Set down your digital wallets. There’s something you really need to know. Those pretty little apps don’t matter quite as much as you think. Most of them couldn’t pick up your tab at IHOP because they’re missing what’s really critical – bank-grade infrastructure. Not the just the security, but the ability to seamlessly communicate across banks and geography. As Monitise’s CEO, Alastair Lukies says, “The Battle for Middle Earth is [for] the Infrastructure.”

And Monitise has just gone nuclear with its purchase of Clairmail for $141 million, clearing regulatory and board approval this week. Joining up with Clairmail is a consolidation of the industry. Monitise has built a platform for communication between your mobile phone and the bank that uses the same system that international ATMs use. Now they’re developing the applications that run on top of it, putting them in control of the space. They already turn over $100 million per year servicing 15 million registered customers. This makes Monitise one of the largest, and only, mobile processors of bank transactions in the world. Surprising, for the amount of digital wallets being pushed in your face.

As nice as it may seem to walk around with all your debit and credit cards synched up to one digital wallet, that won’t do a damn thing for you if the store you walk into doesn’t recognize it. That’s where Monitise has positioned itself. They’re targeting the banks – who already have the customers, which amounts to no expense on rolling out a product, no need for marketing (banks already control their customer base), and complete synergy across platforms.

From there, it’s just a matter of putting the right programs in the hands of the banks. That’s the aim for Monitise over the next year or so. They have big customers too, including Visa, FIS, Fifth Third Bank, US Bank, Royal Bank of Scotland, and HSBC, among several others.

Alastair explains Monitise’s position being as simple as this: “There are 2.2 billion bank accounts on Earth. How is it that I can get off a plane in any country and use my PIN at any ATM?” This existing architecture is what will transform your smartphone into a functional digital ATM.

The company started on the solution ten years ago. At that time they noticed that 140,000 people were accessing their bank accounts from ATMs solely to check their accounts – nothing else. They could solve this problem by simply building an application to allow someone to do the same using their smartphone. They realized the potential of the ATM-route, and the leverage-able infrastructure it was built on.

So why haven’t banks been on top of this all along? Alastair has two theories. First, they’re so focused trying to worm their way out of the current turmoil, they don’t have the resources to commit to it. Monitise had a team of 200 employees on it – and it just grew to 600. Second, they’ve thought all along that someone (Apple) was going to just come along and solve the problem for them. Not so, at least not without some consideration of the infrastructure already in place by banks. It takes time to create the necessary connections and meet regulatory standards for communicating currency through mobile.

For example, in Brazil they rolled out a program that allows customers to withdraw cash from an ATM by using a single-use code that pops up on your smartphone. Input that code on any associated ATM and you’re minted – no card, no PIN, just cash. It can be used by someone else (anywhere else) if you pass that code on, so say you need to quickly allow a family member access to your bank account to withdrawal emergency funds, they can do it.

Monitise is solely focused on how your smartphone speaks to your bank, and provides you with useful financial information, regardless of company or country. It’s light years ahead of what your digital wallet is trying to do. And it’s what banks will use to enter the mobile market.

[Image courtesy 401k 2012]