are
making in Denmark ó over 2.8 million active users with
an app provided by the bank ó those payments are not
going through a MasterCard or a Visa. They are basically
going directly to the bank."
companyís technology includes a small payment terminal
with NFC, Bluetooth LE and Wi-Fi technology that
connects to the cash register. Netclearance provides
software tools for banks and retailers to include mobile
payments as part of their branded apps for customers.
of the way the system works, we donít store credit
card information or account information," said
Fernandez. "Itís a piece of software that we put
on the cash register, and itís a piece of software
that is in the mobile app. Then you marry it through the
in 2011, Netclearance has only a handful of employees
and has raised about $400,000 from angel investors.
Fernandez said its technology is compatible with 200
cash registers to date. Through Danske Bank, the company
expects to further expand into Norway and Finland this
year. It also has a pilot project a bank in Mexico
involving payments at vending machines.
retailers, including Target and Walmart, are members of
the Merchant Customer Exchange, a consortium thatís
developing a merchant-owned mobile payment system.
its part, Netclearance is talking with a large financial
institution about rolling out its system in the U.S. But
it hasnít inked a deal yet.
main customers are the banks," said Fernandez.
"Because itís app based, it gives the banks more
control on the benefits they can give to their users. It
is really an intelligent payment system."