AirPay Starts Small, Seeks Feedback on New Mobile Payment System
I stopped by the launch party late yesterday for AirPay, an early stage startup incubating in San Diego’s Ansir Innovation Center that has been developing a mobile payment system with social media features.
“I have friends who say we’re insane,” says James Adams, the CEO who co-founded AirPay with Web developer Eric Shultz almost two years ago. “They say we’re going up against billion-dollar companies like Google, Foursquare, and PayPal. My response is that nobody has figured it out yet.”
In March, for example, Bloomberg reported that difficulties in getting consumers to embrace its technology had prompted Google to considering changes in its mobile payment strategy, such as sharing revenue with carriers.
Adams describes AirPay as a mobile wallet app that enables users to pay with a smartphone at participating merchants, where they can earn rewards and share their experiences with their friends and family. Users can check in with Foursquare, Twitter, and other social media, write reviews, and invite friends to join them. To pay for a purchase, users display a QR code to a scanning device on the merchant’s counter. For the time being, Adams says AirPay is using a dedicated smartphone because it’s cheaper than developing a more specialized scanner.
AirPay, which has raised $200,000 from four investors, is launching its mobile payment system for Apple’s iOS and Android in part to get what Adams calls some real-world feedback. As an example of its crowd-sourcing approach, AirPay asked a Facebook group of local tech entrepreneurs for advice a few weeks ago on various fonts the company was considering. The company also was working through a few software glitches yesterday, as people attending the party used the AirPay system to buy drinks at Pangea, the Ansir center’s meetup bakery.
“We want people to drive our roadmap, rather than thinking we know better than anyone else,” Adams says.
Adams was a co-founder at San Diego-based Awarepoint, which provides combines wireless technologies with a real-time location system to help hospitals and clinics track medical devices, instruments, and patients. So he has experience in developing the hardware, software, and distribution infrastructure that AirPay needed. He also acknowledges that AirPay faces two significant challenges—persuading consumers to download the app, and persuading merchants to participate.
The company generates revenue by charging merchants 1.99 percent of each transaction. AirPay also offers incentives for users to recruit merchants who sign up for the mobile payment service.
“We’re trying to make it really easy for the businesses, so purchases made today are direct-deposited into merchant accounts tomorrow,” Adams says. So far, however, the service is available only in San Diego.