Is Mobile Commerce Ready for the Main Stream?

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1 + ROAM Data With a visionary founder and an expert team committed to innovation, ROAM Data has an inside track to leadership in the booming mobile commerce market around the world. + Is Mobile Commerce Ready for the Main Stream? ROAM Data Says Yes as its Mobile Commerce Platform Brings the Spark that is Igniting the ROAM Mobile Revolution in the U.S. and Around the World

2 Will Graylin Founder, CEO Ken Paull GM, EVP Marketing & Sales ROAM s Success will continue to be built on its unique ability to provide merchants with a robust platform that facilitates social commerce via the mobile phone helping them manage everything from card acceptance to creating and operating mobile storefronts to creating and serving mobile offers that help merchants acquire and retain customers. Ready for the Revolution 2 Are U.S. consumers finally ready to adopt mobile payments as part of the mainstream shopping experience? Is the environment finally right worldwide for mobile commerce to take hold? It depends on your viewpoint. The good news: According to a recent Harris survey, the number of U.S. consumers who have ever used their phones to make purchases at the point of sale has tripled since The bad news: That number represents just 3% of consumers, up from a miniscule 1% three years ago. But fortunes may be turning, according to Will Graylin, the founder and CEO of Boston-based ROAM Data, one of the technology industry s leading innovators in mobile commerce (mcommerce) point-of-sale technology. Part of Graylin s optimism is grounded in sheer demographics. Smart-phone adoption in the U.S. has created a vast domestic network of operating systems as invisible engines that enable mobile phones to download and use mobile apps for just about anything including serving as point-of-sale payments platforms for merchants of all sizes and merchant categories. Nine of every ten human beings on the planet today own a mobile phone, and 17% of the world s population is connected to the Web via their wireless phones. In 2011, a staggering 492 million smart phones were sold. In the U.S., the correlation between smart phone ownership and income is unquestioned. Some three-quarters of consumers who earn more than $75,000 annually own smart phones. Beyond demographics, Graylin points to other factors that underpin his optimistic outlook for mobile commerce. Wireless connectivity and the ability to process sales transactions via mobile phones have created unprecedented opportunity for merchants to reach targeted consumers more interactively, he contends. The potential to enhance the shopping experience is enormous, according to Graylin, who cited a few examples: Consumers, through their mobile phones, would be able to actively participate in location-based services that they proactively select, taking advantage of offers and inducements from their favorite retailers whenever they re near a choice merchant s physical storefront. According to industry research, 75% of such on-the-go consumers take action after seeing

3 While in stores, consumers would increasingly be able to scan product bar codes to get detailed product descriptions, reviews and ratings; check inventory levels; and even see if another retailer in the area (or online) has it cheaper. Consumers also would increasingly be able to pop open apps while on the move (or stuck in traffic) and shop online. Research shows that the likelihood of sales on mobile devices is actually higher than those on desktops or laptops in part, due to the context of these exploratory sessions, when consumers are in the mood to buy. The ROAM Revolution It s this promise and potential that s driving ROAM Data s innovation push, in an attempt to stay ahead of what Graylin calls the inevitable widespread consumer and merchant adoption of mobile commerce. ROAM specializes in technology that converts cell phones and other mobile devices into secure point-of-sale terminals. ROAM solves a problem for merchants that wish to accept electronic payments but don t want to (or need to) invest in point-of-sale terminals. It turns mobile phones into mobile payments acceptance devices. ROAM also solves a big problem that has plagued mobile commerce since its inception device compatibility. Mobile commerce is all about the apps that enhance the shopping experience for merchants and consumers. It is very difficult to develop apps and peripherals that work across many operating systems environments and different devices. Android and other smart phone platforms are all different and quite fragmented there is no interoperability across all of these platforms. ROAM s mobile commerce platform enables applications and peripherals to work across Apple, Android and Blackberry operating systems and the variances of different smartphones and tablets that run on those OS s. This is tremendously important for apps developers who can expand the reach of their applications and revenue opportunities as well as small and medium-sized merchants who have the ability to choose a handset and operating system that works for them. In addition to enabling merchants to seamlessly and securely process credit, debit and cash transactions, while capturing sales tax, tips and signatures on any mobile device, ROAM s platform allows merchants to white label mobile wallets, develop, populate and update mobile storefronts and publish offers to consumers and their own websites. Upping the Ante In February, ROAM got a boost from its financial backer, Parisbased Ingenico (ING.PA), when it announced that it had upped its 43% investment in ROAM to a majority stake. Ingenico had made its original investment in November With significant fresh capital from Ingenico, we are quickly arming (our payment partners) to compete for this large new market with companies like Square, said Robert Stringer, vice president of products and marketing at ROAM, told Bloomberg BusinessWeek during an interview about the mobile payments upstart. Square is a merchant acquirer targeting small merchants that enable wireless devices to accept electronic payments and enable mobile commerce capabilities for merchants. ROAM s swipe device actually beat Square to market with encryption capabilities on mobile readers nearly two years ago, something Square just recently added. The problem with an unencrypted reader is a consumer s card data is exposed in the open mobile phone when it arrives from the reader, thus fully enabling malware or criminals to capture that data before it gets to the application. Given Square has already put out over 1 million unencrypted readers into the market, and they kept the same form factor with the latest encrypted reader, those who did not trust Square s security cannot distinguish the secure reader from the original unsecure reader. ROAM Data has long been at the forefront of payment data security, according to ROAM s GM and EVP of Marketing and Sales, Ken Paull. Since 2010, the company has been responsible for the vast majority of encrypted mobile card readers shipped by the 3

