When a business contact at JPMorgan Chase & Co. encouraged GoPago Inc. CEO Leo Rocco last summer to share the vision of his small mobile-payment technology company with bank executives, Rocco jumped at the chance.
Rocco felt his company offered a cloud-based product with strong technology minds to back it, but his past experience as a salesman at Intel Corp., Oracle Corp. and IBM Corp. made him understand what his company needed to move forward.
“We needed an outstanding partner, and we felt it had to be a bank,” Rocco tells PaymentsSource. “And it had to be a bank that was one of the world’s largest.”
After the contact at Chase made the initial gesture, Rocco began communicating with bank executives and eventually met with 15 of them in New York last summer. The end result came Feb. 23 when Chase announced an investment in San Francisco-based GoPago (see story).
Though he could not share specifics of the investment, Rocco acknowledges the Chase investment represents the largest his company has received since its creation as Pago Mobile Inc. more than two years ago.
Chase executives understood GoPago’s vision and considered the company the most innovative they had researched in the mobile-payment market, Rocco says. “It’s an investment made to win the mobile-payment space, but it is also a partnership,” he adds.
Chase spokesperson Laura L. Rossi confirms the financial institution views GoPago’s cloud-based system as an important investment. GoPago offers the mobile-payment software that meets Chase’s goals of providing customers “the most sophisticated payment and loyalty tools,” she tells PaymentsSource.
“While most features of GoPago are available for any consumer or merchant, Chase customers will have access to some exclusive offers later in 2012,” Rossi says.
Consumers who download the free GoPago application onto a smartphone may choose a participating merchant from a supplied list the application provides on the phone. When registering, the consumer provides a bank account or credit card number for use when initiating payments with the app. At a merchant location, the customer buying a product 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. Merchants pay no startup fees to accept payments through the Pago Merchant Application, which links to their point-of-sale systems.
GoPago software provides customer analytics for the merchant, allowing the merchant to keep track of what customers purchase and their favorite products so future offers can reflect customer habits.
GoPago first launched its mobile wallet concept last August under its previous name Pago Mobile Inc. (see story).
For now, GoPago remains a mobile-payment option available mostly in the Mountain View, Calif., area, where more than 50 merchants can accept payments through GoPago software at their point-of-sale terminals. With the Chase investment, GoPago will seek future expansion in San Francisco, New York, Chicago, Los Angeles and Dallas, among other cities, Rocco says.
Chase will market GoPago’s mobile-payment technology through multiple channels, Rocco notes. “We’re talking about 95 million Chase cardholders worldwide potentially being exposed to GoPago, and that’s a staggering number,” he says.
“Chase wants to offer its customers the additional benefit of using a smartphone, using the Chase Card with the GoPago wallet,” Rocco adds.
Ultimately, it was the GoPago vision with its cloud-based “open wallet,” or open application protocol interface, and the sales pitch Rocco was able to formulate around that vision that paid off in the major investment.
For the GoPago team, creating that vision was a matter of stepping back from the “growing noise” in the mobile-payment market and rethinking how consumers and merchants interact at brick-and-mortar businesses, Rocco says.
“The value of mobile payments between brick-and-mortar merchants and the consumer had to be aligned for mobile pay to truly be realized,” he suggests.
The concept of mobile payments has to go far beyond a consumer waving a phone in front of a terminal to initiate a transaction, Rocco adds. “It has to be a real mobile storefront for all businesses to take advantage of the power of the smartphone,” he says.
Software that allows merchants to post information about products in their stores and offer discounts sets up immediate interaction within the stores, Rocco contends.
Brick-and-mortar merchants needed something “to fight back” because consumers were going into stores to find a product, then using smartphones to Google onto Amazon.com and compare prices, then leave the store to purchase the product elsewhere, Rocco says.
“That’s been the destruction of the brick-and-mortar store, but turning those stores into a mobile storefront where a customer can get a deal on a product and not wait in line to make the purchase can make the difference,” he notes.
GoPago was wise to impress upon Chase that it was a company that understood mobile payments beyond the technology, industry analyst Todd Ablowitz, president of Centennial, Colo.-based Double Diamond Group LLC, tells PaymentsSource.
“GoPago was focused on much more than just the actual paying experience,” Ablowitz says. “They were focused on the whole shopping experience and how mobile pay works in that environment.”
Convincing merchants they can sell more products by embracing mobile payments and getting the consumer to interact more with the merchant represents GoPago principles that Chase felt comfortable getting behind, Ablowitz suggests.
GoPago’s free mobile-payment software application operates with Apple Inc. iOS, Google Inc. Android and Research in Motion Ltd. Blackberry devices. GoPago soon will release software to operate with Windows Phone 7, Rocco adds.
The company changed its name from Pago Mobile to GoPago on Feb. 22 to coincide with the Chase investment announcement and to create a consistency with the GoPago URLs used for the company website even when it was Pago Mobile, Rocco notes.
Because of the software’s application interfaces, the merchant does not need a radio frequency identification or Near Field Communication reader to complete transactions, Rocco says.
That sort of technology advancement was not lost upon the Chase investors. “There are multiple ways to complete a transaction, which is why Chase explores a variety of [products and services],” Rossi says.
GoPago arms local businesses with the same tools used by online retailers so they can leverage data to improve customer experience and increase loyalty, she adds.
And there is no doubt in Rocco’s mind that the Chase investment allows GoPago to provide a lot more tools to a lot more businesses.
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