With increasing amounts of people choosing to make payments via their smartphones, a number of Stockholm based tech startups are aiming to take the lead in the global race to head the booming m-payment market.

In June, iZettle launched a card reader that allows users to take credit card payments from chip-enabled credit and debit cards. The free device simply plugs into the port of an iPhone.

The Stockholm-based company and its device have been praised by the international media. Forbes wrote: "iZettle offers huge advantages over other systems that let businesses accept chip-card payments". Wired, Cnet, Financial Times and others have given the Swedish startup extensive coverage.

Jacob de Geer, CEO and co-founder of iZettle, believes that the considerable attention is explained by the fact that the service fills a burning need among both consumers and entrepreneurs.

"Businesses and individuals shy away from dealing with cash and the card is the natural alternative, given the spread," he told The Swedish Wire.

It's an innovation that ticks a lot of boxes. For example, tradesmen can save time, money and paper by taking an instant payment, instead of mailing invoices and waiting for payment as in the past.

A few months ago, the company raised 11.2 million dollars of funding, led by Index Ventures, Creandum and Charles Dunstone, co-founder of The Carphone Warehouse. The service has already been launched in Sweden and the company plans to take iZettle to other European countries, including the UK, Spain, Italy, France and Germany.

The concept of iZettle is similar to that of US mobile payment service Square, which was created by Twitter's founder Jack Dorsey. But while Square works when bank cards are swiped, iZettle works with chip-enabled cards, which are popular in Europe.

The competition for m-payment solutions raises an important question: which technology is the most likely to be world de facto standard? A Huffington Post article predicted that "there's a brutal, bloodbath-type clash looming" over mobile payment standards.

"I think I like the odds of a 30-employee Swedish startup with $11 million more than I like a great, big, over-hyped U.S. tech company with $100 million and an absurdly otherworldly valuation," wrote the Huff Post's Bill Robinson.

IZettle owner de Geer said he believes that Swedish tech-companies have the possibility to be frontrunners in developing m-payment services.

"Sweden is a natural test market for Swedish startups. Fortunately, the Swedes are very technology savvy and interested in new technology. We also have a very good internet and mobile penetration, which is helpful," he said.
"Given this, we have much better chances to come out with innovative mobile technologies before others."

In Sweden alone there are approximately 17 million debit cards. In combination with about 1.5 million iPhones, iZettle has a critical mass of potential users from day one, de Geer added.

But it is far from the only mobile payment firm in Stockholm. Growing demand for mobile services has led to a number of ICT companies chasing customers, with many taking advantage of the surging quick response (QR) code technology.

Some of the companies include:

• Payair, which uses the QR code: Mobile phone cameras are pointed at a bar code for automated product identification and approve the purchase with a personal code. The company recently launched its service in the US

• Seamless is a software innovation company which specialises in solutions for money transfers between mobile phones. In its mobile payment platform consumers scan a fixed QR code.

• Payex Mobile, created by debt collector PayEx, is a mobile payment service allowing users to make transfers between mobile phones and to make online payments.

• PayGround is a company independent of card companies, mobile operators and banks. Instead, it has developed partnerships with credit market companies. After registering a mobile phone number to PayGround's service, a person's credit card number is never revealed online.

• Accumulate ME enables a mobile to be used in all payment situations. It allows fast and easy deployment of new and future mobile payment methods using one platform.

According to Cap Gemini's World Payment report 2011, mobile payments are expected to grow from 5 billion euro in 2010 to 15 billion euro in 2013.  InStat said some 400 million people will use mobile devices to make payments by 2015, up from 100 million today.  

Mobile operator Telia predicts that at least half of all Swedes will use mobile phones to make payments within two years. The report Telia Trends also predicted that 30 percent of those polled would make mobile payments today if possible.

And Telia has now formed an alliance with its fellow mobile operators, Tele2, Telenoe and 3. 4TSverige, to offer cross network mobile payment services. It will be launched this summer.

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This article was published in collaboration with Stockholm Business Region.

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