In the past two years a host of companies have jumped into the mobile payment space, hoping to be the one company consumers will turn to when they pay with their phones.
Each new entrant has its own spin on how it will crack the mobile payment nut, from unique technology (think Google Wallet and its "prepaid" card) to partnerships (Isis) to business models (LevelUp's "zero interchange"). But so far, nothing has really caught on.
Today, a new entrant debuts and it boasts something few other companies in the space can offer at this point: a team of executives who have actually launched successful mobile payment products.
The company is Cardfree, a San Francisco-based startup. The company announced today that it closed a first round of funding for $10 million last month. And its leadership team includes a veritable who's who of mobile and payment execs.
Cardfree's CEO is Jon Squire, formerly with Corfire and mFoundry. Corfire is the company behind the Dunkin Donuts mobile payment app, and it provides TSM services for Google Wallet. Squire is joined by president Dustin Young, who was in charge of product strategy for prepaid company InComm. Cardfree's head of product is Chuck Davidson who was most recently with mobile point-of-sale provider GoPago but is probably better known as the man who launched Starbucks' mobile payment app during his tenure with the coffee retailer.
The executive team is rounded out by Diane Hong as head of marketing and Sen Wen as head of architecture. They were with mFoundry and Starbucks respectively.
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According to Squire, it's the deep experience of the Cardfree team that makes a crucial difference between it and other companies in the mobile payment space. In a call with Mobile Payments Today, Squire explained that the company was specifically founded on the idea of bringing together the people who had worked together on successful mobile payment initiatives such as those by Starbucks and Dunkin Donuts.
An additional difference between Cardfree and other solutions is that Cardfree will offer a complete white-label product, Squire said, giving merchants a platform that is both "omni-channel" — meaning that it works across mobile, online and POS — and end-to-end — incorporating not just payments but also loyalty, analytics and marketing.
The company is avoiding issues over competing mobile payment technologies by approaching them in a completely agnostic fashion. Squire said whether it's NFC or barcodes, the problem with payments really boils down to friction; the opportunity is in providing technology, whichever technology that is, to get rid of that friction, he said.
Squire acknowledged that Cardfree's approach sounds vaguely similar to what MCX is attempting with its merchant-centric mobile payment offering. MCX is the mobile payment effort launched by major retailers like Walmart and Target earlier this year. While details are scant as to exactly what the MCX solution will look like, it's focused on the mobile part of mobile payments (see last month's commentary from Dodd Roberts, head of MXC).
Squire said Cardfree's offerings will actually be complementary to what MCX is doing. Most merchants don't have technology teams to handle mobile, online, POS, loyalty, payments and marketing, he explained. "We'll do heavy lifting on stuff MCX won't want to get bogged down in," Squire said.
Squire added that Cardfree even has three current partners who are also members of MCX's initiative.
In reference to mobile payment joint ventures and consortia like MCX and Isis, the carrier-owned mobile payment joint venture, Squire said another key difference with Cardfree is that it's backed by a single investor. In other words, it won't have to deal with owners who have competing agendas. The Series A funding that closed last month is from entrepreneur Jeffrey Katz, Squire said. Katz is an experienced payment veteran, as well as the founder of payment processor Mercury Payment Systems. Katz will also serve as chairman of Cardfree.
Along with its current team of 14 employees, Squire said Cardfree is also partnering with several companies to augment its CRM, loyalty and technology capabilities. Partners companies are Boston-based CRM and loyalty company Restaurant Scientist; Snapfinger, a mobile application and menu development company based in Atlanta, Ga; and ProfitStreams, a Denver-based CRM and technology company.
Now that it's made its debut, Cardfree is focused on "delivering the goods" to its first round of merchant partners, Squire said. Cardfree is targeting companies that interact with customers on a frequent basis —i.e., more than once a month, he said. Target merchants include fast casual restaurants, quick service restaurants, gas stations and convenience stores. (Squire said a channel partner that will target merchants with less frequent consumer interactions will be announced soon.) The company's hope is to announce the first merchant partner by the end of Jaunary 2013, with more to follow, Squire said.
Even with the plethora of companies jumping into the mobile space, Cardfree sees itself as unique in the space.
"There's a gap in the market for a one-stop solution," said Cardfree marketing head Diane Hong. And there's no company that can bring actual experience along with the data and information on how to deploy a mobile payment solution successfully.
"We have experience," Hong said. "We have it and we have people who have done it on a national scale."
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