Yaga, Inc.ISO contact:
Walter Nirenberg
114 Sansome Street, 6th Floor
Article Originally Appeared in |
Making e-Content and e-Commerce Pay
In the Hindu language, "yaga" means moving from the physical to the spiritual. In the payment-processing language, Yaga means a new opportunity for advanced payment services. Formed in 2000 by two established entrepreneurs, Chris Kitze and Vijay Vaidyanathan, Yaga, Inc. was created as a digital marketplace, sort of an eBay for digital content. They started out in a small office with personal funding and focused on mainstream industries such as publishing, music, video and software. They quickly discovered that the potential for success was in payments and brought in outside investors and major talent - the talent being veteran payment-processing leader Steve Elefant. "When I came in as an advisor in January 2002, the philosophy of Yaga changed," says Elefant, now President of Yaga. "They had put together a tool for digital, but it was not being used to its best application. The marketplace has changed, and Yaga needed to become a payments company. I started full time in April, and the company has been reinvented since then. I've taken it in a different direction." That direction is a comprehensive suite of payment solutions, including content access control, digital rights management, payment and accounting services, billing services and selling plans, account management and reporting, and file delivery and hosting. Recognizing the emerging need for cost-effective and flexible management of online business transactions, Yaga offers advanced ASP and enterprise payment platforms to businesses eager to cash in on e-commerce revenue. To date, Yaga's technology has processed more than 50 million transactions across 11 million accounts. "In reality, there are no other companies who provide ASP solutions for managing and delivering content for transactions at an affordable price," says Elefant. "Their seven-figure solutions take months to put together. Our solution is much less expensive and takes a lot less time. The economy is tight and expenditures are being cut back. We are finding we are in the right place at the right time with the right solution." Customers are finding Yaga as well. In a recent bake-off with 12 other providers, including VeriSign and PayPal, Yaga was selected to provide Time.com with payment services. Elefant attributes that coup to the quality and uniqueness of Yaga's offerings. Yaga Access and Yaga Access Plus are the flagship products. Yaga Access is designed for smaller merchants. A self-service product, Yaga Access supports basic Web subscriptions with solid security. Yaga Plus goes to the next level for larger merchants who require digital rights management, royalty accounting, tracking and related wireless solutions. It also provides for micropayments, an area to which Yaga pays particular attention. "The market is changing from formerly free models to small fees," says Elefant. "Yahoo is now charging, and advertising alone is not enough to support online digital merchants who want to expand revenue and offer premium content. Micropayments come into play. Merchants can now accept small payments that haven't been available before us. Companies have tried before by creating their own currency and going around credit card systems. We are not upsetting that system. We are working within it." Yaga works within the system by offering aggregation of micropayments. Small transactions are stored in the Yaga system, and when the total gets to a certain dollar amount the system will initiate authorization, thus saving fees. Yaga believes this is a much more economical way to do business. That same system also supports stored value. According to Elefant, several dozen merchants already are taking advantage of this economic opportunity, with 150 in the pipeline ready to save fees and increase revenue. Yaga boasts that the transition is relatively painless. There are no special hardware requirements or additional equipment needs on the part of the merchant. Yaga's software purports to easily integrate with all existing platforms. The cost and turnaround time for Yaga's product is equally appealing. "Access is meant to be inexpensive," says Elefant. "The cost ranges from $19.90 to $199.95 based on transaction volume. Plus is still relatively inexpensive with a $5,000 setup fee and percentage of transactions, which is considerably less than enterprise solutions. Depending on the sophistication of larger merchants, it could take a few days to a few weeks, and we assist in the deployment. Access can be deployed in minutes." Elefant says there is as much appeal for the ISO community as there is for the merchant marketplace. "The ISO community is very important to us. We created the Access product for the ISO channel since they tend to deal with smaller merchants. We sell the service to the ISO at a discount, so it makes money like on a terminal. They have additional revenue coming in from merchants using Yaga solutions. We give the ISOs another arrow for their quiver." According to Elefant, a couple dozen leading ISOs are in the process of ramping up and expanding their arsenal with Yaga. "We are the leading edge, but it takes education and training on our part to show them it can be valuable," says Elefant. "They've not been in this marketplace before, but the reaction has been very positive. We're looking for companies that can be open to new products, new ideas and have an effective sales force. The only prerequisite is that they need to be working with merchants with digital content." Under Elefant's guidance, when it comes to optimizing its sales, it would appear Yaga's strategy is working. "Qpass was in this space but did not work with the ISO community at all in setting up merchant accounts," says Elefant. "We felt very strongly that was one of the mistakes made. Our key focus from the beginning is to work with ISOs, not against them." Yaga already has partnered with Payment Processing, TransPay Processing and Electronic Merchant Services, to name three independent sales organizations. They share a commonality in their opinion of this unique solutions provider. A