Mocapay Readies for a National Rollout of Its M-Commerce Service

Fledgling mobile-payments processor Mocapay Inc., which has been handling transactions for about 200 merchants in the Boulder, Colo, and Cincinnati areas, plans to launch a national rollout of its service this spring, the company's chief marketing officer tells Digital Transactions News. The 2-year-old company plans to complete work on its processing platform this month that will allow it to support a significant expansion in transaction capacity, says Lance Gentry. Mocapay is handling 50 to 100 transactions a day currently, but Gentry declines to make volume projections with the rollout looming. “We have no idea,” he says. “It could be gargantuan if we do it right and really get some national retailers behind this.” Mocapay is targeting primarily grocery chains and mall merchants, Gentry says, believing these retailers to be the best fit with the company's target customer, whose age falls between 14 and 30. “They spend a lot of time at the mall,” he says. To that end, the company is establishing partnerships with point-of-sale software vendors. It is talking to independent sales organizations, as well, but plans to use them later on once some national chains have signed on and given the mobile-payments service marketing momentum, Gentry says. Last year, Mocapay made its first foray outside of the Denver area by arranging to have its service added by Cincinnati Bell to a handset program it has with the University of Cincinnati that puts cell phones in student hands with certain campus numbers preloaded. About 30 merchants on and around the campus now accept Mocapay, with Kroger Co. expected to add two stores to the service soon. Mocapay (short for “mobile cash payment”) is expanding at a time when the mobile-payments business is starting to get hot. As merchants seek ways to reach handset users and lower transaction costs, a raft of startups have launched services over the past two years. And established e-commerce transaction processor PayPal Inc., San Jose, Calif., last summer expanded its PayPal Mobile service to allow payments to merchants' mobile Web sites. Mocapay, which works at the physical point of sale and online, operates via short-message-service (SMS) transmissions, and can be used on most mobile carriers in the U.S. Consumers use it by texting a PIN to Mocapay's short code. The processor returns a message with the user's account balance and a one-time-use transaction code. The consumer gives the code to the cashier to complete the transaction (or types it into a field on the merchant's checkout page). “We try to imitate the processes people are familiar with,” says Gentry. “With Mocapay you're basically having an ATM experience on your phone.” At enrollment, consumers choose a 4-digit PIN and set up a prepaid account, which they fund with automated clearing house transfers from their checking accounts. Merchants enable their point-of-sales terminals or systems with Mocapay's application programming interface when they sign up to accept the service. They pay a flat 19 cents per transaction, plus a fee of $10 per month per terminal. Funds are settled each night. Gentry says the service has no ambition to enable mobile person-to-person payments, a field dominated by processors like PayPal Mobile and Obopay Inc., Redwood City, Calif. “We don't see a business model there,” he says. “It's really a tough play.” It does, however, allow client merchants to text promotions to enrolled consumers. Though Mocapay says its text messages go through four levels of authentication, a downloadable application that could be used instead of texting and would offer more layers of security is in the works, Gentry says.