Payleven, the Rocket Internet-incubated mobile-payment service that uses a dongle attached to a mobile device to make and process card transactions — yes, like Square — is today announcing that it has picked up another round of funding, as well as a new investor. As has been the case with many past investments in Samwer-incubated startups, neither the exact funding figure, nor the investor, have been disclosed — except to note that the value is in the “high single-digit millions” of dollars, and that it is “largely” from the new backer.
Payleven would not comment on whether this is a strategic investment (eg, from a payments company) or a VC. But, in the process of announcing this news, it did confirm reports of its existing backers — specifically New Enterprise Associates, Holtzbrinck Ventures, ru-Net and the Samwer brothers’ Rocket Internet, which together invested “double-digit millions” in a round last year.
Payleven has not released usage numbers for its service, which is now live in Germany, Netherlands, Italy, United Kingdom, Poland and Brazil, but a spokesperson tells TechCrunch that it will be using the funding to build out its service in markets where it already operates, as well as continue its international push.
The funding comes at a time when competition heats up among services that use dongles on mobile devices to enable credit card payments. But with Square or PayPal’s here yet to make any large movements outside North America, the playing field remains wide open. Startups in addition to Payleven offering dongle-based payments include iZettle, mPowa and SumUp.
Like many of its competitors, Payleven takes a 2.75% commission on all transactions, with a minimum spend of €1. And like these others, Payleven is going after the same type of client — small businesses that, up to now, may not have been able to accept card payments before because of their size.
But Payleven also has a unique selling point. As of October 2012, it became the only one that has integrated a chip-and-pin reader into its offering. The chip-and-pin reader is one of the few ways that major credit card company Visa has said is acceptable for verifying a user’s identity.
This has been a snag for competitors like iZettle and mPowa. At one point last year, iZettle had to stop taking Visa payments through its service because Visa decided that its signature-based authentication was not secure enough.
(Unlike Square and other payment companies in the U.S. that read the magnetic stripe on the back of the card, in Europe the majority of cards have a chip embedded in them, with a user further authenticating their identity by entering a four-digit code, rather than a signature.)
iZettle and others have so far managed to get around this issue by sending buyers to a mobile website for SMS-based authentication, but this of course is less efficient than punching in a short code on a keypad. These other companies are undoubtedly going to arrive at a more frictionless solution — including maybe their own chip-and-pin readers. For now, Payleven is making it more convenient for people to use its service compared to its competitors, with its device linking up with the merchant’s smartphone or tablet via a Bluetooth connection to complete the transaction and sync it up to the merchant’s account.
Because it’s using a European-specific approach to mobile payments, and solving a Europe-specific problem, Payleven believes that this is enough to keep it from being labelled a mere clone. That’s an adjective often applied to Samwer ventures that replicate the features and business models of startups in the U.S. that have yet to hit Europe and other markets where Rocket has launched.
“We are Payleven. We are more than a clone. We are not replicating but we are creating something differently,” co-founder and COO Alston Zecha told me in October when the company first launched the PIN reader.
Full release below.
payleven starts the new year with high single digit USD million funding
Berlin/London 21th Jan, 2013 – At the end of 2012, payleven, Europe’s mobile payment pioneer, secured additional funding to continue its strong growth in Europe and South America. The high single digit USD million amount comes largely from a new investor who joins the existing group consisting of New Enterprise Associates, Holtzbrinck Ventures, ru-Net and Rocket Internet. The name of the investor remains undisclosed. The additional funding comes after an initial double digit investment last summer. payleven turns a smartphone or tablet into a card terminal, enabling small businesses and mobile service providers to accept card payments everywhere – without any fixed costs or a complicated signup process.
Co-Founder and CMO Konstantin Wolff: “We are thrilled to see our investor base grow, which reflects the excitement for the first Chip & PIN mobile point of sale (mPOS) in Continental Europe. We want to remain innovative, develop our product and accelerate the growth of our merchant base. The close partnership we have with our investors is key to achieve this.”
In Europe, Visa only allows mPOS payments with Chip & PIN authorization. With the introduction of its Chip & PIN solution, payleven is the first company in Continental Europe to fulfill the high security standards required for a fully functional mPOS acceptance device. payleven has been working closely with Visa to ensure the right standards for its mPOS solution.
payleven’s Chip & PIN solution works through a compact, secure device that links to a smartphone or tablet via Bluetooth. The PIN is entered on a keypad on the device. With Chip & PIN, transactions are as secure as with a traditional card terminal and therefore merchants are protected to the highest standards.
payleven is tailored to the needs of small and independent businesses with fair and transparent terms and conditions. Billing is solely transaction based – there is no minimum turnover or fixed fee. Transaction costs are as low as 2.75% of the transaction value. All card payments can be accepted starting from EUR 1.
payleven, Europe’s mobile payments pioneer, is a start-up with its headquarters in Berlin and London and was founded in March 2012. payleven is founded by a group of young entrepreneurs who want to do things differently from the way big businesses operate. Our team members come from the payments and financial services industry (including large corporations like American Express, MasterCard, Travelex and Visa as well as small payment startups) and also from the software and technology sectors. The company is under the leadership of Co- Founders Rafael Otero, Alston Zecha, Dr. Alexander Zumdieck as well as Konstantin Wolff and currently employs around 70 employees. payleven is already available in Germany, the Netherlands, Italy, Great Britain, Poland and Brazil. Further press material and information can be downloaded at www.payleven.com