An Oakland, Calif. company said it has introduced a way for customers to buy things on the Internet with cash.
The service, called PaidByCash, is run by the Retail Expansion Network. It wants to let you, the online shopper, select a product, and then be able to visit one of 60,000 retail outlets to pay cash for it. The outlets, which include places like Safeway and Kmart, give you a receipt, which you then must go back to verify at the PaidByCash site. You’re then issued a debit card, via Mastercard, to complete the transaction. This all sounds like quite a chore. Presumably, though, for those without credit cards, this service will be quite welcome. However, it doesn’t look like many sites are accepting the service yet, even the retail partners who have signed up. We tried buying some groceries at the Safeway Web site this morning, and it still says credit card only (See full announcement here)
A 2004 Federal Reserve study found that about a billion transactions worth roughly $120 billion are conducted annually though money orders.
Also, this service is not to be confused with PaybyCash, which does something similar, but is focused on the games industry.
Update: The company, which has been secretive until now, is backed by individual investors, including partners from Goldman Sachs, Great Oaks Capital Management, and Thomas Lee Partners, notes VentureWire (subscription required) today.
9 Comments
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Matty O said:
Matt,
Thanks for the exposure. Glad you see PaidByCash as compelling enough for a discussion. A couple quick responses:1) PaidByCash is a Virtual MasterCard® product and is accepted by nearly every online merchant engaged in e-commerce. What that means is that regardless of whether or not the merchant has the PaidByCash option in their online checkout, they can still accept payment through our service because we run over their existing MasterCard network (means no integration downtime, either). As such, the Safeway.com site for instance, can defintely use PaidByCash because they “see” it as a MasterCard transaction.
2) Compared to what alot of these consumers are doing today to complete their online shopping experience (read: Money Orders). This is no chore at all. And, it’s cheaper, faster and more convenient.
3) And, glad you differentiated us from the PayByCash service which may appear similar, but probably shouldn’t be given as a direct comparison to us — they’ve got a different model.
At first glance, most of us may not see the market this opens up to online merchants — that’s because most of us (your readers) are not among the unbanked and credit constrained. We have no problem laying down plastic to pay for goods and services. Reality is, there is a huge cash-based society in America and bringing these people into the e-commerce economy instantly infuses merchants with an extremely robust buying population that will not cannibalize their existing payment channels.
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will said:
Sequoia funded Green Dot (where I work) has been doing this for quite a long time, and has long been recognized as the leader in this space. Give us some love too :)
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Andy said:
how else can someone buy an AK-47
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Don Vaillancourt said:
It was announced a while back here in Canada that banks were already working on a solution using Interac bank cards which I can’t wait for. It a solution that was described similarly to how OpenId operates.
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Doug Mehus said:
Don, that service went live early last year, I believe. It’s called Interac Online and requires you to login with your online banking credentials to approve the transaction and then it immediately sends payment to the participating merchant. It’s a good idea, except they charge $1.50 per transaction. A total turn off when I can just pay by Visa and pay my Visa off immediately to prevent credit card interest from accruing. If they wanted to make it successful, they’d make the merchants pay for it either through a monthly fee, transaction fees, or both. This would be similar to Interac Direct Payment purchases.
Cheers,
Doug -
Sundar Krishnamurthy said:
If I get this right, the customer buys online, goes to a physical location to pay with cash, gets a debit card, and then uses it to pay online?
If it is aimed at adults without credit cards, these are the same folks who are least likely to be buying online.
If it is aimed at teenagers, it is unlikely they will go through the online-offline-online transaction process.
Not sure how this is of any value with all the friction it introduces in completing a simple transaction.
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Matty O said:
A Harris Interactive Study from 02/05 estimates teens and young adults (ages 8 – 21) spend $22 billion online annually. That same study showed that 42% of teens and young adults (13 – 21) “wanted to buy something online, but didn’t because†they “didn’t have a way to payâ€.
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Daniel said:
I couldn’t understand some parts of this article Shop online with cash? How quaint, but I guess I just need to check some more resources regarding this, because it sounds interesting.
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Visa Merchant said:
Great post about Shop online with cash? How quaint!
