Tandym, a digital private-label credit card issuer, launched Wednesday backed by $60 million in venture capital funding, aiming to help retailers recoup the cost of accepting credit cards by funding merchants’ own loyalty programs.
The Chicago-based startup enables online merchants to instantly issue virtual credit cards to customers who may earn 5% in rewards on future purchases, the company announced Wednesday.
The concept addresses the common merchant complaint that the interchange fees that credit card networks collect typically go toward funding banks’ card rewards programs instead of retailers’ own rewards program.
“Tandym essentially redistributes wealth back to, and empowers, merchants via their own loyalty programs, allowing them to deepen their connection to the consumers they serve,” Jennifer Glaspie-Lundstrom, Tandym’s CEO and a co-founder, said by email.
Gradient Ventures, Google’s AI-focused venture fund, contributed $10 million to the funding round, which was led by Rivonia Road, with participation from Obvious Ventures, the press release said.
Glaspie-Lundstrom spent seven years at the credit card giant Capital One in various executive roles, rising to managing vice president of product and technology before leaving last year to launch Tandym.
Tandym initially will target small to midsize e-commerce merchants through a digital platform leveraging real-time data and machine learning to rapidly make credit decisions at the point of sale with tools previously available only to large merchants, according to Glaspie-Lundstrom.
Significantly, Tandym is bypassing the popular interest-free buy now/pay later lending approach. Instead, Tandym extends consumers a revolving credit line tailored for each merchant’s loyalty program.
“Tandym is different" from BNPL lenders "in that it offers a rewards product. Similar to the traditional credit card space, Tandym’s products are typically rewards-based or low-interest based,” Glaspie-Lundstrom said.
At checkout, shoppers at participating merchants fill out a one-time application by providing some basic information with no impact to their credit score, and each proposed credit offer includes the monthly interest rate.
E-commerce retailers using Tandym include Jennifer Bradly Cosmetics, the Wellness Enterprise and PerioSciences, which makes dental products, Tandym said in the release.
“By making flexible, store-branded payment options more accessible, Tandym empowers merchants to increase their revenue while driving deeper customer loyalty and brand awareness,” Zachary Bratun-Glennon, a partner at Gradient Ventures, said in the release.
