The Samwer brothers, their Rocket Internet investment vehicle and their portfolio of e-commerce companies have been some of the harder-to-penetrate parts of the European startup ecosystem. They often don’t reveal official funding figures for their landscape of businesses and have been publicity shy in other ways, too. So it was with some surprise that I was asked yesterday, in the middle of a crowded apps trade show in London, if I wanted to meet with two of the three co-founders of Payleven, the Rocket-incubated mobile payment startup — one of the many companies, like Square, that have developed a way of attaching a device to a phone to turn it into a card reader — to talk shop.
“The reason we didn’t talk was for what are the right reasons, and it’s not a Rocket thing,” Alston Zecha, one of the three co-founders and the COO, told me. “It’s that there is a lot of noise and talk and we think it’s important to have conversations where we have something to say. We are about substance, not advertising.”
The important thing they had to say was that Payleven, after running a limited service in Germany, is gearing up to enter the European market — and potentially others — properly, with the launch of a whole new device taking the service beyond the Square-like dongle. “We are Payleven. We are more than a clone. We are not replicating but we are creating something differently,” says Zecha.
That device is a small card reader, available initially for iOS and later other platforms, that will let merchants take card payments in the way that the credit card companies in Europe require them to be made: using the embedded chip and not the mag stripe, and with the ability for users to put in PIN numbers, not their signatures, on a secure, separate keypad.
This card reader then speaks to a mobile app on a merchant’s handset using Bluetooth — a system that Payleven says will make its service usable with all major credit card companies in all European markets.
This is in contrast to solutions from the likes of iZettle and mPowa, which have run into problems with systems that didn’t meet card company requirements specifically from Visa, or have a solution similar to Payleven’s but for now are only working in a single market, such as CreditCall. It says that it will start making this terminal available by the end of this year.
This is a big step forward for Payleven, which so far has been limited to a beta in Germany for around 1,000 merchants, because not only does it move it outside of being a carbon copy of someone else’s idea, but it is giving it a shot at breaking ground in a technology that has yet to be really hit critical mass in Europe, but one that many players have been eyeing up: using mobile devices to enable card payments for merchants that currently do not have the facilities to take card payments.
“We’ve invested heavily in a tech solution that as a merchant you can accept everything from the start,” says Rafael Otero, the CTO and another co-founder.
Payleven’s founders, in their own words, are not your “average normal Rocket 20- year old entrepreneurs.” Zecha is Hong Kong-born and half-Dutch, half-Chinese, and cut his teeth working for startups in Thailand and China and had stints in banking, consulting, and software investment. “A little bit of payment and a lot of tech,” is how he describes himself. Otero has been working in payments for 8 years. And Alexander Zumdieck, the third co-founder and MD (who I didn’t meet) is ex-McKinsey.
All had worked in one way or another for Rocket companies as well. Payleven was about “coming together simultaneously,” says Zecha. “When you are in the Rocket family you have conversations.”
But even if Payleven is coming out with a new device, in other ways it is still trying to solve the same problem. As with services like iZettle and Square, the first aim will be small- and medium-sized merchants, who do not take card payments already.
Payleven understands that this space, even at a nascent stage, is crowded. So, it is looking to use payments as a gateway to expand to other merchant services that are also commonplace among larger businesses but are less commonly available for smaller merchants. One example, says Otero, are loyalty services. “How do you know what your customer wants? A larger supermarket like Tesco knows the moment you walk through the door, because they know what you have bought before, and what you may buy in the future. Most of the time small businesses have no clue if they have a loyal customer, or what those customers like to have or might like to have.”
“Loyalty is one service but it’s easy to imagine more,” notes Zecha, and indeed this is why mobile payment services are so compelling to investors and others. “Mobile devices that can be seen as path to location based services, social services and more.”
The compelling thing about something like Payleven is that while it has a chance, like all of the others, at the wider small merchant market, where it might have its most ready audience is within Rocket itself. The wider company has a number of other e-commerce businesses — specifically in the area of food delivery with Food Panda — that could be a natural customer base for Payleven when it finally gets its hardware off the ground — even if that hardware is there “only to get us to becoming the software company that we want to me,” says Otero.
“We talk to those companies and it is a natural fit,” says Zecha. “But I’m not going to talk about something that isn’t going to be available next week. But yes, we are looking to leverage the global footprint of Rocket.”
What’s useful is that the solutions that Rocket is developing longer term are not limited to Android and iOS smartphones — or even any smartphone. It can be a feature device, as long as it has a Bluetooth connection. That will be essential if it hopes to one day extend outside of Europe into some of the developing markets where Rocket has moved, and where lower-end devices are still in strong use.