How PayNearMe Wants to Make Cash Cool Again
For just a minute, forget about futuristic stuff, like waving your mobile phone to pay for things. This Mountain View, Calif.-based company is trying to make cash cool again.
PayNearMe’s goal is to come up with a solution for people who don’t have a debit or credit card but who want to buy things online or transfer money more easily.
Danny Shader, CEO of PayNearMe, will joke in front of a room full of investors and Silicon Valley types that it’s likely a product they won’t ever use. But it’s still a large addressable market, which includes teenagers who are too young to have credit, and those in up to 24 percent of American households who are considered “unbanked.”
“The basic motivation for what we are doing is that there’s a gigantic group of people who need to or want to pay with cash,” he said. “It’s a fairly significant chunk of the population who can’t do remote commerce or business.”
While a lot of the innovation in the payments space is focused on eating away at Visa or MasterCard’s market share, PayNearMe is focused on reinventing transactions that are made in coldhard cash.
So far, the 20-employee company has built relationships with Amazon.com, Facebook and SteelSeries (a seller of hard-core gaming equipment), among others. Additionally, a key component of its business is a partnership with 7-Eleven, where users can go to drop off cash to finalize a purchase.
Starting in March, PayNearMe will launch its biggest technology showcase piece yet, by turning the 6,000-plus 7-Eleven stores into money transfer locations through a partnership with RIA, the third-largest money transfer company after Western Union and MoneyGram. Now users can transfer up to $1,000 to people in 13 countries while picking up a six-pack.
So, how does it work?
When buying something on SteelSeries, the consumer would go through the regular check-out process, but instead of clicking Visa or MasterCard, they would choose PayNearMe. Then he or she would print out a barcode and bring it to any 7-Eleven location. The clerk scans the barcode and collects the cash. As soon as the balance is paid, SteelSeries will be notified and the item will be shipped.
If a user does not have a printer, or is making a money transfer, it gets a little more complicated–but it works similarly to a gift card in reverse.
For money transfers, users go to a 7-Eleven where plastic PayNearMe cards–similar to gift cards–are available. They call customer service and say the code on the back of the card, how much money they’d like to transfer and where they’d like to transfer it. The 7-Eleven clerk then scans the card, collects the cash and prints out a receipt with all the legally required information.”
In this transaction, RIA will share a portion of the profits with 7-Eleven, and 7-Eleven cuts a check to PayNearMe, which has raised $22.3 million in venture capital.
The selling point for consumers is that it’s typically much cheaper than using most traditional money transfer locations or other cash alternatives. Generally, Shader says, “We are way less expensive than anything else for the unbanked.”