The convenience of carrying a single credit card, rather than a wallet full of crumpled bills and coins, has caused many consumers to forgo cash more or less entirely.
But our preference for plastic over hard currency eats into the margins of local stores and establishments, as credit card issuers and payment technology providers all take a cut of each transaction.
AeroPay, a Chicago fintech company, wants to take credit card companies out of the equation altogether.
We really wanted our technology to be hardware-agnostic so it could run on any phone or tablet.”
Its technology lets consumers pay vendors directly from their checking accounts — like Venmo, but for businesses, and without the emoji and jokes about “services rendered.”
“Originally, we were thinking of how to improve the experience of paying: how can consumers walk into the store and pay remotely,” said founder and CEO Daniel Muller. “But we quickly realized that our solution had to be a dollars-and-cents change for the bottom line of small businesses. So we had to take it all the way to how payments are processed.”
What AeroPay came up with was a direct deposit model. After setting up an account, a customer taps a button on their phone to initiate a payment. The vendor sends over a request for the exact purchase amount, which the customer in turn confirms on their screen.
When the customer approves a charge, AeroPay automatically withdraws the payment amount from their bank account, depositing it into the vendor’s account on the next business day.
By decoupling payments from a point-of-sale terminal, AeroPay also lets businesses accept payments from anywhere in the store — whether that’s settling checks at the restaurant table or paying for a piece of art in the middle of the gallery.
AeroPay uses Bluetooth technology to ensure that the user’s device is actually present in the store when transactions take place. As a backup, the app can also generate a QR code, which the vendor can scan to initiate a payment.
“We really wanted our technology to be hardware-agnostic so it could run on any phone or tablet, and avoid some of the limitations that currently exist for mobile payments,” said Muller.
Muller said the idea for AeroPay came from speaking with owners of local businesses around his apartment in Andersonville about their pain points.
“The general consensus was that there was no seamless way to manage payments,” said Muller. “With cash, they had issues with employee theft, and with credit cards they had problems with huge fees.”
For now, AeroPay is free both for vendors and consumers. Muller said the company will never charge percentages for transactions through the platform, instead charging a small, flat rate for each payment received.
Other potential revenue streams include value-added services like targeted marketing and business analytics. For instance, offering discounted happy hours to customers who have used AeroPay at nearby establishments.
Muller said AeroPay also has security benefits over traditional credit cards and other payment solutions, because no sensitive information is exchanged at the point of transaction. Once the consumer agrees to make a payment, the rest of the transaction is handled in the cloud.
For now, AeroPay has five full-time employees, with some additional advisors and consultants working on a project basis. Muller said the startup is officially getting operations off the ground this summer, starting on the north side and in Logan Square.