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Introducing Tappr

Mobile payments company Tappr raises $2 million in funding

When you talk to Brett Hales there is an overriding sense he knows what he is doing and where he is going.

Hales, the 28-year-old chief executive of mobile payments company Tappr, is sharp, smart and determined. Not the kind of person you’d bet against.

Perhaps that’s why he has just managed to close a $1 million investment round, with another $1 million due to follow next week, valuing the company at about $11.2 million post-money. Both investments have been made by professional private investors.

Hales, a university dropout who grew up on the Sunshine Coast, is building a unique mobile payments system for the Australian and Asian markets. The idea originated on a trip to Hong Kong, where the ubiquitous Octopus Card uses smart, contactless technology so holders can easily pay for transport, restaurant meals and groceries, among other things. The Octopus system was so widespread and easy to use that Hales wondered why such a system hadn’t emerged in Australia and other places.

Initially, he investigated whether instead of using a card like the Octopus, consumers could just use a smartphone to carry out transactions. But given the growing ecosystem behind payment terminals decided this was too difficult.

Another hurdle was Australian regulations that require physical PIN keypads for point of sale transactions. Furthermore, there was no real expertise in these systems apart from the transit companies and the banks, which didn’t tend to communicate with each other or explore joint opportunities.

Hales decided a third party was needed to make it happen. Tappr would be the third party, sitting between industry verticals to deliver a ubiquitous mobile payment solution to anyone who needs it.

But Hales lacked the right skills. His background in sales, marketing, business consulting and hospitality didn’t cover the technical knowledge needed to execute the idea. So he approached PyxiApps Australia and Kerry Esson, one of the directors, came on board as a cofounder.

“We never really discussed it; it just sort of happened,” said Hales. “Emails were set up, company was formed. That’s really how it happened, and it just blossomed into what it is now.”

And although regulations created a challenge, they are now likley to work in Tappr’s favour by presenting a barrier to entry for any would-be competitors.

With an expected launch in early 2014, Tappr’s payment acceptance solution bears some resemblance to Square, the San Francisco-based mobile payments solution. However, Tappr has also developed a product that enables consumers to pay for items using their phones.

Tappr’s current payment acceptance concept device  — its third  — enables tap-and-go functionality via an NFC receiver that plugs into the headphone jack of your smart phone or tablet — a la Square. That works if it’s a credit card transaction under $100, but not for a debit card without tap-and-go functionality or for amounts greater than $100. In Australia, larger transactions need a PIN to be entered via a physical keypad.

Tappr has done the hard yard needed to meet all the Australian requirements, which positions it nicely for Asian and European markets.

“The cool thing about Square is that it’s small, it’s easy to use. But in Australia it’s not that easy because it’s not very secure. Yes it’s encrypted, but it doesn’t go to the compliance standards you need to go to. There’s the EMV certification. PCI as well. Those things are necessary to get into the Australian market. So that was our strength.

“Security is a big one for us. The ability to accept those kinds of transactions. We kept the coolness of Square, yet kept the fundamentals of the Australian markets.”

The time and effort spent on R&D has led to the development of a unique, but compliant, PIN device, which Tappr manufactures in China. According to Hales, the communication between the PIN device and the NFC receiver is novel and is being patented.

“As a startup it’s hard because you need a lot of money and a lot of research,” he said. “We’ve been working on it for about 12 months now.”

Tappr targets merchant customers who are currently underserviced by providers offering traditional point-of-sales payment systems.

Juvo+ ipad

Tappr’s Juvo+ application accepts payments, creates coupons, processes loyalty cards, generates gift certificates and accepts Tappr Nero transactions.

“If you’re an artist,” Hales explained, “and you’ve got a number of paintings and you usually take cash payments on the side or maybe invoices or bank transfers as well, you can sign up on our website. The cool thing about us is you can go to a bank to do it — a partner bank of course — and they’ll set you up with a merchant account if you need one and give you advice, and then all you need is a smartphone, an iPhone or an Android, plug it in, go through the sign up process, and that’s essentially how it works.

“Open air markets and farmers markets are definitely one segment we’re going after. We’ll market directly to them.”

About Ricky Robinson

When he's not writing for The Tech Street Journal, Ricky's working at NICTA, Australia’s ICT Centre of Excellence, where he performs a mix of industry engagement, research and, of course, software engineering. Ricky holds a Ph.D. in computer science from the University of Queensland and spent some time in Mountain View, California, at Sun Microsystems Research Labs. Ricky's the prime instigator of TSJ.