ModoPayments is fresh off a string of new customer implementations with COIN, its payment "hub" approach for merchants and banks, and it's already looking ahead to bigger prospects with the emerging Internet of Things (IoT).

"COIN acts like a bridge, handling payments from the accounting and settlement to encryption and compliance, freeing companies up to work on their business processes without having to worry about deeply integrating payments into core functions," said Bruce Parker, a payments industry veteran who previously held senior executive roles at Fidelity National Information Systems (FIS) and ACI Worldwide, before launching ModoPayments in 2010.

It took many twists and turns for ModoPayments to hit on its current concept, Parker admits.The company was originally focused on developing broad mobile payment solutions, but two years ago Parker decided merchants' needs were too varied to corral in a single payments app.

Shopping mall
Merchants' needs are too varied to serve with a one-size-fits-all product — a lesson ModoPayments learned from experience. Adobe Stock

The cautionary tale was the Merchant Customer Exchange, a multi-retailer venture with the backing of Walmart, Target and others. The MCX merchants wanted to build a one-size-fits-all mobile payment platform called CurrentC, but the app never made it past the pilot phase.

"When I saw MCX's CurrentC app fizzle, I realized that if the U.S.'s biggest merchants couldn't find common ground for a one-size-fits-all mobile payments app, there was little hope for us to succeed at anything similar," he said.

ModoPayments shifted gears to devise COIN, a digital payments hub that aims to transfer monetary value to a destination that could be within the same room or across the world, without requiring either partner to modify their systems, according to Parker.

One of ModoPayments' first big deals with COIN was a strategic relationship announced late last year with Bank of America Merrill Lynch, enabling the bank to support cross-border corporate disbursements. BofAML sees many distinct uses for the implementation, such as enabling businesses to more easily pay freelancers and contractors in different countries.

Last year Sweden's Klarna also adopted COIN to enable faster e-commerce checkouts; and earlier this year Verifone and FIS rolled out Verifone Points Redemption, an app that uses COIN to connect payment terminals and merchant data, allowing consumers to pay with accumulated points from merchant loyalty programs.

Parker is now eyeing the IoT as a potential new frontier for COIN, meeting the needs of different organizations that will begin accepting payments for the first time.

“The IoT presents a huge opportunity for us because it’s going to involve a lot of objects—vehicles, appliances, equipment—that typically have no payment terminal or card-swipe mechanism, ideal for a payments hub," he said.

Loyalty—an area where ModoPayments sees more opportunity for bridging technology similar to its recent work with Verifone—also offers rich possibilities as merchants work to embed offers in mobile and IoT e-commerce experiences, Parker said.

"Offers and loyalty are big themes this year for merchants and other organizations, and we're talking to many prospective clients for implementations that involve using our hub approach to business-to-consumer and business-to-business payments," Parker added, without disclosing companies' names.

Creating streamlined approaches to delivering special merchant offers is the holy grail many companies are grasping for, and no one has completely succeeded yet, said Richard Crone, an analyst with Crone Consulting LLC, who focuses on merchant integrations.

"ModoPayments has had to pivot several times as it works to develop a robust payments gateway that supports offers and loyalty, and COIN is its latest iteration," Crone said. "We're still a long way from reaching the point where merchant offers and loyalty are redeemed seamlessly as a byproduct of the transaction, but COIN is going a step in that direction with its latest implementations."

Still relatively small, with just 25 employees, ModoPayments raised more than $2 million last year.

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