As the vacation season approaches, your desk drawers are prone to begin filling up with reward playing cards: these plastic rectangles that appear like cash however so usually sit unused, forgotten and forlorn.
The U.S. reward card market is estimated at greater than $200 billion, but the business is dominated by two little-known corporations, Blackhawk and InComm, and has seen little innovation in latest a long time, whilst cell cost options like Apple Pay and Google Pay have grown in reputation.
On Me, a brand new startup based by Google veterans Darragh Meaney and Sitar Harel, says it’s poised to disrupt this duopoly with a digital-first reward card product not restricted to particular person retailers. On Me has raised $1.7 million in funding from cost large Mastercard, in addition to the highest New York-based enterprise agency Lerer Hippeau.
“A lot of the gift card plays in the last 20 years have been wrappers around existing, very old technologies,” Meaney instructed Fortune in an interview. “What we want to do is build new technology rails from the ground up.”
Present financial system
Present playing cards could look like a wierd endeavor for 2 former Google workers, however Meaney says he was motivated to depart his “cushy” job after seeing the technological progress of cell wallets. Relatively than reward playing cards for particular eating places or shops, Meaney and his cofounder’s concept was to construct a digital model that might be targeted on particular hobbies, like operating, for use at a community of shops and built-in instantly into Apple Pay or Google Pay.
He argues that single-merchant reward playing cards function on the precept of “breakage,” or issuers incomes income as a result of reward playing cards go unspent, with Blackhawk and InComm providing the infrastructure. “It really is the classic VC story of a $200 billion industry that’s ripe for disruption,” Meaney instructed Fortune.
On Me faucets into particular shops that settle for Mastercard, permitting its reward playing cards to be customizable throughout completely different retailers. In return, On Me earns affiliate income from {dollars} spent at shops, moderately than counting on unredeemed balances.
Mastercard invested within the firm with out taking fairness in return, as a substitute approaching board as an advisor. Meaney attributes Mastercard’s resolution to desirous to carry the $200 billion reward card financial system onto its personal community of retailers. “They’re quite keen to get more interesting stuff on their rails, versus other places,” Meaney stated.
He admits that reward playing cards are simply taking cash and “making it less fungible,” however argues they’re nonetheless standard as a result of most individuals don’t really feel comfy giving money, and even cash-based debit playing cards, as items. Meaney says that by basing On Me round completely different hobbies, from magnificence to dessert, reward playing cards can develop into much more customizable.
Isabelle Phelps, a associate at Lerer Hippeau, instructed Fortune that her agency was most enthusiastic about On Me’s up to date cost rails. “It’s enabled secure, personalized, gifting at scale that we think meets the needs of users,” she stated, including that “our phones are our wallets today.”
On Me launched in November with a crew of six and plans to increase the 70-odd classes obtainable as reward playing cards, accounting for round 2,000 retailers.
