Credit, Debit, or Cell Phone? One-stop shopping with MobileLime

Imagine that you’re shopping at the supermarket. As you reach the end of the checkout line, the cashier offers you the familiar menu of choices with a new twist: “Credit, debit, or cell phone?”

Ajay Bam, founder of Boston-based mobile commerce processor Vayusa, Inc., and twice a recipient of NCIIA funding, wants to make this transaction a reality. Bam, who in 2000 along with two other MBAs in Babson College’s Entrepreneurship Intensive Track (EIT) program conceived the idea of paying with a cell phone, has raised $2.2 million from venture capitalists, led by communications technology specialists Seapoint Ventures and Ignition Partners. The company has signed up fifty area merchants since its launch and has a growing network of over 5,000 regular users.

The key to Vayusa’s success is that it has the only in-store mobile payments system that doesn’t require merchants to install new terminal equipment at the point of sale. When they’re ready to pay, consumers call Vayusa’s number on their cell phones and Vayusa identifies the user and authorizes the transaction, which is billed to a credit/debit card or prepaid account set up by the customer upon enrollment.

Vayusa has partnered with VeriFone®, the world’s largest point-of-sale payment company. The technology is designed to work with all 160 million cell phones currently in use in the US.

Beginning as a student with no knowledge of the payments industry and growing a venture capital-funded mobile commerce enterprise has been a long journey. Bam declares that the journey wouldn’t have been possible without the support he has received along the way: NCIIA funding, provided as the members were about to graduate and losing focus, reinvigorated the team. The NCIIA grant supported
the development of alpha and beta prototypes, the filing of a provisional patent, market research, and travel to present the plan to various investors.

NCIIA funding also provided a launching point for further financial support. When Babson professor Jeffrey Timmons put Bam in touch with Tom Huseby, the managing partner at Seapoint Ventures, a lasting and vital friendship formed. Huseby broke the rules at Seapoint and provided Bam with his first significant funding—a bridge note for 250k without a co-investor. From there, Vayusa took off, creating a sub-brand called MobileLime, completing a round of funding that brought in $2.2 million and launching in the last week of March 2003 with four retail merchants and a promotional campaign at Boston University.

What has Vayusa done with the money? According to Bam, the funding went toward expanding the merchant base and performing market research. “The challenge of the venture capitalists was always ‘Will people use this?’” says Bam. “Our first round of funding went toward proving that, yes, they will.”

Bam says that people don’t sign up for MobileLime simply because it’s a cool new way to pay—that might prove to be enough motivation for the small number of high-tech gearheads out there, but not for the majority of cell phone users. The primary attraction of MobileLime is the opportunity to save money.

Along with the ability to pay for products with your cell phone, MobileLime consolidates loyalty and rewards cards into one account, and customers receive discounts automatically when buying with their cell phones. “We understood from
the beginning that being a mobile payments company alone wasn’t going to cut it,” says Bam. “About five mobile payments companies before us disappeared because they focused on payments alone. People use MobileLime not because they can
pay in a fancy way but because they can save more.”

MobileLime goes beyond consolidating loyalty cards: customers also receive advertisements and electronic coupons on their cell phones. One of those coupons is the “Rainy Day Special.” Says Bam, “Let’s say it’s raining on a particular day; we send out a message that morning saying ‘If you shop using MobileLime
between one and fi ve pm, you’ll receive a 20% discount.’ Whereas traditional paper coupons usually get a response rate of .1%, we get 15-18% response on specials like Rainy Day.”

MobileLime has a lot going on these days: aside from completing another round of funding expected to bring in five to six million, they’re determining the best way to roll out the service nationally. “The challenge for us is how we are going to scale,” says Bam. “We’re focused in Boston now, but we’re looking to expand; we’ve been in discussions with some pretty big merchants and you can look for us in familiar stores soon.”

At the same time they’re trying to improve their business practices: getting better at training existing merchants, making improvements to the technology, and ramping up the marketing effort in their target markets of retail, quick-service stores and sit-down restaurants.

Mobile commerce—“m-commerce”—is projected to be a growth market, and MobileLime has aligned itself to be one of the companies riding the first wave.

In 2007 the company merged with Cuesol to become Modiv Media, developer of a next generation retail media delivery platform.

The Vayusa Team (Modiv Media)

Babson College, 2001 - $8,400

Seven years ago, the Babson College Vayusa E-Team created a mobile commerce solution that allows people to pay for products with their cell phones. At the checkout counter, the customer dials the company, enters a four-digit PIN, chooses a payment method (credit card, debit, etc.), and confirms purchase. The Vayusa platform also contains a loyalty card management system, allowing retailers to reward consumers for using certain payment methods. Vayusa's system is fast and safe, requires no additional equipment installed on either side of the transaction, and can be utilized with any existing cell phone.

After graduating from Babson the team went on to incorporate as MobileLime, completed a round of funding that brought in $2.2 million, and launched in Boston with twenty-one employees in March 2003. In 2007 the company merged with Cuesol to become Modiv Media, developer of a next generation retail media delivery platform.



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