This is Part 1 of the “Payments Pain Points” blog series. This initial installment is in partnership with AeroPay, a mobile payments company based in Chicago.
By: Alex Lipnik, Sales and Partnerships @ AeroPay
There are two sides to every transaction.
But with the way traditional payment methods have been designed, one side of the equation is always paying the price.
Card payments lead to substantial fees for businesses, while cash and debit payments provide little or no reward for their customers.
These are, among others, some of the core issues with the current payments infrastructure in the U.S. market.
Merchants Take a Hit
In the United States, business owners are forced to pay significant fees for accepting card payments – almost $90B in a single year – and most view this as an unavoidable cost of doing business.
These fees cut into the margins for every item sold, affecting cash flow, revenue and ultimately profits.
Alternatives like cash and debit exist for business owners, but come with problems of their own (stay tuned for more on that in Part 2 of the “Payments Pain Points” series). Not to mention the lack of incentive they provide for their customers.
Lack of Consumer Incentive
For consumers, cash and debit card users—almost 60% of Americans—receive little or no rewards for their transactions at specific businesses.
Cash provides nothing to consumers that use it – it is an archaic payment option that has lagged behind as alternative payment choices have entered the market.
And while there are a select few debit cards that offer small incentives to consumers that use them, most still offer nothing.
In the end, not adequately incentivizing consumers can cause these payment methods to push consumers to make more purchases with credit cards, thus furthering the burden on businesses’ bottom lines.
Bridging the Gap
A solution that takes both sides of the transaction into consideration has been sorely missing in the marketplace. By utilizing the convenience of mobile and efficiency of electronic processing via the ACH Network and Dwolla, AeroPay is building just that.
AeroPay is a mobile payment solution that allows merchants to accept ACH payments from their customers through the AeroPay iOS or Android app. Store owners and their customers can initiate point-of-sale transactions without swiping a card or exchanging cash. This allows businesses to avoid costly transaction fees and minimize the costs associated with having cash present in their stores. Dwolla powers AeroPay’s ACH payments.
The AeroPay solution provides a convenient payment alternative that circumvents card networks and moves money directly from consumers to businesses. This results in lower fees – less than half those charged by credit card and POS companies – for business owners.
Moreover, AeroPay has created a ‘reuse model’ that repurposes part of this tiny processing fee charged to businesses and passes it directly back to the consumer as a payout reward.
Money saved for businesses, money earned for their customers. A true win-win.