In a crowded mobile-payments market, companies that can focus their products with the merchant in mind have a decent chance to differentiate themselves from a pack seemingly targeting consumers.
United Kingdom-based Yespay International Ltd. puts itself in a category where merchant-payment services are clearly in the forefront. When the global card-payments service company announced in mid February it would partner with subsidiary Yes-wallet.com Ltd. to provide a new cloud-based mobile-wallet application, it clearly had merchants in mind, Zil Bareisis, a London-based senior analyst for research firm Celent, tells PaymentsSource.
The companies are calling the digital wallet, known as Pouch, the first to use Near Field Communication payment technology for NFC-enabled smartphones that allows the digital wallet to serve as a virtual merchant prepaid gift card.
The development of software that allows merchants to issue closed-loop mobile gift cards to the mobile wallet shows that Yespay focuses on merchant needs first, and that consumers will follow, Bareisis says.
Yespay and Yes-wallet.com will provide merchants and consumers with digital-wallet software that processes payments through the Yespay Emboss payment service, which processes cross-border payments. Yespay introduced Emboss to U.S. merchants last May (
With Pouch, the companies plan to provide a cloud-based e-money/prepaid/gift-card payment program that allows payment on NFC smartphones based on Visa Inc.’s payWave and MasterCard Worldwide’s PayPass contactless-payment services and standards.
Yespay and Yes-wallet.com have focused on payments using NFC technology, which allows merchants to accept payments from smartphones but also to push coupons or loyalty points to consumers’ phones, Yespay CEO Chandra Patni tells PaymentsSource.
The companies propose a Yespay closed-loop gift card service for merchants to offer to consumers through virtual contactless NFC cards within the Pouch wallet application, Patni says. Yespay merchants would issue the virtual gift cards and control the closed-loop process, she adds.
“The virtual gift cards will be loosely based on MasterCard PayPass or Visa payWave technical standards, with the gift card issuers owning proprietary card issuer identification number ranges,” Patni says. As such, the gift cards will only operate within the retailers' own point-of-sale infrastructure, Patni adds.
However, if card issuers working with Yespay and Yes-wallet wish to establish an open-loop card scheme, the digital wallet supports any open-loop prepaid card scheme based on PayPass or payWave contactless technology, Patni notes.
Yespay expects midsize and large merchants operating e-commerce or brick-and-mortar businesses to adopt the virtual contactless cards as gift cards for their customers, Patni adds.
“Any merchants wishing to increase customer loyalty and at the same time speed up the whole process of payments will benefit from issuing the NFC virtual card,” Patni suggests.
Consumers with NFC-enabled phones may download the Pouch wallet application from any Apple Inc., Google Inc. Android or Research in Motion Ltd. Blackberry application store to allow contactless payments and discount uploads at terminals with NFC readers, Patni says.
The Yespay payment system holds and secures data in the same manner as a Visa or MasterCard contactless payment from the merchant point-of-sale to the merchant’s payment gateway, Patni adds. Payment Card Industry data security standards apply to the data. However, the proprietary closed-loop card schemes would not come under the same security certifications as those related to Visa or MasterCard, but they would still follow PCI guidelines, she adds.
Merchants pay fees for the virtual gift card service based on the number of cards issued. On average, merchants generally pay about 75 cents to issue a physical gift card, but Yespay expects the cost for merchants to issue the virtual NFC card to be about 50% to 60% of that cost, Patni speculates.
The digital wallet, already available in North America and Europe, moves payments through the Emboss payment gateway, which connects to acquiring banks to process more than 7 million transactions per month from more than 20,000 merchant POS sites, according to a Yespay press release.
Patni believes the cloud-based digital wallet allows many merchants to accept contactless payments without first having to make significant equipment investments because the merchant can use terminals that accept payWave and PayPass. In addition, Yespay provides payment terminals with NFC readers, while Yes-wallet provides the software for contactless payment and virtual gift cards.
Yespay likely will create much interest in the merchant community with the closed-loop mobile gift card option, which is one of the first ventures for NFC in a cloud-based system, Bareisis suggests.
“It’s an interesting [product] and serves a different market segment than the direct-to-consumer model,” Bareisis says.
Most mobile-payment companies developing new digital wallets tend first to pursue consumers with marketing pitches, he contends.
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