With the Covid-19 pandemic accelerating consumer use and merchant acceptance of contactless cards, technology companies are scrambling to exploit new opportunities stemming from the trend. One technology that could get a boost is software that can turn any off-the-shelf smart phone into a payment-acceptance device, a development the major card networks are watching closely.
On Monday, MagicCube Inc. said Visa Inc. had invested an undisclosed sum in the Santa Clara, Calif.-based company, which specializes in software-based contactless acceptance for commercially available mobile devices. The fresh investment was part of a large funding round involving multiple investors and follows one Visa made in the 6-year-old company in 2015.
This latest round will “help us deploy on a large scale on multiple continents,” says Sam Shawki, MagicCube’s chief executive. “That’s going to happen in the next few months.” Countries where the company expects to operate with acquirers soon include the United Kingdom, the Middle East, and Spain. “We also have a very active pipeline in Brazil,” says Shawki.
Visa is not the only major payments player looking to take a stake in this technology. Apple Inc. early this month stunned the industry when news broke that it had acquired Montreal-based Mobeewave Inc. Mobeewave in October launched with Samsung Electronics Co. Ltd. a capability that allows mobile phones without dongles or other card-reader attachments to process card transactions via an NFC link between a contactless card and the device. Apple reportedly paid between $120 million and $150 million for the 9-year-old company.
Shawki: The latest funding round will “help us deploy on a large scale on multiple continents.”
Visa says its MagicCube investment may be timely. “Sellers are looking for simple, low-barrier ways to offer digital payments and there may be nothing simpler than transforming an everyday device, such as a mobile phone, into a payment terminal,” said Mary Kay Bowman, the payments network’s global head of buyer and seller solutions, in a statement. “By expanding our work with the team at MagicCube to scale soft POS technology, including Tap to Phone with PIN support, we want to enable sellers around the world to not only begin accepting digital and contactless payments, but also give them flexibility to do so in a way that is physically less constrained to a traditional point of sale.”
In May last year, MagicCube announced its app, which is based on a virtual trusted execution environment, or vTEE, which had been certified by EMVCo, the international payments standards body controlled by six global payment card networks, including Visa and Mastercard Inc. This move followed a new standard for the method issued in January 2018 by the PCI Security Standards Council, the Wakefield, Mass.-based organization that establishes rules for payment card security.