GoPago’s line-skipping mobile payment system launches in San Francisco

As we’ve mentioned before, the key to mobile payments isn’t in providing an alternative to a credit card swipe or a cash transaction. It’s in providing additional value that you can’t get right now from existing payments. That’s what makes GoPago an interesting player to watch in what is fast becoming a very crowded mobile payment market.
The company is launching its cloud-based mobile payment system in San Francisco on Tuesday, the start of a nationwide rollout that will spread to Dallas, Chicago and New York City later this year. The service, which previously had a small pilot in Mountain View, Calif., and Las Vegas, allows consumers to order and pay ahead from their mobile app and essentially skip the line at all kinds of businesses, from restaurants and hair salons to dry cleaners and coffee shops. That’s where it’s trying to make its mark: by helping people streamline their shopping experience, not just their payment experience.
Users will just download the GoPago app (iOS (s aapl), Android (s goog) and BlackBerry (s rimm)), find a participating business and then browse through their selections, adding any orders to their cart. If they’re a regular at a business, they will get prompted to buy their usual orders. They can alter orders or put in special requests before checking out with a credit or debit card on file. The order gets routed into a business’ system and the user gets a notification confirming the order and the  expected wait time. When it comes time to pick up their order, they just flash a digital receipt to the merchant.
Leo Rocco, CEO and founder, GoPago, said it wasn’t enough to just take on credit card transactions. He said he looked to build a smarter system that provided more value to consumers than other mobile payment systems.
“The fact is I get the usual at the same business so why am I even standing in line? Let me own the menu,” Rocco said. “I don’t think we should replace credit cards for the sake of that. We don’t have a mobile payment problem, we have a mobile shopping problem.”
Designed for merchants too
The system isn’t just designed to make life simpler for consumers. GoPago is also working to make it easier for all kinds of businesses to adopt the system by doing a lot of back-end work, so companies can quickly integrate GoPago into their existing point-of-sale systems. The platform works with 80 percent of the existing POS systems, or merchants can handle sales through their own GoPago tablet app. With about one hour of work, businesses can map their product fields to the GoPago consumer app and configure the look and feel of the app. Once the system is in place, businesses can notify users, push out custom offers and reward their customers through a process that can be automated.
Businesses can expect to pay anywhere from 2.5 to 5 percent on transactions in lieu of traditional credit card transaction fees. They can also get rich analytics on their sales and performance through GoPago’s tablet app. GoPago is getting a good initial response from merchants. It has signed up more than 520 businesses in San Francisco in the last two months and will be gradually activate their services over the course of April.
Chase provides cash and more
The San Francisco company got a big boost in February from JPMorgan Chase & Co(s jpm), which announced it was investing in the startup. But the bank is also providing additional support by encouraging its merchant customers to sign-up for GoPago. Rocco believes that with Chase’s help, it can ramp up business sign-ups to more than 1,000 a week.
GoPago will have plenty of competitors, from NFC-based systems like Google Wallet and Isis to more cloud-based competitors like PayPal (s ebay), Dwolla, LevelUp and Square. Start-ups like PayDragon and Yorder are also in the mobile ordering and payment space as well, as is food services like Seamless and Grubhub. Rocco believes that GoPago works because it doesn’t require major hardware upgrades like NFC and has better backing from Chase than other startups. And he believes the back-end work separates it from Square, which handles transactions through its smartphone and tablet apps. PayPal could be a big competitor and is also targeting ordering ahead through upcoming changes to its mobile app. But Rocco believes many small merchants are still wary of PayPal’s parent company eBay.
Trying to differentiate by enabling pre-ordering and payment sounds good, but my sense is that many cloud-based systems will work to enable the same features. Also, not every business can really take advantage of pre-ordering to the same effect. The fees charged by GoPago could also give some businesses pause if they’re not convinced the service is worth the extra charge. The key will be in making the system really pain free for both consumers and merchants. In that sense, I still think GoPago can do well because they’ve done some heavy lifting to make it easy for many businesses to get on board. And it helps to have a trusted name like Chase behind you, who can help convince business customers and consumers to come on board. Chase will also let its cardholders that use GoPago receive exclusive offers and discounts from Chase merchants. GoPago faces a lot of competition but it’s showing it can be a serious contender. Unfortunately, there’s a lot of them emerging and it’s still early days.