The private-label credit card company Tandym is adding online retail clients, including bike gear company Jenson USA and fashion retailer Unique Vintage, as it prepares to allow in-store programs later this year.
Chicago-based Tandym, which has raised $10 million, lets retailers create their own digital cards and rewards program so they can keep customers coming back to use their points at that retailer. It also charges merchants lower fees for transactions than those levied with standard card programs from Visa and Mastercard.
“We don’t want to be beholden to the legacy technology, to the legacy process,” Tandym CEO Jennifer Glaspie-Lundstrom said in a recent interview.
While the typical interchange fee for a merchant sending a customer’s credit card transaction over those networks is between 2% and 3%, Tandym charges only half a percent, significantly reducing that cost for merchants.
As a result, Tandym’s program makes it more affordable for smaller businesses to extend credit to their customers, said Glaspie-Lundstrom, who was formerly the managing vice president of product and technology at the giant card issuer Capital One.
“These merchants (who use the big card networks) are all funding the big banks’ loyalty programs,” Glaspie-Lundstrom explained.
Businesses with less than $1 billion in annual revenue haven’t historically had access to the type of credit card services Tandym is making available, Glaspie-Lundstrom said.
That’s because they weren’t typically lucrative enough for the larger card companies, but that has begun to change in the era of fintechs offering small- and mid-sized businesses more access to credit and debit services. Indeed, other companies, such as Sionic, have also begun to tout reward programs.
Another pitch for Tandym is that it’s easier to use because it can be added to a retailer’s website in 30 minutes. Tandym has its own capital to extend credit to a retailer’s customers.
While consumers can use Tandym’s card account at multiple retailers on its network, also including costume jewelry retailer Heidi Daus and Baker Creek Heirloom Seeds, the points earned are only good at the retailer where they were earned. For at least one retailer on the network, Jenson, the points expire after 12 months, but at others, they don’t expire at all.
Tandym, which has 17 employees, is also expanding its offering, aiming to make debit options available for consumers and taking its services in-store later this year. For the debit services, the company had plans to start a beta offering this month, Glaspie-Lundstrom said.
“Currently, we’re only doing online, but we’ll be launching into brick-and-mortar most likely toward the end of Q2,” Glaspie-Lundstrom said, noting that the company is making plans this month to go live with a retailer in-store. Because Tandym offers a digital card, in-store users would tap into the card via their phones.
Tandym charges a $10 late fee if consumers don’t make payments on time. Asked if the Consumer Financial Protection Bureau’s recent proposal for a $8 cap on such fees would make a difference to its program, Glaspie-Lundstrom said it wouldn’t, but she still opposes such government intervention. She sees the kind of innovation and competition that Tandym is bringing to the market as a better response.