Payment Platform Strategy

Launch fast with Stripe. Scale by going direct. Own the full payment stack and capture the margin.

The Opportunity

Every restaurant transaction today passes through layers of middlemen — each taking a cut. A typical card payment moves through the card network (Visa/Mastercard), the issuing bank, the acquiring bank, and the payment processor (Stripe, Square, Toast). By the time the restaurant gets paid, ~5% of the transaction is gone.

2.9% + $0.30

Stripe Processing Fee

~1.5–2.0%

Interchange (Card Issuer)

~0.13–0.15%

Card Network Fee

When you use Stripe, their 2.9% bundles interchange + network + their margin. You pay one fee but have zero visibility or control.

Phase 1: Stripe Integration

MVP — Launch Fast

Launch with Stripe as our payment processor. Their APIs, SDKs, and compliance infrastructure let us go to market in weeks instead of months. We pay the premium for speed.

What Stripe Gives Us

Stripe.js Elements

PCI-compliant card tokenization. Card numbers never touch our servers.

PaymentIntents API

Pre-authorization holds with capture_method=manual. Hold funds when diner sits down, capture on checkout.

Stripe Connect

Restaurant onboarding and payouts. Each restaurant gets a connected account with T+2 day settlement.

Split Payments

Charge multiple cards against a single order. Even split, by-item, or custom amounts — all server-validated.

Phase 1 Unit Economics

Diner pays on a $100 tab $100.00

Stripe takes (2.9% + $0.30) -$3.20

PeyePeye charges restaurant (2.5% + $0.10) $2.60

PeyePeye net margin per transaction -$0.60

Negative unit economics in Phase 1 — we subsidize processing to undercut competitors (Square: 2.6% + $0.10, Toast: 2.99% + $0.15) and acquire restaurants fast. Volume and the Trust Layer justify the investment.

Phase 2: Direct Integration

Scale — Own the Stack

Once we have volume and product-market fit, we go upstream. Cut out the Stripe middleman and connect directly to card networks and acquiring banks. This is where the real margin lives.

How We Go Direct

Become a Payment Facilitator (PayFac)

Register as a PayFac with Visa/Mastercard through a sponsoring bank. This lets us onboard restaurants as sub-merchants under our master merchant account — no Stripe needed. Partners like Finix or Adyen for Platforms provide the infrastructure to accelerate this.

Direct Acquiring Relationship

Negotiate directly with acquiring banks for interchange-plus pricing. Instead of Stripe's bundled 2.9%, we pay actual interchange (~1.5–2.0%) plus a small acquirer fee (~0.1–0.3%). Total processing cost drops to ~1.7–2.3%.

Own the Settlement Layer

Control the full flow from authorization to settlement. Faster payouts (T+1 or same-day), better fraud control, and the ability to offer restaurants advances against pending settlements.

Phase 2 Unit Economics

Diner pays on a $100 tab $100.00

Direct processing cost (~1.8% + $0.10) -$1.90

PeyePeye charges restaurant (2.5% + $0.10) $2.60

PeyePeye net margin per transaction +$0.70

From -$0.60 to +$0.70 per $100 transaction. A $1.30 swing per transaction just by cutting out the middleman. At scale, this is the business.

The Margin Journey

Phase 1 — Stripe

-$0.60

per $100 transaction

Pay Stripe 2.9% + $0.30 while charging restaurants 2.5% + $0.10. Negative margin — invest in growth.

Transition — Finix/PayFac

~$0.00

per $100 transaction

Move to Finix or similar PayFac-as-a-service. Lower processing costs (~2.4%) while maintaining same restaurant pricing.

Phase 2 — Direct

+$0.70

per $100 transaction

Direct acquiring at interchange-plus. Processing at ~1.8% + $0.10. Full margin capture on every swipe.

Why This Approach Works

Speed to Market

Stripe's APIs let us launch in weeks. We don't need to wait for bank partnerships or PCI Level 1 certification to start acquiring restaurants and proving the model.

De-risked Scaling

We only invest in direct integration after we have volume and product-market fit. No massive upfront infrastructure spend before we know the product works.

Competitive Moat

Direct integration creates a structural cost advantage. Competitors using Stripe/Square can't match our pricing at the same margin. The Trust Layer + low fees becomes unbeatable.

Revenue Unlock at Scale

At 10,000 restaurants averaging $500K/year in PeyePeye transactions, the Phase 1 to Phase 2 switch turns a $30M annual processing loss into $35M in gross profit. Same restaurants, same pricing — just a different pipe.

Transaction Flow — Both Phases

The diner and restaurant experience stays identical in both phases. Only the plumbing changes underneath.

Diner scans QR code at table

Links to table session, card tokenized via Stripe.js (Phase 1) or our vault (Phase 2)

Pre-authorization hold placed

$150 hold via PaymentIntents (Phase 1) or direct auth API (Phase 2). Restaurant sees guaranteed funds.

Orders accumulate during meal

Tab builds up. No charges yet — hold covers the running total. Kitchen gets order confirmation instantly.

Settlement — charge final amount

Subtotal + tip + tax captured. Remaining hold released. Split payments validated server-side.

Restaurant payout

T+2 via Stripe Connect (Phase 1) or T+1 / same-day via direct settlement (Phase 2)

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