Leveling the Payments Playing Field for SMBs

Why we invested in Tandym

By Vishal Vasishth and Christopher Cheng

It’s no secret that private label credit cards remain highly attractive to retail merchants. In the pre-internet days, these were the same cards that you would see at major department stores like Macy’s and Nordstrom. And yet setting up one of these programs was prohibitively expensive for small businesses. Legacy technology (and a string of players in the value chain taking a cut) meant that to make the unit economics viable, a retailer would need to generate >$1 billion in revenue to start a card program. Naturally this was prohibitively expensive for the majority of businesses.

As we’ve highlighted in the past, retail has now shifted to eCommerce and we know that these kinds of alternative payment options can improve customer engagement, lower customer acquisition costs, and increase average order volumes. With private-label credit card programs being largely inaccessible, merchants had to resort to BNPL (and ended up creating multiple, multi-billion dollar companies like Affirm, Klarna, and Afterpay).

These days, eCommerce checkouts are overrun with 3rd party applications that abstract customers away from merchants and offer opaque credit options that are fundamentally misaligned with the incentives of a merchant. The business of offering people credit comes with significant responsibility, and these 3rd party payment options all of a sudden exposed customers to significant amounts of credit risk. According to research, 7 out of 10 shoppers have faced late fees or interest rates changes (up to 30%) using BNPL, and 72% of those who have fallen behind on their BNPL payments saw their credit score fall.

This lack of transparency ended up creating experiences that pulled customers deeper into debt. And the result is an experience that drives the opposite of what retailers were seeking.

Enter Tandym. Tandym offers retailers of any size a white-label branded credit payment option. In minutes, a retailer can go live with their own payment option.

With Tandym’s full-stack model that abstracts out legacy players in the value chain (i.e., payment aggregators, processors, and issuances), retailers save on all the fees that previously went to payment companies and can give it back to consumers as rewards that they manage through an app. Customers never have to leave the shopping cart, unlike other 3rd party payment options today. Tandym is less focused on being a consumer’s go-to credit option, and more a rewards portal that puts the customer experience at payment and post-purchase back in the hands of businesses.

We believe that Tandym is leveling the playing field for smaller retailers. By creating access to branded enterprise-grade payment options, giving money back to consumers, and driving consumer engagement with rewards, these eCommerce merchants can better compete against the giants of the retail industry.

At Obvious Ventures, we love to invest in founders that make us rethink what it means to be a world positive company, especially in fintech. Jen Glaspie-Lundstrom did exactly that when we met her for the first time. Since our founding we’ve been investing in companies democratizing enterprise tools and making them available for businesses of any size, like Gusto. Jen saw this exact challenge at Capital One where she was the general manager of their private label credit card business.

We’re now proud investors in Tandym, and are excited to back their mission to reimagine payments for eCommerce merchants by providing white-label credit cards that lower payment processing costs and foster brand loyalty for SMBs.