Startups fight over money-transfer technology
BY SANDRA GUY Business Reporteremail@example.com December 7, 2012 5:30PM
Updated: January 9, 2013 6:09AM
Two Chicago startups are in a court battle over who owns a money-transfer technology before they’ve even introduced a product.
POMS, named for “payment over mobile solutions,” claims it developed technology to let people transfer money in real time onto pre-paid cards from a retail checkout counter or on a web or mobile device at cheaper rates than those of Western Union or MoneyGram. The technology is aimed at helping people who have no bank accounts or little access to them.
POMS obtained a temporary restraining order this week against its rival, Pangea, that kept Pangea from pitching its business plan to investors at tech accelerator Impact Engine’s “Investor Day” event on Dec. 5. Impact Engine is a for-profit accelerator that supports startups that solve major societal and environmental issues such as water shortages or rural poverty. The other seven members of the accelerator’s first class, besides Pangea, presented business ideas ranging from a water filtration technology for people in developing countries to a system to help big retailers buy fashions from struggling overseas artisans.
Thomas Buchar, co-founder and interim CEO of POMS, alleged Friday that his company’s co-founder, Rahier Rahman, conspired with POMS’ former business development executive Kyle Stoner to take POMS’ technology, trade secrets, business plans and employees for their own company.
“We have a product,” Buchar said. “You can’t just go steal my Intellectual Property and my ideas.”
POMS, which started in business in June 2011, spent $700,000 to set up its operations.
POMS also says it was first to be accepted into Internet Engine’s inaugural class, but Pangea’s Rahman undermined that effort, too.
Pangea’s attorney said the company intends to prove its case in court.
“Pangea is an exciting new company developing a new service to the under-banked community,” said Doug Rees, partner at law firm Jenner & Block. “We intend to present facts showing that POMS’ allegations are not true.”
The case is in Cook County Circuit Court.
POMS expects to release its product in early 2013 at Preway Sales, a prepaid card distributor in the Southeastern United States, and with two partners in Mexico whose names are not being revealed.
Pangea’s new payment platform is being developed now, Rees said.
A pre-paid card for the so-called “under-banked” is a potentially big market. The Chicago-based Center for Financial Services Innovation reports the people who resort to emergency funds outside of a bank paid a combined $78 billion in 2011 in interest and fees when they used prepaid cards, online payday loans, subprime credit cards and other financial services. That number is expected to jump to $85 billion this year. The cards themselves generated $1.6 billion in revenue in 2011, up 22 percent from 2010.