Samsung invests in Mobeewave as contactless spreads in U.S.

Mobeewave, a provider of in-person contactless payment acceptance software, is getting an investment from Samsung Venture Investment Corporation that pushes a recent Series B funding round led by NewAlpha, Mastercard and Forestay Capital to nearly $20 million.

It's a welcome boost for the Montreal-based company at a time when more retailers are adopting contactless payments — including longtime holdouts such as Target. Mobeewave focuses on converting smartphones into contactless payment terminals without an attached dongle, and looks to the Target development as one that will simply introduce more consumers to using contactless.

The Samsung investment, of roughly $4 million, reinforces a global partnership agreement Mobeewave secured with Samsung a year ago. The two companies have worked together on various projects over the past four years.

"We started working with Samsung on embedded secure elements on the phones very early in that market and have more recently established a technology co-partnership with them," said Benjamin du Hays, Mobeewave's CEO and co-founder.

The embedded secure element is an important piece of Mobeewave's relationship with Samsung, as the two continue discussions on how to best turn that aspect of a smartphone into a revenue generator. Mobeewave's payment terminal software relies on the secure element.

"On the merchant side, there is a strong use case for the secure element because the merchant needs to have a payment solution to survive," du Hays said. "The merchant will pay for use of the platform, and download the app to do so, and that's it. Meanwhile, Samsung gets paid for using the secure element on the device."

The mobile app, which Mobeewave provides on a white-label basis to merchants through acquirers and mobile network operators, allows a merchant to accept contactless cards and mobile wallets.

For now, Mobeewave operates through Android and Samsung phones and access to the secure element. It does not have that relationship with Apple iOS, though the software accepts Apple Pay payments. The secure element encrypts the customer's payment information before it moves to the acquirer so that none of that data is stored on the merchant's smartphone.

"Mobeewave was ahead of the curve on this technology because they understood what was going on with NFC," said Damian Balsan, a former co-founder of LoopPay, which later became Samsung Pay. Balsan is a member of the Mobeewave advisory board and consults regularly with du Hays and co-founder and chief operating officer Maxime de Nanclas.

Mobeewave rolled out its "phone-to-phone" payment concept in Canada four years ago, choosing a country with a heavy sector of contactless payments already taking place.

"I have been at startups that may have been too early, but the ability to turn a phone into a merchant terminal has always interested me," said Balsan, who was involved with mobile POS providers Way Systems and Roam Data, which was acquired by Ingenico in 2012. "We were vying for a billion more merchants, using phones with a small amount of hardware and eventually no hardware."

Getting a financial boost from Samsung illustrates Mobeewave's playbook has worked well. The company has generally established partnerships with distributors or technology firms in new markets, most notably working with Alliance Development Group the past two years in trying to gain a foothold in China.

Similarly, Global Payments became a distributing partner for Mobeewave two years ago in making the contactless technology available to its merchant clients in Canada.

With contactless cards becoming more prevalent in 2019, Mobeewave "is perfectly positioned to catch that wave," said Thad Peterson, senior analyst with Aite Group.

"Mobeewave is a great example of new use cases following new payment capabilities," Peterson added.

With mobile wallet usage "remaining stubbornly low," Mobeewave needs contactless cards to get scale quickly and thrust its technology into higher demand, Peterson said.

As a B2B provider, du Hays views his company as "the Stripe of in-person payments" as opposed to operating like Square and going directly to merchants with a hardware product.

"We have many banks launching their payment products, using our platform," du Hays said, citing the Easy Pay app provided through National Bank of Canada and powered by Mobeewave."We want to be able to provide our SDK to any app developer in the world."