Financial services startup PayNearMe is not as well-known as some of the other high-tech players in the game — largely a consequence of who its target audience is. The firm’s focus are not tech-savvy players after all but instead the 25 or so percent of U.S. consumers who are unbanked and have been left behind in the digital payments revolution that has made everything — from consumer goods to utilities — easier and quicker to pay online.
And so PayNearMe has tapped into 7-Elevens, Family Dollars and Ace Cash Express stores to transform customers’ cash into payments.
Recently, TechCrunch reported, however, that there are reasons to be concerned about PayNearMe’s path, which the publication referred to as “bumpy.”
As evidence of that bumpy road, TechCrunch points to the ending of PayNearMe’s partnership with Family Dollar stores to accept rent payments. Family Dollar offered no comments, but one landlord source did tell TechCrunch that there were concerns about the amount of customers that were walking around with large amounts of cash to pay rent.
TechCrunch also points to a funding round that it reports PayNearMe failed to secure, and reports that employees were told the firm was looking to raise between $50 million and $80 million but settled for a $14 million round from earlier investors.
In fact, according to this source, PayNearMe abruptly laid off roughly one-third of its employees — mostly in sales, marketing and business development — several weeks ago, pressured by investors to scale back on costly efforts to cultivate relationships with third parties and to concentrate more instead on its B2C efforts. The piece also reported that the firm might be looking to limit its retail relationships as part of a pivot in their business model.
TechCrunch further reported that CEO Danny Shader declined to comment for the story, though an unnamed source denied the scale of the layoffs and stated that the firm was not in the market for a new funding round.
PYMNTS, on the other hand, did catch up with Shader, who offered in an email his specific objections to the TechCrunch piece.
First, he noted that the firm grew enough in one month to offset the hit from Family Dollar due to rent and that the firm is “growing their retail relationships,” not shrinking them. He also noted that the tales of the funding round were simply untrue. “We didn’t set out to raise $80 million and never communicated that to our employees,” Shader told PYMNTS.
And, while he did confirm some layoffs, he noted that the number was far under a third and was balanced out by expanded hiring in other areas.
Finally, though the TechCrunch article tells the sad tale of an employee who moved across the country to work for the firm, only be to swept up in the layoffs and fired on his third day, Shader says this event never actually happened.
“No RIF’d employee ever moved across the country — or even across a state — to work for us,” Shader told PYMNTS.
Still, there were elements of TechCrunch’s reporting Shader liked. He said he was “glad to hear that I’m well-liked,” according to the story.
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