self-proclaimed "larger but under the radar ISO" based in Fremont, Calif., Payment Processing selected Yaga because it is "the only micropayment product we looked at that works and works well," says Chuck Smith, President of Payment Processing. "It's a good product. Their leadership with Steve is also good, and CEO Chris Kitze knows what he's doing as well. We don't just look at the product. We look at leadership and financial stability. We want to make sure our partners are going to be there." Smith adds, "It's working great. We have a unique business model and approach. We see application for Yaga in a number of those approaches. It's not for everything we do, but certain clients can put the Yaga products to good use." TransPay Processing, a Paymentech ISO based out of Indian Wells, Calif., chose Yaga after discussions with Elefant. "Steve is well known in our industry as a good guy," says Emil Billman, CEO of TransPay Processing. "We realized they have something very unique to offer merchants. Their technology is cutting edge. There is a definite market for large-volume merchants doing small-ticket transactions cost effectively. Yaga has come up with the only solution in the industry. There is no other, and they do it in a fast and efficient way." Billman is especially pleased with the sharing of information as a result of TransPay's alliance with Yaga. "They have used us in all facets of our processing knowledge and discussions with clients," says Billman. "Giving us access to discussion with clients makes it all run smoothly. It has been a great experience so far. They are a great company to work with. They have really intelligent people working there, which is strange to have in this industry. It's a pleasure to work with something different." Independence, Ohio-based Electronic Merchant Systems is another ISO that has welcomed the opportunity to finally answer the needs of its micropayment merchants. "Yaga brings a needed solution for merchants who process lots of small transactions and find that the traditional solutions are cost-prohibitive to them," says Merrell Sheehan, Director of e-Business Development for EMS. "They are the first I am aware of to do this. There have been other solutions before that attacked the problem, but they have come and gone." Sheehan cites Yaga's management as another key component to the mix. "We are glad to be working with Yaga because Steve Elefant has always been a leader in the payment industry and has brought technology solutions that maximize the efficiency of processing," says Sheehan. "We're pleased to be partnering with Yaga. There is a market segment we weren't able to go after. With a solution like Yaga, we can now attack that market." Yaga is just as excited about these alliances. "We are very happy to be working with these companies," says Elefant. "They have stepped up to the table and made significant commitments by buying licenses up front and fully supporting and implementing our solutions. Yaga provides a way for ISOs to reach the untapped market of merchants with digital content and making micropayments economical. They will make money, and that's their bottom line." In addition to adding ISOs to its roster, Yaga is also on the lookout for acquisitions to enhance its offerings. It already has acquired three companies, including Air-Tunnel, a wireless company that gave Yaga access to more than 300 wireless devices. "We can automatically discriminate between cell phones, pagers or Blackberry and deliver content through these devices to the Yaga system," says Elefant. "We are actively looking for others that are within our realm that can enhance Yaga products." What also has enhanced Yaga products is its recent Visa CISP certification. This program provides for ASPs to be certified to handle all credit card and security information. "Surprisingly, we received this certification through audit by a third-party company," says Elefant. "They spent a week going through our firewalls, our security, our badges, etc. It is a quite costly undertaking. We recently completed it and passed with flying colors. They told us we were the most secure they have ever seen. In fact, Visa is working on a case study about us and how we implemented all this." Does this certification have any bearing on the ISO market? You bet it does. "This is important to ISOs because banks require they deal with vendors with this certification," says Elefant. "Somebody has to store all this data, all that credit card info. It requires redundant systems, multiple locations for Internet services. That is the infrastructure that we spent lots of time and money creating and maintaining." Another area Yaga spent time and money on is in digital-rights management - the ability to offer merchants the protection of their content. "If you have content that you want to specify whether it can be copied or written to disk, our digital-rights management solution allows merchants to do that," Elefant says. "As more content gets published, the merchants need that content protected." Elefant sees this evolving market as one of the biggest challenges facing the industry. "The payment industry is just starting to realize that digital-content merchants are a very good source of additional but as yet untapped revenue," he says. "For us, the challenge is getting the word out that our type of service exists. The challenge is educating the ISO channel that we are a value add to offer their customer base." He adds, "We are finding that there are so many opportunities, particularly with high-profile merchants jumping on board. The small to midsize merchants are now learning there is a way to commoditize their content. There are many Web sites that have lots of traffic but were formerly on advertising models. Now we are showing them they can take premium content and market that for traffic, creating a signification source of revenue." Where is all this leading Yaga? "We are heading straight down the path to modernize digital content, micropayments and regular payments," says Elefant. "We are expanding internally as well. We are adding more people as we grow. We are one of the few tech companies that is growing rather than shrinking." |