Credit card transactions fees are a significant expense for merchants, especially when it comes to rewards cards.
But the PayWith app, made by Vancouver-based PayWith Worldwide, could be the solution.
Consumers who download the app connect their credit cards to a PayWith account. The app then makes a virtual card called an mCard which generates a new number for every transaction. Merchants accepting mCards still pay a transaction fee when they accept an mCard, but at a lower rate. mCards charge 1.25%, and the standard rate for credit cards can be as high as 3% of the purchase price.
PayWith acts as the card issuer. Because there is no physical card and less infrastructure costs associated with distributing and supporting the cards, they are able to charge a lesser fee.
For the merchant, using PayWith only requires them to sign an agreement. There is no special equipment or software. Through PayWith they can offer special promotions and deals to customers at the point of sale. There are also a number of extras available for a price.
“We get a small piece of the revenue of every transaction that goes through,” say David Srebringer, CEO of PayWith. “There is a suite of services that we provide merchants inside our platform. They are things that help them get more media and exposure through local marketing, through social media, through referrals and recommendations from their customers.”
“If they want to run custom campaigns with various different hosting companies, or groups and associations within the community, we can track which community members are coming in and which groups they’re associated with. That has a fee of 5% of the transactional volume,” he says.
The release of PayWith is following a yearlong pilot project that took place in Vancouver and Arizona. The app is mainly being used on the west coast right now, but growth has been high. Over the last month the number of people using PayWith has increased 400%.
“In that year long pilot, many of the merchants we worked with started introducing us to others and now we're dealing with various different groups that are introducing us to franchises and chains,” says Srebringer.
PayWith could be a welcome technology for many outlets. There has been a lot of tension between merchant organizations and credit card companies over transaction fees, especially the extra large charges that come with special rewards cards. PayWith will allow them to save on those costly fees, and that’s always a good thing.