Softcard, the mobile payments company backed by Verizon Wireless (NYSE: VZ), AT&T Mobility (NYSE:T) and T-Mobile US (NYSE:TMUS), has cut 60 employees amid a restructuring. While Softcard insists the layoffs won't affect its pursuit of the mobile payments space, the layoffs are an indication that the mobile payment market remains in flux, especially amid the introduction of Apple Pay (NASDAQ: AAPL) and other competing offerings.
"Softcard is taking steps to reduce costs and strengthen its business. This includes simplifying the company's organizational structure and consolidating all operations into its Dallas and New York offices, which involves layoffs across the company," Softcard said in a statement. "We believe these efficiencies will best position Softcard in the marketplace while maintaining focus on serving our market."
It's unclear what percentage of the company's employee base is being cut with the 60 layoffs. A Softcard spokesperson said the firm's employee base is in the hundreds. According to QR Code Press, the cuts represent anywhere from 12 to 30 percent of Softcard's workers, figures based on the staff size of 201 to 500 employees listed on the company's LinkedIn account.
The cuts seem to affect a wide range of functions at the company, but a spokesperson declined to say which departments are being affected most. "Softcard remains focused on offering the best multi-platform mobile payments solution for consumers and merchant partners," the spokesperson told FierceWireless. "The announced changes are part of an overall strategy to reduce expenses and improve efficiencies while maintaining focus on serving the market."
In November at the Money20/20 conference, Softcard CEO Mike Abbott welcomed the introduction of Apple Pay as a way to increase public awareness of mobile payments. He also said Softcard would stand as the Android alternative to Apple Pay for most Americans, according to Finextra. Abbott added that Softcard would support Microsoft's (NASDAQ: MSFT) Windows Phones, expanding service to around 100 handsets.
"Apple Pay has been a huge tailwind," Abbott told the New York Times in November, especially because both Apple Pay and Softcard use Near Field Communications technology to process mobile payments.
In September, Softcard rebranded itself from Isis to disassociate itself from the extremist Islamist militant group, the Islamic State, also known as ISIS. Softcard was founded in November 2010 and the company officially launched nationwide in November 2013.
Reliable estimates on the size of the mobile payments market are tough to come by. Research firm Gartner estimated that consumers worldwide would spend $235.4 billion through mobile payments in 2013, up from $163.1 billion in 2012. However, mobile payments are still relatively small in North America, where consumers were estimated to have spent about $37 billion via mobile payments in 2013, up from $24 billion in 2012, according to Gartner.
Apple has deals with the six biggest credit-card issuers for its new Apple Pay service, accounting for around 83 percent of credit-card transactions in the U.S. Apple Pay works at around 220,000 stores and lets users pay for goods via NFC on the new iPhone 6 and 6 Plus.
Meanwhile, the Merchant Customer Exchange (MCX) is setting up a mobile payments system called CurrentC to rival Apple Pay, Softcard and other mobile payment offerings. Last fall MCX took a great deal of criticism because merchants that have signed up for its system, including Walmart, Target, CVS, Rite Aid, Best Buy and others, have agreed to use CurrentC exclusively. However, MCX CEO Dekkers Davidson told Re/code in November that the exclusive arrangement likely won't last long.
MCX insisted on exclusivity for now to give its merchants "breathing room" to develop CurrentC, Davidson said. Merchants are rallying behind CurrentC because it's a payment method using QR codes that won't incur the credit card fees that retailers have to pay on each credit card transaction. Davidson said MCX merchants are undertaking a massive overhaul of their systems to launch CurrentC but do not want to see other payment options fail. In fact, he said the exclusivity rule would expire in "months, not years."
- see this Finextra article
- see this Pymnts.com article
- see this QR Code Press article
MCX: Exclusivity agreement on CurrentC that bars Apple Pay to expire in 'months, not years'
Apple Pay rival MCX open to using NFC technology in the future
Verizon leads $9.4M investment in Flint Mobile mobile payments service
Analysts: Apple Pay will help spur wider usage of mobile payments
Isis mobile payments company rebrands itself as Softcard
Isis activated at least 600,000 mobile wallets in the past month