Meet Our Friends // Knox Payment
In the spirit of tech entrepreneurship that is spurred by South by Southwest Interactive, we decided to catch up with a local Richmond start-up that is making some exciting headway in the realm of online payment. Knox Payments is an online payment service that connects merchants, banks and consumers in a seamless and secure way. Both Thomas Eide (CEO) and Tommy Nicholas (Director of Growth) are on the team behind Knox and we’ve had the pleasure of getting to know them over the last few weeks. On the heels of their recent success at San Francisco’s Launch Festival, we caught up with the pair to find out more about their potentially industry-changing service.
Can you tell us more about Knox Payments and how it got started?
We all realize that we’re moving more and more into a culture where we conduct ourselves, exchange information and make transactions electronically. The way we make online payments is just another way that we exchange information. We realized that the traditional way we do this is handled archaically, and we started to question why we couldn’t make online payments in a seamless, safe and secure way. For this to happen, we needed to establish a new payment process so merchants could have better exchanges with their customers.
Knox is a payment processing system that connects customers’ banks with a merchant to enable electronic payments. With Knox, customers do not have to fill out the long form that includes their credit card, address and billing information. The retailer puts Knox on their website, same as a credit card option, and the purchaser decides whether they want to use it or not. The customer logs into Knox with their existing online banking username and password and the transaction is complete. The customer can complete the transaction without giving the merchant their credit card and billing information. The merchant benefits because we charge a flat fee of only $0.18 per transaction, rather than the typical $0.30 per transaction and the additional 2–4% transaction fee.
In light of recent financial security breaches, Knox’s implied safety is something that will resonate with consumers.
The customers’ personal information stays with the bank and is never given over to the merchant. Only the information that they want to share like their name and e-mail address is actually passed. The way hackers get a hold of information is that they get it from the merchants. If a merchant stores your credit card information for future purposes, this holds the risk of hacking. When we keep sensitive information with our banks and away from merchants, there’s nothing to steal. This is safer for the consumer, and cheaper for the merchant.
This sounds similar to a few ACH (Automated Clearing House) services that are already out there, such as PayPal. What is Knox offering to the market that doesn't already exist?
PayPal charges merchants 2.9% and $0.30 per transaction, and forces users to have a PayPal account to make ACH payments with them. We don't think either of those things are what people want. Moreover, Paypal doesn't know if you have the money when you make an ACH transaction – so you risk a costly insufficient funds fee. With Knox, we eliminate risk for both consumers and businesses, and transactions can be completed in seconds.
We first met before you headed to San Francisco for the Launch Festival. Can you tell us more about the event and the experience?
Prior to Launch, there were several tech launch events that were set up where participating start-ups would have to pay near $20,000 to participate. At Launch, it’s free for the startups that get picked to present. 40 companies present, and we were one out of the couple thousand that applied to be selected. We were excited for the opportunity to be among the first to see companies that no one had ever seen before.
The experience was surreal. Coming from Richmond, VA you expect that, although you may be a successful business at some point, no one in Silicon Valley will ever pay attention. Once there, that feeling quickly dissipated. People were open and excited about what we were doing, and we made many connections and more importantly, a few new friends. Knox was well received and we ended up winning the "Best Enterprise Startup" award. At the conference, we were also able to get several companies on board to integrate with Knox.
We were excited to hear about Knox winning the award. How will the “Best Enterprise Startup” recognition, and the additional funding that came with it, impact the company?
The funding we received as a result of the award will help us fill a couple gaps, but more importantly, we've been able to make a lot of great connections as a result of it. The award will allow us to raise a bit more capital from strategic partners and investors. With some of the capital, we plan to open up some business development on the West Coast, which will allow us to be introduced to more of our target customers.
Now that you’re back from San Francisco, how has everything been post-Launch?
Crazy. We have so much to do and build. Your initial product is never quite right, and you realize that as soon as you launch. We didn't realize how many custom integrations we were going to have to build, but everyone who sells something online has his or her own needs. Some need Shopify or BigCommerce plugins, some need APIs for doing payments between three parties (instead of the normal one-to-one transaction), some need to make recurring payments in a specific way, etc. It goes on and on, so we're developing these things as fast as we can, signing up new customers, all while continuing to hire and raise capital. I think we both need a vacation at this point, but we're going to power through.
Working at a start-up and launching an innovative product can be very challenging, but can also reap many rewards. What are the greatest challenges currently pressing the team and how do you plan to overcome them?
Hiring. We need the best people in the world to accomplish a goal as lofty as ours – holistically changing the way payments are made. We know those people are here in Richmond or are willing to come here, but finding them and getting them on board is a daily struggle.
Running with the momentum from Launch, what are the next steps for growth that you see coming up for the company?
We launched at the Launch festival, and we’re going to integrate the first 150 customers within the next four months to see what their needs are. This will be a cap until we do a fully open launch. Within the next 12 months, we plan to scale to three thousand customers and partner with businesses.
For more information about Knox Payments, visit their website at knoxpayment.com.