Another Mobile Payments Company Launches in Google’s Backyard
Pago Mobile is launching a mobile payments service today in Mountain View, Calif., that allows consumers to pay for their dry cleaning or slice of pizza using an app on their phone.
Fueled by significantly far less funding (about $2.1 million), Pago’s service is being rolled out today in 53 merchant locations through the help of Mountain View’s local chamber of commerce.
Like many other experiments in the market, Pago is designed to bring together loyalty programs and offers like Groupon with point-of-sale. Consumers on one end will use a mobile application to place orders and pay; on the other end, merchants will use an iPad to track incoming orders, accept payments and track and reward customer loyalty.
The San Francisco-based company was founded by Leo Rocco, who previously worked at IBM, managing sales relationships with major customers such as Intel, Oracle and eBay.
Rocco said the inspiration for the product was born at San Francisco’s AT&T Park, where he went to watch Barry Bonds break the home run record. But Rocco missed the moment because he was stuck in line at the concession stand.
“This is the hottest space, but I’ll tell you what: There’s a lot of players, and yet, no one has figured it out,” Rocco said. “There’s a battle of ideas from Visa, MasterCard, American Express, PayPal and Google on how do you make payments on the phone ubiquitous.”
No one supplier has nailed it, and if anyone is paying attention, consumers and merchants so far haven’t figured out how to use it yet, either, opting instead to use what’s convenient: cash or credit cards.
Like Square, Pago relies on the iPad as a register, and requires consumers to download an application through which orders can be placed. A user fills out a short form with some personal information and enters his or her credit card number.
And like Google, Pago also provides a loyalty- or offers-like system, which allows restaurants to reward regulars with discounts or enables salons to offer specials when they have a few available hours in the afternoon. They can also present offers at the time of purchase.
For instance, Rocco said, if a customer buys a sandwich, the merchant might recommend a Coke over a Pepsi. He compares it to a company buying Google keywords, except this appears on the mobile device at the point of purchase when people are ready to buy.
The merchants participating in the launch are receiving a limited introductory offer and a subsidized iPad, but down the road, Pago anticipates charging five percent of all transactions, which is about double the normal transaction rate.
“That’s a flat fee that includes credit card processing fees,” he said. “They get all of this ability to collect data and be able to communicate directly with their customers, without having to pay 50 percent to Groupon.”
In one scenario, Rocco describes a dry cleaning company that can send out a reminder to customers that their dry cleaning is ready. Customers can add the reminder to their calendar from the application and click to pay without ever walking in the store. When they go to pick up their clothes, there’s no delay.
Participating retailers in Mountain View include One Love Pizza, Amber India, Baskin-Robbins, Clocktower Coffee, FullForce Fitness, Holiday Cleaners, KFC, Mtn View Grant Florist, New York Pizza, Shoreline Billiards and the Better Bagel. Pago is also available at the Hard Rock Hotel & Casino in Las Vegas.