How ACH Payments Pump Up C-Store Sales

ZipLine Brings Value To ACH Payments

Want to know how a payments method that only a small fraction of consumers actually use increases sales by 6 percent? Stephen Goodrich, president and CEO of ZipLine, told Karen Webster that’s what’s happening in the gas station and C-store vertical, where merchant-branded mobile apps that run on ACH rails are doing just that. Ready to do the math?

It’s a movie we’ve all seen before.

Merchant-driven payments alternatives to the existing card brands come to market, only to quickly see that their appeal to merchants doesn’t translate to consumers, who don’t really care (or understand) the economics of the payments system.

For consumers, the certain draw of being able to use what they have in their wallet and use it everywhere, in most cases, trumps having to sign up for something new that isn’t accepted where they like to shop.

On the flip side, merchant adoption of alternative payment platforms takes more than offering a lower-cost payment method. Though it may help relieve the costs of payments acceptance, it needs to anchor some other source of value that drives incremental sales in some other area.

It’s also a movie that typically has an unhappy ending.

But ZipLine thinks it can make the ending different for a merchant segment and a set of consumers where the value proposition and “ask” is worth making the effort to change.

Stephen Goodrich, president and ­CEO of ZipLine, has targeted the convenience and petroleum vertical using a merchant-branded payments method that is deployed in 7 percent of the c-store market and is servicing more than 130 convenience and petroleum merchants.

Goodrich said that ZipLine has been able to succeed where others have not due to one significant shift: using savings to drive rewards, a lesson the company learned from its roots in the supermarket vertical, where it quickly became apparent that cost savings alone do not drive adoption by merchants or consumers.

“Rather than have the merchant simply pocket the savings on interchange fees, we translate or convert that savings into some type of reward to the consumer,” Goodrich explained, noting that the change has helped to drive adoption with both consumers and merchants.

The payment method offered by ZipLine not only puts some money back on the bottom line for merchants but uses loyalty as a way to engage the consumer, incentivize them to adopt and remain sticky customers.



In the convenience and petroleum space specifically, ZipLine’s model focuses on rolling back costs at the pump. Merchants are able to leverage the low cost of ACH rails versus traditional card rails and leverage mobile to create what Goodrich describes as a very attractive reward that keeps consumers coming back for more. Each mobile app is branded with the name of the c-store or gas station, and the savings get pumped back into the account that the consumer establishes as part of the app enrollment. That, Goodrich says, is what keeps the consumer sticky.

So sticky, in fact, that Goodrich says that when consumers enroll with the product, they typically begin to shop almost exclusively at that retailer. A change in consumer behavior that Goodrich said translates into more spend per trip and more frequent visits in-store for (high-margin) purchases, at an average of $2 to $3 more per in-store purchase.

“Once that begins happening, the retailer not only drives more incremental sales to her store but now also has a direct connection to the consumer through which they can now deliver offers and other content,” Goodrich said.

Though rewards have the power to drive consumer adoption, once that consumer is enrolled, the merchant has a platform and the economics, Goodrich contends, to open the door to continued access to deepen the consumer relationship.

But what about the bigger ask of the consumer — the ask of them to download another app to their phone? Is saving a few cents per gallon really that much of a motivator?

ZipLine says that it is, and in the case of convenience stores and gas stations, consumers are very willing to install the app if it means they get something in return. That something in return can be as simple as receiving a message on the mobile device while a consumer is pumping gas that there’s a free coffee waiting for them if they come into the store. Goodrich says that ZipLine’s experience is that, whether it’s a free donut, double rewards points or a discount on gas, most consumers are ready and willing to accept the offer — and do.



ZipLine estimates that it has over 1 million active users across its merchant-centric mobile platform, with its highest-performing merchant having a nearly 40 percent ZipLine penetration of its payment mix.

“That’s extraordinary when you think that usage actually exceeds well-known card brands,” Goodrich said, adding that ZipLine has “quietly snuck up as a relevant payment type in that regard.”

He attributes it to the underlying premise that it’s not so much about a lower-cost form of payment but the fact that merchants can cultivate a more meaningful and direct relationship with a customer.

Goodrich says that the real proof in the pudding is that, even when gas prices began to drop and didn’t surge right back up as they often do, ZipLine saw virtually no impact to its adoption and usage rates. Even Goodrich admitted he was a bit nervous about what might happen when the nearly $5.00 a gallon prices dropped to roughly $2.00 per gallon but was pleasantly surprised to see that sticky consumers actually remained sticky.

“What happens when prices are high is that a consumer that may have played the field and shopped at a variety of places for petroleum and in-store products will now typically shop at that merchant only, and for some of our retailers, that represents a 5 to 6 percent increase chain-wide,” Goodrich noted.

“That’s pretty tremendous when you think about a retailer getting a 5 to 6 percent increase in sales based on a payment type that is probably only used by about quarter of its consumers.”

Now, Goodrich says that ZipLine is beginning to look outside the c-store vertical again and is working with companies that already have mobile integrations with a variety of POS terminals but may not currently have an ACH platform in place as part of that offering.

Goodrich said the capabilities are in place that would allow ZipLine to turn its system on to be used among multiple merchants. It’s even had discussions with some of its convenience and petroleum partners about identifying synergistic retailers or other verticals where this payment type could be accepted, such as CVS or Rite Aid.