Mocapay Inc., a Denver-based mobile loyalty and gift card technology company, last week unveiled a platform enabling merchants to give customers a one-time authorization code to conduct point-of-sale payments from prepaid accounts using mobile handsets.
What sets Mocapay apart from some other mobile-payment applications is the system’s built-in security, which uses token-based architecture, Kevin Grieve, CEO of Denver-based Mocapay, tells PaymentsSource. “Transactions move through Mocapay’s system as dynamic cryptograms, or tokens, so no sensitive data are exposed or stored on the handset or at the point of sale,” Grieve says.
Mocapay in February received a patent for the technology, the company says.
Participating consumers first must register their mobile-phone numbers through Mocapay’s Web site, enabling them to purchase or receive gift cards or points from participating Mocapay merchants.
To conduct a Mocapay transaction, consumers must open the Mocapay application on their mobile phone and request to make a payment through a participating merchant. Mocapay checks the consumer’s account balance and immediately sends a one-time-use six-digit code to the consumer’s handset, which the consumer may use to make a purchase at the point of sale.
For security purposes, Mocapay’s one-time codes expire 20 minutes after Mocapay issues them. Consumers receive a text message confirming the transaction, with an updated account balance. Mocapay settles the transaction within a day through the automated clearinghouse network.
Participating merchants must download software from Mocapay and install it in their point of sale systems, a process Mocapay says takes 10 to 15 minutes, which some observers have said is a hurdle for widespread adoption.
Steve Klebe, senior vice president of business development at Vindicia Inc., which provides a broad array of online merchants with billing solutions, particularly those with recurring payments for digital goods such as online games and software and services such as online dating, has doubts about such payment systems requiring merchant or consumer setup. He says his company has found that new payment services requiring consumers or merchants to download or install software are “hopeless,” because there is too much effort involved.
But Mocapay says some merchants are willing to make the effort because it provides more-targeted sales and marketing opportunities compared with traditional plastic gift cards.
So far Mocapay has signed a handful of Colorado-based merchants including pizza chain zpizza, convenience store chain ShortStop, Ink! Coffee and Doc Popcorn. Micros Retail Systems Inc., a Weehawken, N.J.-based technology vendor to restaurant industry, this month also agreed to offer Mocapay to its clients for promotions and loyalty programs.
Mocapay is in discussions with a variety of other national merchants that are considering adopting its system for gift and loyalty card programs, Grieve says.
Mocapay operates through various mobile channels including SMS text-messaging, Internet browser-equipped phones and handset applications through Apple Inc.’s iPhone and Google Inc.’s Android, and the service is compatible with all major U.S. wireless carriers, the company says.
Mocapay, a privately held company founded in 2006, last fall received $3 million in funding from Headington Group’s Spartan Mobile, Lacuna Venture Fund and other ventures. Grieve, a former First Data executive in its prepaid card operations, joined Mocapay in 2008.
