September 17, 2013
Companies such Google, Square, PayPal, Isis etc. , offer branded mobile payment systems that have several revenue streams from transactions, data and advertising. Paydiant, a mobile payments startup, claims to have taken a different approach.
Paydiant was founded in 2010 by 3 entrepreneurs - Kevin Laracey (Ex Venture partner at Sigma Partners, also cofounder and CEO eDocs), Joe Paratore (Ex VP of engineering and technical services, eDocs, joined m-Qube and later Verisign after its acquisition) and Chris Gardner (was CMO at ExtendMedia and later joined m-Qube and Verisign).
In February 2011, Northbridge Venture Partners and General Catalyst Partners invested a total of $7.6 million on the company. In addition to the first two, Stage 1 Ventures and Sands Capital Ventures also invested in Paydiant in 2012. On 9th September 2013 they received their 3rd round of funding at $15 million to take their total to 34.6 million.
Paydiant offers a cloud based white label mobile wallet and payment solution that enables retailers, banks and processors to launch a branded contactless mobile wallet and payment platform without the need for middlemen. Their platform works with POS terminals, smartphones, ATMs, etc. without the need of new hardware. Paydiant’s mobile payment technology lets their clients scan a barcode with the phone’s camera to process payment. Their technology supports QR codes and existing cell phone cameras and merchants do not need to upgrade any equipment to use Paydiant. In addition, the platform does not make the customer’s account details available during transactions reducing the risk of fraud.
According to the CEO, Chris Gardener, Paydiant’s model is based on a per-store licensing fee, a small transaction fee and another small fee charged to users. The mobile wallet application is enabled through a secure cloud based system that does not pass account data through the retail environment or store any account information on the mobile device making it a very secure mobile payment method. The software platform allows financial establishments to add options inside their existing mobile payment app. Retailers can accept payments and offer rewards or points inside their own apps. This is their ‘White Label’ approach wherein the customers cannot see Paydiant.
This white label approach also sees competition from companies like LevelUp. In an already crowded market it remains to be seen what Paydiant can achieve with its mobile wallet.
LTP View: Paydiant’s software targets banks and retailers who are stuck trying to establish their own payment systems so as to retain control over consumer data and relationships. The platform’s ability to work with existing POS, ATMs etc. may prove to be beneficial for its customers. In an already crowded market with competition from major players like Google and Isis, and startups like LevelUp it remains to be seen how Paydiant can set itself apart.