A Startup Sees Dramatic Growth with an API for Two-Click E-mail Transactions

As mobile-payments strategists struggle with clunky checkouts that lead to abandoned sales, a startup based in Albuquerque, N.M., is seeing dramatic early success with a 3-month-old solution that allows consumers to buy products from e-mail messages with a pair of clicks.

The company, @Pay LLC, has signed up more than 4,000 merchants for its technology, which went live in April. The user base, some 2 million strong, is growing 15% week-over-week, the company says, while transaction volume has ballooned.

The company’s application programming interface (API) lets sellers send to customers’ mobile devices marketing e-mails with specially programmed “buy” buttons for each product. Customers who click on a button trigger a reply-to e-mail with an embedded token representing their payment credentials, which they will have entered when they first enrolled with the merchant. Customers then hit a “send” key—the second click—to complete the transaction.

Transactions go to @Pay, which decodes them and sends them to the gateway or processor that works with the merchant. Merchants pay 55 cents per transaction for the service.

The @Pay API responds to a number of trends in mobile payments, not least what has been identified as a yawning need to simplify checkout for small screens. “This is getting fairly competitive,” says Rick Oglesby, a senior analyst at Boston-based Aite Group who follows mobile commerce. And @Pay isn’t alone in working out how to use e-mail to make payments easier. Google Inc., for example, in May introduced a feature for its Gmail service that lets users link person-to-person payments to Google Wallet accounts.

But @Pay appears to be unique in that it acts as a kind of front-end gateway for e-commerce merchants. As a white-label service, it is invisible to consumers, so there is no app to download and no wallet to provision. And it works on 94% of existing cell phones, smart phones, and tablets, the company says. “The technology is easy for people to understand,” says Chad Person, marketing and creative director for @Pay, which completed a $3.5 million funding round in April and is working on a second round now.

The API’s ability to link the transaction token to the automated rely e-mail, too, looks to be unique. “This is actually the first I’ve seen of this particular application,” says Oglesby. “It’s a unique deployment of a non-unique technology.” Person says @Pay, which provides another version of its software for quick checkout from merchants’ Web sites, has more than 25 patent applications pending for its system.

The company started out nearly three years ago as EasyGive, a system meant to simplify donations to non-profit organizations. By the summer of 2011, it realized its technology could apply to e-commerce more broadly, and it began working on its API, Person tells Digital Transactions News. Spurring this evolution was the personal experience a few years ago of John Killoran, the company’s president and chief executive.

Finding it necessary to enter reams of information on each Web site, Killoran “was frustrated shopping for his kids’ Christmas gifts, and figured there had to be a better way,” says Person. That, he says, led to the idea of broadly deploying “a piece of code we figured could be leveraged to do a payment by e-mail.”

Killoran is also founder and president of Clover Leaf Solutions Inc., an 8-year-old Albuquerque firm specializing in construction management and environmental consulting that had also developed e-mail signature software. The company is an investor in @Pay.

Besides signing up merchants and merchant groups, @Pay is also talking to e-mail service providers in hopes they will make the service available to their clients. Meanwhile, “growth is exploding,” says Person.

And while the API’s 55-cent price per transaction is “high for gateway pricing,” it could well be worthwhile for merchants looking to chop seven or eight steps to two and drive down cart abandonment, says Oglesby.