Javien Finds Growth Where Others Failed?in Micropayments

While processors continue to struggle with the economics of micropayments, Javien Digital Payment Solutions Inc. may have found a way to make the tricky payments work. The McLean, Va.-based processor, which this week introduced a payments gateway to go along with a payment-processing platform it offers primarily to sellers of digital content like games, movies, and music, has enjoyed substantial growth over the past year and expects to grow even more rapidly in 2008, says its chief executive, Leslie Poole. “2007 was a great year,” he says. The company is processing more than 1 million transactions a month for almost 10 million registered consumers, up from “a few hundred thousand” monthly payments for 4 million consumers a year ago, Poole says. Javien, which handles recurring transactions and subscriptions as well as micropayments, offers its payment software on an application service provider (ASP) model to content sellers. Sellers register buyers and brand and run the service as if it were their own. The company has 44 sellers using its system, including MTV Networks and music marketers Snocap Inc. and Ruckus Network Inc. With its new gateway, Javien offers credit card processing through Optimal Payments Inc., a Montreal-based processor. Poole says Javien, which offers gateway services through CyberSource Corp. and Chase Paymentech Solutions LLC, has stayed away from running its own gateway throughout its 9-year existence. But the company saw an opportunity when clients began asking that Javien run its own gateway to reduce the number of reports and relationships they had to manage to process payments. “There's some money on the table we could capture as opposed to relinquishing it to a gateway,” he says. Apart from gateway costs, Javien's transaction fee runs about 1%, which sellers pay on top of other card-acceptance costs. Although Javien handles subscriptions and unlimited music plans at prices like $9.95, its average ticket comes in at $5, which means its transactions are at the upper end of the micropayments range. To reduce the impact of interchange and other transaction costs, the company aggregates payments linked to a single card over a period of time specified by the seller. This capability, says Poole, is turning out to be increasingly critical to Javien's ability to win business. “Virtually every [request for proposal] I'm responding to these days has a micropayment element,” he says. At the same time, Javien seems to have emerged a survivor in the difficult business of processing micropayments, which by their nature leave ultra-thin margins for players outside content distributors and merchants. Two other startups that emerged in the past five years with ambitious models for micropayment processing?Bitpass Inc. and Peppercoin Inc.?are no longer in business as independent entitities. Bitpass went out of business last year, and Peppercoin was acquired in April by Chockstone Inc. Poole credits Javien's durability to its frugality. The company has a head count of 11 and has largely avoided venture financing, he says, though he adds the company will soon seek between $3 million and $6 million to help support its growth. “Do I need it to make payroll? No. But a little bit of [venture] capital would be beneficial right now,” Poole says. “I know what to do with it.”