Cashless Society

A start-up that wants to make ATMs obsolete

Say you're en route to the Ace Hotel on West 29th St. in Manhattan and you're in the mood for the sort of bourbon that comes mixed with a muddled orange and sugar water. And you want to pay cash. What's the solution? Stop at an ATM.

But what if you don't feel like stopping? Better cue up Nimbl on your iPhone.

In the canon of mobile technology that induces, perhaps, more head-scratching than high-fiving, Nimbl is the latest entry, having launched in beta form in select neighborhoods in San Francisco and New York City at the beginning of October.

Jeffrey Greenberg | UIG | Getty Images

Like an Uber for getting cash, as the blog TechCrunch described it in early October, Nimbl allows its app users to select an amount of cash to be delivered directly to them by a Nimbl runner. (In that regard, Nimbl is probably more like a Postmates for money.)

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As for where the cash gets delivered: Users may type in an address or enable GPS so their Nimbl runner can find them. But no transaction has occurred just yet. Only when the Nimbl runner is standing in front of you some 15 to 20 minutes later—with your cash neatly tucked away—are you prompted to send the corresponding amount of money to Nimbl via a notification from a third-party payment processor such as Venmo or PayPal. And for all this, Nimbl charges a $5 fee—or, at least, it will. In beta, the cash-delivery service has been free.

"There's really been no technology innovation in and around cash payments," said Jim Luo, CEO of GreenOps, the bootstrapped San Francisco-based start-up with less than 10 full-time employees responsible for Nimbl. "These runners, you can think of them as a generic courier. They're doing this as if they were delivering any other package."

That may be true, but analysts point to the difficulties in scaling up such a business model. "It's not hard to launch one of these [delivery start-ups], said Anand Sanwal, CEO and co-founder of CB Insights. But as he explained, "There are going to be a lot of casualties in the space for sure."

That's because the economics of delivery start-ups, and whether they can turn a profit, are suspect. "Delivery is the wrong end of the e-commerce value chain," said Harvard Business School professor John A. Deighton in an email. In other words, scaling a delivery service like Nimbl could be difficult, because the money the start-up makes on each delivery is the same.

However, Luo's hunch that people will pay for his service might be correct. After all, cash is still king, since the average American consumer uses it 40 percent of the time, according to a study by the Federal Reserve Banks.

Right now Nimbl's beta service, which was available in New York City and San Francisco, is on hiatus. But Luo has big plans for his app. He just kicked off a fundraising process and hopes to attract investment money to build a new version. The Nimbl service itself will go dormant for a period of time beginning this month until relaunching after a rebuild sometime in 2015—again in New York City and San Francisco, but for both iOS and Android.

While Luo will introduce the app to other cities as well, he's being tight-lipped about where. He also declined to provide specifics about how much money his start-up has poured into creating and testing Nimbl.

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A former member of the venture team at the investment firm Summit Partners, Luo said thousands of requests for cash have been made using the beta version of Nimbl since it launched exclusively for the iPhone on Oct. 3. Nimbl runners are on call seven days a week beginning at 11 a.m. each day, although the cutoff times for the service vary depending on the city and the day of the week; in New York City, someone can call a Nimbl runner as late as 11 p.m. Thursday through Saturday. The maximum amount of cash deliverable through the service is $200.

The mechanics of how it works

Runners are paid. Luo said the pay is "something we think is quite fair for these folks," a combination of an hourly above-minimum wage rate and a per-delivery amount. As for that $5 delivery fee Luo plans to tack on to any transaction a user makes over the Nimbl app: "Nimbl is essentially just a logistics platform. What it's doing is, it's finding where there's demand, and then it's connecting that demand with supply. That's the service we're charging for," Luo explained.

Incidentally, Nimbl runners have to stop periodically at ATMs in order to withdraw cash from a corporate account—a Nimbl account, not a runner's personal account—so as to have cash to deliver to a Nimbl user. For competitive reasons, Luo declined to discuss further particulars of how Nimbl works.

So what are the benefits of using the Nimbl service if Nimbl runners themselves require an ATM and it takes one Nimbl runner about 15 to 20 minutes to reach your location?

According to Luo, "There are instances where it's not convenient to go find an ATM. Everything that is more mundane, you can have someone else do."

The cash handoff

Set aside, for a moment, Luo's impromptu lesson on the microeconomics of opportunity costs, and allow yourself to ponder the finer points of such a service.

Nimbl claimed it is addressing key safety issues, including theft and bank account hacking. The company doesn't ask customers for credit card information. Nimbl's database holds only the information the app uses to identify you. The money you send to Nimbl after receiving your delivery goes through a payment processor like PayPal.

How is a user's identity verified before a Nimbl runner forks over the cash? Luo said: Runners check your ID before making the handoff.

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Who are these runners, and how do you make sure they don't pose a danger to Nimbl users? Luo said: Runners go through a screening process of phone calls, in-person interviews and background checks. "For security reasons, we don't want to get into the exact details of what we do, but suffice to say, we are being very diligent about who we bring on board," he said.

What if these runners run off with Nimbl's cash? Luo said: "Something like this has never happened." Runners are carrying one or two orders' worth of cash. "It's not like they have access to a vast amount of cash that they can withdraw with no limitations," he said.

Suppose one of these runners pulls a gun after handing over the cash? What then? Luo said: "We haven't had any situations even remotely close to that. For the safety on both sides, we do most of these deliveries during the day. We do these transactions in public areas. We don't go into private property. We're talking about on the curb, on the street."

So if you're at a bar that takes only cash and there's no ATM inside the bar and none within a 15- to 20-minute walk from you, and Pitbull is playing and it's going down, and you're yelling timber ...

Well, it's going down. So you're tapping Nimbl.