As payment solutions proliferate and calls for standardization mount, Israel-based payment platform startup Zooz said it has closed a $24 million led by Target Global Ventures, to expand globally and bolster its products and services.
Zooz’s series C round more than doubles the total amount invested in the company to $40.5 million, raised in four rounds. The latest round included Fang Fund, iAngels, Kreos Capital and existing investors Blumberg Capital, lool ventures, Rhodium, Claltech (Access Industries’ Israeli tech vehicle), XSeed Capital, CampOne Ventures and angel investor Eilon Tirosh.
“We are opening sales and tech support offices in Berlin and San Francisco. We are also you going to invest more in business intelligence that relate to payments and better optimization of data. We are also looking to go from 80 to 120 employees in a year’s time. Sales and tech support in both cities,” said Ronen Morecki, co-founder and CTO of Zooz.
Primarily targeting developers for both mobile and desktop, Zooz provides a payments platform designed to help merchants reduce the rate of international cards being rejected.
“We know to route to the right payment processor, increasing the chances of the card being accepted.”
Zooz wants to be in Germany for the country’s massive growth potential. The company is seeking new retailers and Europe’s largest economy is fertile ground for expansion.
According to ATKearny’s Global Retail Index, Germany is the second largest online market in Europe with almost triple the UK’s current growth potential.
The same report predicts that European online retail sales will reach 234€ billion by 2018 and almost half of all online retail sales across the EU will be from online purchases made using a smartphone or tablet by 2018.
“We believe that the German market is highly advanced in eCommerce and many other retailers in Europe are interested in the German market. So it makes sense for us to follow their lead, said Morecki.
Europe doing the right thing
While Zooz is not directly competing with banks, it is banking on the success of deregulation and the expansion of unified standards globally. In fact, the company’s expansion into Europe plays out against a backdrop of the EU’s planned revised Payment Services Directive (PD2), which is intended to open up the market to new players.
“PSD2 will fundamentally change the game for consumers, banks and third party providers by opening up the market in the same way that the app stores did for mobile phones. With PSD2, third party providers can develop new services on top of existing bank infrastructure that never would have been developed otherwise,” said Erik Engellau-Nilsson, Vice President at Klarna.
According to Uri Rivner from BioCatch, a provider of behavioral authentication, one of the points the directive addresses is electronic payment security in the EU, making online payments safer and more secure.
Payment service providers will be liable for any fraud related issue and will have to be accredited on a yearly basis. Securing the payment ecosystem means a relatively fast, friction-free and unified solution for all.
“The European Commission understands that new payment features are added – purchasing from a new mobile device, first-time customer, applying for a new account – features that up till recently were not addressed, and therefore the need for a regulation is crucial,” said Rivner.
Lack of standardization
One of the biggest hurdles in mainstream adoption and growth in mobile and digital payments is lack of standardization.
There are a multitude of competing platforms, networks, service providers, point of sale technologies, and retailer strategies, including Apple Pay, Samsung Pay, PayPal, Square, Softcard, Walmart Pay, Venmo, just to name a few. Ensuring that there are compliant, secure standards across the board and that solutions are compatible across different channels – online and in-store – will be critical to mass acceptance.
“All parties involved in the payment lifecycle, from retailers to service providers to regulatory bodies, must coordinate to develop consistent and compatible solutions that keep the customer’s needs – convenience and security – at the heart of the conversation,” said Leo Loomie, VP at Digital Risk, a data analytics and compliance solutions provider to large financial institutions.