High on the payment hog

Grunt: Pygg is an idea designed to meet a market

There are entrepreneurs who start out with a great idea then look for a market, and there are others, like Tim Howard and Rohan Lund, who go in the other direction.

“We start with the industry where there’s a bucket of money and some kind of gap or slowness in innovation in the market,” says Howard. “We look for the gap or the point of friction, and then we go in and attack from the top.”

Just over six months old, the gap they found was for a flexible web-based payment mechanism which allow friends and family to make small payments through social networking. The online payments market is already huge Australians spent $26.9 billion in web-based transactions in the last 12 months, but these were mostly consumer transactions, because as yet there isn’t a mechanism for web users to transfer small amounts of money between each other.

This is where Howard and Lund aim to make an impact.

The transfer system, called Pygg, is designed to make it possible for the 6.6 million regular facebook users, and 1.8 million twitter account holders in Australia, to transfer small amounts to their social media connections.

“The focus is on making it as simple to use as possible, and placing the transaction in a social media space,” Howard says, which means much of the complexity associated with the fraud prevention, and regulatory requirements is hidden within the software. “Fraud and risk is something we are hyper sensitive about, but it’s not something which has prevented us from entering the market.”

A little like cloud banking, Pygg users can transfer and collect small amounts of money, and it can be used for transactions like splitting a bill at a restaurant, or paying for a coffee. The funds are pooled in a single bank account and the transactions tracked through the Pygg payment gateway.

“We had been talking about the idea for a while, then mid-way through 2011 we took it to the business incubator Pollenizer, because we knew they have a good track record when it comes to rapid development,” Howard says. “It then took about three months to refine the idea and get a platform up and working.”

The Pollenizer model, where much of the technology development is outsourced, has not only enabled the company to develop quickly, it’s also made it possible for Lund and Howard to become entrepreneurs without giving up their day jobs. Lund is the chief executive office of Yahoo!7 while Howard is the chief financial officer of Vivid Wireless.

“Right now we have a board and there are a few people within Pollenizer who are working on the project,” says Howard. “In the next 12 months we want to expand the platform so that it operates on different social media platforms, and we’re looking to grow through referrals as well as distribution partners.”

And while the longer term vision is for expansion into international markets, Howard is keen to get Pygg trotting, before breaking into a run.

“We’re looking at targeting university students in O week in 2012, and then onto office workers to cover things like coffee runs,” Howard says. “In the longer terms we’ll look at geographical expansion especially into the Asian region, and of then the repatriation of funds market which is huge.”

BRW

Comments (0)