CardLine/CardForum Article

Below is the article that was featured in CardLine/CardForum.

MPAYY SEEKS GROWTH AFTER SECURING ADDITIONAL FINANCING
Mpayy Inc., a Chicago-based alternative-payments company, says it will use
additional funding from U.S. Bancorp to grow its e-commerce, mobile commerce
and widget-based payment services. Minneapolis-based U.S. Bancorp also
provided Mpayy with funding last year. ³We want to tap into larger
retailers,² Conrad Sheehan, Mpayy founder and CEO, tells CardLine. ³They
have not been as aggressive in adopting alternative payments, and for a lot
of good reasons. Any retailer should be extremely comfortable with running
high volume through our platform.² Launched in the first quarter, Mpayy says
it provides consumers, small businesses, Internet retailers and charities
with a variety of payment options. Consumers may make person-to-person funds
transfers through Mpayy¹s online and mobile Web sites and by using a
social-networking widget found on Facebook and MySpace. Consumers can pay
for goods by linking a checking account to Mpayy. Small businesses and such
independent salespeople as taxi drivers and flea-market vendors can use
Mpayy¹s mobile-payment capability to turn their mobile phones into
point-of-sale terminals. ³It works on all phones, but it¹s particularly
tailored to the most-popular devices,² Sheehan says. New York-based charity
Alliance for Lupus Research uses Mpayy¹s widget on social-networking sites
to obtain donations. Sheehan claims Mpayy offers retailers a processing
platform that is ³50% to 60% less expensive than card-based processing.² The
company also is touting Mpayy¹s security. ³We exceed all PCI standards,²
Sheehan says. ³Retailers don¹t have to worry about storing any data because
that information is hosted on servers by U.S. Bank.²

American Banker's "Mobile Banker" Feature

Mpayy is excited about a feature we received in the American Banker today. It can be found here. Registration is required, but they have a two week free trial with no need to input a credit card.

Enjoy!


American Banker
Its Testing Done, Alt-Pay Start-Up Faces New Tests

American Banker | Thursday, July 10, 2008

By Steve Bills

Mpayy Inc., a new entrant in the alternative payments space with backing from U.S. Bancorp, is hoping that its combination of e-commerce, mobile technology, and automated clearing house services will help it stand out in an increasingly crowded market.

The Chicago company announced Wednesday that it had closed a funding round led by the Minneapolis banking company.

Conrad M. Sheehan, Mpayy's founder and chief executive, said U.S. Bancorp had also led an earlier funding round, last year, but he would not disclose the amount of funds raised.

Mr. Sheehan said his company has intentionally been keeping a low profile. "We're very focused on designing and building a great product without putting too much attention on us too early," he said in an interview Wednesday.

But after testing its Internet and mobile commerce technology since early this year, Mpayy is now ready to begin promoting it actively, Mr. Sheehan said.

A U.S. Bancorp spokesman said the company would not discuss Mpayy, though Mac McCullough, an executive vice president at U.S. Bank and a director on Mpayy's board, said in the processor's press release that the banking company is "very pleased to continue with our role in Mpayy and continue to view it as an attractively positioned player in alternative payments with a compelling and unique value proposition."

Mr. Sheehan said that in addition to its financial backing, U.S. Bancorp is hosting Mpayy's applications in its data centers.

Mpayy is positioning itself primarily as a lower-cost alternative to credit cards for online merchants, using the ACH system as a way to beat payment card interchange expenses, Mr. Sheehan said. "It's more of an e-check platform. There's also a stored-value piece" for the unbanked.

Initial customers include Lawbooksforless.com and the Alliance for Lupus Research, which Mr. Sheehan said is using an Mpayy application known as a "widget" to add a payment system to social networking sites.

Mpayy's mobile payment capability uses the same secure Web interface but with a streamlined design, he said. "It turns your cell phone into a mobile point of sale."

Commercial users — such as taxi drivers, flea market sellers, and multilevel marketers who sell using the home party method — could save half or more compared to bank cards, and Mpayy offers free person-to-person transfers.

