In a sea of ‘me too’ mobile payment startups/dongles à la Square, Finnish startup IroFit actually looks like it has an interesting proposition. The soon-to-launch Helsinki company offers a mobile platform for small businesses to accept card payments via a mobile app and ‘EMV-certified’ card reader, underpinned by various business management features.
However, where’s things stand out is IroFit’s “Internet-free” tech that allows the platform to operate in areas where there is no data coverage. Instead, it piggybacks a regular GSM mobile signal and SMS, enabling the startup to target hard-to-reach emerging markets.
The startup has also just closed funding: It’s raised a $600,000 seed round led by Nordic early-stage VC Inventure, with participation from Solinor, a payments industry software developer, and Rasheed Olaoluwa. The funds will be used to further develop IroFit’s platform and launch the service in Nigeria.
“Our proprietary technology transmits secure card transaction data via basic GSM channels — USSD/SMS — thereby making it possible to process card payments in real-time even without an Internet connection,” explains IroFit co-founder and CEO Omoniyi Olawale. “You can accept card payments anywhere you have the basic signal strength to make/receive calls or SMS. Since the coverage area of basic cellular service is much larger than areas with Internet connectivity, it allows us to dramatically expand operational coverage area for our system.”
Furthermore, he argues that even in large cities in emerging markets, where people have mobile Internet, IroFit is still the better option. “[The] Internet connection is usually so spotty and unreliable that it isn’t a reliable option for payment terminals,” says Olawale. “Initial testing in Nigeria have shown our solution consistently delivers greater than 95 per cent connection success rates, as against the less than 50 per cent aggregate for the country. Moreover, it also works in areas where traditional terminals do not function at all due to no Internet coverage.”
He also tells me that the technological challenge for a solution like IroFit is how to transmit a large amount of encrypted data through a limited channel such as SMS, while maintaining the integrity and security of the encryption. “We have solved this, and have filed a U.S. patent for this proprietary technology,” he says.
Unlike Square, which currently only supports magstrip, like other more outward looking card readers, IroFit also works with Chip and PIN, and is NFC enabled. In addition to payment processing, the platform offers other business management tools, such as sales analytics, accounting, inventory management, CRM, loyalty management, and payroll support.
Zooming out further, it would be wrong to think of IroFit as simply an “Internet-free” Square competitor, says Olawale. “While the mPOS solution is our first product built on the platform, it can also process payments for wallet applications, cryptocurrencies, in-app payment processing, and even microlending services for small businesses in developing countries. We decided to start with the strongest business case (retail payments), prove the platform and market demand, then scale from there,” he adds.