PayByCar has built a new, contactless method to pay for gas that does not require handling cash, cards, or tapping any apps. PayByCar leverages the tech behind the 20-year-old electronic toll collection system to transform vehicles into the ultimate payment device. PayByCar’s partnership with the E-ZPass Group (24 tolling agencies across 18 states) allows vehicles to use their existing E-Zpass transponders and smartphones to serve as a form of identification at gas stations. Drivers that pull into partnering gas stations will get a notification on their phone asking them if they would like to “pay via PayByCar”. Once the user approves, PayByCar will keep track of how much gas is purchased, text the total amount, and charge the payment directly to the user’s preferred payment method.
Boston TechWatch caught up with CEO and Founder Kevin Condon to learn more about PayByCar and the opportunities to expand beyond gas payments to drive-thru food, curbside pick-up, commercial parking, and the rest of the in-vehicle economy.
How much did you raise?
Pre-Seed round, $2M in convertible notes.
What inspired the start of PayByCar?
The original idea was for a green policy – that if one could recognize a vehicle at the point-of-sale during re-fueling it would enable a variable gas tax based on factors like the specific vehicle’s fuel efficiency – to leverage gas price sensitivity to spur adoption of fuel-efficient vehicles. That’s still a great idea but not a business model. However, the same concept of integrating 3 elements – vehicle ID at the point-of-sale integrated with the driver’s preferred payment card or wallet, and the retailer’s POS system would make a very simple, secure, and fast in-vehicle payment process.
How is PayByCar different?
Our approach is the take the path of least resistance by leveraging existing behavior and technology in a way that can later support newer tech as it comes online. For consumers, that means leveraging what is arguably the first “contactless payment” around – electronic toll collection, which has been around for over 20 years.
There are 65M+ toll tags in use in the US, not counting millions of non-toll RFID tags in use, and people get it. PayByCar took a less-traveled path by pursuing an agreement with the E-ZPass Group, the coalition of toll agencies spread across 18 states, to use E-ZPass tags (there are 45M of them) for the vehicle ID component. And for payment, rather than requiring yet another app download by consumers, we leverage another even more widely adopted app on everyone’s phone: texting for “pay-by-text”. The charge goes directly over the merchant’s rails to the wallet designated by the consumer.
What market does PayByCar target and how big is it?
US consumers spend hundreds of millions of dollars from their vehicles, including over $600B for fuel alone. Add the growing billions spent on drive-thru food, curbside pick-up, and commercial parking and the total in-vehicle economy is close to $1T dollars.
What’s your business model?
A combination of monthly CaaS fees from retailers and, depending on the use case, convenience fees from consumers.
How has COVID-19 impacted the business?
Since Covid-19, “contactless” or “touchless” payment is top-of-mind for consumers and retailers alike, so educating retailers and consumers on that is no longer necessary. On a direct level, the pandemic slowed the schedule of our roll-out as stay-at-home efforts meant a pause in our in-field work. In addition, it delayed for a bit our fundraising.
What was the funding process like?
We’ve taken the approach of “build as you raise”. Our pre-seed round of $2M was spread over time, with the size of the individual convertible notes growing as we went along.
What are the biggest challenges that you faced while raising capital?
PayByCar is a “big idea”and getting investors to see not only the “rainbow on the wall” vision but also the practical path to making that vision reality is difficult. Fortunately, there are investors capable of seeing what we see. We’ve continued to hit major milestones like signing agreements with the multi-state E-ZPass Group and major retailers to do paid pilots.
What factors about your business led your investors to write the check?
PayByCar is an easy idea to understand. Almost all of us are motorists, and we know how friction-filled and fragmented the in-vehicle payment process is. So, the PayByCar solution is easy to relate to personally.
Investors also have responded favorably to our ability to do what had never been done before – get the 24 tolling agencies across 18 states to unanimously agree to undertake what they call the “non-toll services” project.
What are the milestones you plan to achieve in the next six months?
Scaling-up in MA and NC, where our first two pilots are, and expanding into other states. In addition, we are in active discussions to take PayByCar beyond our first use case (buying gas) to curbside pick-up, drive-thru food, and commercial parking.
In addition, we are in active discussions to take PayByCar beyond our first use case (buying gas) to curbside pick-up, drive-thru food, and commercial parking.
What advice can you offer companies in Boston that do not have a fresh injection of capital in the bank?
Slow the spend, grow the investor out-reach. Don’t say “no” for them, whether investors or customers.
Where do you see the company going now over the near term?
Up! Generally, that is.
What is your favorite restaurant in Boston?
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