There's No App for That: BuyReply Favors Text, Email for Payments

BuyReply, an Australian startup, is going back to the basics in allowing consumers to purchase items from television and magazine advertisements by sending just an email or a text message — no special hardware or software required.

BuyReply allows users to email or tweet alphanumeric short codes, such as the words "shirt" or "purse.". Upon receiving this message, the company sends a link via text message to initiate the payment. Users click the link and are redirected to a mobile website, where they receive a receipt of their purchase.

"There's this very large divide between online and offline commerce," says Brad Lindenberg, cofounder and CEO of BuyReply. "We're trying to capture the purchase intent of the consumer at the same time the purchase intent is created … and make advertising transactional."

BuyReply takes a percentage of each transaction, usually 5% plus 15 cents from merchants that use its platform directly. If a merchant has a $99 monthly subscription, the company takes 3% plus 15 cents.

The concept is an evolved version of something several companies, including PayPal, attempted before the iPhone. PayPal Mobile, which launched in 2006, allowed consumers to text message or call PayPal with a unique code spotted in a printed or TV ad. PayPal would then request a PIN to authorize the purchase.  PayPal moved away from this system after the launch of the iPhone app store — the eBay unit described its earlier text-based system as "not meaty enough" for most consumers.

While a text-based service may seem antiquated in 2013, Lindenberg says the BuyReply system is designed to work with every mobile device.

"Everyone's a customer because everyone can text," he says. "Upfront you might think it's a bit backwards but we think it's more sophisticated and more usable by the large existing market."

BuyReply isn't alone in this philosophy. Square and Google are both testing systems that rely on users' webmail accounts instead of a separate app or special smartphone technology. Google last month began testing a system that lets Gmail users send funds as though they were email attachments.  Square is testing Square Cash, which lets users send funds by adding pay@square.com as a recipient to any email.

BuyReply's test campaigns generated a response rate of 25 times more than that driven by systems that require the use of an app to, for example, scan a QR code, he says.

Since BuyReply is gateway-agnostic, merchants can use their existing processors, including Stripe and PayPal.

BuyReply launched in 2011 and made its system available to the general public at the end of 2012. Recently the company raised $1 million from Valar Ventures, Square Peg Ventures and Adrian MacKenzie.

While BuyReply does not disclose its number of consumer or merchant users, Lindenberg says the company has plenty of customers buying items in magazines through the platform. The service is primarily used in Australia, but there are U.S. companies interested in the service as well, he says. 

Correction: This story was updated to clarify that the way short codes are used within BuyReply's system.