C-Sam Touts ‘Wallet’ Software to Spark Mobile Payments in the U.S.

A small, privately held company based in the outskirts of Chicago figures it has the platform on which mobile payments will take off in the U.S., a market that up to now has not been favorable for handheld-based transactions. By the end of the year, C-Sam Inc. plans to have trials going on with at least three clients?one bank, one retailer, one mobile network operator?for a mobile-payments software system it has invented that allows consumers to carry cards, coupons, financial-account details, and other media on their phones, instantly available with a tap on individual screen icons. Sam Pitroda, C-Sam's founder and chief executive, is targeting his system, called OneWallet, at the largest banks, merchants, and carriers. “If you get 20 big players you cover a big population,” he says. He won't project revenue or transaction volume for his fledgling company, which employs about 120 people, including software engineers in India. But he says C-Sam, which has already licensed OneWallet in Japan, India, and the United Arab Emirates, will be driving commercial services in the U.S. next year. He projects he'll have 15 to 20 clients by year's end, up from five now, with two or three in the U.S. The software resides on clients' servers and acts a sort of switch, reading transactions and sending them on to appropriate processors. In this way it differs from other ventures to drive mobile commerce. Japan's NTT DoCoMo Inc., for example, relies on an embedded chip from Sony Corp. to enable payments. The carrier has issued 5 million of these wallet phones so far, and this spring bought a 34% stake in Sumitomo Mitsui Banking Corp., Japan's No. 2 credit card issuer, to put a credit card on its phones, as well. DoCoMo is doing better than Simpay, a European venture with high ambitions, which shut down earlier this year. Pitroda says he had the idea of a phone-based wallet “metaphor” a decade ago, but he needed phone technology that could support it. “I was convinced that until the user interface could be made to look like a wallet, mobile commerce would not take off,” he says. Now, with smart phones proliferating, is the time to launch, he says. The Yankee Group projects the worldwide smart phone population will more than double, to 49 million handsets, this year, and double again in 2006. These are mobile devices with laptop-like capabilities and large, color displays. C-Sam collects a per-user licensing fee, a charge for upfront installation and maintenance, and a transaction fee. The company refuses to say what its cut is on transactions, but clients pay $2 to $5 per user to license the system. Besides transaction revenue, clients will benefit by cutting costs. Banks, Pitroda says, pay $4 each to issue plastic cards. Issuing them over the air to OneWallet phones, by contrast, costs 50 cents. Pitroda says OneWallet is also set apart because it allows consumers to carry multiple payment and financial media virtually on one handheld, with built-in security. “We allow [clients] to issue credit cards, checkbooks, debit cards, coupons, tickets, over the air directly to your phone,” he says. “That's our difference.” One potential complication for OneWallet is that merchants will have to link up radio-frequency transceivers to allow OneWallet transactions at the point of sale. These readers may be relatively cheap, but OneWallet operates on a different international standard from the one MasterCard International, Visa U.S.A., and American Express Co. rely on in their contactless card programs, which means merchants would have to install two readers at each checkout.