What chip shortage? MagicCube raises $15M to ‘replace all chips,’ starting with POS terminals

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Magic CubeMobile security startup, has raised $15 million in a round led by Mosaic Partners.

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Bold Capital, Epic Ventures, card-reader/POS hardware maker ID Tech and unnamed individual investors in the fintech space also participated in the financing, raising the Santa Clara-based startup’s total funding since its 2014 inception to $30 million. gives.

Simply put, MagicCube’s software-based security technology aims to replace all security chips, which have historically been the standard for securely storing sensitive data and authenticating anyone who needs to access it. And it’s starting with financial services. The company’s technology lets merchants turn mobile devices into payment terminals. Or in other words, it gives merchants a way to accept card payments on any consumer device without a reader or additional hardware.

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“We are on the Nerdshala of a big change when it comes to securing data on all kinds of devices, especially those used for financial transactions,” said MagicCube CEO Sam Shockey. “The chip shortages that are stalling entire industries and soaring device prices have exposed how outdated the current approach is and how valuable MagicCube’s solution to tackling this issue is – this rounds off.”

Shaki, who previously served as the head of Visa global remote payments business unit, co-founded the MagicCube with his wife, Nancy Zayed, who spent years Working on the OS group at Apple. The pair, who are of Egyptian descent, started the company in an effort to develop technology that would eliminate the need for hardware in terms of mobile security.

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Visa is actually an investor in the MagicCube, having backed the company in August of 2020 and a second time before that. Other supporters of the company include A. Are includedZure Capital Partners, Epic Ventures, NTT Data, Silicon Valley Bank and Sony Innovation Fund, among others. (Sony’s VC Fund invested an undisclosed amount In MagicCube at the end of May 2020).

That August 2020 investment came on the heels of Apple’s $100 million acquisition of MagicCube competitor MobiWave, a Montreal startup whose software turns iPhones into mobile payment terminals. MagicCube’s technology reportedly expected to complement Visa tap-to-phone initiative. The Apple/MobiWave deal didn’t deter Shakey, who believes his startup “will be the dominant party on the Android side, which is 85% of the universe.”

MagicCube’s first application center on Software POS, or SoftPOS. Using a smartphone or other mobile device, a merchant can take SoftPOS payments without the need for additional hardware like a traditional POS terminal. According to the company, payments through contactless cards and digital wallets can be accepted through an array of financial service providers through an array of mobile devices with the same security as a chip.

MagicCube also claims that its software-based Trusted Execution Environment (STEE) is “the first and only software solution” to be accredited by EMVCO, t.The consortium that oversees the global infrastructure for chip-based payment cards and acceptance devices — To provide a level of security that is on par with hardware-based approaches.

“What we can do with our technology is to simplify,” Shaki said. “On your credit card, there is a SIM card which is essentially a metal safe. MagicCube has this technology which is a virtual vault that is pure software that hides secrets and codes while serving the same purpose as a physical vault. And it’s huge because unlike competitors, we can hide information in that virtual vault… And yes it’s proven, patented and a great deal.”

image credit: Magic Cube

MagicCube says its STEE is versatile and can be used to replace chips used on hardware-secured elements such as SIM cards, Internet of Things (IoT) devices such as cars and smart home devices and even bank-grade It can be applied to a variety of use cases. Hardware Security Module (HSM). The company’s first product, the i-Accept, was designed in an effort to disrupt more than $70 billion Per year spent on point-of-sale card readers by banks and merchants everywhere.

Through i-Accept, acquiring banks and other financial services institutions give merchants and retailers a way to accept payment cards, contactless transactions and mobile wallets such as Apple Pay, Google Pay and Samsung Pay – all across merchants. For consumers at “Card Current” rates and without transaction volume limits. MagicCube says its i-Accept product can also capture financial PINs and other verification methods on any mobile device, including phones, tablets and large smart screens – without the need for dedicated hardware or terminals.

The company plans to use the capital it raised in its latest funding round to accelerate the deployment of its software-based security products. MagicCube plans to expand its sales and customer delivery teams, as well as accelerate development of products aimed at serving some of the industries affected by chip shortages, such as crypto wallets, cloud and in-car security, etc. Is.

Howard Mergelkamp, ​​partner at Mosaic Partners, believes MagicCube’s technology is “truly unique” and one that the financial services industry in particular has “reached a critical point of both wanting and needing to adopt.”

“This technology can support mobile and IoT devices with a platform that is easy to integrate and is not constrained by device manufacturers or specific use cases,” he said. “This is unheard of on the current scenario.”

MagicCube’s technology is a “killer app” because it is not an “app”.

“It is not tied to a hardware platform or ecosystem (ए la Apple), nor a particular security specification or protocol, nor a specific software solution,” Mergelkamp continued. MagicCube can deliver its ironclad protection to any software-enabled device, comply with the security specifications of any industry today or tomorrow (such as payments or healthcare), and integrate into any company’s existing systems. in order to allow that company to retain full ownership and control of its data.”

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