With NCR, FDC Stakes, ViVOtech Sees More Impetus for Contactless

In a development that ViVOtech Inc. is touting as a major vote of confidence in contactless payment and mobile transactions via near-field communication (NFC) technology, the Santa Clara, Calif.-based maker of contactless readers and mobile wallet software has closed a $22.5 million funding round. ViVOtech had announced the so-called Series C round in May with First Data Corp. as lead investor, but now NCR Corp., a leading manufacturer of ATMs, self-service kiosks, and point-of-sale hardware has joined in the investment round, indicating a wider base of interest in the payments industry in developing contactless capabilties, particularly through NFC. ViVOtech says an “undisclosed Fortune 500 company” also joined in the round. Dayton, Ohio-based NCR, which did not disclose its stake in ViVOtech, said in a statement it plans to use ViVOtech's products “to allow consumers to make contactless payments with [radio-frequency]-enabled credit or debit cards and [NFC]-related mobile phones.” The joint statement says ViVOtech will supply contactless systems and NFC software for several unspecified NCR products. For the near-term future, NCR will rely on ViVOtech to help it integrate contactless and NFC technology in new NCR product platforms “for a variety of applications.” NCR, which has made a recent push into airline ticketing machines and other self-service technology beyond ATMs, indicated it is looking in that direction in particular with its ViVOtech investment. “Today's on-the-go consumers prefer to handle an increasing number of transactions themselves using self-service devices,” said Bill Nuti, NCR's chief executive, in the statement. “By collaborating with ViVOtech, NCR is enabling an infrastructure for contactless payments and mobile phone interaction points.” About 32,000 merchants in the U.S. have installed devices to accept contactless transactions, and some 19 million contacltess cards have been issued over the past two years or so. ViVOtech says it now has a major share of the installed base of contactless readers?some 280,000 units in 25 countries. With contactless, cards or keyfobs transmit card-account data via short-range radio waves to a reader, after which the transaction is processed as if the card had been swiped. With NFC, mobile phones embedded with NFC chips can communicate directly with the readers, replacing cards altogether. With support from companies like First Data and NCR, ViVOtech says it will be able to move faster on contactless and mobile-phone plans. “This funding underpins our strategic development plans and will provide the capital required to execute successfully on our ongoing product development, partnering, and international expansion strategies,” said ViVOtech chief executive Michael Mullagh, in a statement. “Over the last six months, we have seen strong interest from multiple players in the financial, retail, and wireless industries. We are forming key strategic partnerships with these new investors, which we are confident will help ViVOtech to maintain its market leadership and shape the future of contactless and NFC mobile payment applications and technologies.” Still, while the backing from payments giants can only lend further impetus to ViVOtech's plans?and to the contactless trend generally?some observers have reservations about the technology. Bruce Cundiff, a senior analyst at Pleasanton, Calif.-based Javelin Strategy & Research, warned in a recent report that the momentum behind contactless payments could stall if banks and processors don't find a way to put the technology into a broader array of merchant categories, giving consumers a more compelling reason to use contactless. That can only happen, Cundiff argues, if wireless carriers see a business case to back a movement from card-based contactless payment to mobile phones (Digital Transactions News, July 9). With broader merchant coverage, he predicts, consumer adoption can reach 50 million by 2012; without it, only another 1 million consumers will use the technology over that time. Other investors in the funding round include: Alloy Ventures, Draper Fisher Jurvetson, DFJ Gotham Ventures, Miven Venture Partners, and Nokia Growth Partners.