On the road to becoming a cashless society there has always been one small bump: how to handle those small $2 and $3 purchases. No one looks twice when you flash your credit card for a big-ticket item or swipe your debit card to cover a $50 purchase. But when the bill is $1.87 for a large coffee, the only feasible option is cash. Sure, you could use your debit card, but only at the risk of incurring the wrath of a snaky line of caffeine-deficient mochafrappuccino addicts.
Now a Toronto-based company, Dexit Inc., is set to fill that niche with a new piece of plastic: Dexit debit express, an electronic tag consumers can preload with up to $100 then simply tap against a point-of-sale reader. One quick motion is all it takes to transfer the funds from consumer to retailer.
The service rolled out at 62 downtown Toronto shops and restaurants in September has since increased to 100 locations. Dexit, in partnership with TD Canada Trust, National Bank and TELUS Mobility, is set to expand to most major urban locations across Ontario in the coming year.
“The major consumer appeal of Dexit,” explain president and CEO Renah Persofsky, “is that it is quick, simple and saves you the hassle of fishing through your pockets or purse for small bills or coins.” Consumers who want to make purchases as quickly as possible in high traffic areas — think buying a coffee on the way to catch the train — prefer the simple tap of the tag over the time-consuming swiping, PINing and waiting involved with a debit card.
According to Persofsky, the several thousand time-pressed consumers queuing up to use Dexit — the company is on track to top 50,000 individual users by April — represent a significant opportunity for retailers and service providers in dense, highly competitive areas. “Anything you can do to make your transactions faster and easier than the next guy is going generate repeat business.”
Another advantage for early-adopting retailers is that consumers, so far, seem to spend more money than they would have otherwise. Where they might have bought a medium coffee based partly on the convenience of round numbers — say $1.50 — Dexit’s research shows consumers now feel comfortable stepping up to the $1.87 serving because the aggravation of dealing with pennies and nickels is no longer a factor. “We’ve also seen our consumers using the tag to treat their friends,” says Persofsky. “It’s still new enough that people want to show it off.”
While the technology represents a new investment for business — you need to set up an account and rent a tag reader — it is relatively affordable: expect to pay about 25% less to rent a reader than you now pay for debit access. And according to Persofsky, “You’ll pay less for the service than you pay for either credit or debit. And depending on your volumes, you could pay considerably less.”