Typically merchant credit cards have been available only to the largest retailers.
Chicago-based Tandym, founded by former Capital One executives, wants to change that.
After launching less than a year ago, the private-label credit card provider has raised two equity rounds — $2.2 million in pre-seed funds and $8 million for its seed round — in addition to $50 million in debt financing provided by global alternative asset manager Rivonia Road Capital LLC this week. Rivonia also provided the company with an equity investment in its most recent fundraise.
“Amazon, Target, Walmart, Nordstrom — they all have their own branded credit cards. … It’s the most valuable payment method these retailers can accept,” Jennifer Glaspie, co-founder and CEO of Tandym, told the Chicago Business Journal. “However, smaller businesses — roughly a billion dollars in revenue and below — have never had access to their own private-label credit card. That is what Tandym is changing.”
Tandym is currently serving e-commerce businesses and expanding into brick-and-mortar next year.
“The most recent company that we onboarded onto our platform is called Jennifer Bradley, an online cosmetic retailer," Glaspie said.
Tandym cuts out other intermediaries to bring down the cost of credit card processing for retailers so when customers buy products on websites, the company doesn’t pay credit card fees.
“When [a customer] uses their Visa card, [Jennifer Bradley] pays over 3%,” Glaspie explained. “When [the customer] uses Jennifer Bradley Pay, she pays only half a percent. [The difference of] 2.5% might not sound like a lot initially, but a well-run retailer might have 10% operating margin, so 2.5% is 25% of their total operating profit.”
Historically smaller businesses have not had access to the programs that Tandym is offering, Glaspie said.
"I think what we are building has the opportunity to be incredibly disruptive. The fact is retailers pay a huge percentage to accept credit card payments and they don’t have a choice," she said.
Fintech continues to be a high-growth tech sector for Chicago after more than 800 fintech companies raised $4.58 billion in growth capital in 2021, an increase of 112% since 2020, according to World Business Chicago.
