A Kennewick tech startup is transforming the way businesses process their payment transactions, even as coronavirus shutdowns and restrictions threatened its business model.
“It’s interesting because we’re focused on brick-and-mortar transactions, so when Covid hit, we thought we were dead,” said Jeff Payne, BlockChyp’s chief technology officer. BlockChyp designs payment terminals using blockchain technology to guarantee secure transactions at the register.
The BlockChyp team sprang into action and designed a couple of contactless payment features to help their merchants adapt to their “new business as usual” model.
The results were surprising. “The number of merchants we have and the volume we’ve done has quintupled since Covid started. We’re just astonished,” Payne said.
BlockChyp is now used by more than 200 businesses across the country, processing $1 million per week in transactions.
“The reason that’s happened is because we’re in industry verticals that are just not — by dumb luck — that susceptible to Covid, like grocery, hardware, wine and liquor and telecommunications,” Payne said.
“It did freeze capital markets though,” he continued. “A lot of investor deals completely died because of Covid. But once we got a few months into Covid and it was clear we were surviving it, investments picked back up and we managed to do OK.”
Two Tri-City businesses began using BlockChyp technology before the pandemic hit, Knutzen’s Meats of Pasco and Statewide Publishing of Kennewick.
BlockChyp’s first client, an independently-owned, Salinas, California, pet supply store called Pet Fun, went live April 1, 2019.
“We just started scaling up from there,” Payne said.
Knutzen’s Meats began using BlockChyp’s technology in late fall 2019.
The longtime, family-owned meat shop and meat processor’s intersection with BlockChyp was serendipitous.
“(Our) old office was right across from Knutzen’s Engineering,” Payne said. “Paul (Knutzen) walked in one day and said his family was having a hell of a time with their payment processor.”
“Last year around boat race weekend, our mag strip reader went out,” said Caleb Knutzen, son of owners Steve and LeAnn Knutzen, who has followed in his father’s footsteps as a meat cutter and processor and helps to run the family business. “We called the bank, and it took 10 days to get new readers.”
The Knutzens received Bluetooth readers to plug into their tablets, but that didn’t fix the problem — the readers didn’t work as advertised. “It took minutes to run transactions because we were having to type all of the card numbers in by hand,” Caleb said.
Making matters worse, Caleb had ordered new gift cards shortly before their mag strip reader went out, but the cards weren’t compatible with their new point-of-sale, or POS system.
In desperation, the Knutzens moved on to two more POS companies, dropping hundreds of dollars with each change, but still the hardware wasn’t meeting their business needs, and Caleb struggled to get help from customer support.
“Whenever you call, you’re always on hold, then you’re transferred to Tennessee or wherever because no one knows how to fix your problem,” Caleb said. “Everyone promises you the world and doesn’t deliver, they just want to get you in and start being a part of your profits.
“Then Jeff showed up with the terminal that could do everything,” Caleb said, brightening.
“I just went down there one day and told them what BlockChyp can do, got gift cards printed, and we installed the terminals and got them up and running. It’s been a really great relationship,” Payne said.
This isn’t the norm in the world of POS, where the complicated setup and integration process can be frustrating, especially for small business owners.
“Our customers say all the time that nothing works like they say that it’s going to work,” Payne said.
“There is a need for a product that works reliably, that’s simple, that’s transparent and not confusing. It’s really just common sense. We’re not doing anything particularly innovative … It is what we say it is and it works. Something that simple is groundbreaking in payments.”
So what is it that sets BlockChyp apart from their competitors?
For one thing, it puts everything in one place.
“Pet Fun was frustrated because it took 30 seconds to process a transaction because they had systems on top of systems, on top of systems, and every link in the chain adds time. Ten to 15 seconds is not unusual,” Payne said.
BlockChyp’s terminals take minutes instead of hours to set up, a couple of weeks instead of months to become fully integrated, and they process transactions in 1.5 seconds, which Payne said has been consistent since the beginning.
BlockChyp can read debit and credit card strips, chips and tap-and-go technology from Visa, MasterCard, American Express, Discover, Diners Club, JCB and UnionPay. It also can process EBT/SNAP, offering manual card entry support and real-time balance checks.
Other value-added features include line item readouts and discounts on the terminal as orders are entered; adding company logos, slide shows and full-motion video on the terminal’s display, without having to call customer support; the ability to set up custom messages and prompts, which can facilitate loyalty enrollment, coupon redemption, suggestive selling and more; and the ability to conduct surveys and have customers sign contracts and custom agreements.
All is backed by BlockChyp’s triple encryption system, which relies on the impenetrable security of blockchain technology, a digital, decentralized ledger for recording transactions.
Even the gift cards BlockChyp issues use blockchain.
“Our gift card technology is probably the most unique part of our business,” Payne said. “Blockchain gift cards are different than any other because they have blockchain keys on the magnetic strip — there are no numbers. If the numbers don’t exist, (the gift card) can’t be stolen. There’s no way to commit gift card fraud.”
He continued, “If you’re getting a gift card from Knutzen’s, it’s the most secure gift card in the world.”
Weathering a pandemic
Knutzen’s has managed to weather Covid-19 restrictions with help from BlockChyp.
As Caleb recalls of the early days of the pandemic: “Covid hits. I immediately called Jeff. We shut the front door on Saturday and he was right there and wired a terminal to our side window to help customers.”
“I would give (Jeff) six stars out of five … Jeff has not been just the best card processor I could have ever dreamed of, but he saves us thousands of dollars too because his rates are lower,” Caleb said.
With a massive upswing in business since the pandemic hit, Caleb said he is working with BlockChyp and Focal Point Marketing of Kennewick to bring a selection of Knutzen’s products to an online store where customers can place orders for pickup. He hopes the online store will be live by mid-August.
Merchants interested in BlockChyp can use a free and anonymous processing fee comparison tool on BlockChyp’s website.