Do you have a wallet full of rewards credit cards, but don't have any idea how to best earn enough points to take advantage of those rewards? A few days ago, Wallaby (http://www.walla.by) the latest startup out of Los Angeles technology incubator MuckerLab unveiled itself, to solve just that problem. We spoke with founder Matthew Goldman about the startup.
What is Wallaby?
Matthew Goldman: We're helping people to simplify the decision they make when they pay for products. We're bringing a new level of automation and intelligence to payment networks.
What does that look like to a consumer?
Matthew Goldman: Initially, we're providing a card that allow users to access a digital wallet in the cloud. They use our card whenever they shop offline, and they don't have to have the right phone with the right carrier, or the right bank with something like Google Wallet. Mobile payments are very cool, but they have lots of requirements. What we have, is a card you can use anywhere major credit cards are being accepted, and the advantage is we help people make smart decisions. For example, maybe you can earn more in cash back if you use your Visa instead of your Mastercard, assuming you want more cash back, and you can also do cool things like automatically checking into Foursquare ot Tweeting when you charge your card. It makes things you do, and places you go accessible to the Internet, should you choose.
Is this something that behaves exactly like a credit card?
Matthew Goldman: It's something that looks and behaves exactly like a credit card. To merchants, what is in your wallet looks just like a regular credit card. But, it's not a new line of credit, and it's not a new account. It's just an access point for all of the other cards I your wallet.
What's your background and how did you get into this?
Matthew Goldman: All of my payment background I spent at Green Dot. I was there for three years, from 2006 to 2009, in product management and working with retailers launching programs. I was on the launch team for Walmart, Kmart, and others, and helped improve the program with major retailers. We went through our major growth when I was there. That really helped me understand a lot about payments. For the last three years, I was at Yellowpages.com, working on ad technology, which is an important part of the components and what we're doing to scale to help merchants and cardholders connect on offers. Personally, I love credit card points. I've always thought it's been complicated, and there has to be a better way to deal with them. I have thought about this as I have listened to couples having conversations at the check out register talking about which cards they should use, trying to figure out which rewards card to use, what interest rates they want to pay, and current balances. I thought—instead of having to think through all of that on the go, why not use a computer to make the decision for you, and take advantage of that?
Is there any additional transaction cost for your service?
Matthew Goldman: There is no additional cost to the merchant or the user on a transaction basis. As we slowly roll out the product, we plan to be a subscription service with a low annual fee, and no extra transaction costs for merchants or users.
Was it difficult to figure out legal and security issues with something like this?
Matthew Goldman: That is something we bring to the table, especially with my background at Green Dot. I learned a lot, and had gone through a lot. We even have a regulatory and monetary council to help us figure these things out. If you're a startup building an iPhone app for social media, you don't need an extra council. We've also developed our program so that we'll keep very light on regulatory concerns, because we're not a new account, not giving you new credit, and we're making transactions very well defined so that they're manageable. Plus, unlike a Green Dot or 24/7 Card, where you have to accept cash, which makes it much more complex, we are able to avoid much of the regulatory and compliance overhead and complications.
As you launch, will anyone be able to sign up?
Matthew Goldman: It will be a very slow rollout, and as we get people on the list, we'll try to learn a bit more about our users and talk to them before, so we're ready when we roll out the card. It will probably be towards the end of the year when we get the first thousand people to actually have a card in their hands. Before we do that and go live, we'l be asking the for their name, email, and cards they have, but not personal info, because until we're ready to issue them a wallet, we don't want them to have to give us their personal data. Once you have a spot on the list, we'll send you to a private signup page, and you tell us about things in your wallet, so that we can make sure you are who you say you are, verify your identity, and mail you a card.
Finally, who's the ideal user for the service?
Matthew Goldman: We've gone and done some market research on people with cards, and people have lots of credit cards. On average, people have 3.5 credit cards, and three out of four people have rewards cards. People know this is a problem, and that it's overwhelmingly complicated, and we want to help. We're hearing lots of feedback that there is an advantage of having just one card to carry in your wallet.