Startup Check-In

Modo: Interoperability Is Payments’ Better Mouse Trap

There are a lot of different ways to pay for things. That’s not news to PYMNTS or its readers — but now, people in the analyst, vendor and client worlds are starting to cotton on to just how many methods are encompassed by “a lot,” and they’re realizing that trying to support them all is an endless race where they can never get ahead.

At least, they can’t get ahead if they’re relying on tech integrations to enable each and every new payment method. But according to FinTech startup Modo, it’s time to stop thinking about new payment methods in terms of integrations, and time to start marking them interoperable instead.

What’s the difference? Modo CEO and Co-Founder Bruce Parker said that in terms of the final result, there isn’t one.

“It’s not the same technical issues, but it’s the same functional outcome,” Parker said.

He explained that most companies realize they should be offering as many payment options as possible; this is a big differentiator, according to PYMNTS’ Checkout Conversion Index. If major companies aren’t doing it, Parker surmised it’s because they haven’t gone through with the integration yet.

That’s often due to the cost and complexity of doing a full integration. Parker said checkouts are complex, and it takes a lot of work to make changes or add new methods. Merchants want to know how they can add new functionality without creating integration challenges or consumer friction.

Parker said that’s where interoperability can become an attractive alternative approach. It’s a way for merchants that can’t afford to make changes to start accepting new payment methods without the massive, total-system overhaul.

“There’s a compelling reason to make more choices available, and merchants understand that — but people are focused on integration, not interoperability,” said Parker. “Interoperability is the better mouse trap for payments acceptance.”

Interoperability is equally attractive in online and offline environments, he added. Modo has been partnering with players like FIS, Verifone and Alliance Data Systems on in-store and digital checkout environments for a long time.

In April 2016, it added Klarna to the roster — a partnership that has recently driven significant online growth for the startup, Parker said, noting that Modo’s transaction volume is up seven-fold from last year and the company is moving toward $1 billion in volume for 2018.

“It’s online that’s really taking off, and that’s where we’re getting a lot of volume now,” Parker said. “We’ve got more specific solutions coming later this year that will grow that even more.”

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