By Snapping up C-Sam, MasterCard Bolsters Mobile Capability, Matches Rivals

MasterCard Inc.’s purchase Monday of C-Sam Inc., a mobile wallet technology company, boosts the card brand’s ability to provide mobile wallet services via a variety of payment methods, suggests a payment analyst.

MasterCard paid an undisclosed amount for the Oakbrook Terrace, Ill.-based C-Sam, which began offering a mobile wallet in 2005.

“Bringing C-Sam’s mobile expertise into MasterCard will help us launch a wider range of mobile and virtual solutions better and faster,” says Ed McLaughlin, MasterCard chief emerging payments officer, ultimately meaning more convenience and choice for consumers and additional value for the brand’s telecommunication, government, and merchant partners. The deal enables MasterCard to have full control of the technologies that support its digital-payment services, a MasterCard spokesman says.

C-Sam provides the platform for many mobile wallets, including Isis, the near-field communication-based mobile payment service backed by AT&T Mobility, T-Mobile USA, and Verizon Wireless. MasterCard says those relationships are not changing because of the acquisition.

MasterCard will benefit from being able to more easily provide a variety of mobile-payment methods, says Mary Monahan, executive vice president and research director for mobile at payments research firm Javelin Strategy & Research, Pleasanton, Calif. C-Sam’s product includes a software development kit, supports NFC, bar codes, cloud-based offers, and provides for loyalty, banking, and other offers, she says.

“Mobile wallets are becoming increasingly important to merchants,” Monahan says in an email. “Last year in the U.S., almost $60 billion was spent by consumers using their mobile devices. Additionally, according to the 2013 Lexis-Nexis Merchant Study of 1,139 U.S. merchants, 19% of merchants’ total revenue was derived from the mobile channel in 2013.”

The sophistication and success of the C-Sam platform is unique in the mobile wallet industry, the MasterCard spokesman says. “C-Sam has successfully deployed a wide range of mobile solutions across many industries and geographies, ranging from banking to payments to health care.”

The acquisition is especially important for MasterCard, Monahan says, because of what its competitors have done. Both Visa Inc. and PayPal, the payments arm of eBay Inc., have made mobile-payments deals to secure technology. In 2011, Visa bought Fundamo, a South Africa-based mobile-payments provider, and last year PayPal bought payment processor Braintree Payments Solutions LLC. “Acquisitions of proven players are often the best way for networks to ‘innovate from without,’” she says.

MasterCard and C-Sam have a history, with C-Sam in December launching a mobile wallet compatible with MasterCard’s MasterPass digital wallet, enabling financial institutions and merchants to build their own wallet service that consumers can use at MasterPass-enabled merchants.

MasterCard also took a minority investment in C-Sam in December 2012 along with agreeing to work on mobile-wallet products. Mung Ki Woo, MasterCard executive vice president of mobile and industry alliances, had been an advisor to the formerly independent C-Sam.