French startup Lydia looks and acts a lot like Venmo — and it’s not a bad thing. Venmo is a great way to pay back your friends in a few taps without having to pay any fee. But its main issue is that it only works in the U.S. This is where Lydia comes into play.
“Lydia isn’t a payment technology, it’s just a new payment processor like PayPal,” co-founder and CEO Cyril Chiche told me in a phone interview. “We use existing payment technologies, and, in particular, debit cards.”
Sending and receiving money is absolutely free. First, you choose the payment card that you want to use. Then you enter the amount and your passcode. After that, you can send a payment notification via email or text message. And it’s done. All your friend has to do is open the app to accept the payment.
Alternatively, after entering the amount, you can ask your friend to scan a QR code with the Lydia app to receive the payment immediately. If you don’t want to keep any money in the app, you can withdraw it to your bank account — it’s free. Lydia doesn’t have any incentive to keep your money because it can’t make the money work due to regulations.
If Lydia pays the card fees, how does it plan to make money? The startup bets on retail stores. Professional users can start accepting payments using Lydia. Every time someone wants to pay using Lydia, he or she opens the app, enters the amount and shows the QR code to the merchant. The cashier scans the QR code with a phone. This way, it doesn’t rely on the client’s cellular network.
Lydia Pro isn’t free. Merchants have to pay 0.3 percent per transaction and a monthly plan that starts at $6.70 (€4.90). It is still a lot cheaper than other payment processors.
“We had two possibilities. We could either have charged higher fees and reinvested part of them on marketing to gain new users,” Chiche said. “Or we could have made payment processing so cheap that your merchants become your marketing team — we chose the latter.”
Founded in 2011, the company had to work nearly two years on Lydia before releasing it in July 2013. It has raised $820,000 so far (€600,000).
The startup only has 20,000 registered users for now. But it has doubled its user base since December 2013. A thousand retail stores have signed up to Lydia Pro — the biggest merchants already handle more than 1,000 transactions per month. The app is available on iOS and Android.
For now, Lydia is only available in France. But the company is ready to handle multiple languages and currencies — there is no technological or regulatory issue. France is just the starting point to test and tweak the app.
“When you are a startup, there is a motto that is dear to me,” Chiche said. “This motto is ‘don’t spread yourself too thin.'”