Accelitec Lays Technical Groundwork for PayPilot Expansion in ’06

Accelitec Inc., a Seattle-based company that last year launched a contactless-payment system aimed at merchants rather than banks, says it is preparing for expansion this year by smoothing integration with existing merchant networks. The company's PayPilot product is in beta with an unidentified merchant, and officials say they expect to begin expanding the merchant base in 2006. Like other payment products based on radio-frequency identification (RFID), PayPilot focuses on merchants that place a premium on speed and convenience at the point-of-sale, such as quick-service restaurants, gas stations, and supermarkets. Part of its appeal to merchants could lie in its promise to cut acceptance costs by relying on the automated clearing house. Consumers designate whether they want to charge a credit card, create a prepaid account or debit a checking account through the ACH. Since ACH transactions cost considerably less than card-based transactions, Accelitec contends that if merchants move just 10% of their payment volume to the ACH, they can substantially lower their acceptance costs?a contention that could resonate with merchants at a time when 47 retailer-inspired lawsuits against the bank card networks are pending over the issue of interchange costs. Accelitec also allows merchants to brand the PayPilot payment devices and link loyalty programs to them. PayPilot uses RFID transponders?cards or key fobs?dispensed in stores to communicate with POS terminals in a closed-loop environment. Accelitec supplies the complete system, including dispensing kiosks, tokens, and transceivers. Accelitec runs the network, switching transactions as required to merchant acquirers (Digital Transactions News, Aug. 16, 2005). To ease technical issues at the stores, Accelitec is building PayPilot on Microsoft Corp.'s .Net platform. The aim is to connect seamlessly to the integration pathways most merchants have established between their POS terminals and back-office servers. Most merchants run Microsoft-based applications, such as Excel, on their servers. Accelitec envisions using the .Net platform to allow merchants to download transaction and consumer data captured over its network directly to merchant servers and view it in real-time. On the flip side, consumers can access their account information using a personal computer and download it into Money, Microsoft's personal-finance application. The ubiquity of the Microsoft platform also makes it easier for merchants to send messages to their customers on their cell phones. “We are focused on integration,” says Fred Miller, director of business development for Accelitec, who adds the company has hired several former Microsoft developers. “The .Net platform provides the integration paths and the tools commonly used by merchants and consumers.” To aide in its expansion, Accelitec has also hired as a consultant former MasterCard executive Alan Schultheis, a director at Edgar Dunn & Co. The company is also working with Fred Gumbel, a principal at Payments Insights, a Dallas-based consulting firm, as unpaid advisor. Schultheis and Gumbel have experience in cobranding and debit acceptance, respectively, and both are focused on merchants' rising ire over interchange rates.