Ever since my conversation with Alex last week, I've been pondering one thing he said in particular:
"We’ve built out our system in a way that allows us to deliver bill payments cheaper than absolutely any other person, any other company, in this country. And we have patents around that process, so we’re the only ones who can do those things. It allows us, where other companies and banks, it costs them, so the bank will usually pay somewhere between $50 and $60 a year per every customer who uses their online bill pay service, on average, for us the cost is significantly less."
What patents, and what process?
Believe it or not, in a former life I was an aspiring lawyer and have always loved digging into the minutiae of these things, so I visited the US Patent and Trademark Office's website to see what I could see. By searching for "precash," Evolve Money's parent company, I found 6 patents which are registered to Mssrs. Randy Templeton, Matt Callanan, and David Resnick:
"David Resnick (Resnick) was the founder of PreNet (previously known as PreCash) and a member of its board of directors. In 2001, to recapitalize PreNet, Resnick sold his PreNet stock to KCI for $3.165 million. KCI distributed the stock to investors."
As I dug into the 6 patents, my first reactions was, "these guys are jokers." It appears that the inventors were claiming to have invented the storage of value. There was a lot of language like this:
"With this approach, the end-user stores value on the end-user's account and the end-user account is decremented when the end-user actually purchases or uses the particular good or service."
In other words they were claiming to have invented "currency:" the end user has a thing of value they exchange for goods and services at the time of purchase or use.
Then when I got to the 5th patent I was blown away. It appears to me that the process patented by PreCash is something like the process used by Square Cash, whereby a charge to one debit card is treated as a refund to another debit card. As patent #8086530 states:
"The present invention leverages the existing financial network that is used around the world for credit card transactions, but it uses that existing system "backwards" in that payments are received, rather than credit extended, at the merchant point-of-sale. Interfacing to the existing world-wide network, e.g. VisaNet or another card association network, in this new way allows payments to be received at any of literally millions of merchant locations that are coupled to the network, thus providing extraordinary convenience for the end-user. The payments are posted to an intermediary account maintained on the centralized payment system."
Patent trolls have been in the news a lot lately, but if, and it's a big "if," these folks actually were the first ones to realize that merchant payment terminals could be used to route payments backwards through the payment network, then they're heroes.
Alternatively, they might just be patent trolls. What say you?