The most immediate relationship the average person has with fintech comes in the form of digital payment services. Apps like PayPal, Venmo, and Zelle have made it easier than ever to send money to friends and coworkers for things as small as food, drinks, or concert tickets. Cash is a relic of the past.
Regardless of such convenience, there is much to be improved in the digital transaction space. Processing and security fees applied on a percentage basis prevent the widespread adoption of such digital services. Additionally, paper checks continue to be used by individuals, businesses, and even the government. The Federal Reserve Bank estimates that it processes 15.2 billion paper checks per year.
Enter Checkbook, a Digital Checking solution that is changing the way that individuals and businesses alike send and receive payments. Checkbook provides its users with a platform to send Digital Checks with nothing more than the recipient’s name, email address, and desired amount. After a simple verification process that doesn’t require creating an account with an e-wallet or downloading any app, payment takes less than one minute to complete. The revolutionary service is free for individuals and costs $1 per check for businesses.
Join me as I chat with PJ Gupta (Founder) and Jake Mastrandrea (Head of Marketing) from Checkbook...
DO: Jake, you come from a background in marketing and are also the founder of several successful online media groups with large followings. How have you translated your previous experience into your role as the Head of Marketing at Checkbook?
JM: My media experience has helped me directly in my role. At Checkbook, I focus on creating valuable content that helps expedite the decision making process through persona specific brand alignment and education. First, I've started by analyzing the digital landscape to better grasp cohort behaviors.. Secondly, it’s my job to take the understanding I have and apply it to utilize media and digital as a facade to personify our brand for the end user. In this respect, my previous media work is really similar to the goals I have now.
In more well-defined terms, our team works to build an experience congruent with the deal cycle, vertical interests, and values of our clients. We start with a content strategy that decreases the amount of time spent TOFU (Top of Funnel) but aims to increase our NPS (Net Promoter Score) and client satisfaction with BOFU (Bottom of Funnel) engagement.
DO: PJ, as the previous Chief Network Architect at Visa and current CEO, Product Architect, and Founder at Checkbook, how do you think about building out Checkbook’s brand?
PJ: As a founder, I believe it’s my job to orchestrate our marketing and sales initiatives to match the goals that Jake mentioned above, but from an ROI perspective. I’m always looking to maximize the return that we get on the energy and time we put into our campaigns. To do so, I work to surround myself with people who believe in our business and are passionate about the tasks and projects they’re working on. The current makeup of our team has played a crucial role in our success.
DO: How would you define Checkbook’s mission?
JM:. A core component to our mission is that we believe that doing good and being good do not need to be mutually exclusive. For example, our team believes we can run an efficient business while also helping the environment by keeping trees alive. The digital landscape provides us the opportunity to attend to these inefficiencies and bring about tangible change.
PJ: That’s a great way of putting it. Simply put, our mission is to remove the use of paper checks. We believe there is no need for their existence. Paper checks waste time as an inefficient form of payment and come with increased security risks due to their physical format, all while negatively impacting the environment by killing trees .
Additionally, doing good also means we are treating our clients and customers with fairness. Unlike other services, we feel strongly about providing a transactional service that doesn’t charge a percentage fee through an online wallet. Whether you’re completing a $10 payment or a $1,000 payment, the amount of work we have to do on our end is the same. Every payment involves the same amount of data transfer.. It doesn’t make sense for us to charge a variable fee. At Checkbook, we charge our clients $1.00 per check and make our service free to individual consumers (upto 3 Checks/month)
DO: What pain point do you solve for your customers over traditional checks? (Is it speed, transparency, security, cost) And given the prevalent demand for instant peer-to-peer payment services like Venmo, Zelle, and PayPal, where does Checkbook fit within the larger online-payment ecosystem?
JM: I’d say all of the above actually. We direct a lot of our energy on knowing our customers and their specific needs. It’s important that we provide them with benefits in all the categories you mentioned.
