• With COVID-19, more fast-service and delivery restaurants, hair salons, and gig economy companies are looking to replace cash disbursements for gratuities and earnings with a digital payment ecosystem—and avoid fraud while they’re at it
  • XTM’s Tipstoday eliminates cash, using Mastercard/phone app combinations to pay servers, drivers, hotel workers, and hairdressers their tips, mileage, and wages electronically
  • Technology eliminates the health risks of cash, cuts the workload, and conflict that comes with envelopes of $20 bills

These days, we are dining digitally. Cash has been usurped as king, as quickly and unequivocally as it arrived.  It’s always been a pain and a safety risk. Now it’s dirty too. Like really dirty, in need of a washing machine. Germs cling to the notes and make them an unacceptable tender in many establishments. The server who wrapped up a late shift at a busy, high-end restaurant and had to wait for her tips until next Tuesday, typically called due-back day, because there is no cash in the till, now can get her gratuities every day, digitally. Gone are the days when she would stop off at the manager’s office to pick up her tips for the last week—more than $500 in cash from the register from three shifts, mostly in $20-dollar bills in an envelope with her name on it. She tucks the envelope in her purse and heads out to catch the bus home.

In what seems like an era ago, but was really just yesterday, she works a shift at the local sports arena. An experienced pro, she’s assigned to serve a half-dozen private suites, joking and schmoozing with executives as she makes sure their orders are taken care of. She makes great tips when she pulls a shift in the suites, generally every couple of weeks during hockey season. At the end of the night, she takes an elevator down to a staff-only basement level to visit the vault, walking past an armed security guard to pick up her pay and tips from the manager. Again, she’s paid in cash—more than $400 in $20s and $10s in an envelope.

“Cash was always going to disappear because it’s hard to track and reconcile. But now, because of this disruption making us rethink every aspect of business, the acceleration of the elimination of cash is exponential – a decade has been reduced to a few months. For XTM, we are at the right place at the right time. We solve the cash problem, safely, efficiently and for free.”

— Marilyn Schaffer, CEO, XTM Inc.

Sophisticated in many other ways, most restaurants, pubs, sports venues, and food delivery operations in Canada and the U.S. still pay service employees and gig workers in cash, often requiring a weekly run to the bank with a significant withdrawal. Even hair salons often pay in cash, especially tips.

Not Domino’s Pizza.

Domino’s Pizza among the first in food delivery to sign onto XTM’s Tipstoday service

Domino’s stores in Canada recently launched XTM Inc.’s (CSE: CSE: PAID, Deutsche Boerse AG: 7XT) Tipstoday service—a sophisticated digital payment platform that eliminates cash from the equation—and all the risks it carries. Domino’s no longer take cash at the door but accepts payment on portable point-of-sale machines. Each delivery driver is provided with a Mastercard and an app on their phone. At the end of a shift, the system automatically calculates their tips, mileage, and pay and then transfers it to them electronically, sending a notice on their app.

The Mastercard acts like any other, allowing online and in-person cashless payment for everything from groceries to transit. The app is also a virtual bank, complete with a savings account for members.

XTM Inc., a global fintech 20-person business in Toronto, which went public on March 10th, makes its money from the credit card payment surcharge paid by retailers—called an interchange fee—typically three per cent of a purchase’s value.

500 Domino’s outlets in Canada will generate almost $2 million a year in gross revenue for XTM.

In addition to signing Domino’s, XTM announced on May 19th, that it had signed an additional 80 food delivery stores including Topper’s Pizza Franchise Company. As a result, XTM now has 85,000 users and with neobanks garnering valuations in excess of $1,000 per user, which the company believes is the key recipe for success and shareholder value. 

High-end restaurant groups were the initial focus, until COVID-19 struck

Delivery restaurants like pizza operations were not part of XTM’s initial focus. Before COVID-19, their marketing team was focused on several high-end restaurant groups in large Canadian cities. With several restaurants each, these companies handle numerous tips for up to 150 employees at a single location but are now interested in moving away from cash in envelopes. However, those operations were temporarily shuttered by the pandemic this spring and put their plans to adopt XTM’s technology on hold.

However, it wasn’t long before XTM started hearing from other kinds of operations—delivery restaurants and providers busier than ever during the crisis, and hair salons interested in eliminating cash when they re-open.  

XTM’s CEO, Marilyn Schaffer, says the pandemic is likely to expedite the disappearance of cash from our lives.

Pandemic likely expediting the disappearance of cash

“People said, six months ago, that in a decade cash would be eliminated. I think given current events cash will disappear much sooner,” Schaffer notes. “Because of this disruption in legacy processes, all kinds of things are going to emerge. For us, we were at the right place at the right time. We’re providing a solution.”

The company has doubled in size to about 20 employees in the last year to a team that has been busy this spring retooling its offering to meet this shift in direction caused by the pandemic.  

For employers, cashless payment systems appeal for several reasons. Money is dirty and requires contact to exchange; this interaction increases the worry about spreading COVID-19. Even before the pandemic, scooping up wads of $20s from the till into an envelope wasn’t clean.

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A three-part digital solution for cashless tips: the App, the card, and the portal.

Just as important, the company’s app automatically calculates what’s owed and delivers it to all team members with the push of a button at the end of a day, removing human error and the work managers have to do to manually calculate what each employee is owed and divvy it out. The app presents payments in clear terms, and if there’s any doubt or disagreement about what’s owed, the information is available with a digital trail.

