New Zipmark Blog

Everywhere you turn these days, technology is driving business processes to be more efficient.  While maximizing the impact of limited resources is the the day-to-day goal for nearly every small businesses, we continue to see most non-retail businesses accept archaic and costly paper checks. Most of us grew up in a time when personal checkbooks were part of the standard financial toolkit and in certain cases checks are still the preferred method of payment.  Accepting checks comes with an enormous amount of risk and hidden costs.  Here are some things you need to know if you choose to take them:

1) Accepting a check is a leap of faith:  All card payment methods verify funds at the time of purchase.  Accepting a check on the other hand, is a leap of faith that the account being drawn on has sufficient funds to cover the transaction.  There typically are not many alternatives for a merchant or biller when a check bounces.  Overall check volume may be declining, but the percentage of bad checks is increasing as found by the analysts at Celent.

2) No matter what you think, checks are not free: When asked why they still accept paper checks in light of so many electronic options with lower risk, merchants most often cite the fact that checks are free.  There are many sources of research on the cost of issuing and accepting paper checks ranging from $4 to $10 per check when you factor in labor costs.  Businesses also pay for fraud protection services and in the case of a bounced check, punitive fees from their bank.  The bank fees may be separate line items or bundled into the account servicing fee.  So, while checks may not have a transaction fee, the costs are very real and can be more than businesses think.

3) No security features at all:  Some merchants may require ID to accept a check, but if consider it, your bank routing and account number is out there for anyone to see.  Not to mention your legal name and address as well.  On face this is a completely unacceptable risk and there is no way to take advantage of new technology such as tokenization and strong encryption which is securing the universe of electronic payments. Moreover, the consequences of a compromised checking account are far greater than typical card fraud.  In many cases the account holder is on the hook for fraudulent transactions because checking accounts do not carry the same liability limits as card accounts.

4) Speedy? Not really:  For most businesses, particularly small businesses, cashflow is a crucial issue.  Checks are fraught with problems if you need to predict when a payment is going to hit your account and become available for you to use.  Some dependencies include your bank's hours, the issuing banks geography, size and policies, availability rules and transaction size.  

by Galina Khorkova

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Over the last few months, our team has been hard at work trying to take the pain out of payouts. As a result of that effort, we’re pleased to introduce our latest service: Zipmark Deposit.

Our #1 priority is to eliminate pain for our clients. Since we started Zipmark in 2010, we've heard the same pain points again and again: reliability, transparency and support. To handle payouts, companies often have to hire new staff, build internal infrastructure, and put more resources on customer support. What does all of this mean? Fewer resources and less energy focused on actually growing the business.

We realized growing businesses needed a payables platform that they could set up quickly, and scale up without ongoing work. To achieve this goal, we act like an extension of your team -- not like a payment processor or vendor. That means:

Deposit pool funding is easy, and same day -- send us funds via wire, ACH, or Zipmark. Likewise, you can send us the information for your payments via file upload, API, or SFTP.

We will collect and validate bank account information to make sure payments go to the right place, and get there reliably.

Zipmark is your support team. If there is a problem with a payment, we will handle the entire error resolution process, including communicating with the recipient and the recipient's bank.

We speak English. You don’t have to deal with any cryptic bank error messages or unexplained payment failures. We tell you exactly what is going on.

This is the first payout solution designed for growing businesses. As your business grows and changes, Deposit scales to meet your needs. Simplified, reliable clearing schedules, and quick transfers, give businesses increased flexibility while allowing you to send funds right on time.

BOSTON, MA--(Marketwired - Jul 30, 2013) - Zipmark™, a pioneer in mobile and online payments, today announced that RE/MAX® Executive Realty, a RE/MAX affiliate, has made Zipmark available as a rent payment option. Residents of RE/MAX Executive Property Management now have the ability to pay their rent online or via a mobile phone using Zipmark's secure digital check. Once payment is submitted with Zipmark, funds are deposited into the appropriate RE/MAX Executive Realty operating account on the next business day.

RE/MAX Executive Property Management residents now no longer need to mail a check or visit the property manager's office. RE/MAX's deployment of Zipmark follows on the heels of both IBS and RentShare selecting Zipmark to conduct digital check rent payments for their respective property management clients.

"RE/MAX Executive Realty is staying ahead of the curve in leveraging payment technology to simplify and improve the payment experience for both the property manager and the residents," said Jay Bhattacharya, CEO and co-founder of Zipmark. "Digital checks from Zipmark are the best in class solution as businesses seeking to improve the speed, security and convenience of payments. The rental market is hungry for a payment option that addresses these needs and keeps it easy for tenants. Which is why replacing outdated paper checks with Zipmark is a smart choice all-around." 

