Danish operators sell Paii mobile payments company to bank-owned rival Swipp

TDC, Telenor, Telia and Three Denmark have sold their mobile payments venture Paii to a rival company owned by banks, conceding that payment activities are perhaps more suited to financial institutions than telecoms service providers.

The four Danish operators, which established the venture in 2012, sold out to Swipp, a competing mobile payments solution established by Danish banks including Nordea and Nykredit. The plan is to merge the two payment services to form a single application that will allow Danish consumers to use their mobile phones for money transfers, and online and in-store payments.

"With the acquisition of Paii we will create the future mobile payment solution. Swipp will be available to all Danes, regardless of which bank the customer is in, and our joint solution will make it easier for both consumers and traders to use the phone as a payment method online and in physical stores," said Martin Andersen, managing director of Swipp.

A new Swipp app is now planned for 2015 that will incorporate complementary technology of the previous two applications. The CEO of Paii, Peter Bredgaard, will join the board of the merged company and the new company will also take over all employees of Paii.

The four operators set up Paii at a time when telecoms service providers across Europe were trialling and launching mobile payments services, many based on near field communications (NFC) contactless technology.

Indeed, the Danish company was launched just two weeks after mobile operators in the UK formally named their mobile payments venture Weve. However, the Danish venture did not include NFC in its initial phase, instead making use of SMS and apps-based services for mobile payments.

Now, new NFC-based solutions such as the Apple Pay mobile wallet and the growing interest by banks in host card emulation (HCE) have raised questions about the future role of mobile operators in NFC: both applications leave mobile operators out of the value chain as the SIM is no longer relied on as the secure element.

Indeed, it has recently been rumoured that Weve has abandoned plans to launch a standard mobile wallet following the launch of the iPhone 6, which supports Apple Pay.

The Danish operators have certainly admitted that perhaps payments services are best left to the experts:

"With Paii we have built a company with strong skills and developed a technical platform with unique functionalities that have proved attractive to banks. At the same time, we have come to the conclusion that the payments are not telecommunications companies' core business in the same way as it is for the banks. Against this background, it is the right decision to sell Paii to Swipp," said the chairman of Paii, Flemming Jensen.

For more:
- see this Paii release (in Danish)

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