How Startups Can Turn Payments into revenue

After years of readily available capital, startups and small to medium sized businesses are facing a new reality – the need to live within their means. With venture capital funding evaporating, obtaining profitability is the new North Star for founders as they look to weather the current environment.

Many companies looking to reduce expenses focus on doing more with less by cutting staff or trimming non-core products and services. For merchants trying to lower expenses they often see credit card fees as non-negotiable and a necessary cost of doing business. This is especially true of start-ups looking to compete with larger more established businesses. However, that doesn’t have to be the case.

During the inaugural episode of The Interchange, Lynk’s new podcast, our Founder and CEO Nabi Awada explained that the U.S. banking system trails much of Europe and Australia when it comes to how payments are processed and when merchants have access to their funds. In these countries, bank-to-bank transfers make the flow of capital less costly and more efficient.

Today, in the U.S. merchants pay anywhere between 2.5-5% in processing fees to allow their customers to pay by credit or debit card. For a business generating $100 million in revenue that’s $2.5-$5 million a year. In addition, it can take up to 10 business days to receive funds. 

Awada says the payment platform in North America was ripe for disruption, and Lynk was born out of a belief that there could be a safe and secure solution for businesses, especially fledging startups, to reduce the cost of payments and receive instant disbursements.

Although a 5% fee and waiting to receive funds may not be an issue for large established businesses, the current system puts smaller businesses looking to optimize cash at a significant disadvantage.

“Payments can be revenue generating, they don’t need to be part of a businesses cost structure,” said Awada, who said Lynk’s newest product, Pay by Bank, addresses the top three pain points for most businesses – cash flow, high processing fees and customer retention.

Pay by Bank is designed to provide startups, small- to medium-sized marketplace and gig economy companies a secure alternative to high credit card processing fees and immediate access to their funds. 

How Pay by Bank Works 

Pay by Bank is not looking to replace or compete with credit cards, which customers often turn to because of reward programs. In the US, debit cards account for more than 60% of online transactions and none of those offer loyalty rewards for consumers and and have high processing fees for the merchant. Pay by Banks allows the merchant to take the fee savings and repurpose those for loyalty programs thats drives repeat business.

Lynk’s fee ranges between 0.5-1% per transaction, significantly less than typical card fees of 2.5-5%. 

Pay by Bank seamlessly integrates with existing eCommerce or app payment flows, making it easy to use. A consumer links their bank account by selecting Pay by Bank at the checkout. 

Another advantage of Pay by Bank is it reduces a merchant’s transaction failure rate to nearly zero. Pay by Bank also utilizes a proprietary authorization method that removes the possibility of unauthorized transactions, chargebacks and fraud, including friendly fraud which is now the No. 1 reported fraud source affecting merchants. 

Businesses have access to their revenue in real-time, giving them the ability to pay their delivery personnel and others immediately without impacting their bottom line. 

In addition to reducing expenses and making funds immediately available, businesses have the opportunity to use their savings to build their own loyalty programs that drive report business. 

To listen to the podcast, click here. You can learn more about Lynk, schedule a demo or sign up for the Pay by Bank waitlist at www.trylynk.com/waitlist.