PaidPiper, a startup that will debut at the CTIA Wireless show this week, is developing a mobile money transfer system suited to developed economies where the credit-card infrastructure is dominant.
Money transfers via mobile phone are common in many developing countries where traditional banking and credit cards are scarce. PaidPiper, based in San Francisco, is putting credit-card numbers at the center of its payment system, which is due to become available this summer. It says these can be easier both to give and to spend than gift cards or virtual coupons. The company is using APIs (application programming interfaces) from MasterCard WorldWide, which the company is making available to third parties to develop new uses for credit-card infrastructure.
With PaidPiper, retailers and brands will be able to give consumers incentives by issuing unique MasterCard numbers on the spot, either in person or via the mobile network. Consumers will also be able to ask the companies for incentives, which a vendor can deliver in exchange for a consumer action such as filling out a survey, said Atif Hussein, PaidPiper's CEO. He introduced the concept at Mobile Web and Apps World, a side conference held in New Orleans on Monday, the day before CTIA begins.
PaidPiper is a SaaS (software-as-a-service) provider of customer-relationship management, Hussein said. The startup used MasterCard's MoneySend API to develop its own API, which it will use as the basis of a service that third parties can offer under their own brands.
PaidPiper will demonstrate its system with an app of its own making, called, Ok'd, which it expects to have available free for Apple iOS in the middle of this summer. The opening screen of the app has an "Ask" and a "Give" button. As an example of how it would work, Hussein said a shopper who saw a videogame he liked in a store could take out his phone, tap the "Ask" button, and ask for $10 as an incentive to buy the game.
If the maker of the game participated in PaidPiper's service, it could then ask the consumer to fill out a survey in exchange for the $10. After the buyer filled it out, the game maker would use PaidPiper to have a credit-card number issued to him. That number would simply show up on the consumer's phone, and if he wanted to buy anything in the future, either online or in a store, he would give the number or show it to a clerk who would type it in.
Consumers can also download the Ok'd app and issue card numbers themselves. For example, a parent could give a teen-ager a specific sum of money on the fly, from her mobile phone to the child's, and could even restrict where that money could be spent, according to Hussein. PaidPiper can do this by "geofencing" the use of the card to a specific area, such as one store or all locations of a given retail chain, he said. Alternatively, a consumer could scan the barcode of a product in a store and ask someone else -- a parent or a boss -- for a number to pay for it.
PaidPiper can also be used to give incentives in person, from phone to phone, which is ideal for small businesses, the company said. Rather than having to follow up an in-store encounter with a later contact via e-mail, a merchant can reward the customer immediately, PaidPiper said.
Though the idea of typing in long credit-card numbers may seem cumbersome, PaidPiper's service takes advantage of a massive infrastructure that is already ubiquitous in most advanced economies. For example, MasterCard has 1.7 billion cards in use today, issued by 22,000 different banks, and MasterCard is accepted at 33 million locations around the world, said David Butler, MasterCard's vice president and open API product manager.
The PaidPiper system is ready to become more streamlined for in-store use when NFC (near-field computing) becomes more widely available in phones and point-of-sale systems, Hussein said.