4 payments industry. ROAM intends to use the additional capital from Ingenico to increase its technology investments and R&D efforts, and expand beyond the U.S. market, particularly in Europe, where mobile payments have taken stronger hold among consumers and merchants. We are also adding a significant number of experienced people from the industry to expand ROAM s presence globally and in key industry sectors, remarked Ken Paull, in a recent interview. Our Goal, says Graylin, is to power the innovation of a lot of brands you do know and care about. + Another Industry First: NFC-enabled Swipe Devices On the heels of the Ingenico investment, ROAM announced this month it will commercialize, by mid- 2012, the industry s first device-agnostic mobile card reader that combines both near-field communication (NFC) and magnetic stripe processing capabilities. The addition of EMV chip card reader with Swipe is also planned for later this year (currently, competing readers on the market can only process one or the other). ROAM also released a video demonstration of its prototype in action. ROAM s NFC Swipe device provides end-to-end encryption to protect cardholder data processed by merchants. It s also compatible with literally hundreds of smart phones, tablets and PCs, turning them into secure mobile POS devices. ROAM s NFC Swipe, in short, transforms any smart-phone or tablet into a secure, contactless and magnetic-stripe POS, enabling a host of new applications for merchants and consumers. The device also conforms to both Visa PayWave and MasterCard PayPass specifications, the de facto standards that govern contactless payments globally. The NFC Swipe plugs into any smart-phone and tablet with a 3.5mm audio jack; it s also equipped with a micro USB interface for PCs. We ve accelerated our timetable for the commercial rollout of the NFC Swipe, in the first of what will be many new ROAM innovations in mobile payments, said Graylin. We want to help fuel the larger ecosystem with such innovations that help bridge the gap between where we are today and where NFC as an enabling payments capability may be well positioned to succeed. Unlike current smart-phones with NFC chips that read contactless cards and pass the data in the clear to the app on the phone, our NFC Swipe technology immediately encrypts the transaction data, said Graylin. The data are decrypted only after being 4

5 + Cardholder data from being attacked by malware or intentionally skimmed. In the United Kingdom, according to ROAM, there have been a growing number of cases of data theft via NFC-based contactless phones that does not provide full encryption of the track data which can be used for skimming card data. ROAM s solution mitigates this issue (See A Flexible and Scalable Mobile Platform Illustrating the portability of ROAM s secure payment platform, the Girl Scouts have been using ROAM technology to accept and process credit and debit card transactions door-to-door for cookie sales. Girl Scout troops across the country have been using the technology widely since Such growing adoption has led to a surge in ROAM s revenue; its annual sales growth has exceeded 600% over the past three years, catching the attention of not only Ingenico, but also other top global payments point of sales to mobile devices. ROAM also offers tools for developers to build their own mobile payment applications using the company s platform, while enabling merchants to use their existing merchant accounts. Leadership at the Core ROAM is but the latest entrepreneurial endeavor for Graylin in mobile payments. The first Chinese immigrant to ever serve as an officer in the U.S. Navy s Nuclear Submarine program, he has amassed a stellar track record in starting and building mobile payments technology companies. Since earning his master's from MIT in 1999, he has built ROAM Data; WAY Systems, the world's first pocket-size point-of-sale service company acquired by VeriFone; and EntitleNet, a security software provider that supports web and e-commerce applications acquired by BEA Systems, now part of Oracle. Graylin's master's thesis at MIT focused on "Addressing The Complexity of Mobile Computing," a seminal piece that set his mobile payments entrepreneurial push into motion. He holds both an MBA and a Master of Science in Electrical Engineering and Computer Science from MIT. technology players. ROAM doesn t market directly to merchants and never set out to be a consumer brand. Rather, the company s partner roster encompasses some of the industry s largest merchant service providers, including Global Payments, Sage Payment Systems, Vantiv, North American Bankcard, Total Merchant Services, Intuit, First Data, and Chase Paymentech. Our goal, says Graylin, is to power the innovation of a lot of brands you do know and care about. According to Graylin, by establishing such strong industry ties and methodically rolling out innovative technology that advances mobile payments, in short order, ROAM has become the leading mcommerce ROAM Data has long been at the forefront of payment data security, according to ROAM s GM and EVP of Marketing and Sales, Ken Paull. Since 2010, the company has been responsible for the vast majority of encrypted mobile card readers shipped by the payments industry. 5