GoPago makes its own pitch in the mobile payments ball game

Lucky Dogs using GoPago's new
Image Credit: Rocky Agrawal

Lucky Dogs using GoPago's new GoPago Live systemWhen it comes to launching, it helps to have a great pitch man. GoPago does, in San Francisco Giants pitcher Tim Lincecum, who has been touting the startup on his Facebook page. He’s handing out $10 credit at hundred of restaurants in San Francisco. (According to Lincecum’s Facebook page, 30,000 fans received a free lunch.)

Now, GoPago is making a big pivot, and Square is getting yet another competitor. GoPago this morning announced GoPago Live, a complete point-of-sale and payments system that it’s offering for free. According to CEO Leo Rocco, GoPago received its entire Series A funding from Chase, which is also an investor in Square. According to a filing with the Alaska Department of Commerce reported by Business Insider, Chase owns 5% of Square.

GoPago is offering small businesses a complete setup, including a 4G Android tablet, card reader, cash register, receipt printer, and cash drawer for the low, low price of free. GoPago is charging small businesses 2.85% for credit and debit card transactions, a nominal surcharge to the 2.75% rate that Square charges. GoPago also covers the cost of the data connectivity.

GoPago Live represents a substantial pivot from its previous offering, an app that allowed iPhone and Android users to order food remotely for pick up. Those features are still available — users can order from the app and the order shows up immediately on the restaurant’s GoPago Live POS system. The restaurant can then send the order to the ticket printer.

The new payments plan is audacious in its ambition. Here’s a (very) partial list of GoPago’s competitors: Square, PayPal Here, VeriFone Sail, GrubHub, Groupon, Seamless, Eat24Hours, NCR Silver, Micros, Perkville, and Belly.

(Disclosure: I have small positions in VeriFone and Micros.)

I sat down with Rocco and Aric Doo of Lucky Dogs (pictured) to discuss the new offering. Doo has been testing GoPago Live at his hot dog store in the Marina district in San Francisco. (The chili cheese dog that GoPago’s product manager bought for me with their app was delicious.)

Doo had previously used Square on an iPad and had a cash register. Lucky Dogs was burgled recently and all of that was stolen. The free use of hardware from GoPago made it easy to get back to taking payments. Based on the hardware GoPago provided, I estimate the cost at $1,000 to $1,500.

“Those days of paying thousands of dollars for point of sale is over,” Rocco said.

Rocco previously worked at IBM developing technology for retailers like Wal-Mart. His goal with GoPago is to bring that kind of technology to small businesses.

“We didn’t think that just replacing credit cards was enough of a value proposition,” Rocco said. “It’s time to level the playing field.”

GoPago Live is open to all businesses in the United States with an EIN and a good business standing with Dun & Bradstreet. There is no minimum revenue requirement. But the sales efforts will be focused on San Francisco and Dallas.

Rocco says that providing the whole solution, including the hardware, makes it easier for the company to provide customer support and to ensure that the solution works. Instead of using a wireless receipt printer, like Square offers, GoPago uses a wired printer. That’s a pain that Doo has felt. He said that with his Square solution, tickets didn’t print about half the time. Square pushed him off to the printer’s manufacturer for support. The manufacturer wasn’t helpful. (Square did not respond to a request for comment on Doo’s issues.)

“I don’t want to worry about this,” Doo said. “This is just a tool for me to make money.”

Rocco views the technology as a tool, not the endgame for businesses.

“Last time I checked, a beautiful cash register didn’t pay the rent,” Rocco said, taking a swipe at Square.

Critical for small businesses, Rocco says GoPago is providing 24/7 support. If a POS system isn’t working, GoPago can replace it in about an hour in a market like San Francisco where it has staff.

He considers GoPago well positioned against Groupon. “I don’t even know where he’s going,” Rocco said of Groupon CEO Andrew Mason. “They’re going in 100 different directions.” He says Groupon has burned its capital with merchants.

(Disclosure:  I have various puts against Groupon and Yelp.)

Doo, who ran a Groupon, agreed. “I don’t even talk to them anymore.”

The application also provides customer relationship management and sales reporting features. For example, Lucky Dogs can send targeted offers to its customers.

Although transactions at the register are 2.85%, if a customer orders through the mobile app, those transactions are charged at 5%. That’s still significantly cheaper than competitors that charge 10%-30%.

GoPago currently has more than 70 employees, with 14 in sales.

When it comes to local, I’ve always said that the trick is striking the right balance in value between consumers, the company, and merchants. Notably, Yelp and Groupon screw merchants while driving value for themselves and consumers. GoPago has built an extremely compelling offer for merchants and is also delivering good value for consumers.

My big question is whether they can make any money doing it. Based on my estimates, there’s no way they will ever make money off Doo at Lucky Dogs.

Rocco acknowledged that if every business in the system were like Lucky Dogs, the model wouldn’t work. But their dogs are delicious. And having signature businesses like Lucky Dogs can help flesh out the network.

For the next 48 hours, VentureBeat readers who download the app can use the promo code “rakeshlobster” for $10 off a GoPago purchase.