Monitise Heightens Its U.S. Mobile-Payments Profile With Pending Clairmail Deal

British mobile-banking and payments technology provider Monitise plc announced a $173 million deal Monday to buy San Rafael, Calif.-based Clairmail Inc. that will give Monitise a much bigger U.S. presence in mobile financial services and further consolidate a market nurtured by startups but feeling the increasing presence of international card networks and payment processors.

Monitise says it will be the largest pure-play mobile-banking and -payments company in America when the deal, which requires approval from shareholders and U.S. regulators, is completed. Clairmail, which gets most of its revenues in the U.S., will bring to Monitise 48 U.S. bank clients, including more than a third of the top 50 and eight of the top 13. Clients include Fifth Third Bank, PNC Bank, UMB, and Bank of the West. Clairmail’s revenues grew 90% in 2011 over 2010 to $18 million.

Customers of Clairmail clients generate 745 million transactions annually. The combined entity will have 13 million registered consumers through its client financial institutions on four continents that generate more than $10 billion in payments and transfers on an annualized basis. Monitise’s global presence will help Clairmail’s technology make its way abroad, especially as more banks set up or expand global operations, Clairmail chief marketing officer Carl Tsukahara tells Digital Transactions News. “They [Clairmail-Monitise customers] are going to be getting a fabulous mobile-money platform,” he says.

Tsukahara wouldn’t break out how much of Clairmail’s transaction volume comes from banking functions versus mobile payments, but says bankers’ interest in offering basic bank services through mobile devices often is quickly followed by inquiries about payments. “We certainly see this [payments] as a growth area,” he says.

Customers of Clairmail banks can access mobile-banking and -payment services through short-message service (SMS), the technology behind text messaging, as well as mobile applications and the mobile Web. As part of Monitise, Clairmail will continue to offer clients the ability to deliver its technology by licensing its software or through a software-as-a-service model, Tsukahara says.

While Clairmail will greatly enhance Monitise’s U.S. presence, the company already had a beachhead through a joint venture called Monitise Americas that it formed in 2007 with banking processor Fidelity National Information Services Inc. (FIS). Last October, Monitise bought out FIS’s 51% stake in the venture while FIS took a 3.3% equity stake in Monitise. FIS made Monitise’s technology available to 250 financial institutions. In addition, last June Monitise announced a five-year agreement with Visa Inc. to help extend mobile-payment technology to Visa cardholders in the U.S. and elsewhere.

The acquisition of Clairmail is further evidence that the mobile financial-services market is beginning to mature, says Mary T. Monahan, research director, mobile, at Pleasanton, Calif.-based Javelin Strategy & Research. She notes that Visa in June bought South Africa-based Fundamo, one of the leading providers of mobile financial services for unbanked or underbanked consumers in 40 countries. Earlier in 2011, bank processor Fiserv Inc. bought Mobile Commerce Ltd. (M-Com). “We’re seeing this industry consolidation; some [companies] will go away, some will make it,” she says.

One mobile financial-services provider that plans to stick around is Larkspur, Calif.-based mFoundry Inc. Co-founder and chief executive Drew Sievers declined to comment about the Monitise-Clairmail deal, but says by e-mail that his firm has 650 financial-institution clients, including Bank of America and PNC. Processor partners include First Data, FIS, Co-Op Financial Services, PSCU Financial Services, and others, including NCR Corp. In payments, mFoundry’s platform runs the Starbucks Corp. mobile application and those of two large financial institutions whose identities Sievers says he can’t disclose. Excluding Starbucks, more than 10 million consumers use mFoundry mobile-banking technology, Sievers says.

Monitise said it would issue up to 313 million new shares of stock to fund the Clairmail acquisition. On a pro-forma basis, the combined revenues of Monitise and Clairmail would have been $56 million in 2011, a figure Monitise expects to approach $100 million this year. Monitise expects Clairmail’s senior management team, including chief executive Pete Daffern, to remain with the combined company. A spokesperson says the Clairmail brand will continue, though long-term branding decisions have yet to be made.