Gemalto Acquires Mobile-Payment and Messaging Platform from Ericsson
Gemalto has acquired the mobile-payment platform of big Swedish telecoms equipment maker Ericsson, which will deepen Gemalto’s already strong connections to mobile operators offering payment and other mobile-commerce services.
The 100-employee Ericsson Internet Payment Exchange, or IPX, which operates separately from Ericsson’s telecom-equipment division, enables subscribers to pay on their phone bills to buy games, ringtones and other digital content, as well as do mobile voting and to receive other services via SMS, MMS, WAP or the Web. The acquisition includes IPX’s little-used trusted service manager.
The IPX unit is, in effect, a payment-clearing service and broker, giving content providers access to more than 100 mobile operators in over 25 countries, including the United Kingdom, United States and China. The platform also could be used to enable consumers to buy physical goods and tickets on their phones, through carrier billing.
That could help Gemalto in offering more fee-based services to telcos seeking to deepen their reach into the payments market. And it could also create more business with content and service providers, helping them reach mobile subscribers worldwide. Gemalto also could add more security to the IPX platform, thus expanding the payment services it could handle.
UPDATED: The acquisition comes more than two years after Gemalto acquired a majority stake in France-based Netsize, which at the time provided a mobile-messaging and operator-billing platform serving 100 operators in 28 countries.
“By acquiring IPX, and combining it with Netsize, we can offer our customers unrivalled breadth and depth of coverage for messaging and operator-centric payment,” a Gemalto spokeswoman told NFC Times. END UPDATE.
Gemalto CEO Olivier Piou, in a statement today, said the acquisition is a “natural step to supporting the ramp up of MNO (mobile network operator) and mobile service providers' related payment and identity services.”
A statement from Ericsson IPX chief Richard Anell said Gemalto could use the IPX platform to further develop its “mobile-money, mobile identity and mobile security” offers and its work in smart cards and NFC.
UPDATE: Gemalto did not immediately release the price it paid for Ericsson IPX, which excludes the latter's U.S. operators. Gemalto paid €9 million (US$12.9 million), along with acquiring some debts, for a nearly 62% stake in the 180-employee Netsize, according to the Gemalto's 2010 annual report. It added to Gemalto’s 24% stake in the company. The 2010 report said Netsize generated €61 million in revenue and a €4 million net loss for Gemalto since the acquisition, which was announced in early January of 2010. END UPDATE.
It seems unlikely that Gemalto bought the IPX unit for its TSM contracts.
TSMs are mainly set up to manage the secure chips that store NFC applications, such as SIM cards or embedded chips in phones. TSMs also download and provision payment and other secure applications for banks and other service providers.
Little TSM Business So Far
But since launching its TSM service about five years ago, IPX has made little headway in the market, competing against the likes of Gemalto and other smart card vendors–with their strong contacts with telcos and banks.
IPX served as TSM for a small trial in late 2010 for Spanish bank and mobile virtual network operator Bankinter and perhaps a few other pilots, but did not have any TSM contracts for NFC rollouts, a source told NFC Times.
The Ericsson unit has no expertise in handling secure elements or offering personalization for banking cards, which is what the telcos and banks that have hired TSMs so far are looking for.
But IPX earlier told NFC Times that it had no intention of trying to compete head-on with smart card vendors for TSM contracts to directly manage secure elements or to offer certified provisioning of such payment applications as Visa payWave or MasterCard PayPass.
Instead, with its TSM unit, IPX has hoped to roughly follow its mobile for carrier-billed payment for content. It would sign up service providers such as banks, transit operators and hotels and bring them together with operators. Then it would work with partners to provide the secure TSM piece.
This then is one of the components Gemalto would offer with its acquisition.
Earning Brokerage Fees
In addition to its direct connection with more than 100 operators, IPX has said it has more indirect links with 800 operators for SMS and other messaging, connecting 96% of the world’s subscribers. This can be used by banks, enterprises and mobile advertisers, among other companies, to send alerts and promotions.
For bringing together operators and content providers and making sure the content gets billed, Ericsson IPX takes a piece of the sale. For example, for a US$1 game, IPX might get a 5% cut from the mobile operator that sells the game. The telco would keep 20% and the content provider would get the rest, IPX told NFC Times earlier.
IPX didn’t disclose fees it planned to charge for its TSM brokerage services.
The unit will become part of Gemalto’s software and services business line, which the France-based vendor has been seeking to build to balance its smart card business.