Brand Reps, Boba, and Bylaws
By Kalan K. Birnie and Ethan Tan
You’ve probably seen the ads on Instagram, handbills around campus, or heard about it from your friends and asked yourself, “What the heck is iWallet? Is it like Apple Pay?”
The answer is no. Although iWallet may sound like a new Apple feature, iWallet is not a brainchild of Palo Alto visionaries. It has its roots in USF’s backyard — quite literally.
What is iWallet?
Simply put, iWallet, which was created by Jim Kolchin, a self-described “serial entrepreneur,” is a payment processing system which uses QR codes. Users scan a QR code at a merchant’s register, which then allows the user to select how much money to transfer from their bank accounts directly to the merchant.
iWallet is comparable to other payment platforms such as Venmo and Apple Pay, though Kolchin’s aim is to “disrupt the world of payment.” He hopes to circumvent traditional payment terminals (credit card readers) and relieve merchants of traditional transaction fees, which he claims is “killing small businesses.”
When asked about what inspired him to pursue iWallet, Kolchin said that he was inspired by China’s adoption of mobile wallets and sees that as the future of mobile payment technology. In an article he wrote for Forbes, Kolchin advocated for mobile wallets, noting that they are safer than traditional wallets and credit cards.
How does iWallet operate?
iWallet is focused on merchants and small businesses along or near Geary Boulevard, USF’s neighborhood. Kolchin chose to target the Geary corridor because he saw that many merchants were closing shops in the area — he hypothesized that small businesses were cracking under the weight of processing fees charged by major credit card companies.
According to Kolchin, iWallet looks to help these shops by not charging transaction fees, which are a major revenue source for credit card companies. Kolchin believes waiving transaction fees is the solution to help “revitalize the Geary corridor.”
The company is not currently turning a profit, a common predicament for new start-ups. Kolchin recently sold his previous start-up, ReSharp, an automated knife sharpener, and is currently using money from that deal to fund iWallet — he has invested $500,000 of his own money into the endeavor. He has not taken any venture capital money but said that he has “received offers.”
Similar to Venmo, Kolchin’s plan for profit involves using funds in users’ account balances to sell insurance packages, finance loans, or purchase other items of financial securities. And like other payment apps, iWallet will collect user data to analyze spending habits.
Kolchin told the Foghorn that he plans to use iWallet user data to examine whether users are creditworthy, as he eventually wants to create a “financial services company” that invests in other companies or provides loans to individuals or businesses.
It was not clear whether Kolchin intends to sell this data.
At the time of press, 34 merchants have signed up to use iWallet. Some accepted iWallet very quickly, as Kolchin provides the necessary equipment and assists with the setup.
Some merchants took more time to convince. Mo’z Cafe, for example, took more than three months to persuade, Kolchin admits.
Kolchin admits that iWallet “might never make it” and its “chances are low, but we’re trying hard to survive […] struggling and searching to make the world a better place.”
What’s iWallet’s relationship with USF?
Many students first encountered iWallet through the merchandise and promotional material the company has distributed. From silicone phone wallets to countless handbills, iWallet seems to be everywhere on campus. One would be forgiven for assuming USF has partnered with iWallet, especially as their promotional materials imply that USF is intertwined with the business. One iWallet’s handbill says “USF is changing the world with iWallet” and encourages students to “Support USF” by signing up for iWallet.
iWallet has been an official sponsor of Dons Athletics since September 2019. Dons Athletics endorsements are managed by Van Wagner Sports and Entertainment, a third-party firm contracted by the University. Van Wagner and Dons Athletics declined to comment on the terms of the sponsorship, including whether or not iWallet receives any perks. Kolchin did reveal, however, that they signed a one-year contract.
Beyond the athletics sponsorship, iWallet does not maintain any official ties with USF. The Office of Marketing Communications did not respond in time to comment on the situation.
Kolchin said he chose to work closely with the University because “USF is one of the leading entrepreneurial universities in Silicon Valley and the oldest in San Francisco.” USF is also the closest university to Kolchin’s target market around Geary.
iWallet has also geared several promotions specifically toward USF students, such as a $25 signup bonus and cashback benefits.
iWallet offered a Foghorn reporter a $250 account bonus while they were investigating this story. The offer was declined because ethics guidelines forbid journalists from accepting gifts from sources.
How have Dons become involved with iWallet?
In recent months, iWallet has employed many students on campus, mainly as influencers, brand ambassadors, or student testers. Most back-end coding operations are outsourced to coders in other countries, mainly India.
Most iWallet brand ambassadors come from the School of Management. Professor Gleb Nikitenko teaches the “Entrepreneurship and Innovation Practicum” class, which allows students to intern with start-ups and technology companies of their choice. Nikitenko noted that out of 25 students in his class, 11 are working for iWallet. Nikitenko and Kolchin worked closely together on the iWallet project.
The company has chosen a different tack to recruit influencers. Junior Charles Choi told the Foghorn that a friend working for iWallet reached out to him and offered him $1,000 to have advertising control of his personal Instagram account. iWallet identified Choi (who has over 1,200 followers) as an “influencer” on campus. He declined the offer because he felt that the way iWallet tried to recruit him seemed “shady and suspicious.”
“It seemed too good to be true,” Choi said.
Choi wanted to remind students who are signing up to be careful, as iWallet connects to users’ bank account. In addition, students have to provide their Social Security number when registering. He also referred to iWallet’s promotion for USF students. “Sure, you might get $15 or $20 off your next food purchase, but at what cost?” Choi said.
iWallet on campus
Another marketing strategy iWallet has carried out entails “sponsoring” student organizations on campus. In practice, student orgs promote the app to their membership, and iWallet in turn supplies free food and merchandise at org events. When speaking about this strategy, senior Abby Asuncion, iWallet’s social media marketing manager, said, “[we’re] basically throwing money at them.”
When speaking about this strategy, senior Abby Asuncion, iWallet’s social media marketing manager, said, “[we’re] basically throwing money at them.”
This is likely a violation of the University’s bylaws on Fundraising and Noncommercial Activities. Foghorn inquiries into the Division of Student Life and Engagement (SLE), the USF body responsible for managing student organizations, suggested that SLE had been unaware of the issue and was looking into the matter.
On Friday, Oct. 4, the USF Stock Investment Club (SIC) reserved two tables on the UC second floor intended to be used to promote the organization. Instead, the tables hosted a promotional event for iWallet. Students were encouraged to download and sign up for the app, and, once they did so, received boba milk tea with their signup bonus, effectively a free gift for joining. The Stock Investment Club (SIC) also received $5 for every student who signed up for the app during their tabling session. SIC also kept the profits for the boba tea sales, which was purchased by iWallet and Kolchin.
Section A (4) of the bylaws on Fundraising and Noncommercial Activities states that “Solicitation for corporate sponsorship for any University-sanctioned event or activity by any individual student or student organization must be reviewed and approved by the Assistant Vice Provost for Student Engagement prior to contact with a potential sponsor.”
When asked for comment, Lester Deanes, assistant vice provost for student engagement, said that his office was “in the process of gathering more information about iWallet and the reported connection” with the University, suggesting SLE was not previously aware of these potential violations.
A student organization consultant told the Foghorn that iWallet is currently working to get approved by USF Accounting and Business Services. At the moment, the implications of this are unclear.
Disclaimer: iWallet advertised in the Oct. 3 issue of the Foghorn.