For starters, we ensure that our platform is extremely secure. We have virtually zero fraud due to our multi-factor authentication, and we never store any of our client’s payment information. Enterprises loves our system for its security, as well as the lack of heavy TCO or onboarding costs associated.
With respect to speed, we made our system as simple as possible to expedite transactions. All you need to do to pay someone is input the recipient’s name, email address, and the amount of money you’d like to send them. You then verify that you have the necessary funds to complete the payment by inputting bank info, and the Digital Check goes out immediately. The entire process literally takes less than a minute to complete. Small to mid-size businesses love Checkbook because it's quick and inexpensive.
PJ: Agreed with everything Jake said.
With respect to other providers, Checkbook differs in that it does not involve an intermediary like a Paypal so funds are transferred directly from one bank account to another bank account.. We are not an e-wallet company, rather we focus on transfers and payment processing. Transactions are sent quickly and securely to the recipients’ email. If you want to liquidate your money right away, that time to usage is a fraction of the cost and a fraction of the amount.
And as I mentioned before, we also do not charge percentage fees based on the amount of money our clients’ send. We charge $1 per check and go by volume of transactions.
DO: You mentioned that you’ve worked with large businesses that include DHL, Lularoe, and Whirlpool. What have been their reactions to Checkbook’s offerings?
JM: Great question. So far, we’ve received incredible feedback from both the client and recipient side. For context, we served Lularoe and Whirlpool in their class action distributions, providing the proper recipients with the Digital Checks they were owed. From these two experiences alone, numerous people wrote five star reviews on our Facebook page and left positive comments about the simplicity of our service. This is one of the major reasons why we’ve been able to grow so quickly. Everybody who has interacted our API thus far has been really excited.
PJ: We’ve been met with similar positivity from SMBs. For small to medium-sized businesses, Checkbook is integrated with systems including Intuit Quickbooks, WordPress, and Xero. In this respect, our system is usable by a wide range of individuals and businesses.
DO: What are the challenges of building both a B2B and B2C company at the same time, and how does that affect the way you structure your sales team?
JM: I’ll speak to the B2C portion of your question. For our smaller clients who come in, we want to give them the same value and experience as our larger partners. As a result, we spend a lot of curated time speaking with our individual users. We want to personalize and have relationships with the people we are working with. Ultimately, our goal is to connect with the end-person, the end-consumer.
PJ: On the B2B side, we are going after the low-hanging fruit. Where are paper checks most present?
It turns out, they are used most as banks. Regardless of the online platforms most banks provide their clients, online billpay still goes to paper checks that are outsourced to third-party vendors. There are also rebate and class-action distributors sending out millions of checks. Currently, they have no option but to use paper.
As a result, we started off going after these distribution points. Whirlpool and Lularoe were both huge settlements we helped make easier for both the businesses and recipients involved. We connect with the B2C portion through these settlements, as they use our product line to receive their payment.
DO: Given the privacy risk that comes with online payment solutions, what systems are in place to protect user data and verify transactions?
PJ: This traces back to knowing our customers. We use a push payments model, which means the money is being sent by the account holder, not pulled by the recipient. Pushes go out only when there are sufficient funds in the source account.
Furthermore, our verification system requires that the sender input a code sent to their cell phone or answer a phone call i.e. two-factor verification. When a client enters their phone number, we have information about them from the carriers.
With the bank verification, we are requesting information that banks already ask for. This is all happening real time, without a sign up process or downloading an app. As a result, we have virtually no fraud.
DO: At this point in time, what do your customer acquisition and pricing models look like?
JM: Speaking more to the customer acquisition side, we definitely target B2B. The majority of our clients are inevitably going to be B to B because we large businesses are the culprit when it comes to paper checks. There are about 17 billion checks sent every year from businesses.
PJ: For pricing, our overhead is a lot lower than other companies. It’s not difficult for us to make margin with our business model. Our vision is to make transactions happen, to be the facilitator for people’s needs. This is reflected in our pricing of $1 per check. We provide our service at a price that makes sense for the costs we incur.
