Mobile payments, viable alternatives

It is ironic that the United States, a leader in technological innovation, is lagging behind much of the rest of the world (especially in the Asia-Pacific and European markets) in the adoption of mobile payment technology.

This circumstance is due mainly to the success of telecommunications technology deployed across the nation in the latter part of the 20th century. Because of its efficiency over the past 30 years, the telecom industry has inhibited mobile payment application development in the United States in the last decade.

But Conrad Sheehan, founder and Chief Executive Officer of mobile and alternative payment solutions provider mPayy Inc., has spent the last three years determined to change the U.S. mobile payment landscape. Sheehan founded mPayy in 2007 when he saw the alternative payment and smart phone worlds expanding simultaneously, but no "real players" in the payments industry to bring these technologies together.

"Prior to founding mPayy, I was an SVP [Senior Vice President] responsible for the consumer payments business at JPMorgan that included all paper-based and electronic payment systems outside of credit cards," Sheehan said.

"So we had our ACH [automated clearing house], retail lockbox and check conversion products, and the knowledge I gained there was invaluable for a young executive at the time.

"My experience at JPMorgan gave me an early foundation with creating companies and commercializing payment products. So when the opportunity and the idea started to come together around an alternative payment network that didn't use Visa or MasterCard, it was actually at the same time that the first uptick was beginning with smart phones, the early BlackBerrys and the first spots of the 3G network."

New trails, new trials

Sheehan said mPayy is developing and deploying new mobile and alternative payment solutions in a market that has seen limited movement in the United States. He added that payment and other financial organizations have talked about implementing mobile payment technology for a long time, but no one has really figured out a way to do it securely, easily and cost-effectively.

What Sheehan found was a patchwork of payment networks and inadequate solutions that were not secure; for the most part, systems were too complex to use for both merchants and consumers.

"The networks didn't communicate the same exact way across different systems, even within the same bank, much less across huge acquirers and issuers," Sheehan said. "What inspired me to start mPayy was the desire to fill a gap that was missing for an easier, simpler payment system for e-commerce that could work on the Web and on today's phones - as well as tomorrow's future devices."

Debit payments, secure options

Sheehan noted that mPayy provides a comprehensive set of debit options on mobile devices and the Web. The company targets lower average ticket commerce sites and enables mPayy to serve a market he felt was greatly underserved - and where debit payments are preferred.

"There are very few people in our space and really no one exactly in the space we are in and providing the services we are," Sheehan said. "Naturally we do mobile payments and believe we are forerunners in the development and deployment of that technology, but we have built out a multifeature, multipayment type platform that can handle e-commerce, P2P [person-to-person], micropayments and recurring and subscription payments on the Web and on social networks."

Sheehan and his team of information technology (IT) specialists have developed and implemented an in-house proprietary platform for multichannel payment processing and settlement.

Additionally, mPayy has built its own Triple Data Encryption Standard security and anti-fraud solutions that alleviate many of the complex interchange rates and Payment Card Industry (PCI) Data Security Standard (DSS) requirements for mPayy merchants. Sheehan believes keeping sensitive data in one controlled space is the key to survival in today's payments arena.

"We felt there wasn't a first-rate security solution for consumers and merchants, especially in the periodic billing segment," Sheehan said. "Now we of course generally lean toward the merchant, where the card issuers massively lean toward the consumer. Customers want to buy things in the card-not-present world and how they pay is not a key part of their decision-making process.

"They are concerned only with whether the Web site they're on is safe and if they might be susceptible to identity theft. So we focus on the merchants and their security first. We can add value to any retailer of any size, so by streamlining our merchants' costs, protecting their data from stem to stern and simplifying their platforms, the consumer can't help but benefit - and consequently spend more money with that merchant."

Indigenous stateside, soon worldwide

Sheehan said mPayy's operations are currently limited to the United States, but his team has been architecting a multicurrency conversion solution that will extend to the Single Euro Payments Area, which covers 22 European countries, as well as the Asia-Pacific region over the next year. Additionally, the Chicago-based company launched both Google Inc. Android and Apple Inc. iPhone applications in December 2009 and Sheehan believes this will significantly expand mPayy's geographic and demographic segments.

"When we look at our customer base, the mobile channel skews younger," Sheehan said. "So in terms of mobile payments and the potential in the Gen Y segment, it's absolutely massive.

"Everything is mobile-centric with them, whether it's mobile banking, text messaging or social networking. The potential for mobile payment applications and the revenue streams it can generate is there simply because we're seeing exponentially more activity on smart-phone devices."

Expanded footprints, reseller opportunities

In addition to mPayy's direct sales force, the company is in the process of expanding its geographic footprint and partnerships. Sheehan is in discussions with merchant acquirers in an effort to establish an ISO reseller channel. "We are certainly open to exploring any channel where it helps us sell our products and services," Sheehan said.

"We understand that the ISO reseller channel is coin-operated - that is just how the payments industry makes its money and how sales agents make their living. But I do know that mPayy's solutions are unique from what is out there on the market currently, and I believe our offerings will enable MLSs [merchant level salespeople] to differentiate themselves when competing for a merchant's services."

A large part of mPayy's consistent growth is the team of veteran professionals that Sheehan has been able to attract. The company's executives have nearly 100 years of aggregate experience - a unique trait for such a small, young startup company, Sheehan said.

Kimberly Lewis, mPayy's Vice President of Business Development and a 20-year payment veteran, met Sheehan during her seven-year tenure as a sales executive at Chase Paymentech LLC.

Lewis' expertise is in the U.S. and international card-not-present arenas. It was out of conversations she had with Sheehan about the potential in the card-not-present and mobile payment spheres that enticed her to join mPayy's team in October 2008.

"I knew Conrad had started his own company, and periodically we'd get together and talk about the industry," Lewis said. "He'd kind of pick my brain, though at the time I didn't realize he was trying to recruit me. And I thought, 'You know, if there is a time to control your destiny and decide what to do with your career, now is it.' I also feel that alternative and mobile payments are really up and coming, so I said sign me up."

Keeping priorities, addressing complaints

Lewis is responsible for expanding the company's market and vertical segments and developing its ISO reseller channel. And she added that though mPayy is planning cross-border expansion through 2010 and beyond, the United States will continue to remain the priority market for mPayy, where it will also address merchants' biggest complaints: issues surrounding fraud, PCI mandates and interchange fees.

"We work outside the credit card space as an alternative payment provider, and it's incumbent upon us as a new company to help them control the lion's share of their costs, which is interchange from Visa and MasterCard," Lewis said.

"Additionally, we provide secure debit and ACH solutions that are low cost to the merchant and guaranteed against fraud - which is more appealing than anything else in today's market."

Lewis noted that mPayy's biggest challenge may also be its greatest asset, which is the company's size.

"We're a smaller organization," she said. "We certainly don't have the name recognition of a Chase, but unlike Chase or PayPal or Bill Me Later, we're small enough that we can quickly identify the market needs and trends in order to build the products and services based on client demands. We've got the latest technology and a great team of folks who can create innovative payment solutions as the market stipulates."

Staying genuine, always fair

As a payment and IT specialist, Sheehan said he will always strive to help mPayy's team create new and more secure payment applications; however, the customer- and staff-centric focus will continue to remain at the core of mPayy's infrastructure and business model.

"I think everyone here at the company believes in what we're doing and what we're accomplishing in terms of providing the best deal to merchants and consumers," Sheehan said.

"We take the approach that we have a great system, we're priced fairly and we don't ever take our merchants for granted.

"In order to prevail in this industry, it's paramount that we're genuine and fair to each other as well as to all our merchants and vendors," he shared.

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