"I've tried to ensure that our residents have access to the most convenient tools available. Residents have been asking for the ability to pay online for a while," said Bill Wright, Founder of RE/MAX Executive Realty. "However, other online payment platforms didn't make my life or my residents' lives easier. Zipmark is great for my business and it's great for my residents. No complaints!"

About Zipmark Zipmark's goal is to remove barriers between businesses and their money by bringing the checkbook into the 21st century: reducing the amount of time and money it takes to make a check payment, eliminating the possibility for bounced checks and taking all risk out of the equation for payer and payee alike. Zipmark was launched in 2010 by Jay Bhattacharya and Jake Howerton, and is based in New York City. To learn more: www.zipmark.com.

Zipmark's investors are Village Ventures, Contour Venture Partners, NYC Seed, High Peaks Venture Capital and the New York City Investment Fund.

About RE/MAX Executive Realty  RE/MAX Executive Realty was founded in 1992 and has offices throughout Massachusetts. RE/MAX Executive Realty was recognized by RE/MAX of New England both in 1999 and 2001 as the Outstanding RE/MAX Franchise of the year. In 2010 RE/MAX Executive Realty was named by RE/MAX International as one of the Top 50 Franchises in the United States.

NEW YORK, Apr 10, 2013 (BUSINESS WIRE) -- Zipmark(TM), a pioneer in mobile and online payments, today announced a strategic partnership with Rearden Commerce, Inc., the creator of Deem(TM), the largest and most diverse syndicated commerce network, to enable merchant payments to Rearden using the Zipmark platform. The partnership enables Deem's merchants to pay for offers and marketing fees via Zipmark digital check, reducing the costs and complexities that merchants typically face in payment processing. Zipmark's unique patented payment platform and user experience will allow Deem to onboard its merchants quickly and confidently.

"Zipmark was created to address the speed and cost challenges faced every day by businesses of all sizes," said Jay Bhattacharya, CEO of Zipmark. "Zipmark is the first true modernization of the checkbook. The ACH network hasn't changed in decades and businesses have reverted to paper checks because of the lack of innovation. It was high time for check innovation and Zipmark's secure digital check is the answer. By adding Zipmark as a payment option for its merchants, the Deem platform will be able to collect fees via secure digital check overnight."

The Deem platform is a highly configurable white-label solution that can be embedded virtually anywhere across web, mobile and other social surfaces. The technology powering the platform - its "relevance engine" - correlates the identity, preferences, location and context of a user with the unique availability, capabilities and offerings of merchants to deliver personalized deals and offers. In this virtual commerce circle, the customer, merchant and partner site all gain significant benefits: the customer experiences more relevant content and an easy, seamless, direct purchase; the merchant gets broad reach targeting relevant customers and high performance marketing in the form of transactions versus leads; and the partner maintains customer engagement, retains brand consistency and shares in revenue.

"Deem partners with merchants across a wide variety of industries, but of particular importance to us are local merchants - typically small businesses," said Patrick W. Grady, founder and CEO of Rearden Commerce, Inc. "Deploying Zipmark's leading-edge technology will enable us to settle payments with our local merchants in a new and highly efficient manner."

About Zipmark

Zipmark's goal is to remove barriers between businesses and their money by bringing the checkbook into the 21st century: reducing the amount of time and money it takes to make a check payment, eliminating the possibility for bounced checks and taking all risk out of the equation for payer and payee alike. Zipmark was launched in 2010 by Jay Bhattacharya and Jake Howerton, and is based in New York City. Zipmark's investors are Village Ventures, Contour Venture Partners, NYC Seed, High Peaks Venture Capital and the New York City Investment Fund. www.zipmark.com

About Rearden Commerce

Rearden Commerce is the creator of Deem(TM), the largest and most diverse syndicated commerce network that enables the syndication of highly relevant transactional commerce experiences across any online or mobile surface within the business-to-consumer and business-to-business markets. Deem leverages big data, social collaboration, semantics and advanced machine learning to optimize the exchange of goods and services between buyers and sellers, resulting in a personalized, white-label, one-to-one marketplace. For users, this means highly relevant and seamless commerce experiences and for merchants (aka advertisers), this means true performance-based advertising. Deem provides network participants with potential access to over 200 million consumers, 10 million businesses and a highly-diverse base of 1.2 million national and local merchants and generates revenue from its network via transaction fees and subscription licensing fees. Rearden Commerce, Inc. is headquartered in Foster City, California.

