Digital Transactions Authoritative, insightful and timely information for payments professionals
Bling Nation Ltd., which late last year unveiled a private-label payment network intended for local transactions (Digital Transactions News, Nov. 19, 2008), this week announced it has signed up its first financial institution and has been processing transactions for it in Colorado. The State Bank, La Junta, went live on Bling Nation's network May 21 and has 38 local merchants accepting the company's contactless-payment tags. So far, the bank has issued about 100 tags, says Brad Rose, vice president of information technology security at The State Bank. More banks may be signing up before long. Meyer Malka, co-founder of Palo Alto, Calif.-based Bling Nation, says his company's plan is to sign up eight to 10 community banks by year's end in a variety of geographic locations. “We are calling on areas where the bank has a high deposit market share, there is a high number of small and medium-size merchants, and the bank is looking to grow deposits and relationships,” he says in an e-mail message. Rose tells Digital Transactions News his bank was attracted to Bling Nation's Community Payments Service as a way to help revive La Junta's downtown business district, which he says has suffered with the arrival of so-called big-box merchants. He says the bank also hopes the payment system?which allows community banks to act as both issuer and acquirer, signing up both local businesses and residents?will augment its commercial deposit base. So far, 60% to 70% of the merchants that have started accepting the tags are new to the bank, Rose says. The contactless tags are slightly larger than a postage stamp and typically are affixed to a mobile phone. Consumers wave or tap their phones to perform transactions, with settlement occurring against their checking accounts. Since both users and merchants are customers of the bank, all transactions are on-us, leading to cost savings that merchants can use to fund loyalty programs, according to Bling Nation. Bling Nation's platform works through the bank's core-processing system, an ATM switch, or an online-banking provider. In La Junta, The State Bank is stocking Bling Nation's contactless readers, installing them as merchants sign up. “It's very easy,” says Rose. Local merchants are enthusiastic, says Rachel Wallace, marketing director for Wallace Oil, an eight-store gasoline and convenience-store chain that operates in and near La Junta. Some Wallace Oil stores have been accepting Bling Nation since May. “Merchants are really excited,” says Wallace, who is also president of the local chamber of commerce. “It's growing day by day.” She says the product has handed The State Bank a competitive edge as merchants switch accounts to the bank to be eligible to use the payment platform. So far, the three Wallace Oil stores in La Junta, which have been accepting the payment method the longest, are getting 10 to 15 transactions a day, Wallace says. The stores are offering Bling Nation users $5 off on in-store merchandise after five visits, she says, though she adds the company is still working out its rewards offers. She says it didn't take long for her to sign up once she met with Rose and heard about the program. “Within 10 minutes I thought it was a wonderful idea,” she says. “I got it right away.” Wallace will not discuss pricing for Bling Nation, saying her company has negotiated rates with The State Bank. She does say Wallace Oil is saving between 1.5 and 2 percentage points per transaction compared to what it pays to accept Visa, MasterCard, American Express, and Discover. Pricing is a major selling point for Bling Nation. “The rates are structured such that merchants can benefit from a lower cost of acceptance and banks can earn higher profits per transaction,” says Bling Nation's Malka. “The cost to participating community-based financial institutions is such that each transaction is more profitable than a signature-debit transaction.” Rose says his bank issues a Visa debit card at account opening. But he says he sees strong reasons for promoting Bling Nation for local usage. “The bank sees a tremendous business advantage, and we see it as an extreme value for the merchant,” he says.
