UK-based JarStar Inc. is taking a feature of some debit cards and applying it to cash.

JarStar's system in some ways resembles Bank of America's Keep the Change, which rounds up debit-card payments to the next dollar and deposits the difference in a user's savings account. A similar program at Wells Fargo, Way2Save, transfers a dollar from checking to savings for every debit-card purchase or electronic payment made. The key difference for JarStar is it doesn't rely on cards.

"In the same way you can pick up points through loyalty cards you can pick up change when paying with cash," says Oisin Margey, chief technology officer of JarStar.

When JarStar users pay for groceries with cash, for example, the change from the transaction is deposited into the JarStar savings account instead of handed to the consumer.  JarStar can be used with or without a retailer's loyalty program.

When the JarStar savings account reaches a certain balance, JarStar will transfer the funds to the consumer's bank account or sell the user a voucher for a participating retailer.

"We're using the platform to target the savings retail customers are holding," Margey says. "Potentially someone like Macy's might offer vouchers."

In the future, JarStar plans to work with charities as well, allowing consumers to donate their change to those in need.

JarStar began developing its product about a year and a half ago. The company hasn't yet launched to the market, but is working to partner with retailers, mostly large grocery chains, which do a high volume of transactions every day, Margey says.

"Because of their size they have the most to save as well," he says. The company is currently speaking with the two major grocery retailers in the UK.

Large retailers can save money on cash turnover with the JarStar offering, Margey says. Merchants could save money paid to employees for sorting and taking change to the bank, he says. Merchants also benefit from moving consumers through the checkout faster.

The company is also trying to find point of sale terminal makers to partner with, hoping these companies could bring them to scale quicker. Payment companies such as LevelUp have taken a similar approach in partnering with more established businesses. LevelUp's partners include Merchant Warehouse and Heartland Payment Systems.

Bank of America launched its Keep the Change program in 2005. The bank matches savings for the first three months, but only up to $250, and it makes deposits to the customer's savings account once a year.

"The bank's Keep the Change program was designed as one tool to encourage consumers to save and it provides a simple way for consumers to save when making everyday purchases," says Betty Riess, a B of A spokeswoman in an email. "Customers have saved more than $6 billion through the Keep the Change savings program."

JarStar's model also somewhat resembles that of the prepaid card provider SmartyPig in the way it offers to disburse saved funds in the form of retailer vouchers as an alternative to cash. 

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