June 18, 2014
We chatted up with Jeremy Almond (CEO, PayStand) recently and wanted to share the discussion with you. He will also be speaking at The Money Event. See the end of the article for more details on the event.
There are several players in the payments processing space. What sets you apart?
Much of the payment processing industry is built on aging banking and card network system that charges organizations a transaction fee (usually 3%) every time they receive money. While we continue to support credit card and bank processing, we also leverage newer payment systems like check21 and digital currency (bitcoin) to lower and in some cases eliminate transaction fees. PayStand's money router technology enable merchants to easily get paid in these different payment methods (Credit Cards, eCheck, and eCash). Our goal is to help drives adoption of the next generation financial networks that are less expensive for merchants and provide choice to consumers.
Why did you choose to price your product as 'No Merchant Transaction Fees'
As money movement becomes digital, the notion of charging merchants transaction fees to do what amounts to moving ones and zeros from one bank database to another seems a little unfair. Industries such as entertainment (with Netflix) and music (with Spotify) have moved to a subscription model, and we intend to do the same for payments. Instead of making our revenue from transaction fees like everyone else, we are pioneering a fixed cost business model (we call it 'payments as service') where merchants pay a single monthly amount to use our payment software just like the do with nearly every of other software they use (accounting, crm, etc). We think this creates better alignment with organizations, and so far they seem to agree.
A few days back you introduced digital download support as mentioned on your website. What propelled PayStand to do that?
While credit card processing works well in some scenarios it can be extremely expensive to other types of organizations. For example, in small margin businesses such as retail, it can eat up much of the profit that could go back to creating more jobs and better products. And for big ticket items such as bills or invoices, transaction fees can simply be too prohibitive to use, so paper checks still rains supreme. To your point with digital downloads, what we found was that content creators wanted to sell their content online, but the usual of 3% + $0.30 from say Paypal simply doesn't work. With these types of 'micro transactions' where you are a selling say a $0.99 song, you'd up losing 33% of your revenue - which clearly doesn't work. So this is an area where PayStand enabling next generation networks like digital currency can be great.
What are the trends in terms of New over-the-top-value in payments processing?
Well you are hearing a lot about bitcoin in the news, and a lot of of people are wondering - is it viable, is it safe, where can I use it, etc. And I would say that it's still very very early days within the evolution of digital currency, perhaps much like the Internet was in 1995. But the potential of digital currency as a cash-like payment network, holds a lot of promise. It enable nearly instant transfer of money to anyone without 3rd party involvement and without transaction fees. That's a pretty revolutionary technology breakthrough, and in some form or another (perhaps not bitcoin itself) it will only continue to pickup speed. Will it replace the Visas of the world? Probably not - there are still important cases where you want a third party system that you can trust and that can provide valuable services such as credit extension, chargeback support, loyalty points, etc. But there are plenty of places where that type of infrastructure either isn't there (such as emerging countries) or isn't needed and that's where you are seeing a lot of adoption of digital currency. In fact, it's perhaps not widely known, but Bitcoin volume has already exceeded Paypal's volume. And there is particularly good uptake in countries that are underbanked but are experiencing rapid technology adoption, so I think that's a good indicator of things to come.
Jeremy will be speaking at The Money Event at Super Mobility Week, September 9, 10, 11, in Las Vegas.
The Money Event: