Will ModoPayments Finally Monetize Check-In?

Based in Dallas, Texas and led by CEO Bruce Parker, ModoPayments is a startup with a goal to do exactly what their tagline says – “convert redemptions to payments and make payments mobile”. What exactly does that mean? First, know that ModoPayments definitely has a payments piece and I’ll come to that in a moment, but a supremely important part of their business plan is creating and tying value offers to the purchases they enable in order to enhance and promote their mobile payments solution. They create monetary savings that users can cash in on if they transact with ModoPayments instead of another tender.

It has often been stated that mobile payments are a solution searching for a problem. Indeed, what is the big deal about pulling a card out of your wallet vs. pulling your phone out of your pocket, to transact? Where is the value to drive the mobile payment other than convenience?

Modo thinks it has to do with offers and they have integrated a framework for redeeming merchant offers with their payments platform. This makes sense to me. If I had to choose between paying with my Visa card in my wallet or my Visa on my phone (that also happens to give me a big discount on the purchase) I think the choice is obvious. So right out of the gate, ModoPayments has tied a distinct consumer value proposition to their service in order to drive usage (they hope). Google Wallet has a similar concept. It will definitely be a motivator.

Jay Donovan is a writer and mobile strategy professional based in Columbus, Ohio. He has written for the TechCrunch network since 2009. You can reach reach him at jaydonovan at crunchgear dot com. → Learn More
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ModoPayments’ simple and comprehensive solution for providing mobile payments is interesting and what’s more, its offer-based approach may have finally cracked the code for monetizing check-ins. This is something that mobile location-based service providers (LBSs) like Foursquare, Loopt, Gowalla and ShopKick have, no doubt, been laboring over since their inceptions. And while ModoPayments is, at present, a non-NFC mobile payments platform, they plan to integrate with NFC too, when NFC reaches retail maturity.

Based in Dallas, Texas and led by CEO Bruce Parker, ModoPayments is a startup with a goal to do exactly what their tagline says – “convert redemptions to payments and make payments mobile”. What exactly does that mean? First, know that ModoPayments definitely has a payments piece and I’ll come to that in a moment, but a supremely important part of their business plan is creating and tying value offers to the purchases they enable in order to enhance and promote their mobile payments solution. They create monetary savings that users can cash in on if they transact with ModoPayments instead of another tender.

It has often been stated that mobile payments are a solution searching for a problem. Indeed, what is the big deal about pulling a card out of your wallet vs. pulling your phone out of your pocket, to transact? Where is the value to drive the mobile payment other than convenience?

Modo thinks it has to do with offers and they have integrated a framework for redeeming merchant offers with their payments platform. This makes sense to me. If I had to choose between paying with my Visa card in my wallet or my Visa on my phone (that also happens to give me a big discount on the purchase) I think the choice is obvious. So right out of the gate, ModoPayments has tied a distinct consumer value proposition to their service in order to drive usage (they hope). Google Wallet has a similar concept. It will definitely be a motivator.

The platform makes it possible to, in the words of Bruce, “generate a mobile payment transaction at any location that accepts either Visa or MasterCard with no change to POS and no change to the phone that uses ModoPayments.” It can exist as an SMS or native app solution; customers can choose either touchpoint.

I’ve heard this one before, but their scenario is really simple and honestly sounds like it might work.

First, a customer creates an account at the ModoPayments website and registers a credit card with that account. When it later comes time to pay for something at a participating location, the customer texts “VISIT” to the Modo short code or else they check-in with the Modo native app. (In the text scenario, Modo will try to triangulate on a customer’s network location. If they can’t locate them, ultimately they will just ask the customer via text—‘are you at X location’ and via process of elimination, locate them).

After Modo have verified that the location matches up with a supporting offer, they will create a randomized credit account number for that location which is good for one transaction only. They then load it with money that the merchant or other 3rd party has set aside for the specific offer.

Next, they will grab the difference still needed to complete the sale from the customers registered credit card. In essence, they are creating pre-paid card numbers that will only work for a limited time and that are loaded with money from both the offer provider and the customer.

Then, they send half of the account number to the merchant and half of the number to the customer. The two sides combine their numbers to create the actionable account number to complete the transaction. (The merchant half of the number may or may not be static and therefore might not even need to be sent).

Pretty tricky. So here they have tied a distinct merchant value proposition to their service—no costly POS change required plus a mobile marketing channel.