Giving payment pros the technological edge

Located within a breath of California's storied Silicon Valley, PayCube Inc. specializes in providing end-to-end payment technology services - from strategy consultations to building and supporting payment gateways. The company's offerings include payment system assessment and evaluation; vendor and technology evaluations; and information technology (IT) project planning, execution and support.

PayCube noted that its clients include product vendors, financial institutions, ISOs, retailers, processors and networks. The company provides them access to multichannel payment, transaction acquiring, switching, settlement, reporting and security capabilities, as needed. "We appeal to a very broad audience," PayCube co-founder and Principal Mustafa Shehabi said. "Our projects range from a few thousand dollars to multimillion dollar projects."

Shehabi said the company is growing because PayCube "understands the business outright" and finds out what solution a given ISO is looking for and then builds it. "If a customer wants to hook up a POS to a mobile phone using QR codes, how many companies not only understand the question but can also build the solution?," he said. "We offer ISOs the opportunity to have payment capabilities across the board so they can share these capabilities with customers."

35 years in payments

PayCube's co-founders, Shehabi and Chandan Mukherjee, have more than 35 years' combined experience working in payments and IT outsourcing. The two men started PayCube in 2011 when they saw an opportunity to turn their technical payment-focused backgrounds into a business. "Our mission is to evangelize forms of technology in world payments processing," Shehabi said. He added that PayCube's technical capabilities could be widely applied, but the founders elected to dedicate the company's resources and talent exclusively to the payments space.

Shehabi said PayCube aims to foster change and innovation by keeping clients technologically up to date. "We are a payments focused technology consulting company and a custom software development company in the world of payments," he said. "If the customer needs an application built for a web page, a POS, a kiosk or ATM we can build that application. We are technology enablers. Customers need us to make technology come to life."

Both founders believe the company's strength lies in thoroughly understanding the needs of all parties in the payments space - from merchants and card issuers to the acquirers, banks and technology companies. They noted that PayCube knows how to ask the right questions to find the business solution a particular client is looking for, and it has the ability to build the exact system the client needs.

For instance, if an acquirer has an idea of what it wants to do but no technology or staff to develop and execute the concept, PayCube can step in and provide the requisite payment-focused technological resources, Shehabi pointed out. "Not all organizations have to be technology organizations," he said. "Emerging ISOs who are new to technology find it synergistic to partner with a payments focused technology firm like PayCube to help them through this process and become a partner to grow with."

Projects across the payments spectrum

PayCube's offerings include traditional POS and mobile applications that are compliant with the Payment Card Industry (PCI) Data Security Standard (DSS). Recent client projects have included building the following:

• Card-not-present payment apps
• A card-present app that employs Bluetooth card readers
• A web POS system
• A payment and promotion system for a mobile wallet
• A proof-of-concept payment system using quick response (QR) codes

In addition, the company has recently:

• Delivered technical requirements for a multiprocessor, multicurrency, multilingual payment switch
• Performed a prepaid technology competence evaluation for a large payment processor
• Created a credit, debit, gift card application that allows customers using specified terminals to make charity donations.

A key to keeping transactions in-house

Another piece of PayCube's business the founders deem to be significant is custom gateway building. Mukherjee believes acquirers need to control a larger portion of the transaction cycle to profit in the payments market because declining margins are challenging the viability of pure ISOs. Thus, PayCube promotes payment gateways as an effective way to capture a larger share of the transaction cycle.

The company customizes its gateways to include such options as the ability to:

• Use multiple processors for least-cost acquiring and settlement
• Include value-added programs
• Provide the opportunity to host real-time, location-based loyalty, promotion, incentive, prepaid and wallet solutions
• Include electronic funds transfer switching capabilities on terminals and mobile devices

PayCube's payment transaction switches are PCI compliant and work with credit, debit and open- and closed-loop gift cards; telephone top-ups; loyalty cards and programs; and other payment alternatives. Shehabi said a customized gateway can increase the value of an ISO by shifting it from being a seller of cost-based processing to becoming a technology asset-based processor.

PayCube's familiarity with cross-channel payments and its ability to provide technology-neutral solutions give gateway clients a competitive advantage, he added.

Social payments pointing to the future

Social payments demonstrate the kind of complexity PayCube can help ISOs address, Mukherjee said. Such payments comprise an emerging market where he expects to see rapid growth. He pointed out that social payments are difficult to define, but they include multiparty payments, fundraising and split payments.

"The basic idea of social payments is that a group of people get together to pool in funds for one common purchase, cause or service," he said, citing group fundraising, office donations, and gifts paid for by groups as examples.

Mukherjee also said acquiring transactions in the social payments arena will mean being able to accommodate multiple channels such as e-commerce, social media, mobile and traditional POS transactions. "Regardless of the transaction acquiring channel, the transaction must clearly identify the group for which the funds are being accumulated," he said. "Processing payments for obtaining the funds from multiple members of the group is not always smooth." Mukherjee noted that social payment technology is similar to the technology powering stored-value account systems, but a social payments system needs to be enhanced to support such items as single point of funds disbursement.

He illustrated the challenge of processing social payments by noting that credit and debit cards give instant authorization, but automated clearing house payments may take days to clear, leaving the processor with serious fund collection, data storage and fund distribution challenges. Among the leading issues are how to handle declined cards and fraud in social payments.

Importance of technology, business strategy integration

Having a technology strategy is critical if an ISO wants to grow to the next level, Shehabi said. PayCube often counsels businesses on how to marry a technology strategy with a business strategy. He noted that the cost-benefit calculation is complex when it includes the cost of building, owning, maintaining and securing a gateway, for instance. Finding the answers to myriad payment technology questions begins with a consultation focusing on the goals and drivers of an ISO's business technology.

"Nobody has all the answers, not even the big guys in the industry," Shehabi said. "This means ISOs aren't the only ones making the decisions. Technology models will change even as companies invest in technology. Therefore they need a technology strategy. We offer complete back-end services to continue to address technology needs."

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