By David Ortiz
PBN Staff Writer
Betting that millions of North American consumers will use their cell phones to pay bills, wire money or buy a half-gallon of milk, four former GTECH Corp. executives and an international business consultant have formed a company to market a mobile-phone payment platform in the United States, Central America and the Caribbean.
North Kingstown-based Ocean State Solutions LLC is preparing to launch mPay, a system that enables cell phone subscribers to use their phones to pay for goods and services as easily as they use credit and debit cards, said Brent Pennington, the company’s commercial director and a former director of retail development at the lottery giant GTECH Corp.
Other directors of the company include Donald. L. Stanford, a former chief technology officer and senior vice president at GTECH, and an adjunct technology and business professor at Brown University; Miroslaw “Mirek” Kula, an engineer who worked for GTECH as an expert on electronic payment systems; T.V. Jayamaran, a consultant to R.I. Economic Development Corporation and the John H. Chafee Center for International Business at Bryant University; and Kenneth C. Kirsch, a former finance executive at GTECH.
They hope to cash in on a potentially blockbuster mobile payment market that is already maturing in Asia. In places such as Taiwan and Singapore, 70 percent of cell phone subscribers use their phones to conduct daily financial transactions, Pennington said.
With consumer usage of mobile devices continuing to explode in the United States, some leading researchers forecast a wave of mobile payment sweeping North America in about four years, with the category experiencing double-digit growth for five or more years and becoming a major payment system in 12 to 15 years, he said.
“The mobile phone is the only device that’s an always-with-you device today – more than women are carrying purses, more than men are carrying wallets, more than people are carrying plastic cards in their pocket,” Pennington said.
Ocean State Partners owns the North American rights to m-Pay, a payment system developed in Poland that links merchants with banks using any mobile telephone network. The system can be used in every way that a debit card can be used – to pay for groceries, make cash withdrawals, make “top-up” payments on a prepaid cell phone or make money transfers.
Transactions are settled directly from a bank account or prepaid mPay system account, and the system uses the same back-end software applications used by most credit card companies to process transactions.
Ocean State Solutions plans to launch mPay USA in Rhode Island this spring, initially targeting the more than 8,000 college students in the state, Pennington said. The company has had discussions with officials at Brown University, Johnson & Wales University and Bryant University, he said.
Eventually, the company will seek to penetrate retail markets in Rhode Island and across the Northeast and the country, Pennington said.
The company is also targeting consumers in developing economies in Central America and the Caribbean, where large numbers of people don’t have bank accounts and conduct most of their daily business with cash, but who nevertheless use cell phones.
In February, Ocean State Partners plans to launch the service in Guatemala as mPay GT. The service will be offered in partnership with Transol SA, a Guatemala-based company whose primary business is running call centers and a top-off payment service centers for pre-paid mobile phones, which accounts for about 95 percent of mobile market in Guatemala, Pennington said.
mPay would be a cheaper and easier alternative to traditional transfer services for the estimated 2 million Guatemalans living in the United States who send remittances back to the country every year, Pennington said.
“Guatemalans working in the U.S. … are paying very, very high rates for money transfer right now through Western Union and other means, and we should be able to reduce that substantially and still have a good, profitable business for us,” he said. “It will be consumer to consumer through their mPay account – mPay GT being the business in Guatemala and mPay USA here. It will come directly to the phone, and they can access that money and actually pay at retailers like they pay with a debit or credit card, using the mobile phone as the activator.” •
