Deal with First Data, Star Gives Big Boost to M-Banking Startup

Extending its reach into emerging mobile-banking and payments markets, First Data Corp. on Thursday announced an agreement with mFoundry Inc. under which the leading payment processor will offer mFoundry services to the thousands of bank and credit-union members of First Data's Star electronic-funds transfer network. The First Data agreement marks yet another win for the Sausalito, Calif.-based startup that already counts Citigroup Inc.'s Citibank among its customers for mobile-banking software (Digital Transactions News, April 4). Under the non-exclusive agreement, First Data will sell and host various services for mobile devices available on what mFoundry calls its Spotlight Financial Platform. These services include balance inquiries, transfers between accounts, transaction histories, and others. Spotlight also enables payments through mobile devices, including contactless and person-to-person transactions. “With the Star network, we have the ability to quickly and cost-effectively bring mobile-banking services to more than 5,400 financial institutions, and FDC [First Data] has other payments products that can be incorporated into our operator financial-services applications such as stored-value and credit products,” an mFoundry spokesperson tells Digital Transactions News via e-mail. “FDC also has great sales reach into the financial-institution community.” Greenwood Village, Colo.-based First Data expects to have users by the fourth quarter, according to Sara Bonn, chief product and innovation officer, First Data Financial Institution Services. First Data is offering the mFoundry services in response to demand from clients, Bonn tells Digital Transactions News. “We are getting interest from financial institutions,” she says. “I think it's a natural evolution.” Some functions, such as balance inquiries, will use Star's switch, she says, but all will use some aspect of First Data's infrastructure. “Through this commercial relationship we think we can provide our clients with really strong products in regards to mobile banking,” Bonn says. In a release, First Data and mFoundry also said they “have agreed to pursue opportunities as they arise to support near-field communication [NFC] solutions that will be rolled out by the mobile operators, merchants, and financial institutions.” NFC is a technology that enables contactless payment terminals to communicate with mobile devices. Neither Bonn nor the mFoundry spokesperson would comment in detail about what those opportunities might be. It wouldn't be surprising, however, if any future product or service involves mobile-payments hardware developer ViVOtech Inc. Santa Clara, Calif.-based ViVOtech recently closed on a $22.5 million round of funding that included First Data as the lead investor (Digital Transactions News, Aug. 7), and in June ViVOtech and mFoundry announced they were working together to provide financial services to users of cell phones and other mobile devices. “We have previously announced a relationship with ViVOtech and will work with them on integrating platforms, but there is also pre-NFC work that can also be done,” the mFoundry spokesperson says. The spokesperson adds that MFoundry works “with a number of other top U.S. banks,” but currently can publicly identify only Citi. On the carrier side, the firm says it has specific partnerships with Sprint and Verizon Wireless, though its applications work with most North American carriers. First Data and mFoundry will share revenues, according to the mFoundry spokesperson, but otherwise neither party would disclose financial terms of their agreement.