When Pago Mobile Inc. launched its mobile wallet with 53 merchants in Mountain View, Calif., last week, initial industry reaction focused on the smaller payments-application company venturing into turf more commonly associated with Google Inc. in northern California.
But Leo Rocco, a former salesperson who handled major accounts involving Intel Corp., Oracle Corp. and eBay Inc. while at IBM Corp. and founded San Francisco-based Pago Mobile two years ago, tells PaymentsSource his company is not competing with the Google Wallet, Google’s mobile-payment application. Instead, it seeks to address “the transactional lifestyle” in a way that helps merchants, consumers and advertisers simultaneously.
“Google Wallet is a payment system in conjunction with Near Field Communication, while we are an application layer on top of payments that makes life better for the merchants by helping manage accounts, customer retention and rewards,” Rocco says.
In Mountain View, consumers who download the free Pago application onto a smartphone may choose a participating merchant from a supplied list the app notes on the phone. When registering, the consumer provides a bank account or credit card number for use when initiating payments using the app.
If choosing a coffee shop, for example, the app would show the shop’s logo and information on the phone, and the customer would choose from a menu item what to buy or order “the usual” if he is a repeat customer. He then would click the “order now” button and type in a PIN. After the merchant confirms the order, the consumer receives a confirmation code and receipt on his phone via the app.
After completing the transaction, the consumer has the option to write a review of his experience and send it to the merchant, Rocco says. Consumers using the Pago mobile-wallet application can categorize “favorite merchants under one roof,” while merchants can provide rewards to their most loyal customers through the marketing facet of the Pago application.
Merchants pay no startup fees to accept payments through the Pago Merchant Application, which links to their point-of-sale systems. Pago also supplies the merchant with a free Apple Inc. iPad to accept its payments. Other merchant costs are similar to those associated with traditional card payments, a spokesperson tells PaymentsSource.
Merchants may view transactions on the iPad, which interacts with the free consumer application available for Apple iPhones, T-Mobile Inc. phones powered by Google’s Android operating system and Research in Motion Ltd.’s BlackBerry devices, Pago noted in an Aug. 9 press release.
Feedback from Mountain View vendors during the first week of the launch was positive, Rocco says. The Hard Rock Hotel in Las Vegas has used the Pago Merchant Application for 18 months and has proven to be an excellent testing ground for Pago Mobile, Rocco says.
Hard Rock is like its own little community, with a Starbucks, restaurants, a pool and concerts where hotel visitors may use Pago Mobile. So it is similar to Mountain View, “except in Mountain View we are dealing with individual merchants,” Rocco explains.
The small merchants in Mountain View typically are too busy to deal with accounting and marketing tasks, and they rarely have time to check their emails or Facebook accounts, so the Pago mobile-wallet application addresses all of those needs, Rocco says.
Brian Riley, an industry analyst at Tower Group, says a mobile-wallet launch by a smaller startup company provides benefits to the entire payments industry.
“One of the good things is that a lot of creativity goes on at these smaller companies that can never be fostered in some of the bigger companies,” Riley tells PaymentsSource. “Realistically, they are not going to knock Google out, but they may find niches and develop products others have not.”
Depending on how aggressive a smaller company is in patenting new technologies, they may “hit pay dirt” in the vast mobile payments playing field, Riley says. “They are not going to take on PayPal, but they maybe can develop some concepts that are unique enough to take hold,” he adds.
The mobile-payments market is a “gigantic space” in which the companies that are in the forefront of how consumers will interact with merchants will survive and thrive, Rocco contends.
“Some companies can position themselves for a buyout in the future, but we are not like that,” he says. “What’s important to us is that we are looking to provide [services] that add significant value to the consumer, merchant and advertiser in a way that has never connected them before.”
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