Cash Points

DM: So Keith, give us the low-down on paythru if you would please?


KB: Sure. paythru is a payment-enabling mCommerce platform that uses the ‘rails’ that already exist, by which I mean that it’s a gateway for payment type that people already use. It enables people to do securely through the mobile what they are already doing through the e-channel.

It’s the only mobile payment system that works on all mobile handsets, on all networks and with every bank, anywhere in the world. There is no limit to the amount a customer can spend using Paythru, other than how much they have in the bank or on their credit card.

In developed countries, we see a channel shift, moving from eCommerce on PCs and laptops to iPads and mobile, where people are expecting to be able to do the same things, but maybe in a slightly different way, and the inability to recognise that that journey has to be different has held mobile payments back.

The principle we use is universality – take the indigenous payment types that people are using already and allow them to use them through the mobile channel. We were the first mobile payment platform to achieve PSI-DSS compliance, so we can provide a gateway for Visa, Mastercard, Amex, Diners Club, actual and virtual prepay cards, and later this year we will be introducing credit on the platform.


DM: What does that mean exactly?


KB: It means we will offer the capability for an individual to apply for credit via our platform, so this is very interesting for shopping centres and retailers. It will dovetail with the secure document processing platform that’s already in use to integrate with the retailer’s existing suppliers for store credit, and it will enable consumers to see if they can apply for credit through the mob phone, and allocate it to use as full or part payment for a transaction through the mobile.


DM: It was interesting that you said your platform enables people to do securely through the mobile what they are already doing through the e-channel, but you didn’t mention what most people would probably think of when they think of mobile payments, i.e. carrier billing. Do you support that?


KB: We support it where it’s appropriate. Charities are the biggest sector for this, but we have done lots of work also with publishers. But we tend to see operator billing as a constraint, because of the limits applied. We ran a campaign using the seven series numbers with the £5 limit, and when we went back to the people who had donated £5, 40 per cent of them gave another £5.


DM: And where do you see NFC in the mobile payment ecosystem?


KB: We don’t believe the future of mobile payments lies with NFC. Payments come down to two things. The first is that it’s subliminal. You don’t go out thinking about payments; you assume that your cards will work, so it’s not top of mind. Payment is all about authenticating, is this you and do you have the money? So our view is that it will all be cloud-based and people will be able to store their means of paying like loyalty points or vouchers that will equate to access to real money. So you whack it into your personal account in the cloud and use it where you like. NFC comes into that as a delivery mechanism.

So let’s say you are working with a theme park operator, maybe a water park, where it’s impractical to use cash or the phone, so you put the cash on an NFC-enabled wristband and control the money through the gateway.

NFC will not be anything like ubiquitous for three to five years. There are too many noses in the trough and no one knows who’s going to pay for it. The merchant won’t and the consumer won’t. But like operator billing, it does have its place, and it is part of our gateway.


DM: So how long do you think it will be before people are routinely using their phone to pay for things in shops?


KB: We will see it this year, and it will be part of everyday life by the end of 2013. This year will be the year that mobile payments consolidate, as retailers will provide the optimised experience people need for mobile. People are using the phone to execute, so retailers need to provide an optimised experience on their mobile sites so that people will transact, in the same way that with Amazon, you can go in, find what you want, and buy it easily.


DM: That’s interesting you should say that. Pizza Express launched their iOS app that enables you to pay for your meal at the table earlier this year and it is a great idea, but having used it, I felt they had not quite closed the loop. Once you had paid, there was nothing to confirm to you that the restaurant knew you had paid so I had a slightly uncomfortable feeling about it.


KB: Well we are launching a pay-at-table product very soon, and it does close the loop, to the extent that it is fully integrated into the till and CRM systems, and it will enable you to use any card, and once it is set up, you will be able to use it to pay before, during or after eating. You will be able to check out with a text, build the tab on the phone or call for it, it will be up to you.


DM: And when exactly does this launch?


KB: We are waiting on the till guys now, we have done our but, but it will definitely be Q1 and it will hopefully go live this month. We are also very close to launching similar technology for a well-known London attraction to buy fast-track tickets, using reverse-engineered codes at the till.


DM: So why do you think so many people are seeing mobile payments as the next Gold Rush?


KB: The biggest puff cloud is NFC, and if you look for the root cause of all the activity, the people pushing it are Mastercard and Visa, because ever since Mondex, that is the bandwagon, and it’s not surprising, because we know that we know that 36 per cent of transactions by volume are by cash. Even among local authorities, 20 per cent of transactions are cash. People go back to cash in a recession. Now if you are Mastercard or Visa and you are looking to drive more transactions, the biggest untapped market is the 36 per cent of transactions that are cash. So for them, it’s all about how can we get some of these cash transactions onto cards, and that’s all about NFC.

The problem is though, that if you have to enter your PIN every four or five transactions, it destroys the value in the mCommerce chain, because if you are in a fast-track queue and you have to validate by entering your PIN, then it’s not a fast-track queue any more, and it will drive everyone mad. NFC does have a role but there is more hype around NFC than anything else right now.


DM: And just coming back to paythru in particular, what business model do you work on, and where do you see your business coming from in the short to mid-term?


KB: We are like a PSP (payment services provider) in that we take a click fee, but we also have a more flexible model built around a revenue share. Either an upfront fee and smaller rev share or in some instances, there could be no upfront fee and a larger revenue share.

In the UK, we are focusing on six areas, and overseas, we tend to go for immature regions, where consumers go straight to mobile, so as an example, we are live in S. Africa, and we are working with the likes of Takealot, Groupon and others.


DM: So what are the six areas you are focused on in the UK?


KB: These are sectors where we think the opportunities to move mCommerce forward the greatest, so that’s Retail; Charity; Ticketing, including events and parking; Local Authorities, helping them to take cost out of payments, enabling people to put cash onto virtual cards to pay for council services; Debt Collection; and Restaurants, with our pay-at-table solution.


Keith Brown is managing director of paythru