PayRewards launches in America with $28M and a 1.75% fee to earn points

An Australian payments company thinks American small businesses will pay for the privilege of earning points. PayRewards, the US arm of Pay.com.au, has launched with $28M in funding and a promise that bank transfers which currently earn nothing can earn something.

The parent business is not speculative. Pay.com.au says it has processed more than $7bn over twelve months for over 30,000 customers, growing 100% year on year since it was founded in 2019.

Chief executive Blake Hutchison frames it as a fairness problem. “Large companies negotiate their way into rewards,” he said. “Small businesses get an invoice and a due date.”

The pricing is refreshingly plain. There is no monthly platform fee, and on a bank transfer a business pays 1.75% to earn one point per dollar or 3.25% to earn two.

Then you reach the company’s own valuation of its currency. PayRewards says its points are generally worth one to two cents each.

Run that together and the margin is thin. The cheaper tier costs 1.75 cents to generate something the company itself values at one to two cents, so the entire proposition rests on redeeming at the top of that range.

The card route costs considerably more. Paying a vendor who does not accept cards carries a 2.9% processing fee, and adding the points layer takes the total to between 4.65% and 6.15%.

What that buys is time and stacking. The business gets the float on its card, keeps its own card rewards, and collects PayRewards points on top, which the company calls the Double Dip.

Europe’s version of this sector sells software instead of points. Berlin’s Moss became a unicorn on spend management, on subscriptions rather than a cut of every payment.

Regulation explains part of that divergence. EU rules cap consumer card interchange at 0.2% on debit and 0.3% on credit, and payment services law prohibits surcharging on those same cards, which leaves far less room for a rewards arbitrage to sit in.

So the question a business owner faces is arithmetical rather than emotional. Germany produced Moss and Denmark produced one of its rivals because Europe answered it differently, which is that most firms would rather keep the 1.75%.