Meet Clover, possible savior of lost mobile transactions

The emergence of mobile devices as robust shopping machines has been a boon for retailers and online merchants, who are seeing more sales come through smartphones and tablets. But the rise of mobile shopping hides the fact that many transactions still go unfulfilled because the check-out process gets bogged down with the entry of financial information, which can be tricky on smaller touch screens.
But help may be on the way in the form of a new payment start-up called Clover, which is trying to radically reduce the time and steps it takes to check-out at retail sites, making it about as simple as an Amazon (s amzn) or iTunes (s aapl) transaction. Clover, which quietly hit the App Store and Android Market (s goog) in November as a peer-to-peer payment rival to PayPal (s ebay), is releasing SDKs for native iOS and Android apps and mobile websites that allow online merchants to incorporate Clover as a payment option. It’s already lined up a handful of clients and partners including food ordering service Yorder, which will use it for payments and lolapps and Ansca Mobile, which will make Clover available to its developers.
Making transactions fast
This might sound like just another option for online businesses, who already have existing payment tools like PayPal, Google Checkout as well as carrier billing options and other new alternatives like Stripe. But Clover has done some nice work to make payments on mobile dead simple and fast and it’s that focus that could make it stand out as a tool for both merchants and consumers.
Here’s how it works: Developers can drop in Clover as a payment option with just about 15 minutes of work; deeper integration into their site’s back end takes longer. When a user goes to pay and selects Clover for the first time, they are prompted to check out by entering a credit or debit card. After they pay, they can get an offer for a $5 refund on their purchase if they sign up for an account on Clover. If a user agrees, Clover takes the recently entered payment data and quickly sets up an account with that payment card on file.

What’s interesting about Clover is that it uses iOS’s fast app switching and Android Intent to make the process of paying and signing really quick. Once a user establishes an account and links it to their phone, they just create a 4-6 digit PIN. When it’s time to make another payment at any retail site, the user is immediately switched over from an app or website to the Clover app, where they confirm a purchase by entering their PIN. They are then returned to the original app or website and the transaction is completed. Clover has cut down the actual amount of data transferred to under one kilobyte and has reduced the number of HTTP requests to just one, so transactions complete in about two seconds or less. That’s far less data transferred and far fewer HTTP roundtrips than most other payment systems, said Clover CEO Bryan Lamkin.
Boosting conversion rates for mobile
Lamkin said smartphone conversion rates are typically about 5 percent, compared to 35 percent on desktop transactions. He believes retailers can at least double their conversion rates on mobile purchases using Clover and probably do a lot better than that. Clover takes a 3 percent fee on transactions.
The biggest hurdle will be to get merchants and consumers on the system. Clover is establishing a $100,000 fund to encourage developers to use the platform. And it’s trying to entice consumers by offering incentives such as $5 off a purchase for signing up. The fact that it’s got a fast way to convert an initial transaction into an account registration is appealing because it can get people on board in a hurry.
“Our goal is to dramatically improve smartphone commerce for a one-tap checkout,” Lamkin said. “We think there’s a huge opportunity in the online segment but there is a lot of friction that needs to be solved.”
Security covered
Clover ties a user’s account to a device via an SMS authentication so when a transaction is initiated, Clover only asks for a PIN number That speeds things up while keeping transactions secure. With PayPal, for example, you have to enter an email address and password to complete a transaction. Clover said it also applies machine learning and its own risk scoring system to help reduce risk.
Lamkin, a former Adobe veteran (s adbe)  who also led consumer products at Yahoo (s yhoo), leads a team that includes VP of Product Leonard Speiser, who came from Yahoo, Bix, eBay and Intuit (s intu) and VP of Engineering John Beatty, formerly of Yahoo, Bix, BEA (s orcl) and Sun. The company is funded with $5.8 million from Andreesen Horowitz and Sutter Hill Ventures.
I like Clover’s mobile focus and the way it’s worked to whittle down payments to a very quick transaction. Consumers are buying more stuff with mobile devices but having to enter credentials can kill a purchase. That’s why Apple and Amazon have been so successful with online transactions, because once they have a credit card on file, they make it effortless to check-out. Clover is also light on the network so it can still push through transactions even in weak coverage areas. If Clover can get merchants to sign on, it could see some good success as payment option.
There’s a lot of talk about bringing mobile payments into the real world and enabling mobile wallets at point of sale terminals. That’s where PayPal is turning its focus these days. But Clover shows there’s room for more innovation in online payments. And with more people transacting through mobile devices, it’s a ripe opportunity for whoever can improve the current check-out process.