The Green Sheet :: Company Profiles

A sure WAY to mobile merchants

In the highly competitive payments industry, ISOs and merchant level salespeople (MLSs) commit countless hours and resources to retain their merchants and win new ones. Much of this effort goes into traditional retail accounts. But another market can also be very lucrative _ mobile merchants.

According to research from Mercator Advisory Group, the mobile merchant market is a $1.1 billion annual industry.

Mobile merchants include diverse businesses: home improvement contractors, flea markets, home parties, delivery services, mobile auto services, direct sales, and taxi and limousine services, for example.

MLSs who can provide any of these tens of millions of merchants with a processing solution that does not require electrical outlets, a phone line or software downloads will be able to tap into that billion dollar market.

WAY Systems Inc., a provider of mobile wireless card payment solutions, can help MLSs gain access to mobile merchants. The company offers an end-to-end solution, including the WAY Transaction Gateway (WTG) and the WAY Mobile Transaction Terminal (MTT).

Randall R. Wheeler, the company's Chief Marketing Officer, said WAY provides an opportunity to penetrate the mobile merchant market with a cost-effective, innovative solution that offers a compelling business case.

Big names, big results

Will Graylin founded WAY Systems in 2002. Previously, he was the founder and Chief Executive Officer of EntitleNet Inc., as well as founder and President of SkyFire Technologies. Graylin is now Chairman of WAY Systems' board, which reads like a who's who of the financial services industry.

The board includes George Wallner, founder of Hypercom Corp., and Bill Melton, founder of VeriFone. Until recently, John McDonnell, founder of Transaction Network Services Inc., was on the board. Upon retiring from TNS, he vacated his seat, which is now held by TNS President Ray Low.

Due to their stature within the industry, WAY Systems' board members have been able to attract high-caliber executive talent.

For example, Lance Nakamura, WAY's Chief Technology Officer, was the 17th employee Melton hired at VeriFone. When Melton joined the WAY board, he encouraged Nakamura to become CTO "at a little startup in Boston." Because of Nakamura's regard for Melton, he was willing to make the move.

WAY's CEO, Fred Gumble, also saw the potential for WAY's mobile POS solutions. He formerly served as Chairman, President and CEO of Vital Processing Services (now TSYS Acquiring Solutions).

WAY employs approximately 100 people and is headquartered in Boston. It also has offices in Atlanta; Shanghai, China; Hong Kong; and Mexico City. Since the company's initial product launch, it has shipped tens of thousands of MTTs to mobile merchants throughout the world.

Early last year WAY activated its 10,000th merchant in North America. Also, in November 2006, the company received the prestigious Sesames Award for innovation at the Cartes tradeshow _ for the third time.

Unparalleled network

The wireless market's growth is explosive, and it is predicted to continue. There are two main reasons. First, the general packet radio service (GPRS) global data network is ubiquitous. This means people who were unable to conduct transactions easily and consistently can now do so.

Referring to the lack of reliability and coverage of other wireless technologies, such as cellular digital packet data and Mobitex, Wheeler said "wireless carrier technologies have come and gone, GPRS leverages expansive cell phone coverage to deliver reliable data services."

The second reason the wireless market is poised for growth is its accessibility to global regions that lack well-established landline phone systems.

Many such locales are leapfrogging the need for traditional systems and going directly to wireless networks.

In China, India and Latin America, for example, wireless infrastructures are growing rapidly.

It's affordable, really

A common objection to mobile terminals has been their price. It was, until recently, a valid complaint. Terminals could cost more than $1,000 wholesale.

It would not be uncommon to have a merchant pay two, three or even four times that over the life of a lease.

Part of WAY's goal is to make mobile terminals affordable. "It's WAY Systems' mission to make truly mobile card payment capabilities accessible to segments of the market that have been underserved," Wheeler said.

"The total cost of ownership is purposely designed to reach everyone who has a need to accept card payments," he added.

Some merchants may not object to the equipment's price, but rather the recurring monthly fee.

According to WAY, the fee, which is typically less than $20 for unlimited transactions, is reasonable and affordable: A merchant who has been unpleasantly surprised by a cellphone bill will recognize that WAY's fee is more than fair.

Additionally, WAY notes that merchants can save money because using a mobile terminal means more payments will be processed as card present, rather than the more expensive card not present transactions.

By swiping transactions, mobile merchants can save as much as fifty basis points on their discount rate.

WAY's largest market segment is contractors, some of whom process transactions valued as high as $30,000. If these customers paid an additional 50 basis points per transaction, that would be 0.005% of $30,000, which could really add up.

WAY opportunities

WAY markets its products through national distributors, ISOs, acquiring processors, third-party gateway providers and value-added resellers. ISOs and MLSs can benefit upfront by marking up the MTTs they provide to mobile merchants.

The company, which is not a processor, focuses on providing solutions and does not offer residuals in the true sense. It does, however, offer MLSs the opportunity to mark up the WTG's buy rate. This represents another source of residual income for MLSs.

WAY routes transactions through the gateway to the processor because many processors cannot accept wireless transactions in a native fashion.

Even including an ISO or MLS markup on the WTG, WAY has found that many merchants still find the fee reasonable because it is for an unlimited number of transactions. The monthly charge is approximately $15, which includes cellular data service.

Many agents mark up interchange and add statement fees, batch header fees and so forth. It may be difficult to convince merchants that a statement fee is necessary; it is a bit easier to charge a fee for an unlimited number of transactions.

Many people already pay a set fee for an unlimited number of cell phone calls.

WAY does not offer commissions; it sells to channel partners. And the company does not compete with partners by selling directly to merchants.

Ready, set, go!

Unlike other wireless payment devices, the MTT is set up like a cell phone. The familiar user interface can reduce training time and make it easier to use.

Also, the MTT is pocket-sized, just like a cell phone, and WAY has an exclusive worldwide license for this type of device.

To make deployment easy for merchants and MLSs, the MTT arrives at the merchant location ready to use out of the box.

No downloads, initializations or similar procedures are required. And a test transaction is processed before the unit is shipped.

Also, MLSs don't have to worry about support: WAY's help desk is available 24/7.

ISOs and MLSs can fight to retain market share in the brick-and-mortar world, or they can be among the first to tap into the billion dollar mobile merchant market.

WAY's executives and board members understand the payments market. They have experienced it at all levels, from working in the trenches, to heading multibillion dollar companies.