There’s been much talk in the payments industry about the rise of buy-now-pay-later. But in the first of our Founders’ Stories series, we sat down with Mat Megens, founder and CEO at HyperJar, to find out how their ‘save-now-buy-later’ product is quietly disrupting customer loyalty, SME lending and even consumer banking.
It is 2013. In the offices of one of the world’s biggest investment banks, a conversation between two of its supply chain finance experts asks the question: “What if we could use payments technology to connect people directly to the places they intend to shop? Is there a better solution than banks triangulating this relationship and taking out value?”.
Fast forward a couple of years. One of the supply chain whizzes, Mat Megens, has come up with the answer. After a couple of years in beta, HyperJar launched to the public in October 2020 with a slew of unique PayTech and a brilliantly original take on money management and planning.
Jam Jars Go Digital
The name HyperJar references an old-school way of organising money in jars according to where it’s going to be spent. Each customer account is made up of multiple sub-accounts – shown as jars – all linked to the same smart payment card.
Some may contain money committed to participating merchant partners in return for a time-linked annual reward rate, like interest – going right back to that founding idea of Mat’s. Others may be the digital equivalent of budgeting jars, holding funds for specific purposes like ‘groceries’, ‘kids’, ‘bills’, ‘going out’ and so on.
Unlike traditional bank accounts, this unique network of mini accounts reflects each individual customer’s life, their priorities and the relationships they have with the people and places they spend. Some of the proprietary technology developed to make this happen includes:
- Dynamic authorisation – customers link their card to any Jar as the funding source for purchases, either for the next transaction or until it is changed in the app.
- Shared Jars – Jars can be shared with any other HyperJar customer. These act as instant digital kitties for joint planning and spending in small or large groups. The Jar ‘owner’ can set individual permissions for each sharer and all members of the Jar with spending permissions can link their cards to it.
- Auto-link – customers can link the UK’s most popular retailers and brands to a particular Jar so that when they spend with a specified business, the money comes from that Jar automatically. Customers can also block spending with any business from a HyperJar account or add controls to a Jar so that money can only or never be spent with specified brands.
- Payment cascade – users can nominate a backup Jar if their linked jar has insufficient funds, or lock spend to a particular jar to prevent overspending. The HyperJar decision engine also cascades payments to ensure the most beneficial outcome for users. For ‘HMoney’ – that’s money committed to spend with merchants in the app – the rewards are spent first, followed by any advance payments.
Save Now Buy Later vs. Buy Now Pay Later
“The concept of save-now-buy-later rather than buy-now-pay-later seemed very timely to us. A lot of payment options in the retail sector are about point-of-sale lending, where they extend a line of credit to customers,” says Mat.
“We wanted to allow people to save up for things they were going to buy. It turns out that there’s a huge untapped demand for everyday saving in the UK, which doesn’t lock money away in an ISA or similar product.
“A big proportion of the population have £2,000-3,000 a month that comes into their bank account, earns nothing, and is spent during that month.
“We offer an innovative product that allows customers to commit money to Shell, for example, for petrol they know they’re going to buy in future and grow their spending power by around 5%. HyperJar calls this an ‘annual growth rate’ and it’s calculated and added in real time in the app. It gamifies and incentivises a savings mentality in a way nothing else can at the moment,” Mat explains.
People Spend Where They Save
Payments is a two-sided market and there must be a compelling proposition for the merchant, too. Merchant partners fund HyperJar and pay the customer reward. Why? Put simply: people spend where they save. HyperJar’s merchant partners get sticky, differentiated loyalty, a huge extension of customer data and a new step in the marketing cycle: the point of intent (POI) to spend.
“We analysed more than 20,000 transactions over a six-month period, comparing total spend in groceries and petrol with partner merchant spend. The results showed that the propensity to spend with a merchant where you already have growing, committed funds was very high,” says Mat.
For a non-partner grocery store, customers averaged 35% of their spend at that store; this rose to 89% for a partner grocery store. For petrol, the figures were 60% for non-HyperJar merchants versus 93% for a partner store.
Allowing people to shop where they save dramatically increases ‘share of wallet’ for HyperJar partners. It creates loyalty that is non-transactional as it has nothing to do with price at the till. Partners reach customers at the ‘top of the funnel’ and lock in loyalty with a compelling growth rate on their spending power.
Getting To Scale
HyperJar currently has just over 200,000 users and 30 merchant partners. It’s turning shopping into a universal investment asset, with radical implications for customer loyalty, SME lending and consumer banking.
“But all this is based on the original idea that payments technology could take something that previously only existed in people’s heads – the knowledge of where they were likely to spend in the future – and make it real, meaningful and highly valuable.”
Monavate provide BIN sponsorship and issuing services to HyperJar.
“The team are experts in their fields. Their customer-centric approach was clear to see from day one. Partnering with them gives us the confidence to continue to evolve and grow our product in such a competitive industry,” concludes Mat.