Cash Is No Longer Enough for PayNearMe's Audience
PayNearMe has long offered a service designed for consumers who prefer to use cash in a digital world, but even it has to accept the need to get on board with electronic payments.
PayNearMe on Tuesday announced it has acquired Prism Money, a consumer financial management app that enables consumers to make ACH or card payments. Prism also offers personal financial management tools such as monitors for balances, paychecks, billing amounts due, due dates and the ability to make a payment within the app.
"Prism targets millennials and others for real time presentment, so it serves a bit of a higher end market than we do," said Danny Shader, founder and CEO of PayNearMe.
The acquired tools will allow PayNearMe to approach businesses, banks and government agencies with an application programming interface to integrate near real time payment and presentment with prepaid services such as budget tools, account loading and payroll.
Additionally, Visa will offer PayNearMe's bill presentment and payment processing capabilities to the card network's prepaid consumer reloadable card programs. This will allow Visa prepaid card providers to integrate bill pay into their apps, so cardholders can pay bills immediately upon receiving funds, with use cases including payments following the receipt of wages on the a prepaid payroll card. "Any Visa partner can add that mobile experience for bill pay," Shader said.
This tech combo fills a hole in bill payment and presentment systems, which Shader said are unable to accommodate the fast processing pressures inherent in mobile payments and payroll.
"If electronic bill payment and presentment are [using batch] and not settling in real time, people don't know their balance when they need to know to cover their payment," Shader said. "The Prism systems know where you are with your account at any time."
PayNearMe's legacy business targets payment types that often still include cash and checks; these include rent, utilities and transactions for underbanked consumers. The company has relied on digital technology on the back end, providing a printed or mobile bar code that consumers bring to stores such as 7-Eleven, Family Dollar and ACE Cash Express to complete a payment.
The company has broadened its reach to include tax payments, a self-service remote payments option that's more of a merchant acquisition play, and it has also ramped up its health care payments services in anticipation of more volume from the Affordable Care Act and the growth of consumer health savings accounts.
By closely tying payroll with bill payments, PayNearMe is entering a market inhabited by players such as Green Dot and RushCard, both of which have faced some recent struggles—Green Dot with a fight over its management structure and RushCard with user access. TSYS also offers payroll cards through its NetSpend subsidiary.
Shader sees these companies are potential partners, not competitors.
"We're not a prepaid issuer, so we seem them as potentially benefiting from our service," he said. "Consumers who use electronic bill payment are more likely to add direct deposit and those relationships last longer."
PayNearMe is not abandoning its cash payments business, noting that payments doubled in the past year and volume reached $1 billion. There's some debate over the role of cash in the future, with dueling predictions of its decline and continued strength, and Shader said that part of its business remains strong.
Financial terms of the Prism acquisition were not disclosed.