$2.7b Powa play? I just do not get it

It seems no time ago that I was the grateful recipient of a days corporate hospitality at Chester Racecourse, courtesy of mobile payments platform, MPayMe. The occasion: the UK launch of MPayMe's ZNAP. I have written elsewhere that there were few better ways to spend a Saturday in late August, writes Douglas Blakey

$2.7b Powa play? I just do not get it

It seems no time ago that I was the grateful recipient of a days corporate hospitality at Chester Racecourse, courtesy of mobile payments platform, MPayMe. The occasion: the UK launch of MPayMe’s ZNAP. I have written elsewhere that there were few better ways to spend a Saturday in late August, writes Douglas Blakey

The press party were each gifted Sony Experia handsets loads with the ZNAP app that enabled a limitless supply of drinks to be delivered within the private box at the races.

Chuck into the mix convivial company, the picturesque setting of Chester and loads of banking and payments gossip and a free bet, courtesy of the sponsors.

That is a lot of words to say that the app worked and that a good time was had by all.

Accordingly, it was with heavy heart and a modicum of a guilty conscience, having enjoyed the day out, that I wrote on The Digital Banking Club site in March, that ZNAP progress post-launch seemed to be ‘pedestrian’ and that I was ‘sceptical’ about its chances of success.

The premise of ZNAP was sound: it was more than just a method of making payments and agreed that in isolation, mobile payments solve a problem that doesn’t exist – making payments.

So ZNAP was designed to do more than give the punter a new way of buying a coffee – it offered an app to pay bills, use multiple coupons and loyalty cards.

Now ZNAP is no more with MPayMe being snapped up today by Dan Wagner’s Powa Technologies in exchange for 3% of Powa’s stock.

According to Wagner, Powa is worth a whopping $2.7bn. To say that I nearly fell off my seat in the train on learning that Powa was valuing itself at $2.7bn would be an understatement.

Wagner is a business journalists dream; controversial, outspoken and with form for the unpredictable such as his famous donning of a Donald Duck waistcoat for an IPO publicity shoot.

What is not in dispute is that Wagner is a genius at raising capital such as the $98m raised last year ahead of Powa’s launch.

It has been on a hiring (and firing spree according to its detractors) ever since, secured prestige office space in The Heron Tower and ramped up its slick sales operation, signing up around 500 retailers at the latest count.

If things go to plan, expect to see PowaTags springing up in newspapers and mags, on websites and in-store by way of Powa codes next to product displays. Wagner also plans to add Beacons in-store so that users will receive Bluetooth alerts.

For their part, merchants will receive an alert when you walk into a store.

The jury is out as regards how much consumer demand there will be for QR codes.

I remain of the view that QR codes are a solution for which there is questionable mass market demand.

Revenue at Powa remains modest; of the 500 retailers signed up, only one seems to have gone live.

I just cannot quite equate what we hear about its set up with a $2.7bn valuation.

Wagner does not have any pressing need to go down the IPO route or keep venture capitalists happy by selling out; he has talked about a possible float some time before next April.

The prospectus for any such flotation will make fascinating reading; quite what MPayMe’s 3% will be worth by next April is not something I am brave enough to guestimate.