Payments startup Kuto’s mission is to help local merchants by saving them money on credit card and bank fees. Now it is diving deeper into customer discovery to help pull in new customers for those merchants, and hopefully, create new regular customers.
The company is launching a new section in its app called Store that will highlight merchants in the Kuto payments network. Customers that already have the app can scroll through, learn about a business, and buy discounted gift cards to then go use at the business.
“It’s a way for people to discover new places in Portland they haven’t been to,” said co-founder and CEO Kiyo Kubo.
Kuto started in 2020 because the founders wanted to help local merchants survive the initial onset of the Covid-19 pandemic. Kuto is a payments app that connects a consumer’s bank account to the Kuto platform and moves money like a debit card. The fees charged by Kuto are lower than those of other payments products, on average 70% less. Those savings can be passed on to customers as loyalty rewards that bring those customers back.
For example, if a business saves $5 on fees it can pass that to a customer as a $5 off credit that is handled by the app through the payment flow, and if that customer comes back they are worth another $100 to that business in sales, said Kubo.
Since Kuto started it has saved businesses $50,000. Kuto is available in Portland and Corvallis. There are 1,000 stores in the system and about one-third of those have transactions every week, said Kubo.
He noted that the app has found strong adoption at places like Farmer’s Markets or events like My People’s Market where merchants sign on and event organizers give out gift cards to consumers to spend within those markets.
With the Store feature, Kubo is hoping to boost usage so people use the app at more than one place. Because once someone is in the system they can use it to pay at any other store that is also in the system.
As consumer spending tightens people are thinking harder about where they spend their money, said Kubo. This offers businesses an incentive to get people in, plus people can feel good about spending local and saving the merchant money as well.
Kuto is not a daily discount site, Kubo said. Any discounts given to customers are taken from what the business would have sent to a bank or credit card company in fees. Whereas those daily discount businesses of the mid-aughts required businesses to lose money.
“These discounts aren’t a cost to (the merchants) but the new customers are valuable,” Kubo said.
Kuto is a team of 12. The company raised a bit of money early on, but Kubo expects to start fundraising his next round soon.
