If large retailers felt a need to create their own mobile commerce brand through the Merchant Customer Exchange to lessen customer confusion and control transaction data, then smaller retailers must also feel overwhelmed with all of the mobile payment and commerce choices available.

Starting Dec. 10, San Francisco-based CardFree hopes to address that problem as a new company helping merchants develop their own custom-branded mobile commerce tools.

With an executive team dotted with managers who helped create the successful Starbucks Card Mobile and Dunkin’ Donuts Mobile programs, CardFree plans to provide merchants with the technology to personalize offers and promotions through all mobile payment options.

“While a new branded opportunity pops up every day, in our experience merchants kept asking why someone can’t just do this [build a mobile commerce] on our behalf?” says Jon Squire, CEO of CardFree.

Squire and others he has worked with in previous jobs at mFoundry and as a senior vice president at CorFire started to talk about “bringing the band back together” to create a new company that could provide all aspects of mobile commerce—mobile, online and point of sale.

“The idea was to pull all aspects of mobile commerce together with a core team that already has vendors married to the team for loyalty and payments programs,” Squire says.

CardFree’s concept of providing all aspects of mobile commerce for a merchant to white-label, caught the attention of investor Jeffrey Katz, who founded Mercury Payments Systems. Ultimately, Katz invested in the company to complete Series A funding and become chairman of the board, thus CardFree operates as part of Katz’ portfolio of companies.

Katz’ involvement with Atlanta-based Snapfinger, an online ordering service for restaurants, and Boston-based Restaurant Sciences LLC, a restaurant data analytics service, provides CardFree with experience in those types of mobile commerce.

Diane Hong, head of marketing for CardFree, says the new company isn’t waiting, or banking, on a certain mobile wallet technology to take hold as a clear leader in the future. Instead, CardFree will provide a mobile application-based service.

“Regardless of who the winner is in mobile wallet competition, we realized that in the very near future merchants will be driving a lot of this consumer behavior,” Hong says.

“Any mobile wallet would still have real issues because consumers want to know gift card balances, and keep track of loyalty programs and rewards through the mobile wallet,” Hong says. “We want to provide all of those services to the merchant.”

In a mobile payments industry that remains unclear, CardFree presents a business model that “makes a heck of a lot of sense,” says Richard Oglesby, senior analyst and mobile pay expert with Boston-based Aite Group.

“From a merchant perspective, a mobile device is not a payment channel, it’s a communication channel, and they want to communicate with their customers on their own terms,” Oglesby says. “That’s why Starbucks is so successful and that’s why the MCX merchants got together.”

CardFree could serve large retailers, but its biggest opportunity is with an “out-of-the-box” approach for small merchants, Oglesby says.

“This is an underserved area because there’s been a lot of focus on the large retailers with MCX, but there’s a big opportunity with smaller merchants,” he adds.

Squire says CardFree has been talking with MCX merchants because the company views its services as complementary to what MCX is trying to accomplish in controlling its customer relationships and data through a branded service.

“It takes years before something like MCX can be pulled together,” Squire says. “We believe we can help them, and we’re not looking to step on anyone’s toes.”

An ideal CardFree target client would be a merchant in the fast-casual business, or one “who can really influence consumer behavior on a monthly basis or less,” Squire says.

In mobile commerce, opportunities to catch consumer attention are limited, so CardFree has to focus on those brands that can do it on a regular basis, he adds.

“It can be a local merchant, or it can be national, such as Applebee’s,” Squire says. “While we focus on establishing our niche market, we maybe get a national client along the way.”

CardFree will establish contracts based on client size and business potential, Squire says.

Small merchants may pay CardFree on a transaction-volume basis, while larger merchants may purchase a managed service, Squire says.

“Some may want to change their economics and go entirely virtual,” he adds. “We could offer loyalty programs and base cost on the success rate, in which you pay us only when you have success.”

Merchants using CardFree’s service would have access to a cloud-based dashboard for managing marketing and advertising campaigns or establishing rules for analyzing data. Merchant interaction with customers would take place through branded applications or web-based browsers.

Merchants can receive CardFree’s entire mobile platform or components of it, and also allow in third parties for various services, Squire says. “Merchants are cautious about their data, but they may have two or three systems to leverage, so maybe they would use a third party for ‘gifting’ for example.”

Square and Google have attempted to approach small merchants, but through their brand, which merchants may not want, Oglesby says. “If you are communicating to customers through a third party, you are really just borrowing those customers,” he adds.

Non-merchant brands will always have a place because consumers are not going to download apps for every single merchant, Oglesby says.

But CardFree embraces the real potential for mobile as a way for merchants to capture customer information, he adds.

“Get those customers to download an app and you have a way to communicate with them,” Oglesby says. “Otherwise, it is just customer anonymity.”

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