Y Combinator-Backed Kash Lets Retailers Offer Starbucks-Like Mobile Payments While Cutting Out Credit Cards

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If you’ve been to a Starbucks in the past year or so, it’s almost guaranteed you’ve seen someone in line pay with their smartphone by opening the Starbucks app and holding a bar code up to a scanner. Kash is hoping to bring the same experience to other retailers and small businesses while cutting out one of their biggest costs: credit card fees.

Users just have to install the Kash app for iOS or Android. Unlike the Starbucks app, which forces you to create an account and enter your credit card information the first time you use it, Kash’s app just shows a green debit card labeled “tap to pay,” and the first purchase is on them. It’s a smart way of jumping straight to the best part of the app experience, even if the card does seem weirdly skeuomorphic in the otherwise flat iOS 7-style interface.

Kash gets around credit cards entirely, letting users pay straight from their checking accounts by entering their online banking log-in info, as you would with an app like Mint. Some people might not be comfortable with that, but Kash promises that it fully covers any fraud that could result from using its app. Since payments are being handled directly, retailers get paid for their sales in a day instead of potentially waiting days or weeks for things to go through traditional processors.

Retailers that sign up for Kash get on-site setup and a free scanner. While Kash doesn’t currently integrate directly with existing point-of-sales systems or any of Square’s fancy tools for retailers, Kash CEO Kaz Nejatian told me in a phone call that retailers it has approached would rather have the separate installation now than wait a few months for those features to be rolled out. Customers seem to be jumping on it as well, as businesses that have signed up so far report that 15-20% of their customers have already tried using Kash to pay.

Small businesses won’t pay anything for quite some time, as Kash doesn’t charge any fees on the first $100,000 of payments in processes. This means that bigger retailers using the service will effectively subsidize early usage by local businesses that sign up.

Once you do pass that $100,000 figure, Kash charges a 1% fee on all transactions it processes. That’s both cheaper and less confusing than the per-month, per-swipe, percentage, and other fees that credit card companies can drop on their customers.

With only 5 employees, Kash already has a backlog of retailers and small businesses that have signed up that it plans to get up-and-running over the next few weeks. Nejatian told me that at its current rate, businesses that signed up in the last few days will be set up in about three weeks.

While Kash originally started in Canada, the company moved to San Francisco to join the current Y Combinator batch. In the last few weeks, it’s managed to sign up dozens of retailers for its beta in the city as well as in the East Bay and in the San Jose/Mountain View area.

Kash locations