On Thursday, PayRange which builds small devices to enable vending machines to accept any form of payment, has raised $12 million in Series A round venture financing led by Matrix Partners and the other participants include Nyca Partners, Google Ventures. It also had individual investors like former Google Payments head Osama Bedier and PayPal co-founder Max Levchin.
Portland-based startup, PayRange makes small device that when plugged into a vending machine interacts with an app to allow user purchase items using their smart phone. Customers can use the PayRange’s mobile app to select a payment method that includes credit card, debit card, Apple pay etc and choose a nearby machine that will display the balance to the users. The device is compatible with any vending machine, making it a good way to fit into already existing machines to take credit cards apart from cash may simplify the buying experience for the users. No personal details is sent to the machine and the credit card number are managed securely by a PCI-compliant processor.The small Bluetooth-enabled dongle is priced $49 only.
Startup’s CEO Paresh Patel said, “People often run to the ER without their phone chargers or headphone. At my former company – which was a vending machine operator – we took the same snack machine and removed two food items and replaced with phone chargers and headphones. We priced those items for $12.50 each. The average price of the other items in the machine was $1.25. We could only do this because the machine took cashless payment as almost no one would have had $13 bills on them to make a purchase, since the machines do not take larger bills like $20s.” He also added, “In other words, we solve the last mile problem. We can bring payment to machines that would not have had any other connectivity.”
Currently, more than two-thirds of retail transactions are completed with a credit or debit card, that results in more than $4 trillion of card payments annually in the U.S. Card acceptance has become close to mandatory in all the merchandise stores. When it is compared with the vending industry, an industry where more than 80 million consumers in the U.S make everyday purchase from more than 8 million machine in the nation. But still, around 98% of the vending purchases are made with cash only mainly because it becomes too expensive and complex to implement credit and debit card readers.
Patel said, “The expectation of paying by cash and coin is particularly painful for the tens of millions of consumer who use vending machines as their work or school fridge. They visit the same machine everyday and deserve an easier way to buy their morning coffee, bottled water, sandwich or afternoon snacks. Many visit the vending machine but return empty-handed because they do not have the right change.” The startup PayRange aims to solve this problem by providing the easy and less expensive way to win back the lost sales.
The 18-person startups allows users see real-time inventory analytics and user purchasing data. Until now, the startup is working with over 680 operators in the U.S and Canada that manage a total of one million vending machines with the company’s technology. With the new funds, the company intends to increase the employee team in the coming months as widen its services and technology to more locations around the country.
As the result of the new funds, former Square executive Jared Fliesler would soon become part of the board of directors of the company. Fliesler said, “PayRange applies sophisticated technology in an elegant affordable way to remove all payment friction from the vending experience.” He also added, “In doing so, it generates happier customers and more revenue for operators. It also provides the potential to sell a wider range of products at varying price points and the tools to operate these machines as mini retail centers.”