Not all new ideas for technology have to be, well, new.
As the start-ups around it tinkered with the cutting edge, a Reston company called GeoPay stuck by decades-old technology — the same used in messaging systems that led to the earliest cellphones — to create a mobile-banking platform.
The start-up, founded in 2011, provides cellphone-based banking services for people who might not otherwise have accounts at financial institutions. The simpler the interface, the more people the system could reach in the developing world, GeoPay said.
“Right away, we wanted to take advantage of older, but extremely well-deployed technology,” said Sean Kidder, chief technology officer of GeoPay. “For us, it’s about how many customers we can reach, not whether someone who’s hip and cool may turn their nose up at the technology we’re using.”
GeoPay introduced mobile banking to Kyrgyzstan, in central Asia, in October. Since then, more than 40,000 people, 2,000 merchants and 80 bank branches have signed up.
This is how the system works: Consumers add money to their online accounts using existing kiosks — the same machines they would use to add funds to pay-as-you-go cellphone plans. The money is associated with an individual’s mobile-phone number, and it can be used to pay bills or buy goods and services using a messaging-based system.
“It’s essentially like text-messaging the transaction to a merchant or to a peer,” said Darren Feeley, founder and chief executive of GeoPay. “The beauty of this is that it provides lightweight, basic financial services for those who ordinarily would not have them.”
Most transactions are $10 to $20, Feeley said. There is no charge for mobile-to-mobile transfers, but cash withdrawals, which typically take place at banks, carry a 1.5 percent fee.
Feeley said GeoPay not only ensures that a person’s money is safe — funds are insured — but also acclimates users to the idea of leaving their money with financial institutions.
“If you lose your wallet with cash, it’s gone,” he said. “If you lose your phone, we can always reverse the transaction or credit it to your new phone number, or whatever it is. There’s a lot more flexibility in the digital world.”
Programs similar to GeoPay have been introduced in other countries, as well. Standard Bank of South Africa and Dutch-Bangla Bank in Bangladesh have created mobile-banking apps, and the British Department for International Development has ongoing efforts to encourage the rise of phone-based banking.
Feeley, who used to work for AOL’s payments and acquisitions group, said he got the idea for GeoPay a few years ago. He recruited a team that consisted largely of former AOL colleagues and got to work.
It took about a year to develop and test a prototype for GeoPay. The first step, Kidder said, was to establish the app’s core functions: How would money be deposited? Where would the funds go? What would a phone-to-phone transfer look like?
“We had a lot of strong plumbing to build,” Kidder said. “After that, we just layered new user interfaces on top. In terms of the coding, it’s pretty straightforward.”
The company offers more complex programs for tablet and Internet users, and it has an intricate cloud-based system for processing and securing transactions. But for the most part, GeoPay relies on text messages, which even the simplest of mobile phones can access.
The small population of Kyrgyzstan — roughly 5.5 million — and the prevalence of pay-as-you-go cellphone services there made it a particularly good place to start, Feeley said. In August 2011, the company opened an outpost in Kyrgyzstan and hired nine employees to oversee the marketing and management of GeoPay.
“We wanted to start in a market that was smaller so we could turn the dials and fine-tune the product, the marketing and the consumer experience before we go to the next level,” Feeley said.
By the end of this year, the company plans to expand to Kazakhstan, Russia and the United States, where 20 percent of adults do not have bank accounts, according to Federal Deposit Insurance Corp. data.
For now, funds from all GeoPay accounts are pooled behind-the-scenes into one aggregate bank account. Eventually, Feeley said, users will be able to link individual checking accounts to their mobile phones.
“That would provide a true mobile wallet for people who do have bank accounts,” Feeley said, “and also provide traditional financial institutions the ability to sell to our consumers or promote their products and graduate that consumer up into a financial facility.”
The company is constantly updating its platform, Feeley said. He plans to add loyalty programs for frequent users and to partner with daily deals sites to offer location-based deals to GeoPay users. Feeley would not discuss revenue figures, but he said he and others had invested more than $1 million in the company to date.
The biggest challenge, he said, is marketing the system to customers and merchants who may be wary of financial institutions and traditional fee structures. There are other limitations, too. Phone lines can go down. Kiosks can stop working.
“No matter how you’re trying to connect to something, there are third parties, and you’re sometimes only as good as they are,” Feeley said. “That could be a mobile operator, that could be an Internet provider, that could be a banking system or a kiosk. There are all kinds of things that can go wrong.”
But, he added, there is plenty of room to grow, particularly given that one-third of the world’s population does not have bank accounts, according to the World Bank.
“This is going to evolve,” Feeley said. “We’re only in the infant stages of mobile banking.”