Zipmark speeds up the time it takes for checks to clear, easing small businesses' cash flow pain.

Jeff Ng keeps a close eye on cash flow at his digital-products studio, Eastmedia. With checks from clients sometimes taking more than 45 days to arrive and clear, he recently tried Zipmark, a service to speed up access to the funds. "The money comes to me literally in one day," he says.

Zipmark, launched by former Citigroup executive Jay Bhattacharya in March 2010, lets businesses get this next-day access to funds from checks deposited in their business bank accounts in exchange for a 1% fee on the transaction, up to a $5 maximum.

"It helps me run my business a lot more efficiently," said Mr. Ng, whose business in the Flatiron district employs 10 people. Now, when he sends an invoice by email using FreshBooks, he can give clients the option to send money by electronic check from their bank accounts to his.

Zipmark may make sense for businesses that need to access cash right away and for which checks are a common payment method. Taking credit cards is the alternative, but card processing fees are high, averaging about 2.9% plus 10 cents per online sale, said Mr. Bhattacharya.

Low-cost alternative to credit cards

Matt Harris, managing director of the New York office of Bain Capital Ventures, said he invested in Zipmark at his previous firm, Village Ventures in Williamstown, Mass., because it seemed like a good alternative for merchants, rather than accepting credit cards.

"A model built on checks could penetrate as a lower-cost model," he said.

The fees merchants pay for accepting credit cards depend on their industry and the type of credit card a customer uses. For example, American Express charges computer programming businesses 2.89% to 3.2%, plus 15 cents per transaction in its traditional merchant account. Using Square, a service that turns a mobile phone into a card reader and offers next-day deposits, merchants pay a flat fee of 2.75% per transaction.

Mr. Bhattacharya, who formerly ran Citi's internal venture-capital arm, started his nine-person business with serial entrepreneur Jake Howerton, who has built billing systems.

They noticed that banks were sitting on checks deposited in business bank accounts. The Federal Reserve's Regulation CC, which tells banks how long they may hold checks, gives them broad latitude. For "nonlocal checks," written from banks outside the same check-processing region, they can wait five days, for instance. And for new bank accounts, they can wait up to nine days in certain cases.

While many business owners grouse about the system, banks "are not incentivized to change it," Mr. Bhattacharya said. "They're making money on the float."

According to Nat Wasserstein, who often advises local businesses with cash-flow problems at his crisis-management firm, Lindenwood Associates, Zipmark could help many businesses that now depend on factoring, a financing option that is typically more expensive. "It's like having a factor without having to pay a factor," he said. Zipmark offers volume pricing for businesses that do a large number of transactions.

Businesses can use Zipmark if they prepare invoices using software such as WorkingPoint, Apptivo, Toast Invoice, FreshBooks and Harvest or a variety of real estate and utility payments software programs, said Mr. Bhattacharya.

Participating merchants can send clients an email asking if they'd like to pay electronically through a checking account. Customers have the option to use an iPhone app from Zipmark to scan bills and QR codes and make secure electronic check payments from their bank accounts to registered merchants for free. Zipmark can then use its internal risk-management algorithms, which tap into public information such as credit histories and privately negotiated data to instantly assess the likelihood that a customer's check will clear.

"Our goal is to get the businesses paid as fast as possible," Mr. Bhattacharya said. If a check were returned and a customer failed to deposit the funds to cover it, Zipmark would send it to a specialized check-collection agency, he said.

Launched in the Partnership Fund for New York City's FinTech Innovation Lab, Zipmark has raised just under $3 million in seed funding from investors such as Village Ventures, New York City firms Contour Venture Partners and High Peaks Venture Partners, and NYC Seed, the city's seed fund for startups.

About six months ago, Zipmark made a deal with Supply Hog, an online building supply store, that lets contractors pay by check. "Now we do about 80% of their dollar volume," said Mr. Bhattacharya.

Zipmark's payment service targets the dying — but not dead yet — paper check.

Our company "allows businesses to send and receive digital checks to take away the pain – the time it takes to clear and the risk – of dealing with paper checks," says Jay Bhattacharya, CEO of Zipmark.

Zipmark allows both consumers and businesses to link checking accounts so money can be immediately transferred when a payment needs to be made. Zipmark creates the digital check for users to submit for settlement at the participants' banks. It charges a 1% fee and caps its fee at $5 per transaction to make its pricing more appealing than wires.

