Businesses in the towns of Bray and Greystones, Co Wicklow, have been the test bed for new fintech start-up VillagePod, a payment system that has an emphasis on "shop local".
The system is at its heart an app that acts as a payment sytem for locals doing business in the town but with added benefits in terms of incentives and charitable donations.
"It's a human trait that people seek connection. People want to feel that they're doing some good in their own lives," says co-founder Cormac McKenna.
“It’s a community-based platform. There’s no point ... figuring out nationally if it’s going to work – we have to see it working in a relatively limited local area. We chose Bray/Greystones [as the pilot] area, partially because I’m from around here, but also because I know people around here. We can talk to people more openly about what we’re doing. We limited the pilot to 50 retailers. It’s really just using the strength of who we know around the area.”
While in some respects VillagePod has similar features to the other fintech start-ups, the focus on creating business or keeping business in the local community gives it a unique twist. The business is building on the idea of making payments an experience.
“The ability to pay, in itself, is not a new thing. It’s not something that people really have a problem with. Debit and credit cards work fine – it’s what we build on top of that. That’s where it begins to make sense – things like loyalty features and gifting; small businesses getting into the digital gifting market that they don’t really access at the moment. That’s what’s really exciting.”
One of the options retailers have with VillagePod is to offer cash back, either 1, 2 or 3 per cent on each transaction but the incentive is not mandatory to signing up.
“We suggested those levels to retailers. This is not about 20 or 30 per cent, and unsustainable discounts. We felt those amounts sufficient to recognise people for spending their money. In that sense it’s a loyalty scheme. It doesn’t need to be at a higher level that’s unsustainable for the retailer.”
One retailer that has adopted VillagePod is running specialist Amphibian King. It is offering the 3 per cent cashback in Bray and has been on board with the start-up since its launch at the end of last year.
"It was presented to me that it's very much keeping shopping local. This was coming up towards Christmas, actually, so it's when you're all conscious of shopping local. Rates-wise it was competitive enough, so we took a chance on it," says owner Damian McKeever. "It's competitive enough with Visa, Laser and all those transactions. We give VillagePod users an extra 3 per cent cash back, and there is a charity donation added to that as well – we support the Gavin Glynn Foundation. I think it's good to be involved in something that's trying to encourage people to shop locally."
The charity donation is taken from every VillagePod transaction and donated to the retailer’s chosen charity, which customers can see on the app at the time of purchase.
McKeever has already benefited from the new custom the association with VillagePod has given him. “From a business point of view, we’re getting a lot of advertisement on the VillagePod platforms – sometimes people come in and say ‘We saw you on VillagePod’, so we also get sales that way and not just from those who have the app.”
Having used the app himself, he can see benefits for his family.
"Grace, my daughter, is going to be 13 next year. She'll be going to secondary school, and it's a way of tracking what money you give her if it's on the app. I can see where she's spending it in the month. I like the concept of that instead of giving €50 cash and not knowing how she's spending it."
The app is topped up via card payments but it's ready to roll out direct bank account top-ups once all the major banks make this facility available. Currently only Ulster Bank are in this position.
Originally the name of the currency on the app was Village Coin, to signify that the funds were to be spent locally, but since the launch, the “spend local” concept has taken off and it’s been rethought and is deemed unnecessary as an extra marketing tool.
“It’s probably unnecessary for us to do that now,” says McKenna when asked about Village Coin. “I think we’ll probably drop that. People understand the VillagePod concept, that it’s money to be spent locally.”
Another setting is the round-up function, which works similarly to other schemes out there and can be turned on and off. The money is “saved” in the Vault account to be spent locally. All money on the app can be used in local VillagePod stores only.
“It’s not just an in-store solution,” says McKenna. “It’s also a solution for micro business or casual businesses that are around the community. A local language school has just come on board. What the owner of this school expressed to us was a difficulty in being paid. She found that having to invoice and collect payments from people was cumbersome. Now what people are able to do is go in [to the app] and actually select and book a particular course and payment directly to her on this app.”
McKenna comes from a finance background. His co-founder, Marijus Planciunas, brings the technology expertise. They are a team of six working out of an office in Bray, and they already have new additions to the app in the pipeline, which will incorporate digital gifting and loyalty schemes but the initial roll-out of the MVP was to embed the ideas of community into spending.
“The way that manifests itself, at the moment, is highlighting and supporting local businesses and helping people follow through on what they say is important, which is helping those around them. It’s a platform to strengthen those communities.” Watch this space.