DMN: What’s the future of money? Richardson’s Modo is connecting the dots

Originally published in The Dallas Morning News 

Bruce Parker’s obsession is an invisible technology that you use each day, but rarely think about: payment systems that shuffle money around after you swipe your credit card, reimburse your friend through an app or make an online purchase. Parker — a self-described payments geek — is the founder and CEO of ModoPayments. That’s short for “mobile does” or “more dough.”

Modo acts as like a payment plumber. It uses a transaction system called COIN to connect financial services companies or other sources of value with digital payment tools. It connects old and new payment systems and can integrate loyalty programs. Its list of clients includes Bank of America, VeriFone and European financial tech startup Klarna.

Bruce Parker started ModoPayments after researching how mobile payments were changing the payments industry.(Brandon Wade/Special Contributor)
Bruce Parker started ModoPayments after researching how mobile payments were changing the payments industry.
(Brandon Wade/Special Contributor)

Parker began the company in 2010 thinking it would help brands build their own payment app, like Starbucks did. But over time,  when it became clear that few customers were ditching their plastic credit cards for phone payment apps like Apple Pay, Modo pivoted. It lopped off the consumer-facing part and decided to sell “the engine that converted value,” which was the COIN system.

Modo has raised about $11.6 million from strategic partners and investors.  It was used for about $10 million of transactions in January, but Parker said he’d like to see that grow to $85 million per month by December.

Parker spoke about the startup’s growth at Modo’s Richardson office. His answers have been edited for brevity and clarity.

How did you become an entrepreneur?

I was the head of strategy for the largest payment software company in the world — ACI Worldwide. I was asked by the board of directors to do a review of the impact of mobile on the payments industry. And they never took the briefing. I spent over a year on this, with this big team and we were studying all of these different issues.

I was the classic frustrated corporate dude who had some insights, some ideas and some experiences, and it took me a full year to get up the gumption to quit over this. I finally decided something was going to happen. I needed to be a part of it, and that was ultimately when I left.

What does Modo do? How do you typically explain it to a newbie?

Every form of payment you can think of started as paper. All of the computer systems that deal with that stuff follow the same path. They think in terms of ‘I’m going to bring all of this stuff in, dump it on the desk and figure out what to do with it.’ That’s batch processing. It’s a very industrial kind of thing.

We enable people to say ‘You can have as many participants in payment as you want and you can add them whenever you want.’ You can verify that someone has good money before you go down the path of trying to exchange value. We can figure out ‘This person has loyalty points. This person has a gift card. And this person has goats, whatever it is’ — and we can make sure everyone agrees on what that value is.

Give me an example of a client and how they use you.

For Bank of America, we’re connecting a system that sends payments between companies and individuals. The most compelling example is sending value between Google [which owns YouTube] and somebody who’s posted a video on YouTube. When those folks were from North America, that was very, very easy. Send them a check. Ask them for their bank details.

Now, we’ve got people in Indonesia, the Philippines and all over the world posting videos to YouTube and they’re going viral. All the sudden YouTube needs to pay that person and they may not even have a bank account. If they’re in Indonesia, they may be on a different island from where there is a bank. What we’re doing is we’re connecting that disbursements platform to an individual anywhere around the world. We are going to use PayPal, AliPay, M-Pesa and 117 other digital payments networks around the world that those consumers may or may not already participate in. That person in Indonesia can use their version of Paypal — Dompetku — and they can say, ‘Oh, I got paid from my Youtube video’ instead of having to figure out, ‘How do I take the check to the bank?’ or ‘How do I provide bank details, which I may or may not even have?’

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