PayStand is launching a new mobile payment app and card reader to accept credit card payments, but promises to cut merchants' costs by also accepting e-checks and Bitcoin.

When Square introduced a mobile card reader five years ago for merchants who might not otherwise be able to accept credit card payments, price was one of its main selling points. As more companies entered the mobile point of sale market, it became clear that one way to stand out in a crowded field was to deliver an even less expensive option.

Scotts Valley, Calif.-based PayStand began offering services for e-commerce merchants early last year with a subscription-based model touting no transaction fees. Around the same time, the company opened its application to support credit cards, e-checks and Bitcoin.

Its new mobile point of sale app marks the company's "first foray into the physical world," said PayStand CEO Jeremy Almond.

"Tech companies have jumped on the digital cash model, but something bigger is going on," Almond said. "They offer slightly lower fees, but don't go far enough. That is why we are looking to drive costs down farther and get those costs to zero."

PayStand recommends merchants offer discounts to encourage customers to pay by low-cost methods like e-checks and Bitcoin.

Almond calls PayStand the "Netflix" of the payments industry because of its subscription-based model that charges $49 to $300 a month, depending on the size and needs of the merchant. PayStand lets merchants pass transaction fees along to the consumer or absorb them.

PayStand views a credit card payment as a "transitioning problem" within the industry, Almond said. "Cards have been the predominant vehicle used, but we are just now at the stage where there are alternatives, and those will continue to grow."

PayStand is targeting service businesses and non-profits with its mPOS app and reader, allowing a merchant to scan a paper check to immediately deposit it. If a consumer wants to pay in Bitcoin, PayStand handles the transaction through a Bitcoin account for the merchant, who can accept the funds in Bitcoin or dollars, Almond said.

Offering Bitcoin payments may not "move the needle" for PayStand, but it does provide consumers and merchants another option, said Marc Cochrane, an independent senior payments advisor.

In a similar manner as other mPOS providers, PayStand represents "a nice convenience" for merchants, Cochrane said. But the company faces the same challenges as others because "nothing is really free and you have to pay fees for ACH or card payments."

Other companies have pushed ACH as an alternative to cards, and like those companies, PayStand will have to deal with many merchants who are already locked in by an acquirer or bank, Cochrane added.

PayStand, which used Balanced Payments and Stripe for payment processing in the past, now works directly with banks for those services, Almond said.

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