As much as our transactions are going digital and mobile, we still haul out the checkbook for certain payments. Now, a New York startup called Zipmark is looking to help ease the venerable checkbook into retirement. The company is going live today with its developer program and is poised to release an iPhone app for customers next month at South By Southwest.
But, ultimately, Zipmark has bigger plans beyond the checkbook: it hopes to use the check-payment network as an entry point into other non-checking transactions. That could help it stand out among competitors like PayPal and payment solutions from banks.
The company, which raised $2 million in December, led by Village Ventures and Contour Venture Partners, leverages the existing check-processing infrastructure to create a digital payment system that it says is fast, simple and cheap for users and merchants. The startup charges 1 percent for each transaction and caps fees at $5 regardless of the total amount. With the new developer program, merchants and developers will be able to offer Zipmark payments to customers using an API that will enable authorized checking transactions.
For merchants and billers, the appeal of Zipmark is, in part, speed: it authorizes payments and forwards the funds the next day, instead of two to four days for most checks. Also, by tapping the existing checking network, Zipmark can keep fees low enough to provide an interesting alternative to credit-card payments.
For consumers, they will be able to use the iPhone app to connect bills from participating merchants to their Zipmark account. They will be able to scan QR codes provided by vendors on their bills and then pay from their phone for things like rent, subscriptions, utility bills and other recurring expenses. They can also get future bills directly through their Zipmark app.
“In a lot of cases, paper checks are being sent. That means payment takes a while to get there. And for businesses, it’s a bad outcome. They’re getting a paper check they need to handle, and there’s a chance someone can overdraw the account so the check won’t be cashed,” CEO and co-founder Jay Bhattacharya told me. “Zipmark addresses those shortcomings.”
Zipmark’s most natural business customers will be companies that take recurring payments. To capitalize on this market, the company has lined up a handful of early partners including Singular Payments, which helps companies bill their customers; UnitConnect, a property management software company; and InvoiceASAP, which provides mobile invoicing services. But Zipmark isn’t just looking to handle payments from landlords and utilities. It’s also looking to become a payment option for retailers.
“PayPal handles transactions and takes money out of a checking account and puts it into a PayPal account. We can do that without taking it into a separate account,” said Bhattacharya.
The online payment space has attracted a host of new entrants in recent years. PayPal is still the big leader, but the list includes Stripe, Dwolla, Payz and others. All of them are trying to compete with credit-card networks and banks, which have had a stranglehold on the payment business for decades
Zipmark will, of course, have to prove popular with both merchants and consumers. If merchants share some of their savings with users in the form of promotions of discounts, that could also be an incentive for them to adopt Zipmark.