Apriva Poised to Offer a Mobile Wallet Aimed at Guarding Acquirers from ‘Outsiders’

The mobile-wallet race, which has attracted a slew of entrants in recent months, is about to get more crowded on fears that established merchant acquirers could be elbowed out of the nascent mobile-payments business. Apriva Inc., a Scottsdale, Ariz.-based provider of wireless technology for payments, will launch in November a wallet intended to bolster the prospects of the independent sales organizations and other acquirers that resell the company’s products and services.

The new product, which will allow consumers to store an array of payment cards along with offers and receipts, will technically be part of Apriva’s gateway service, with Apriva managing and serving up data. In development for about two years, the company’s app will work on devices running Apple Inc.’s operating system as well as Google Inc.’s Android and Research in Motion Ltd.’s BlackBerry software.

A large merchant has already signed on and will launch the app in the first quarter. About a dozen of the 550 acquirers in Apriva’s acquirer network have also agreed to offer the wallet so far to their merchants. Paul Coppinger, Apriva’s president, won’t name the merchant but says it is a recognizable brand.

The product comes as major companies, many without roots in the card-payments business, are launching mobile-payments systems. Google Inc. unveiled its near-field communication (NFC) system this spring and launched it commercially in September on Samsungs’ Nexus S 4G handset on the Sprint network. Isis, a consortium put together by AT&T Inc., Verizon Wireless, and T-Mobile USA, plans to launch its NFC service next year in Salt Lake City, Utah, and Austin, Texas. And PayPal Inc. earlier this month unveiled a wallet that can be accessed at the point of sale either by swiping a physical PayPal card or by typing in a PIN and phone number at the terminal.

Apriva developed its wallet in part because it fears these initiatives will ultimately dissolve the links acquirers have forged with merchants, Coppinger says. “I’m worried about the future of acquirers, that they’ll get disintermediated by outsiders,” he tells Digital Transactions News. “Google and Isis aren’t members of the payments community.”

The new product will arm acquirers with a competitive product they can sell to merchants, pricing it either in the discount fee or taking a slice of the discounts merchants grant to consumers, Coppinger says. “It’s a way to produce revenue,” he says, that allows ISOs to alleviate rate pressure from their clients. “Acquirers are afraid of calling on their merchants because they’re afraid [the conversation] will turn into a rate adjustment,” he adds.

Apriva’s initiative isn’t the first wallet intended to be marketed to merchants specifically by acquirers. Cleveland-based SparkBase Inc., for example, sells its PayCloud wallet through ISOs. But it may be the first response by a major company rooted in the payments business to the wallet plans announced, to considerable fanfare, by the likes of Google and Isis. “I want to give bullets to the merchant acquirers to shoot back,” Coppinger says.

Some observers, though, discount the threat Apriva sees in the phone companies and entrants from Silicon Valley. Companies like Google will need to work with acquirers, argues Aaron McPherson, practice director for financial services at IDC Financial Insights. “I just don’t see the threat,” he says. “It’s more political or positioning than real.” He agrees that while “Silicon Valley types are ignorantly contemptuous of payments people,” they will change their tune when they must confront problems for which they have no background, such as chargebacks.

McPherson also fears the mobile-wallet business may be too crowded. “Already there are too many wallets,” he notes. “I’m not even sure Visa should be doing a wallet.” Visa Inc., which has agreed to participate in the Google and Isis wallets, announced earlier this year it is working on a mobile wallet of its own.

With the Apriva product, participating merchants will gather mobile numbers from interested customers during a transaction. Customers will then receive a text with a link to download the Apriva app from the app store for their phone system. The app will arrive loaded with the card the customer just used, a loyalty card for the merchant, and a digitally signed receipt for the transaction. Merchants that choose to will also be able to offer coupons that can be digitally signed and serialized to prevent duplication.