Exciting articles several times a month
24 October 2017
Ecommerce and fintech companies are increasingly taking to social networks and messengers realizing high potential of customers’ affection to texting and, accordingly, developing solutions, which bring together messaging and shopping experiences. Today we are talking to Ronald Reeser from Pagato, a startup focused on commerce and payments via chats. Ronald has kindly given us an exciting tour into the messaging-based world of commerce.
Pagato is a very unique payment service due to its chat-based model. Why chats?
Chat has long been a popular channel for customers to communicate with businesses. A trend that began 20+ years ago with firms adding online chat to their websites has accelerated in recent years with the enormous popularity of online messaging apps such as WhatsApp and Facebook Messenger.
We believe messaging presents a tremendous opportunity as a channel for commerce. This concept is now commonly referred to as conversational commerce, a term coined in a 2015 Medium post by [Chris Messina] (https://twitter.com/chrismessina) to refer to the intersection of messaging apps and shopping. Most of the attention surrounding conversational commerce has focused on chatbots. Pagato is taking a different approach by instead focusing on conversations amongst humans and providing payment tools for an emerging category: the online sales associate.
By interacting directly via messaging, the online sales associate can provide customers with a level of service similar to the attention the customer might get from a sales associate in a store. What has been missing is secure payment tools that facilitate commerce in this context.
How did you come to this idea?
In 2015, a friend was starting a chain of boutique wine stores and I was helping out with the e-commerce and local delivery pieces. After some time we observed that while local marketing efforts were driving traffic to the site, people weren’t ordering there. Instead, folks seemed to be visiting the site and then picking up the phone to order.
I started to drop in at the stores to observe things and I was immediately struck by the amount and depth of conversation that accompanied each sale: Is this dry or sweet? Does this pair well with what I’m planning for dinner? My significant other likes Wine X, can you recommend something else that he/she will like as well? Whether in the store or over the phone, each sale was a conversation. Never mind that nearly all of the above information was available on the website; people wanted to talk to a trusted expert. It was the observation that some purchase experiences are inherently conversational and as such do not fit the typical e-commerce self-service paradigm, that led to the development of Pagato. With a first customer standing by ready to dogfood the service as it was built, I began.
Where does your company operate? Which country is your key market?
Pagato is based in NYC and its initial focus is on the North American market. It can presently be used in any locale supported by a compatible payment gateway but we still have some work to do to properly internationalize the service. We plan on formally expanding to Europe with full internationalization support in early 2018.
What challenges do fintech startups face?
Pagato’s primary challenge, not really specific to fintech, is that we are not just bringing a new service to market, we are also inventing a new category. An online sales associate is not yet a thing and there is no large cohort googling for SaaS tools that enable them to sell via chat. Consequently, we have a lot of work to do to educate the market about this new paradigm and the opportunities it presents. Pagato is not so much in the business of making and selling payment solutions as we are in the business of making people better at online selling.
You list three products on your website: Checkout, Vault and Links. Could you, please, elaborate on each of them for our readers?
Checkout was our first product and remains our primary offering. It is a point-of-sale solution for conversational commerce. It allows sales agents to easily take orders via any messaging channel and then at checkout, send the customer a link that allows them to view their order and securely submit payment.
Vault is a companion product to Checkout that allows merchants to securely store payment methods on file and apply them to subsequent orders. Using Checkout and Vault together, merchants can provide repeat customers with concierge-level service and no-click checkout.
Pagato Links are a set of flexible payment solutions that address a wide variety of use cases.
The simplest link type (ex: https://paga.to/DemoStore) opens to reveal a payment form that allows the end user to specify how much they wish to pay. This is useful for simple transactions like fundraising and tip jars as well as for sharing on social media. (GoFundMe and Patreon charge 5% for fundraising; compare that with Pagato at 1%.)
For ad-hoc payments, Pagato users may create a link by specifying only the payment amount and what the payment is for. This works like a simple, reusable invoice. For example, you could create a single payment link with the information ‘$20 for lawn mowing’ and share this link with each customer whose lawn you mow, enabling them to pay you on the spot.
Finally, Pagato buy-it-now links (currently in private beta) are a familiar concept with a twist. Each inventory item in Pagato has a unique, reusable link that can be used to purchase one or more of that particular item. As you might expect, you can embed these links in your website or share them all over social media for simple single-item sales. The twist is, since all Pagato links can also be loaded by scanning a corresponding QR code, it is possible to embed Pagato buy-it-now links directly in offline media. For example, imagine you are standing in the aforementioned wine store holding a bottle of Pinot in your hand. You scan the QR code affixed to the bottle and you can pay for it directly from your phone. (Yes, QR codes have not really taken off in the west, but this is set to change as iOS11 has the QR code reader integrated into the native camera.)
Who is your target customer? Who may connect to your platform?
Pagato’s initial target market is e-commerce merchants. More specifically, we are going after e-commerce merchants that have already installed online chat software on their sites or otherwise indicated that they are communicating with customers via messaging.
What do your clients need to get connected? Do they need any special hardware or software?
In order to use Pagato, clients need an account with a supported e-commerce payment gateway. We presently support Stripe, Braintree, and QuickBooks Payments. This keeps payments secure and it also simplifies reporting, as transactions processed via Pagato appear in the payment gateway alongside transactions from other channels.
How shoppers may pay through the chats? Are there any restrictions on payment options: credit or debit cards?
Pagato presently supports payments via credit, debit, and PayPal, depending on the capabilities of the connected payment gateway.
Could you, please, tell us about your rates? Are there any incentives for your customers?
Pagato charges a 1% fee per transaction, billed monthly. There are no up-front costs, monthly fees, or other hidden fees. Also, fees are waived on the first $1000 USD processed, so it is possible to try Pagato with no risk.
How do you ensure security for transaction parties?
Pagato leverages client-side tokenization features offered by modern payment gateways to collect payment information in a secure manner. Payment information is captured (and optionally stored) directly by the gateway and is never handled by Pagato. Additionally, all non-payment customer information captured by Pagato is encrypted before being stored.
Tell us, please, where do you see your company in next several years?
We have an enormous amount of work to do to educate the marketplace about the value of online consultative sales. It is hard to imagine any point when we will be able to call that effort ‘done’. We will certainly be at it for the next several years.
The other thing we will be doing a lot of is integrations. We will soon announce turn-key integrations with some of the most popular support chat and helpdesk providers, enabling agents on these platforms to take orders and accept payments in the same place they are already communicating with their customers. Following that, look for an announcement of an integration and distribution arrangement with a major e-commerce platform–the first of many to come.
Exciting articles several times a month