ShopKeep — the NYC-based mobile payments startup founded by a Brooklyn wine shop owner to help other merchants improve their services with iPad-based payment apps and analytics — is growing. The company has acquired another startup, Payment Revolution, and will now offer payment processing as part of its point-of-sale platform, under a new name, ShopKeep Payments.
This is an agnostic solution, CEO Norm Merritt told me, which is capable of working with the likes of Apple Pay but also whatever other payment methods and mobile wallets come down the pipeline. ShopKeep is currently “just shy of 15,000 merchants and basically profitable at the margin”, but because it’s also investing in more customer acquisition, it is “unprofitable by choice” at the moment.
The terms of the deal are not being disclosed but from what we understand, it is a tech and talent grab, with Payment Revolution’s CEO, Etie Hertz, taken on a new role at ShopKeep as SVP of Payments.
While Payment Revolution was a bootstrapped startup (and, as with so many of these, quite under the radar as a result), ShopKeep has raised just under $40 million, with $25 million of that coming in the form of a Series C led by Thayer Street Partners with participation from individual investors like Tom Glocer.
Payment Revolution is not a stranger to ShopKeep: the companies were already partnering together in cases where merchants needed payment processing services alongside new POS software.
“We speak to a lot of merchants every moth and a lot of them are looking for partners for payments processing, so we would pass them off to Payment Revolution,” said Merritt in an interview.
Adding Payment Revolution to the bigger solution, will mean an even more simplified product offering that caters to the sometimes unpredictable nature of running a small business, and to the fact that many small merchants have no interest in becoming technology nerds on the side.
“Most merchants do not have the time to research the intricacies of payment processing, and because ShopKeep has such transparent pricing options, many of them have requested a simpler payments solution from us,” Merritt said. Features that ShopKeep offers are transparent pricing plans, customized rates (basically that change depending on what kind of business you are), 24/7 customer support; and importantly no termination fees and no contracts.
This also makes some business sense for ShopKeep because the initial contract with a merchant can now potentially reap better margins and more recurring revenue. And it also gives the company a stronger position versus the competition, of which there is a substantial amount, including Square, PayPal, Google, Groupon, Amazon and many, many more.
“There are a lot of folks who are trying to meet the need of merchants in this space,” Merritt acknowledged, but he also noted that ShopKeep has built a position distinct from them. “One thing that sets ShopKeep apart is that we were started by a merchant,” he noted. “That DNA means we have a good reputation. We are on their side.”
The company, Merritt said, is currently in the process of raising a Series D round of funding to continue its expansion. “Right now it’s about building marketshare and getting more merchants to adopt all this new technology,” he added.