Payleven, the Rocket Internet-backed mobile payments provider, has taken a big step towards making its solution a mainstream one across Europe after it announced that it will launch a fully certified Chip & PIN technology, with the backing of Visa Europe.
The company landed an undisclosed round of funding last month — in the “high single digit USD million” range — and it became the first to launch a Chip & pin solution of any kind when it rolled out a solution in a limited trial with selected partners in October 2012. Now the technology will be available for all this month. Today’s two pronged news is a huge deal for the company since it is now fully compliant with all major credit and debit cards across Europe, after becoming Visa Europe’s first full payment service provider.
Payleven says that the service will go live in its markets across Europe, which include the UK, Germany, Italy, The Netherlands and Poland.
The company’s solution authorizes payment by requiring customers to enter a PIN on their device via the Payleven mobile app. That’s in contrast to rival iZettle — the Swedish startup — and SumUp — the Berlin-based firm that is Payleven’s biggest rival — both of which use an ‘electronic signature’ to verify the identity of the card holder.
iZettle, in particular, has impressive credentials. It raised a $31.4 million Series B funding round and is backed by American Express, among others, but it has had its issues with Visa Europe which are believed to stem from its technology. The money giant withdrew support for iZettle in Denmark, Finland and Norway and, though iZettle found a somewhat convoluted getaround, the fact that Payleven has got full approval from Visa Europe will be of concern to the company.
Payleven doesn’t direct mention iZettle in its announcements today, but this comment from CTO and co-founder Rafael Otero makes for interesting reading given the circumstances — the emphasis here is ours:
Payleven has worked hard to deliver a mobile payments solution which is convenient and also gives merchants and cardholders confidence in its security. Without PIN entry, you can’t have the same quality of security. End-to-end encryption is also very important to protect your card information, because it ensures that your personal data cannot be compromised during a transaction. This is why Visa has rightly maintained its high standards to protect cardholders and their information.
Co-founder and CMO Konstantin Wolff emphasized the importance of the alliance with Visa Europe and the security of the Chip & PIN solution in a statement:
We are excited to launch the perfect solution for the European market. Since Visa requires PIN authorization at the mobile point of sale in Europe, we are now in the position to allow our merchants to accept the leading card brand in the world – Visa. With Chip & PIN we can offer our merchants the highest security standard in card payments whilst being fully mobile, more flexible and convenient than traditional card terminals.
Interested merchants can sign up at the Payleven website and pay €49 (around $65) to buy a Chip & PIN reader. The company generates revenue by taking 2.75 percent of merchant’s transactions; the solution can handle all card payments for transactions of €1.00 or above. Payleven says that the devices will begin shipping to merchants on February 18, and that’s sure to put heat on iZettle, SumUp and others.
It’s worth noting that Payleven is sometimes referred to as a Square ‘clone’, which is somewhat inaccurate. While it is true to say that the Samwer brothers who run Rocket Internet have a track report for (sometimes blatently) ripping off successfully businesses, Payleven works in an entirely different way to Square.
Card-based transactions are not the same in Europe as merchants’ readers tap into the chip embedded inside them, while a four letter-long PIN number is required to authenticate and authorize a transaction. That makes the Square solution, which uses the magnetic stripe of a card, inoperable there. Payleven’s take is to have its device — which plugs into a smartphone — ‘talk’ to the merchant’s smartphone/tablet via Bluetooth.
Headline image via Payleven, second image via heisenbergmedia / Flickr