Firethorn Chief Says Qualcomm Deal Will Speed up M-Payments

Qualcomm Inc.'s $210 million cash deal for Firethorn Holdings Inc., announced on Wednesday, is expected to accelerate Firethorn's movement toward mobile payments and hands Qualcomm a significant stake in the rapidly developing markets for both banking and payments via handsets, according to Tripp Rackley, chief executive of Atlanta-based Firethorn. “All we care about is getting to the finish line faster,” Rackley tells Digital Transactions News, referring to the payments goal. “This [Qualcomm] platform will expedite getting to payments.” A 6-year-old company, Firethorn began releasing software a year ago that enables consumers to use their mobile devices to check balances, move funds among accounts, and pay bills. Following a conscious strategy of working with wireless networks, Firethorn has struck deals with the country's two biggest carriers, AT&T Mobility and Verizon Wireless, to support its banking application. With this kind of coverage in hand, it has signed up nine banks to use its software. SunTrust Banks, Wachovia Corp., Bancorp South, Synovus Corp., and FirstBank have implemented Firethorn's system, while Regions Financial Corp., America West Credit Union, Arvest Bank Group, and USAA have agreed to adopt it. While Firethorn is one of a number of companies that have emerged recently to develop and sell applications to enable mobile banking, Rackley's strategy has long focused on moving from banking functions to electronic payment, particularly contactless point-of-sale transactions via near-field communication (Digital Transactions News, Nov. 16, 2006). NFC chips allow phones to link to contactless readers to process tap-and-go payments. This strategy, he says, is shared by San Diego-based Qualcomm, perhaps best known as developer of a key mobile technology called code division multiple access, a protocol used by the Verizon Wireless and Sprint networks in the U.S. “All we've talked about is payments,” Rackley says of his conversations with Len Lauer, a former Sprint executive who is executive vice president and group president at Qualcomm. Rackley and his staff will remain in Atlanta and report to Lauer after the deal closes, an event expected in about 30 days. Rackley says Qualcomm's software expertise, as well as its cash, will help his company move faster toward payment capability. “Qualcomm will work with us and this [Firethorn] application will get better,” he says. Referring to Qualcomm's $11 billion in cash, with no debt, Rackley says the larger company's backing will be critical to developing and marketing payments features. “We were comfortable raising capital, but going into payments takes a lot of capital,” he says. Qualcomm also brings a global perspective missing at Firethorn., Rackley adds. “This is clearly a global business,” he says. “Our expertise is domestic.” Rackley says he has been approached by a number of companies about buying Firethorn, especially in the past year as mobile-banking momentum has picked up. Qualcomm, he says, appeared to be the best fit both because of its scale and its neutral position in the crucial merchant-acquiring business. He says he began talking casually to Qualcomm about a year ago, but negotiations took a serious turn over the past three weeks. Though it is eyeing the nascent market for NFC payment, Firethorn isn't ignoring other mobile-payment opportunities, including payments consumers make to merchant sites on the mobile Web. “If money moves, we care about it,” he says. But he cautions that Firethorn is interested in providing mechanisms to deliver payments, not in creating alternative payment methods. “If I offer an alternative payment I'm now in competition with my partners,” he says, referring to bank card payment brands. In another development this week involving Firethorn, AT&T on Tuesday rolled out a nationwide mobile-banking service based on the company's software (Digital Transactions News, Nov. 13).