US-based micropayments start-up Peppercoin has secured a referral agreement with the nation's largest merchant acquirer Chase Merchant Services.
Under the agreement, Chase will offer Peppercoin's Small Transaction Suite to online and physical retailers as a low-cost mechanism for processing sub-$20 transactions.
The Peppercoin micropayment system, developed as a spin-off from the cryptographic and information security group at MIT, cuts the costs of processing loose change trade for banks and card companies by aggregating the value of multiple transactions.
According to TowerGroup research, total US consumer transactions below $5 at the physical point of sale in 2003 represented $1.32 trillion, representing a large untapped market for card operators.
Chase Merchant Services processes 4.3 billion transactions annually, translating to an annual revenue stream of $295 billion.
Mark Friedman, president of Peppercoin, says: "Merchants are eager to grow revenue by tapping into the small-dollar transactions market, and we expect that Chase's recommendation of our joint solution will drive a significant increase in transactions through Chase Merchant Services."