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Boston: The next generation payments hub

Posted by Chad O'Connor  May 6, 2013 11:00 AM

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[Editor's Note: Join former Global Business Hub editors Devin Cole and Meg Reilly at Lir on Boylston Street on May 9th for the "Toast the Press" event to show some #journolove]

New England is a hub for innovation and residents are notably proud of the important technological developments born in our backyard. We’ve dominated the biotech and enterprise software markets, so what’s the next industry to create big waves in New England’s innovation pool? Financial technology.

There is an evident uptick in the number of mobile commerce companies that have evolved in Boston and the surrounding areas in the past few years, and for good reason. Boston is often overshadowed by Silicon Valley as a hotbed for tech startups because of some amazing companies that flourished out West and are now pillars of entrepreneurship. The difference is that Boston is earning a much stronger reputation for developing technology that bridges the on and offline worlds. Local innovations in the robotics and medical device industries are two good examples of that.

When you add Boston’s strong collegiate and entrepreneurial roots into that equation, along with a general population that is more than willing to experiment with new technology, you can see why it’s been an ideal place for many disruptive payments startups to grow and thrive. What’s more, savvy merchants catering to the college and high-tech crowds know that a cash-only business is shocking to these types of customers and will deter them from setting foot in the door. Together, these factors are causing a visible shift around town that you can see on counters of local businesses such as Berry Line, Magic Beans, Sebastian’s, Sweet, and Voltage Coffee that have been eager to adopt new, locally-grown technology to support New England’s innovation economy and cater to their customers.

Next generation payments technology offers a variety of solutions to renovate the typical in-store, cash-only business or jazz up the clunky, old-school register on the counter, and local companies are popping-up to address many different stages of the payment process. As a consumer, handing over a credit card and providing a signature or PIN is pretty seamless, so you may not realize that there are different stages of the payment process. But behind the scenes, there are multiple players involved to handle things like gift cards, loyalty programs, the seemingly simple process of clearing the transaction with your bank, and emerging features like business analytics and mobile payments.

Startups all around New England are innovating in these areas to create a better shopping experience for merchants and consumers. For instance, CashStar, out of Portland, ME developed the first digital gifting and incentives platform that’s used by many leading retailers and restaurant chains to give customers the option of emailing personalized gift cards. Mobile payment apps have been pretty hot too, such as LevelUp, the loyalty and payments app developed by SCVNGR in Cambridge, or the white-label mobile wallet and payments solution developed by Paydiant in Wellesley.

Other payments startups in the area have already built their ideas into successful and attractive businesses causing them to be snapped up by the likes of Google, eBay and Intuit. Where.com, Boston-bred mobile commerce discovery application was acquired by eBay and is now part of the auction giant’s PayPal unit, while Intuit bought the mobile checkout app AisleBuyer last spring, and Google purchased Cambridge’s Incentive Targeting, a self-service app for behaviorally targeted promotions.

These payment applications give businesses incredibly useful sales and marketing tools, as well as analytics at various points of the customer experience. One of the main reasons I founded Leaf in Cambridge was to make life easier for small businesses by tying all of these efforts together with an open platform. Our tablets replace cash registers and give business owners a smart, cloud-based platform to leverage all the innovation taking place in the payments industry. They can monitor their business from anywhere, giving them real-time access to a wealth of knowledge that was once out of reach and leveling the playing field with big box stores.

It’s an exciting time in the payment industry and the wave of innovation shows no signs of slowing down. Our local innovation community is taking a holistic, first-mover approach, and our residents are hungry to take advantage of smart technology at their fingertips. Together, these factors are positioning Greater Boston to become a true hub of payments.

Aron Schwarzkopf is CEO of Leaf, a Cambridge based next generation payments leader.

This blog is not written or edited by Boston.com or the Boston Globe.
The author is solely responsible for the content.

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