Targeting the Underbanked

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Lessons for MFD Partnerships: LivingSocial Addresses Merchant Dissatisfaction

What About the Merchants?

As banks increasingly with banish their debit rewards programs or turn to merchant funded discounts (MFDs) to load share costs, there is a key lesson they can learn from Daily Deal schemes: What about the merchants?

Daily Deal providers (Groupon, LivingSocial, Google Offers and Amazon Local) have been challenged to address this central issue and flaw in their strategy.  

Below, we outline both the scope of the problem and the efforts Groupon and LivingSocial are marking to address merchant ill will and attrition.

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Is That Crickets We Hear?

Is Simple Actually Up and Running? or, The Case of the Missing Next Big Thing

(Feb. 2012)  Simple (formerly known as BankSimple) is finally opening its virtual doors to new customers. While arranging a bank depository partnership (necessary to hold customers’ deposits in an FDIC-insured institution) took 2 years longer than founders anticipated, the well-financed start-up, with its impeccable credentials is, apparently, open for business. Or is it?

Every start-up has its can’t miss plan and this is Simple’s: it’s an Alternative to Traditional Banking which appears to mean that it’s a prepaid VISA card with the reporting detail of a traditional online bank and the nimble savings features of SmartyPig.

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Square Converts Underbanked Small Businesses

Payments analysts greeted the arrival of Square with intense curiosity and more than a smidgeon of skepticism. Would a start-up be able to distribute free card readers to any merchant, charge transaction fees small merchants would tolerate AND be able to make money while absorbing a seemingly bottomless exposure to risk? The answer to all of those questions appears to be yes.

Processing more than $11 million in credit card transactions a day, Square has tapped a brand new market by allowing a million small merchants to switch their preferred transaction type from cash to card. That growth from zero to 1 million merchants happened by word of mouth by a company that cannot afford mass market advertising campaigns.

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