The startup ecosystem might be the only market where “free” is considered a perfectly viable business model. Manufacturers can’t – and don’t – work for years developing and building products only to ship them for free and hope that a sticker on the front might help mitigate some of the costs until the next funding round comes through. They don’t deal in promises and prospective revenue streams. If you want what they’re selling, you’d better pay up.

That doesn’t mean that manufacturers don’t take advantage of a “free” sticker every now and then. If TLC has taught us anything, it’s that child pageant queens are GIF-mines and that people can get a lot of free goods by hoarding and strategically using coupons. (If you didn’t get either of those references, don’t worry. It just means that you have a job and your dignity.) Endorse, a mobile app for iOS and Android devices, is taking the coupon model and making it better in just about every way imaginable to help brands move into the mobile age.

Endorse is fairly simple. Users can browse through the company’s offers, which come directly from brands, and then they purchase the item and snap a picture of their receipt. Endorse then analyzes the receipt and puts the money from the offer directly into the user’s bank account. The company is today announcing a partnership with PayPal that will allow users to get this cash back deposited into their PayPal accounts or stick with the direct-to-bank model.

Depositing the cash into a PayPal account makes little sense at first. Moving money from a PayPal account to a bank account typically takes a few days (or, at least, it did when I was a freelancer and got paid via PayPal), and that’s assuming that people actually have and use a PayPal account. Why prolong the deposit?

According to Endorse CEO Steven Carpenter, the partnership with PayPal is based on a bet that PayPal is going to lead the digital wallet revolution. Though Endorse itself is payment platform agnostic – the app doesn’t even come into play until a receipt is hand, and it doesn’t care how it gets there – Carpenter says that he wanted to work with PayPal because it’s already established.

“I don’t know how the digital wallet landscape is going to evolve,” he says, “but certainly PayPal is in a very strong position to take a leadership position in the emerging mobile wallet space. We want to work with the leader.” He says that PayPal also offers other advantages, such as same-day deposits and no minimum deposit. Users that disagree, or would rather not use their PayPal account, will be able to do so. The partnership is less about making PayPal’s wallet big and more about making life easier for Endorse’s users, which is exactly as it should be.

Ultimately, what drives my bullishness towards the model is the attitude that Endorse should work no matter where someone is or how they purchase an item. The company isn’t tying itself to one payments platform or technology over another – the only way Endorse goes down is if people stop printing receipts, which seems unlikely.

Endorse has already returned $400,000 to customers in its relatively short lifespan. The company takes a cut from each transaction, but it manages to do so in a way that keeps both brands and consumers happy. Consumers get money in their pocket, which is always a plus, and Carpenter says that Endorse’s cut is smaller than the coupon fees that manufacturers have to pay for the dead-tree offers.  Brands are also able to avoid coupon fraud, which keeps them even happier.

The company also offers cross-retailer data to brands, allowing them to learn who is buying their products and where they bought them from for no additional charge. This can help brands figure out where they should be spending money (brands actually pay for their products’ shelf space in the hopes that getting a better spot will improve sales) and where they might need to cut back. Brands can also use Endorse to figure out how many of their “fans” on Facebook or Twitter followers will actually take advantage of a discount, allowing them to suss out the lucrative fans from the “yeah, I guess I ‘Like’ Panera Bread” crowd.

All told, Endorse provides a large variety of services to brands. An offer on Endorse is not only more secure and cheaper than the typical print coupon. It also provides a lot of data that brands may not otherwise be able to gather, and does it for free, all while making customers happy by giving them some cash back without any of the hassles of dealing with print coupons.

[Image courtesy zeusandhera]