Digital Transactions Authoritative, insightful and timely information for payments professionals
By John Stewart
While many observers might argue the U.S. payments market has plenty of mobile-wallet entries for the time being, a U.K. startup called Yoyo Wallet figures there’s room for one more.
London-based Yoyo, which launched with university cafeterias nearly two years ago and has expanded to catering operations within businesses offices, is already recruiting organizations here for a beta launch, though it won’t name names. “We do have clients signed in the U.S., around the corporate and university space, and we’re in the early stages of a rollout,” Michael Rolph, cofounder and chief revenue officer for Yoyo, tells Digital Transactions News. “We’re super-excited about opportunities in the U.S.” A commercial launch, he says, is coming in the first quarter next year.
Yoyo’s U.S. debut comes as the market is already trying to sort out entries from startups and established companies alike, including Apple Inc., Google Inc., LevelUp, Merchant Customer Exchange LLC, and Samsung Electronics Co. Ltd. Just in recent weeks both a behemoth bank, JPMorgan Chase & Co., and the world’s largest retailer, Wal-Mart Stores Inc., have unveiled digital-wallet plans. But so far these wallets have struggled to gain consumer adoption, have been slow to expand, or are too new to have made any impact, and that creates an opening for Yoyo, argues Rolph.
“We’ve talked to merchants that have tried various services, and the reality is they haven’t said to us that they’re very happy,” he says.
Certainly, Yoyo is pleasing someone in its home market. From a standing start in January 2014, when it launched at Imperial College London, the service is now clocking 220,000 transactions monthly, largely for cafeteria and restaurant facilities at 40 universities and 70 corporate offices. It has recruited nearly 1 million users. “We’ll be live in many corporate head offices next year. It’s going very nicely,” says Rolph, a former PayPal and First Data executive.
But Yoyo doesn’t necessarily restrict itself to dining operations. “The value proposition is extremely valuable to the catering environment, but we’re wide open,” Rolph says.
In the U.S., its service is probably most similar to those of LevelUp, a Boston-based digital-wallet service, and Paydiant, another Boston-based service PayPal Holdings Inc. acquired earlier this year. Rolph also draws a parallel to Starbucks Coffee Co.’s highly successful, proprietary digital wallet.
Like these services, Yoyo relies on quick-response (QR) codes to transmit consumer credentials to the merchant’s point of sale. Besides processing payments on general-purpose as well as private-label payment media, the service also manages loyalty points and offers and deposits a digital receipt in the user’s Yoyo wallet. With Yoyo, he says, the thinking is, “Let’s do Starbucks, but it can be used at multiple locations.”
For double-plated security, Yoyo masks the credentials represented by the QR code with one-time tokens, after they have already been tokenized by Stripe, a digital-payments service. Yoyo’s service works with sophisticated point-of-sale systems, and for small merchants it can be installed as an app, Rolph says. Transaction fees are pass-throughs, though Yoyo tacks on a monthly fee that starts at $50 and depends on the merchant’s volume, number of locations, and which features it is using.
But in extending its service beyond closed-loop college or corporate settings, Yoyo might run into some static in the U.S. “It’s all very well to work within some campus environments, but to blip over to multiple environments is a little audacious. You’re up against Apple [Pay] and Android [Pay]” warns Nick Holland, an independent payments researcher.
The solution will rely on how well Yoyo can manage loyalty, Holland says. Any mobile wallet must also prove itself superior to existing payment methods. That can be daunting, even for technically superior wallets. “People will default to normal ways to pay,” he says. “Apple Pay is a beautifully architected system but you can’t just build it and expect them to come. You’ve got to have an incentive.”
Yoyo, with a loyalty capability built in to its application programming interface, may have that key, particularly if points work smoothly across merchants rather than just at, say, Starbucks, Holland adds.