It also eliminates the risk of employee fraud. One hair salon operation XTM recently started working with, which has numerous outlets in malls across Canada and the U.S., recently calculated it was losing $50,000 a year in employee theft. Most of the theft was in small increments as employees rounded their tips up to the next $20 or skimmed an extra bill or two when collecting tips at the end of a shift.

The benefits are insurmountable for gig workers and hospitality employees. Payment at the end of each shift, no risk of cash being stolen on your way home, and a simple interface they can use for everything, including paying for groceries at a point-of-purchase machine through to paying rent and monthly bills are crucial benefits that cannot be beaten. They can even tuck up to $10,000 in savings away within the system’s built-in savings account or transfer funds to a bricks-and-mortar bank for longer-term savings (there is a $1.50 transaction fee for transferring money to a bank).

They also aren’t stuck with being paid in $5s and $10s stuck in their pocket over the course of a shift.

“Now it’s real money I can put towards my rent. It makes for a more responsible employee, and a happier employer,” Schaffer explains. “It’s like a free, mobile bank account. This is their bank.”

She adds that the company is finding that new users take about a month to get used to the system. At first, they often transfer all their funds out to a bank so they can take out cash, but over a few weeks they come to like the ease of using the system to track income and spending, and the credit card for making purchases.  

“We are looking at people who are gig workers, people who are maybe on the younger side, or new immigrants who don’t have a bank account yet. And then we’ve got some career waiters,” she notes.

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Say 'bye-bye' to cash—This is a cashless way to offer daily pay.

Increasingly, large sports and entertainment facilities are starting to look at XTM’s transformative system. Those sites have hundreds of regular gig workers who come out for big games and shows to serve suites, work the bars and restaurants, sell souvenirs, and walk the stands selling drinks and snacks. The suite servers can make hundreds of dollars a night in tips, which they have to pick up in cash from an underground vault and then head home with that on their bodies.

“That’s a huge risk,” explains Schaffer.

XTM didn’t start as a digital payment company, but rather as a marketing agency. About five years ago, they took on a client which, among other things, owned the Angry Birds prepayment card. The company ran into financial issues and XTM ended up taking over the card. That planted the seed.

Then, two years ago they had the opportunity to purchase a digital wallet app called Zoompass that had been created in a joint venture between Bell, Rogers, and Telus. The telecoms invested $40 million to build the app a year ago, crafting an “incredibly robust” platform that is compliant as a bank. The telecoms found, however, that interest in technology wasn’t there and sold the product along. It went through several hands before Schaffer had a chance to purchase it in 2018.

In Schaffer’s view, the product was simply too early, developed and launched before its time.

With the purchase, XTM’s team started re-inventing itself, evolving from a marketing agency into a financial services firm. The company is now considered a Money Services Business (MSB) that is licenced and complies with rules similar to that of traditional banks.

Moreover, the core team has stayed the same, and is largely led by women, one of few financial tech companies with both a female CEO and CFO.

The platform also came with some legacy business, in particular about 100,000 travel agents who are paid sales incentives and commissions through it. Starting with that foundation, Schaffer and her team drew on their marketing expertise and understanding of clients in the hospitality sector to build out a new product. 

“We wanted a unicorn, and we see the unicorn as the hospitality space because there is a big hole in their system,” Schaffer explains.

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Get gratuities instantly, paid to a Tipstoday prepaid Mastercard and check your balance on your mobile device.

High-end restaurants have sophisticated systems for measuring profitability, ensuring the exact right amount of steak is served to ensure they make a profit margin, that servers are offering the right experience for their brand. But, when it comes to tips, they were still paying in cash out of the till, or from a time-consuming bank run.

While many companies getting into the emerging digital wallet business are focused on offering service directly to consumers, such as Petals Card or Chine, early on XTM made the decision to focus on marketing their service to businesses with several of employees who would benefit from the solution they can offer.

“Our model is such that we don’t have to go out and acquire separate users,” Schaffer says. “We sign a sports facility and we get 5,000 users. We sign a restaurant group and we get 500 users. That is really the beauty of our model.” As a result, the cost per acquisition is much lower.

They’re already working with quick-service and delivery restaurants and getting into mall hair salons with thousands of franchises across North America. They are also thinking about golf courses with caddies and servers, hotel chains looking for in-room tipping options, and delivery services. Additionally, they are looking forward to their original partners, high-end restaurant groups, re-opening in the not-to-distant future.

Currently, two months after going public, XTM is valued at about $14 million, with shares worth about 15 cents each.

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XTM's Market Opening Ceremony (CSE: PAID).

“We’ve just started our promotion. We’re generating interest,” Schaffer notes. “This is a good deal, and we’re a good, strong company with an amazing team. We’re real.”

The impact of going cashless is crucial and XTM is already ahead of the curve and is ready for society to make the move. There are numerous benefits to going cashless and using a mobile wallet, with the added bonus of a permanent paper trail.

Even more exciting is XTM’s announcement that it is leveraging the Bulk Interac eTransfer® solution offered by the Royal Bank of Canada to help its business clients facilitate near real time payments.

The solution allows XTM customers or Today™ mobile users to send funds in near real-time to any bank in Canada. Businesses wishing to push funds faster can send a batch file or use an XTM API with only a mobile phone or an email address and dollar amount as the required fields. No other information or banking details are required.

So, with its listing on the CSE, and recent listing on the Frankfurt Stock Exchange under the symbol “7XT,”as well as new initiatives coming up, this global fintech company is uniquely positioned to conceive and execute innovation programs that integrate brands to their own payment ecosystems. The sky’s the limit for XTM’s acquisition model and future prospects.

Take a look at how XTM’s Tipstoday service works.

Learn more about XTM here.

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