New cash payment service provides an alternative to plastic
September 09, 2011
More than a quarter of Americans go without credit cards, making web purchases and other money transfers difficult, if not impossible, according to various studies. The Federal Deposit Insurance Corporation, in a survey from 2009, noted that 60 million U.S. households are "unbanked or underbanked."
PayNearMe's answer? Just stroll to your neighborhood 7-Eleven. The company, based in Mountain View, Calif., has partnered with the convenience store chain and Ria Financial Services to let people order items on the web (anything from a bus or concert ticket to an Amazon book) then pay in cash at one of the nearly 6,200 7-Elevens dotting the urban landscape. Customers can also pay utility bills and wire funds up to $1,000, which is also the limit for purchases.
"Some people don't have credit cards and some don't want to use them because they're worried about security issues," says Danny Shader, PayNearMe's CEO. "Some people just don't have the money [for checking or savings accounts]. Then there's the teen market. We realize that 95 percent of teenagers tend to pay with cash."
Cash-only folks do appear to be a huge group; the research firm Aite Group says they made $1.2 trillion in purchases last year. But, as Shader points out, it becomes more than daunting when they move from brick-and-mortar stores and try to buy on the Internet.
"The 'underbanked' is a very large market that we hope to serve [by reducing] the complications they have to face," he says. "PayNearMe is all about making it faster and cheaper for them to complete their transactions."
No credit card? No problem.
It works like this: You're surfing through Amazon and find a book or DVD or some shiny object that caught your eye. The next step is to visit Amazon's gift card section, where you click the PayNearMe icon and enter the item's price.
Print the PayNearMe transaction slip and head to a 7-Eleven. A clerk takes the slip and gives you a receipt and gift card code. Back on Amazon, you enter the code during checkout and the purchase is mailed to you. No home printer? PayNearMe can send a text message with a transaction code to your mobile phone. Give it to the clerk, open your wallet and receive the gift card code.
Need to buy a bus ticket? Shader says the old way for the cash crowd would be to hike down to the local bus station, wait in line for a Greyhound ticket and hope the bus isn't overbooked. But now, he says, you just book online, print out the PayNearMe slip and make the transaction at a 7-Eleven. The receipt is your bus ticket.
Greyhound is currently offering the program in Dallas, but has expansion plans at the ready. "PayNearMe will ultimately enable us to add thousands of ticketing locations, so that our customers can easily get tickets any time of day," says Greyhound's CEO Dave Leach in a press release.
Shader notes that customers typically don't pay a fee to use PayNearMe because the firm makes money by charging affiliate companies for the service. He was reluctant to get into specifics, but did say that PayNearMe makes about $3 per transaction.
Just bill me
While Internet buying is attractive to many consumers, Shader believes PayNearMe may be most useful as a way to pay bills. Instead of buying and mailing a money order to cover a company's bill or heading to a utility office to pay for monthly service, you could do it at a 7-Eleven.
Shader says about 3,000 billers have signed up so far, with PayNearMe adding more every day. "We're growing at about 20 to 40 percent each month," he claims.
Company spokesperson Stephanie Gnibus notes that people who are struggling to get by could find PayNearMe's convenience appealing. "Some folks have three jobs just to pay their bills, which takes up a lot of their day," she says. "Being able to go to a 7-Eleven [to handle all their transactions] instead of having to take the time to drive all over to pay for necessities should help them … at least that's what we hope."