Other companies, such as PayNearMe Inc., came to the market to target businesses that rely on cash – usually overlapping with those that depend on checks. PayNearMe Express allows consumers to make cash payments electronically.

Both Zipmark and PayNearMe sell to real estate property managers and utility companies, which are both highly reliant on cash and paper checks.

Zipmark addresses the 45,000 rural utility companies that have outdated online billing systems or don't accept payments online at all, says Bhattacharya. Zipmark launched to the public in January, and although Bhattacharya wouldn't reveal the number of users on the platform, he says Zipmark is processing millions of dollars a month.

US firm Zipmark plans to expand its mobile payments service for SMEs with the launch of an Android app in the second half of 2013, according to founder Jay Bhattacharya (pictured), speaking with Mobile World Live.

Zipmark’s clients are SMEs who need to collect regular payments from their customers. They are typically utility companies, property managers and self storage firms to whom Zipmark offers faster processing of existing payments from their customers.

The customer of a utility company accesses the Zipmark service by downloading its app, currently only available for iOS devices.

Zipmark hopes utility company customers will want to access its service because it is a less cumbersome means to pay their bills. For instance, the firm adds QR codes to utility bills so users can scan and then pay bills more easily.

“We are giving companies the opportunity to move from being inefficient to a modern, mobile-first process,” said Bhattacharya, a former Citigroup executive.

The firm guarantees payments to its clients within one business day, effectively taking over the risk of payment collection itself. In return, it charges its clients one per cent of the sum processed with a maximum of $5 per transaction.

The bank relies on its clients’ customers having their own bank accounts. Banks are also Zipmark’s main competitors, so leaving it reliant on rivals.

Bhattacharya argues Zipmark is protected by federal regulation in the US which means banks must handle cheques originating with the firm. He also said Zipmark is looking to partner with certain banks to further speed up processing time.

As payments evolve, many a headline has declared this or that payment method "dead." But Zipmark, a New York-based mobile payment startup, is determined to keep one payment method alive: the check. That's not to say that Zipmark is making anyone actually write paper checks, but the company is bringing checking accounts into the mobile payment era. 

According to company founder and CEO Jay Bhattacharya, there are still plenty of transaction types for which checks are used today and that's where Zipmark wants to be.

"We want to be known as good at certain types of payments," Bhattacharya said. For instance, checks still proliferate in business-to-business payments, he said, as well as for rent, utility and subscription service remittances. Bhattacharya said the transactions Zipmark is targeting are unglamorous, but that's fine with him. "I'm OK with not being sexy," Bhattacharya said.

Many of us use PayPal quite a bit to send and receive money, I know that I do. In fact Paypal is integrated into many online services, such as Eventbrite – so many of us use it more than we think.

There’s a new service I’ve been looking at called Zipmark, which let’s vendors/businesses/people transfer money from their bank account to the recipient’s bank account – instantly. No middleman.  And, unlike services like PayPal, who charge higher transaction fees, Zipmark’s transaction fee is only 1% with a $5 cap.

Here’s a detailed overview of how it works from a Zipmark spokesperson:

Zipmark doesn’t require you to constantly log-in to your account to receive or pay money and is not a ”clearinghouse” like PayPal that is actually moving money. Instead, Zipmark allows the payee to send money directly to the payer’s checking account. Below is a step-by-step process of how Zipmark has transformed the payment process for small businesses.

Wanda’s Interior Design sends her new client an invoice for $1,200 via email to her customer, Betty.

Betty receives the invoice, opens it and sees various ways she can pay for it (check via snail mail, PayPal or Zipmark).

Betty chooses Zipmark and a link takes her to the Zipmark registration site where she authorizes her bank to send money to that particular vendor (Wanda’s Interior Design).

Once registration is complete, Betty hits the “pay” button on Wanda’s electronic invoice and she authorizes payment for $1,200.

The next day Wanda’s Interior Design accesses their bank account online and sees a cleared deposit for $1,200 from Betty.

Wanda’s Interior Design offered Betty a secure and easy way to pay her bill once she received her invoice. For Betty, no time was wasted cutting a paper check, placing a stamp on the envelope and inserting the letter in the mailbox or taking it to the Post Office. No money is stored using Zipmark; Zipmark is just helping open the connection between the bank accounts to send and receive money.

“Zipmark secure digital checks improve the way small businesses send and collect money from their customers by bringing check payments into the 21st century,” said Jay Bhattacharya, CEO and co-founder of Zipmark. “Zipmark is as much a risk management platform as it is a payment platform. We take on the risk of the transaction and guarantee funds to billers.”