UK payment startups join forces in $87 million merger

2011 seems to be the year that mobile payments go mainstream with everyone from the big mobile carriers and handset manufacturers to scrappy new startups scrambling on to the payments bandwagon.

sQuid and ACT, which together cover 85 percent of the UK’s smartcard-based, contactless payments market, announced a merger today. The new company, Smart Transactions Group is valued at $87 million and expects to generate revenue of $15 million in 2011.

ACT specializes in retail reward programs and transit solutions for public transport. It handles 50 million transit transactions a month. sQuid supplies low-value, pre-paid payment cards for the education and retail sectors. sQuid payment cards are expected to be used in 10 million transactions this year. Neither payment system relies on existing bank or credit card infrastructure.

Smart Transactions Group’s payments business is growing at a double digit monthly rate, while transit transactions are expected to grow 50 percent in 2011. The new company will continue to expand its deployments in the UK and will target emerging markets such as Kenya and the United Arab Emirates. But more interestingly it also plans to launch NFC and mobile phone-based payments and ticketing.

Both companies are privately funded. ACT was formed in 2002 and sQuid in 2005.