The world of online and in-store payments has been changing rapidly in the past few years. Developers, financial institutions and innovators are looking at new ways to pay and collect payment, boost sales and save more.
We’re clearly currently in a transition period where everyone’s figuring out what makes sense when it comes to paying for services and products in the digital age. Physical money is on its way out of vogue – even when it comes to brick-and-mortar retail. Physical banks might also start to disappear in our time. With the rapid adoption trajectory of Bitcoin, there are even signs that currencies issued by national governments might soon start getting phased out.
The way we do business needs to keep up with the way we use technology, and in this context, solutions for small business transactions have a lot of catching up to do. The old guard of finance might not feel the same need to innovate that today’s generation of entrepreneurs feels, and that’s a good thing. The old banks and investment houses have had their chance to make their rich stakeholders even richer – it’s time for new blood to address the needs of a new generation of digitally connected entrepreneurs.
Here we look at five vanguard tech companies that are shaking things up, changing the way we all think and act when it comes to money.
Turnkey customer rewards with Huzzah
Customer reward and loyalty programs are proven to boost sales for businesses, and keeping your existing clientele coming back for more is less heavy on resources than acquiring new clients. Until now, smaller businesses seeking to gamify rewards in the digital realm had to build proprietary tools from the ground up, a process that proved to be prohibitively expensive. A Houston-based company, Huzzah is finally changing all of that by offering small companies the ability to inexpensively create modular turnkey digital loyalty programs. When businesses sign up, they choose the rewards that fit their niche. They receive a tablet to display at the point of sale and loyalty cards with QR codes to distribute to customers. Then, when customers come in, they scan the QR codes with their smartphones in order to win points and collect rewards.
Huzzah’s research indicates that customers who are actively involved with loyalty rewards are not only 70% more likely to keep coming back for more business, they’re also far more likely to recommend the business to a friend. In order to allow local merchants to capitalize on this, Huzzah integrates with social media, so customers can let their friends know where they are and what products they are into. Huzzah also offers an app for customers, which allows them to find all the loyalty deals in their area.
Affordable virtual wallets with PayStand
Have you noticed that while ecommerce has become so popular in recent years, payment methods haven’t advanced at all? Consumers are still forced to pay via credit card, and businesses are still paying transaction fees of 3% or higher in order to accept payment. Launched a few months ago with “only” $1 million in seed venture funding, PayStand wants to change all that, enabling merchants to accept Bitcoin – but without the exorbitant transaction fees, and without forcing anyone to ditch credit cards.
Built in Santa Cruz, the PayStand platform charges online retail businesses a flat fee in order to accept payments instead of a percentage of each sale. This makes it a really good deal for successful companies that depend on a high volume of transactions every month. What’s more, merchant accounts and other extras are included, making it a highly cost-effective option all around. With PayStand, customers can choose between three methods of payment: credit card, e-check and Bitcoin. Checkout is simple and seamless and can be done from within the ecommerce website with no extra login required.
“This gives merchants an easy way to take credit card processing and create a cash like system which also takes digital currencies,” PayStand CEO Jeremy Almond told Techcrunch.
Smartphone-integrated vending hardware with On Track Innovations
OTI specializes in cashless payment solutions around the world and has already been deployed in 50 countries. It’s all made possible through the use of a proprietary NFC (Near Field Communication) device, which allows smartphones and smart vending hardware to communicate with each other when in proximity of each other. The Israel-based company has been around for decades, but they’ve recently emerged as one of the pioneers in the NFC field, beating out Google and other major players for the 2014 PYMNTS Innovator Award and going public on NASDAQ this past January on the strength of over 100 patents and patent applications. Since the 2014 IPO, OTI’s revenues have grown by 43% to $5.2 million.
And their products are already out there, changing the payment integration game. To date, they’ve sold over 600,000 of their Saturn NFC units. OTI is making strong inroads into the paid parking industry in the United States. NFC devices are placed in car windows, so drivers pay only for the time they have actually parked. The system saves the municipality money on expensive meters, and helps them easily collect fees as well as data on parking habits.
Gas stations are also making use of OTI technology, to offer customers the ability to pay for their fuel just by inserting the nozzle into their gas tank. The nozzle is fitted with a reader that automatically identifies the car when inserted. Loyalty rewards are also issued via the reader.
On Track also allows railroad passengers in Poland the ability to top up their pre-paid mobile phone airtime at the same vending machines where they buy their railway tickets, a great convenience for busy travelers and commuters. Could OTI soon offer a solution for small businesses?
Taking Bitcoin to the streets with LevelUp
There’s been talk of digital wallets for a while now, but we are all still carrying wallets around along with our phones. Is it really possible to replace the old methods of payment? LevelUp thinks so, having recently launched an app that makes mobile payments easy, with the additional benefits of Bitcoin integration, merchant-managed discounted offers and loyalty program integrations.
Backed by $40 million via three funding rounds and based in Boston, LevelUp aims to revolutionize in-store payment. The app assigns a QR Code to each user, which is linked to his or her credit card or debit card. The user approaches a terminal in the store and scans his QR Code, where payment is logged a digital receipt is dispatched. Selected businesses in the Boston, Chicago, Philadelphia, St. Louis, New York City, Atlanta, San Francisco and Seattle areas are now accepting payment with LevelUp, with more to follow.
LevelUp’s benefits to local businesses are numerous. Stores are charged a flat 1.95% payment processing fee, and payments are transferred daily. The app collects customer and marketing data that helps businesses run targeted campaigns to increase sales. And the convenience and loyalty programs, central functionalities of the app, encourage customers to return.
Getting non-geeks to buy and sell Bitcoin with Circle Internet Financial
Like PayStand, the developers of Boston-based Circle are driven to close the gap between the capabilities of connected technologies and the payment methods currently available. Circle is bringing about change through the use of open-source technology and digital currencies like Bitcoin.
The company has just recently begun a limited availability release of its first consumer-facing product, so it may be a while before we see results from this interesting enterprise. But ultimately, the company’s goal is to transform Bitcoin from a geek experiment to a mainstream currency used in online transactions. Circle allows users to deposit dollars in an online account, where the money is transferred into Bitcoin and accrues interest until it is spent in transactions with companies accepting the new currency as a form of payment.
In March 2014, Circle Internet Financial announced that they had raised a total of $26 million in funding. While the company is doing its best to make Bitcoin a viable currency, CEO Jeremy Allaire admits that financial institutions and banks will have to do their part to smooth out the volatility of Bitcoin in order to make it a trustworthy currency that average people will have faith in.