Change a good thing for Ottawa fintech entrepreneur

Startup’s app that lets customers pay with ‘digital’ coins gaining traction with merchants
ChangeJar

Shortly after selling a company he had built into an industry-leading provider of Wi-Fi networks, Tom Camps was driving home from Toronto with his son when they stopped at Tim Hortons for sandwiches.

That’s when he came up with an idea that turned what was supposed to be a six-month-long break to wind-surf into the beginnings of his next startup – one that now looks poised for a breakthrough in the coming year.

His son went into the restaurant and came out with a couple of sandwiches and a handful of change. “He said, ‘Dad, I hate change,’” Mr. Camps recalls. “And I said, ‘I do too! Everybody hates change!’ Everybody’s got a change jar where if you pay with cash, you go home and throw the change in your change jar, and that’s where it goes to die.”

His search for a solution led to ChangeJar, an Ottawa-based fintech startup Mr. Camps launched in late summer of 2014 that is dedicated to replicating the cash experience using mobile app technology.

ChangeJar’s app lets customers collect and pay with their change from cash transactions using a digital wallet on their smartphones, avoiding the hassle of carrying physical coins. In contrast with card-based mobile payments, there are no transaction fees, funds are always immediately transferred and the transaction is carried out with the privacy and anonymity of regular currency.

“We can reflect the values of cash with ChangeJar,” says Mr. Camps. “We are completely different than any other mobile payment app because we’re focused completely on cash.”

Recently, the startup has been working on establishing partnerships with merchant aggregators such as payments and point-of-sale system companies, order-ahead apps, e-commerce payment gateways and the like. That will be a big part of a “smokin’ huge launch” this fall, Mr. Camps says. Meanwhile, a partnership with Interac appears to be in the works but is still not official.

The company currently operates at about 25 businesses in Ottawa; the top merchant, LUNCH, does up to 140 ChangeJar transactions a day – more than it processes with credit cards. Mr. Camps won’t disclose the company’s revenues, but with major expansion plans in the works at ChangeJar, he says he’s confident the firm will “easily” have 10,000 merchants and a million end-users within a year from now. The company currently employs seven people, with two more to be added to the team this month.

While debit and credit card use has been growing in Canada – due in no small part to online shopping, among plenty of other factors – cash still plays a major role in consumer spending habits. Nearly one-third of all transactions were done using cash in 2015, according to Payments Canada’s latest Canadian Payment Methods and Trends report (debit and credit were used for 25 and 22 per cent of transactions, respectively).

The use of cash has been gradually declining, however. Now, Mr. Camps sees an opportunity to give the age-old medium of exchange new life in the digital age.

"There’s a huge number of transactions that are cash and likely will remain cash for a long time. There are so many reasons why cash still hangs in there.”

“Certainly, credit card (use) is growing. There’s no question … (but) there’s a huge number of transactions that are cash and likely will remain cash for a long time,” he says. “There are so many reasons why cash still hangs in there.”

Mr. Camps points out that credit card companies charge merchants a fee every time cards are used in a transaction, which cuts into businesses’ profit margins. Instead, ChangeJar charges merchants an annual flat fee, and it charges apps that integrate it a one-time flat fee per user.

“Because there are no fees other than that, (merchants) will make their money back on the first transaction,” he says.

So far, ChangeJar has raised more than $1 million in three angel rounds, along with additional investment from participating in the 500 Startups accelerator in Silicon Valley. The firm will hold another funding round in the fall that’s expected to bring in another $1 million or more.

“We’ve got big stuff happening,” Mr. Camps says. “We’ve been working on this for a few years, and the cycle of testing and launching has given us something that’s not only robust but fits the market beautifully. And we’re ready to go.”