Wellesley, Mass.-based Paydiant, provider of a white label mobile wallet solution for merchants and banks, announced today it has secured $12 million in new funding. The Series B round was led by Stage 1 Ventures, and also included existing investors North Bridge Venture Partners and General Catalyst Partners.
As part of the deal, David Baum, Stage 1 Ventures managing director, will join the Paydiant board of directors.
"We believe that Paydiant's solution is unique in its ability to deliver integrated mobile payment, offer redemption and e-receipts today, and have it work with the payment terminals and smartphones available both today and in the future," Baum said in the announcement. "It's very well positioned."
Paydiant's white label solution is a turnkey product that lets FIs and merchants provide their own mobile wallet, allowing customers to load their payment cards into the app and then pay using a number of technologies at the point of sale — such as 2D barcodes or NFC. But since Paydiant provides a white label solution, the product also offers a few key benefits that other mobile wallets (for example, Google Wallet or the always-on-the-horizon Isis product) can't claim.
First, merchants don't have to upgrade their point of sale equipment. And consumers don't have to carry a specific device that supports a particular technology. (Both of those issues are huge hurdles at the moment in the adoption of NFC wallets.) As a software-only, cloud-based solution, Paydiant's mobile wallet applications work on current iPhone and Android smartphones. And its payment APIs work with merchants' current equipment, enabling retailers and FIs to accept mobile payments and redeem mobile offers through existing POS systems, online shopping carts and even ATMs.
Additionally, Paydiant lets merchants and FIs retain ownership of their all-important transaction and customer data. That means no giving data away to third-party providers so they can use it to market to consumers. Plus, Paydiant partners maintain control of the branding and experience of the mobile wallet.
Think of it as a solution that lets a merchant or bank create its own version of Starbucks' popular payment app but without having to bear the development costs alone.
"We want merchants and banks to have their own mobile wallets," said Chris Gardner, cofounder of Paydiant. In a call with Mobile Payments Today, Gardner said merchants and banks shouldn't have to give up control for their customers to use a mobile wallet, nor should they be obliged to cede access to their own data.
Gardner said Paydiant will spend its newly raised funds to communicate this message to merchants and bring more of them into the fold. To date, the company's efforts to attract financial institutions have been extremely successful — "We're crushing it with banks," Gardner said — and now Paydiant wants to leverage those relationships to bring more merchants on board.
Most of Paydiant's FI partners have mobile banking customers who could be turned on to using a mobile wallet product to pay at the point of sale, and they also have acquirer relationships with merchants. Gardner said the company wants to sell directly to retailers using those acquirer relationships.
"Our sales pitch [to banks] as a software-only mobile solution is that you can light up a lot of retailers at once instead of us going [from] coffee shop to coffee shop," Gardner said. That would give bank customers places to use their mobile wallet almost immediately.
Gardner said the company is already beginning to add merchants using these tactics and that additional announcements about new partnerships will be coming later this year.
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