Zenius Hopes to Break NFC Logjam By Focusing on Non-Bank Players

While a number of technology companies have recently introduced products allowing mobile merchants to accept card payments on their handsets, a startup is demonstrating the first application that would let merchants take contactless payments on a wide variety of mobile phones. Indeed, Zenius Solutions Inc. hopes its software, called ZeniusMobilePOS, will also whet appetites among merchants and mobile carriers for both payment and non-payment applications based on near-field communication (NFC) technology. “There's demand out there for” NFC-based private-label payments, says John Wiese, a former VeriFone Holdings Inc. and ViVOtech Inc. engineer who co-founded Redding, Calif.-based Zenius last year and serves as its chief executive. But, he adds, the company is also targeting “loyalty, coupons, tickets?a true wallet” beyond payments in an effort to help merchants and mobile operators build a business model for NFC. To that end, Wiese says the software for plumbers, delivery persons, and other mobile merchants is just the start. He is talking to vendors of mobile-wallet software, point-of-sale hardware, and back-end servers to get them to integrate Zenius's software. And he says the product is geared to work with WiFi and Bluetooth links, so there is no need to wait for wide availability of NFC-enabled phones. An announcement concerning Apple Inc.'s wildly popular iPhone will emerge shortly, he says, without giving details. Up to now, most pilots for NFC?which sets up a short-range, two-way communications link between phones and other NFC-enabled devices and media?have concentrated on bank card payments as banks seek ways to earn more interchange revenue by displacing cash transactions. Banks stand to net an incremental $1.83 per debit card account annually through NFC payments, according to research released last week by Celent LLC. But the pilots have bogged down in wrangling among financial institutions, carriers, and merchants over revenue-sharing and other issues, frustrating backers who had hoped to see commercial rollouts. At the sane time, handset makers have been reluctant to buy and embed NFC chips in their products, leaving the market largely devoid of available devices. By focusing on merchants and carriers, Zenius may help create revenue streams for them independent of transaction fees and break the logjam for NFC. Bruce Cundiff, a senior analyst at Pleasanton, Calif.-based Javelin Strategy & Research who has studied Zenius's strategy, cites the example of a fee carriers could charge merchants for texting offers to nearby customers who are also among the carrier's subscribers. The effort so far for NFC, he argues, “falls apart if you don't create something of value” for merchants and operators. For merchants, Wiese hopes Zenius's software will make it easier to add new applications at the point of sale, including closed-loop loyalty and payments systems. “It's hard to penetrate the merchant desktop,” he says “We're trying to break that barrier down by offering these frameworks and apps.” But it will take some time to discover whether the startup's strategy of focusing on the non-bank part of the NFC arena will pay off. “Their technology is very impressive,” says Cundiff. “Can the rubber hit the road?” For now, Wiese's long experience in point-of-sale and mobile-payments technology may help. “The Roledex was a good jump start,” says Jenny Rae Cortese, Zenius's vice president of marketing.