Big banking companies have begun placing some bets on alternative payment technologies. Bank of America Corp. last week took an equity stake in mFoundry Inc., a developer of mobile banking and payments software. Citigroup Inc. is pursuing a variety of strategies, testing mobile-phone payments with technology from Obopay Inc. and forming a joint venture with the South Korean wireless carrier SK Telecom Co. Ltd. to develop mobile technology.

Bruce Cundiff, a research analyst at Javelin Strategy and Research, said Mpayy could break through by offering its service online, on mobile devices and through social networking widgets.

"I like the fact that they are going after multiple markets here. They're not putting all their eggs in one basket," Mr. Cundiff said.

But like other entrants in the alternative payments market, Mpayy faces what Mr. Cundiff called a "chicken and egg" predicament in trying to develop both a merchant base and a customer base, similar to the issue that eBay Inc.'s PayPal unit faced in e-commerce in the early part of this decade before beating out rivals.

"Mpayy's key differentiator is being able to integrate with U.S. Bank's robust merchant services business," he said. "I think that dovetails nicely with U.S. Bank's merchant strategy."

© 2008 American Banker and SourceMedia, Inc. All Rights Reserved.

Hard Data on Mobile Usage

Nielsen Mobile put out new data today based on a global survey of 1 million mobile subscribers' use of the web on their phones, and the numbers continue to point to a growth narrative that is one of the strongest in the American economy.

Monthly Usage & Upside

Nielsen's data demonstrates that 40 million Americans access the Internet via their cell phones as of May 2008, which is 15.6% of the mobile subscribers in the US. This data is very consistent with what the Pew Center found that we discussed here. However, even more exciting is the fact that fully 95 million Americans have access to the mobile web through their cell phone service provider either by directly paying for it, or bundled with their other services. That number is up 28% from Q1 2007, but still accounts for just 37% of the 254 million mobile phone subscribers in the US.

These numbers are very exciting for Mpayy demonstrating that the installed untapped base is already 55 million strong. Further, continued growth of the mobile web subscribers to even 50% will more than triple the number of users today. Mobile data packages account for $1.7 billion in annual sales, and the average subscriber is spending $11 on monthly data plans.

Specific Uses

Nielsen's data contradicts what we discuss yesterday, demonstrating that the iPhone is #2 in the device list with 4% penetration, still a ways behind the 10% occupied by the Motorola Razor.


As far as the specific browsing habits, Nielsen reveals that 40% of mobile Internet users find their favorite sites through search engines, and 22% type in the exact URL. Just 17% of users find their sites through carrier portals, a number that is likely to continue to decline as iPhone, SmartPhones and imitators continue penetration.

Further, 5 million users in the US are accessing mobile banking websites that mostly just allow them to view their account balances and make a few payments. This number shows massive potential for breakout for Mpayy's Personal accounts that allow electronic payments to friends and family as well as roving salespeople that use Mpayy's secure Mobile Merchant account. As you can see from the left, email, weather and sports continue to lead mobile web usage, but watch out for Mpayy!

SmartPhone & iPhone Penetration Continue

This blog has covered mobile web usage growth as reliable numbers come out. A couple of interesting data points have been released lately that point to a high probability for the continuation of this trend.

SmartPhone Numbers

Nielsen Mobile put out numbers on SmartPhone penetration last week. The numbers are consistent with the Pew Research numbers we discussed here. Fully 63.9% of SmartPhone users are below 45, with 35.9% below the age of 35.

Further, focusing on this market exposes companies to some of the highest paid Americans with 35.1% having incomes over $100,000, according to Nielsen's data. These users are spending over $200 for their device and over $100 on their monthly plans, and 52% of those users are paying for the plans themselves as opposed to their companies remitting these fees.

Many Apples a Day

The Apple 3G iPhone launches on Friday, and though it is still 4th in the SmartPhone race, this year promises to be a barnburner. Apple expects to sell 5.1 million iPhones in Q3 2008 and another 6.5 million iPhones in the 4th quarter, according to numbers quoted by Silicon Alley Insider. Some analysts are estimating that Apple will sell 45 million iPhones in 2009.

SmartPhones and the iPhone are driving the move of functionality from the internet to the mobile web. As more and more of these phones come online, more people will begin to use Mpayy for free person-to-person money transfers, and independent salespeople and small businesses can use these phones as mobile Points of Sale. Check out our mobile website with advanced account management features.