Seeing coins as dead weight in payments, a startup called Coinvenience is designing a system to allow consumers to reject loose change by instructing retailers to deposit the leftover coins into a stored-value account at the point of sale.

"When we get change, most of the time we don't want that change; it either sits in our cup holders or we end up holding onto it for a while and then going to Coinstar," says Leo Gutierrez, founder of Coinvenience.

Coinvenience aims to undercut the fees charged by coin-cashing companies such as Coinstar, which is now called Outerwall. To use Coinvenience's service, consumers would present a card or a mobile app to the cashier, who would then send the shopper's change to a predetermined Dwolla or PayPal account.

While Gutierrez wouldn't go into detail about the fees planned for Coinvenience, it may not be a free service. "We are looking at the potential of a small transaction fee in our revenue model," he says.

The service is in a prototype state with questions still to be answered, but the software has been in development for six months and Gutierrez says he's ready to get in front of investors. He's in the process of applying to TechStars, a startup accelerator.

"This is actually a business that will be changing throughout the years," he says. "The U.S. is not the main target; it's actually third-world countries that use cash more often."

Several other companies take a similar approach to cutting out coins.

JarStar, a U.K.-based company, deposits change from cash transactions into a JarStar savings account. When the savings account reaches a certain balance, the company transfers the funds to the consumer's bank account or sells the consumer a voucher for use at a participating retailer.

Coinvenience's other rivals include Bank of America and Wells Fargo, although the banks tend to focus on card purchases instead of cash purchases. Bank of America offers Keep the Change, a service that rounds debit card payments to the next dollar and deposits the difference in the user's savings account. Wells Fargo offers Way2Save, which transfers a dollar from the customer's checking account to a linked savings account for every debit card purchase or electronic payment.

The startups offer a more flexible option than the bank's initiatives since any customer of any bank could use the service, says Gil Luria, vice president of Wedbush Securities.

But because it's difficult to get broad adoption from both consumers and merchants, these tools might work better as an added feature in Google Wallet, Isis or PayPal, he says.

"Something like that has the potential to be additive and incremental to the type of mobile wallet we're seeing launch today," Luria says. "As our phones replace our leather wallets, these incremental features could really help tip people over the edge as far as using the phone more and more and their pockets less and less." 

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