Two payments technology veterans are working on a mobile wallet that would not require changes to the hardware and software at the point of sale.

The process behind their system, called magnetic secure transmission, was developed late last year by former Roam Data CEO Will Graylin and former Hypercom Chairman George Wallner. They plan to offer it through a company called ActPay Inc.

"It's truly a breakthrough," says Graylin, who's serving as ActPay CEO. "It works at nearly 90% of existing shops with no changes."

Graylin and Wallner, ActPay's chief technologist, were stockholders in ActPay who "decided to roll up our sleeves and take the company to the next level," Graylin says.

ActPay plans to test the technology in the third quarter of this year and offer it on a large scale in the fourth quarter, Graylin says.

Consumers would use a free app to enroll with the system and merchants have the option to use a dongle to accept payments, he says. Graylin did not provide further details on how the payment takes place.

ActPay plans to offer loyalty programs that operate through the system. The rewards will make the system worthwhile for merchants and for consumers, Graylin maintains.

"You take away the chicken and egg," he says of whether consumers or merchants have to become the first group to embrace mobile wallets. "You change it to chickens laying eggs."

Merchants will probably pay a monthly fee to use the system, but ActPay has not determined how much it will charge, Graylin says.

The company intends to split the monthly fee 50-50 with independent sales organizations that promote the product to merchants, he notes.

 "From an ISO perspective, we believe in partnering," Graylin says.  

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