Interview with Kevin Grieve, Mocapay

Mocapay ( is a Boulder-based mobile commerce platform that enables consumers to use their mobile phones as virtual wallets, which, in essence, allows them to use their mobile phones as credit, debit or gift cards at the point of sale. The Mocapay platform also includes an integrated loyalty and marketing engine that merchants and issuers can use to make direct offers to their mobile-enabled customers. During the summer, Mocapay hired former First Data executive Kevin Grieve as its chief executive officer. recently had the opportunity to sit down with Grieve and discuss his company, its product and its backers.

How'd you come by the Mocapay name?

Kevin Grieve: It stands for mobile-capable payments.

What is a “mobile wallet?”

Kevin Grieve: We can let any issuer take [the consumer's] tender, such as a gift card. So, if you think of a Starbuck's card that you carry around today that's made of plastic and has a [magnetic] stripe on it, I can take that card, and register with Mocapay on my phone, and then never have to carry around that plastic again and use my phone to pay at point of sale.

I can also reload that card on my mobile phone. I could also gift a friend if I wanted to send someone a $25 Starbuck's card. Or I could send you a gift card over the phone.

It sounds as if, in a virtual sense, the phone becomes the card.

Kevin Grieve: Correct. It absorbs [the card].

One of the things we did right away is make sure that we weren't down at the client-side on the handset, so the architecture for this system is a server-side wallet. Everything's done on a Mocapay-hosted server, and that allows a lot of flexibility around any handset being able to work. It also allows a lot of flexibility with integrating with the point of sale.

It sounds as if not having the system client-side is sort of a built-in security feature.

Kevin Grieve: Since it's not client-side, there are two things that gives us, the major one being security because I don't have sensitive customer information at the handset level.

The second component is when someone—and they typically do this in 18-month cycles—is when someone upgrades their phone. We can move that information to the new phone without having a lot of difficulty for the consumer.

Because we support multiple tender in that mobile wallet, you could have a Starbuck's card, you could have a Best Buy card, you could have a Blockbuster card. We can support those multiple tender types.

We could also move and go into private-label debit cards or even credit cards. We can put those on your phone.

How will the Mocapay system work with credit and debit cards?

Kevin Grieve: That will be something that we do later because the issue that you have is acceptance.

It's very easy for us, when we mobile-enable a gift card, you know exactly where that gift card can be accepted—at that merchant and not anywhere else. That whole landscape is called closed loop.

We're going to focus on [closed-loop payment systems] for the next … call it at least three years. We're going to focus on them because we essentially can provide ubiquity instantaneously once we sign up a merchant and deploy our solution.

Whereas, if you have a credit card, which you can use anywhere, until you've built up enough people that accept the Mocapay solution at point of sale, it's better to limit yourself on the open-loop side until you get to critical mass.

What about acceptance issues? Like if I pay with a debit or credit card, the merchant's card reader is going to dial in to the issuer and make sure that it's a valid card and the funds are there.

Kevin Grieve: We don't eliminate any of that infrastructure. What we do is we allow the person to pay with their mobile phone and we capture that transaction and information about where it should go. Should it go to Person A's bank or whoever is issuing that credit card? If it's a gift card, does it go to the gift card issuer?

So we route and then we do the normal payment settlement processing on the back end, leveraging the existing payment infrastructure. We don't have to replicate or reinvent or copy or duplicate any of that infrastructure. We put a layer in on top of the payments infrastructure to allow a person to activate a card on their mobile phone and then pay with their mobile phone.

So does your solution require hardware?

Kevin Grieve: No hardware. That was by design. If you have a mobile phone, you're ready to go, but you'll have to register and say, “I want to register this card and I want to connect to this account.”

From the merchant's perspective, we do a download to the point of sale. Once that software is downloaded, we're embedded in the point of sale and we show up on the cash register just like another tender.

How does the cash register or point-of-sale device interact with the phone?

Kevin Grieve: What we do is—just to walk you through the process—the consumer has their phone, they go into their Mocapay wallet, and they select which payment tender they want to use.

As an example, we'll say a Starbuck's card. I select Starbuck's and then I enter my PIN, for security, and then I receive an authorization code from Mocapay. That authorization code is provided to the person at the cash register.

We offer four capabilities to communicate that code to the point of sale:

  • You can tell them the code—just read it off the handset's screen—and they key that in.
  • Second, if they have PIN pads, you as the consumer could key that in.
  • The third way would be, if they have contactless, or NFC near-field communication, we could use a contactless pad to transfer that code.
  • Or we could convert that code to a bar code that they could scan at point of sale.

That's what we mean by “no new hardware” required.

Is that a strong selling point, the fact that your solution doesn't require any new hardware?

Kevin Grieve: Absolutely. It reduces counter clutter and it doesn't require a capital outlay.

When you talk about big, multi-lane retailers, one of their largest costs is their PoS hardware, so not having them spend money to deploy new hardware is a big selling point relative to implementing our solution. [The Mocapay system] can simply be installed as part of the merchant's software update cycle at point of sale for those merchants that have large-scale, custom PoS solutions.

For a smaller retailer, we are simply a 15-minute download to the different point-of-sale hardware terminals that we've already been integrated with and certified on.

What's your current range of clientele?

Kevin Grieve: We're focusing on the gift card providers. That's closed loop, and that's our first go-to-market [strategy]. We're talking to regional and national players.

We conducted our pilot program in Boulder, and it was really focused on a local set of merchants. Now that we've switched to gift, we're going to focus on some of those top retailers that have regional or national footprints.

So are you currently negotiating any deals with national retailers that have gift card programs?

Kevin Grieve: We'll target all those companies, but I can't talk about specifics. However, we recently announced in a press release that we're partnering with a gift card provider, STS. They've got about 4,500 merchant locations that they provide gift card solutions for.

We're working with them to mobile enable their set-up merchants. That will get us a whole swath of accounts: some local, some regional and some national.

Also, we're probably working with, I would say, about 15 different regional and national merchants that we're in discussions with right now. We're probably looking at 2-4 merchants that we would want to pilot with in 2009. <./p>

Would those be national merchants?

Kevin Grieve: They would have a combination of local, regional and national. What we would typically do is, for any large retailer—and this is when you launch any new payment capability—you typically do a 25-, 50-store pilot and go through a minimum three-month test and then from there you make a decision and then you scale and roll that out nationally.

What is your timeline for going from pilot or beta to full deployment?

Kevin Grieve: We're looking at trying to do that in the next 12-18 months. So that says we're going to get 2-4 regional and national players and then we would pilot with them. After that, what we would like to do is secure a national deployment with those retailers within that [12- to 18-month] timeframe.

That's what we're looking at doing. Once we do that, the rest of the merchants would be coming on board with the assumption that they're going to do a national rollout.

Let's talk about venture financing. Who are your current backers, how much are you looking to raise with your next round of funding, and what do you plan to do with that money?

Kevin Grieve: To date, we've raised $4.5 million. That's through a combination of seed capital from friends and family and from Lacuna Gap Capital, our current VC.

We're looking at raising another $4-$5 million for this pilot-to-national rollout with regional and national players over the next 12-18 months. This would be considered Series B, from an investor's standpoint.