Punchey: Price “Half The Equation” For POS Success

The point of sale (POS) market is in the midst of one heated battle.

Competition is getting so tough, even industry CEOs are beginning to acknowledge it publicly. Leaf CEO Aaron Schwarzkopf spoke out last week, describing the market as “a race against time” for players to acquire merchants and reach critical mass.

But, with so many major players entering the market, how can new entrants capture merchant attention and market share? Boston-based payment processing and POS provider Punchey believes the key will be appealing to merchants with first-rate features, cut-rate prices and added incentives they can’t get elsewhere.

Since developing a payment platform in 2012, Punchey has demonstrated a willingness to keep its prices competitive. This past June, for instanace, it eased rates on small business owners.

But, Punchey CEO Nathaniel Stevens says pricing is only half the equation. Speaking to PYMNTS.com, he said he believes his company can beat the competition by appealing to merchant bottom lines.

PYMNTS.com: This is the first time we’ve had Punchey on the site, so tell us your story: How long have you been around for and what are you trying to do in payments?

Nathaniel Stevens: Punchey was founded in 2011, and came out of private beta on June 18 with a product that is easy-to-use and cost-effective for small businesses accepting larger transactions via mobile or desktop. What we’re trying to achieve with our product is to level the playing field for small businesses by giving them access to pass-through pricing – which is normally reserved for larger businesses – and to powerful customer relationship management and marketing automation tools that enable them to increase revenues from their existing customer base.

You advertise yourself as a better solution for SMBs conducting larger transactions. The example you use on your site is that the same pricing structure that works for coffee shops and food trucks doesn’t work for lawyers and mechanics. Talk about what makes you a better fit for companies with larger transactions. 

Pass-through pricing enables SMBs to take advantage of low interchange rates. Since the Durbin Amendment regulates debit card rates – by setting a cap on the interchange fee that large banks can charge businesses for debit card transactions – merchants can save on debit card transactions, whereas flat-rate pricing models penalize the merchant as transaction size increases.

Talk about “pass through pricing” and why that allows you to charge less for card processing. How does Punchey benefit from this, and how do the businesses you serve benefit as well?

Whereas other payment companies typically charge a 2.75 percent flat fee on every transaction, Punchey charges a rate of 0.75 percent (plus interchange). This makes it ideal for any transaction that’s $50 and over. For example, a $100 debit transaction would cost merchants $1.24 with Punchey, versus $2.75 with Square. Punchey benefits from this pricing structure by enabling smaller businesses to become more profitable, thereby improving our customer relationships over the long term. Our goal is not too make as much as we can off of each individual transaction, but instead to build strong relationships with our customers to facilitate their growth and success. 

I think a great quote on your site is “payments shouldn’t end transactions, they should start relationships.” Talk about how you start relationships and any value-added services you may provide.

Our goal is to eliminate the complexity that’s often associated with starting and managing a credit card processing account, an approach that should build strong relationships with our customers right from the start. On top of that, we’ve created a robust suite of tools for customer relationship management, marketing automation and sales analytics in an easy-to-use format that will enable businesses to make informed, data-driven decisions to increase their revenues and maximize their profits.

It seems like this could really eat the lunch of some of the major established players in this space right now. I know you can’t speak on their behalf, but do you expect others to take an approach like this for larger transactions down the road?

We’re really excited about our pricing model and our current positioning – pricing is only half of the equation. Insights and data capture are where we can really help businesses move the needle in terms of revenue, customer engagement and profitability – and with that data, we enable customers to not only save money but also grow their business.

Finally, tell us what’s next for Punchey. Now that you’ve officially launched, what do the next six months look like for you?

Now that we’ve launched out of beta, we’re looking to scale – through merchant acquisition, partnerships and a countertop retail solution.