Low-Cost Bling Nation Debit Network Grows To Three Markets

Bling Nation Ltd., which last year rolled out its first proprietary local debit card payment network (see story), this month plans to announce its third such network in partnership with a community bank in upstate New York.

Palo Alto, Calif.-based Bling declined to disclose the name of the bank. But Wences Casares, Bling co-CEO, tells PaymentsSource other banks are interested in signing on this year to take advantage of Bling’s lower-cost local debit payments.

Bling enables consumers to make immediate debit purchases at local merchants that are connected to Bling’s closed-loop networks.

Bling has generated significant venture capital, receiving an additional $20 million last November from Balderton Capital (see story). And last week Bling announced that Chamath Palihapitiya, vice president of user growth, mobile and international at social-networking Web site Facebook, has joined its board of directors.

Not immediately clear is whether Bling has specific plans to expand through social media. “Just as Facebook revolutionized the way in which people interact and share online, we plan to revolutionize the way in which payments are processing through mobile technology, and Chamath will play a pivotal role in assisting us in the realization of that vision,” Meyer Malka, Bling co-CEO, said in a statement.

Bling Nation last May launched its first closed-loop contactless local debit-payment network with La Junta, Colo.-based The State Bank (see story). The scheme, called Redi Pay Bling, uses the automated clearinghouse system to link local merchants through a bank’s core processing system. Customers initiate payments using a postage stamp-size “BlingTag” contactless payment sticker, which most attach to their cell phones.

Bling sends an SMS text message confirmation of the transaction to customers’ cell phones within seconds of authorizing the transaction, including the merchant’s name, the transaction amount, an updated debit-account balance and notification of any rewards points earned.

Within four months of the launch, 80% of the State Bank’s customers had activated a BlingTag, and some 62% had used it to conduct a transaction, the bank says.

Merchants can design their own rewards program; the issuing bank also may offer rewards directly to customers.

Merchant fees vary based on contract, but in general Bling debit transactions cost merchants 50% less to accept than signature-debit transactions, Casares says. And banks are receiving “two to three times more” merchant-fee revenue per transaction through Bling than through signature debit, he says, although he declined to provide specifics.

Banks pay Bling “a small fee” Casares did not disclose.

Bling launched a second local network last October with Woodland Park, Colo.-based Park State Bank & Trust. Some 30 local merchants are participating, including local franchises of The UPS Store, Quizno’s Subs and Big O Tire. Park State is giving customers a 3% reward on every BlingTag purchase during an introductory promotion. 

Bling is generating interest from community and regional banks across the U.S., Casares says. “We are focused right now on choosing the right banking partners for our next deployments, particularly seeking different regions, demographics and types of financial institutions so that we can prove our product,” he says.