DO: The Federal Reserve Bank estimates they process vast quantities of paper checks every year. I love the idea that Checkbook’s online system is saving trees. If you had to guess, how many trees has Checkbook saved so far? And is there the potential for real, tangible environmental change?
JM: As of now, we’ve processed over couple of million checks, which amounts to about 250 trees. At scale, there are 17 billion checks sent by businesses. That’s over 2 million trees being used for an outdated, unnecessary form of payment. For context, there are about 5 million trees in New York. When you consider those stats, you realize there’s a large opportunity to truly lessen our environmental impact.
PJ: Paper checks are an outdated convention we need to retire. It’s funny to consider, but hundreds of years ago, people like Ben Franklin used paper checks for their purchases. Payment is simply the transfer of data securely. There is no reason to complicate it with paper, or the need for digital downloads and processing fees. Why not complete transfers in a way that is simple, easy, and good for the environment?
DO: Growing up, I’ve seen my parents pay with checks but have never done so myself. Before Checkbook, did you ever use checks? And if not, do you have a personal connection to Checkbook’s mission?
JM: I do actually. I’ve worked with several boutique social agencies whose preferred form of payment is via checks and wire transfer. It was always inconvenient, whether it be a matter of cost or time. I actually found out about Checkbook as I was doing research on alternative ways to send money.
DO: Checkbook is moving into its Series A, which is obviously a critical stage in the company’s future development. How do you plan to deploy the capital you receive, and can you speak to some of the positive growth signals you’ve seen so far?
PJ: Since we already have a cash flow positive business model, our Series A is going to be used for growth. We do have existing capital from our seed investors, and about 1 dozen of our customers already invest in us. We aren’t short on capital but would like to grow substantially in the coming days.
DO: From your perspective, if you could provide one tip to someone considering starting up, what would it be and why?
JM: If I had to pick one tip, it would be to work with good people. You’ll be spending 12-15 hours per day with the people in your startup every single day. Technicals and skills will change over time, but the culture of your company will not. It is important to surround yourself with people who share the same values and ambitions, and truly shake hands with the company’s mission. You have to scale with people who share your mission.
PJ: I agree, and I can provide another tip as well. Fintech looks intimidating from the outside, fraught with rules and regulations, but you shouldn’t care about being an expert. The only thing you need is an incessant desire to change the status quo for the better.
Don’t let your lack of pre-existing knowledge deter you from coming into fintech. It is one of the most inefficient domains out there. You can see the the opportunity within changes that have occurred in the past few years. 7 years ago, nobody was touching payment systems. Now you have companies like Square and Stripe. If you have the passion and determination, there is opportunity.
DO: If you could model yourself after one founder or leader in the fintech industry, who would it be and why?
JM: I am more inspired by the industry and innovation and change. For me, it has always been about the difference and the grander vision. However, I’m inspired by innovators who are accomplishing unbelievable things. I think so much of what I would like to do and what this company is doing is different, so it is difficult to model myself after just one person specifically.
PJ: Definitely Larry and Sergei. I remember I had come of age when they first started at Google. Throughout the years, I admire that they’ve continued to keep their personalities and passions intact. They built one of the most successful companies in the world and both still attend tech seminars and write papers in their free time. They get to live the lives they enjoy while having created one of the biggest game-changing companies in the world.
The team at Checkbook typifies the positive mission and shared company culture that we’ve come to love and expect from the fin-tech industry. By creating a pricing model that prioritizes the needs of its individual users and larger company partners, Checkbook is challenging current payment solutions and making the convenience of digital transactions accessible to all people. With their combination of passion, innovation, and drive, we can safely say that the reign of paper checks will be coming to a close in the near future.
A big thank you to PJ, Jake, and the entire team at Checkbook for investing in Simple Innovative Change!