Payments, 2.0

Startups & Venture Capital

Punchey takes new swipe at payment systems

Dynamic databases can be formed to drive growth

 

Premium content from Boston Business Journal by Taryn Plumb, Special to the Journal

Friday, October 12, 2012

W. Marc Bernsau

Millions of times a day, all around the world, consumers swipe their credit and debit cards through those small, ubiquitous electronic readers.
And with each swipe, potentially valuable data that could be captured for merchants is simply getting lost in the retail ether. That’s where Boston-based startup Punchey comes in, with the goal of upending the payments process as we know it.
Founded by Nathaniel Stevens — best known for developing Yodle (an online marketing and technology platform) — and backed by $1.7 million from his Cambridge-based investment firm Stevens Ventures, Punchey aims to provide businesses with an intuitive, Web-enabled payments platform.
“I’ve always been fascinated by electronic commerce, and by the electronic movement of money,” Stevens said. “You’re looking at an industry that really hasn’t had much innovation for the last 30 to 40 years.”
When businesses sign up with Punchey, they swap their old card readers for mobile card terminals or countertop readers that attach to Internet-connected devices. Then, each time a customer swipes their card, a profile is created (and then updated) in the business’ Punchey dashboard. Over time, those profiles develop into a more dynamic database, and can begin to reflect various trends in the business, Stevens explained, from top customers, to transaction volume and frequency. Businesses also receive customized sales forecasting.
All that data can, in turn, help businesses improve their numbers or shift their focus when it comes to staffing, sales, promotions and marketing campaigns, Stevens said. They can also create reward and loyalty programs through the platform, and provide their customers with automatic email or text receipts.
“The idea is to give them a view into how their business is doing,” Stevens said. “It’s really designed to help them grow.”
Officially launched Aug. 16 — but in the works since mid-2011 — Punchey has secured “dozens” of small to-medium-sized customers, according to Stevens.
The startup has reeled companies in with lures such as no long-term contracts, a pledge against hidden fees and the option of flat-rate pricing. In contrast, fees from credit card companies vary widely based on the company, bank or type of card, and are typically 2 to 5 percent of the payment price, according to financial experts.
That can take a big chunk out of profits, said Peter Solomon, who expects to save 15 to 20 percent with Punchey at his Boston-based State Street Barbers.
He called the platform an “innovative” addition to an industry that has been “devoid” of change.
“Traditional payment processes are going to go under extreme scrutiny,” he said, calling them “dinosaurs.”
And with credit and debit cards accounting for 60 percent of in-store sales, according to Javelin Strategy and Research, Stevens sees immense opportunity.
Punchey has a “long road map” for the future, he said. A main goal is to further delve into business operations and analytics, and help businesses develop stronger relationships with customers.
Ultimately, “we’re hoping to create an East Coast tech giant,” Stevens said.

Original story link here.