December 31, 2014
PayClip offers Square like services in Latin American region complete with a card reader and dedicated apps. The company recently raised $5.2 Mn in a new funding round. The company had also raised $3.6 Mn from investors such as Alta Ventures, 500 Startups, Venture Lab and others. Like Square, PayClip also focuses on enabling smartphone users to accept credit/debit card payments. The company is working in contrast with growing demand for payment terminal alternatives like digital wallets, mobile based checkout, virtual currencies, etc.
In developed countries like US, we already have Square, PayPal and Intuit offering dongle based mobile card-processing solutions. PayClip is focused on developing nations like Mexico where the concept of mobile payments is not that popular. In such developing markets, majority of merchants do not even accept payment cards and deal in cash. PayClip is embracing the challenge and offering merchants solutions enabling them to accept Amex, Visa, MasterCard, JCB and Discover.
In Mexico itself, 60% of the population can be considered as unbanked. But the smartphone penetration of such markets is at par or even higher than that of developed nations. This does brings an opportunity for companies like PayClip to offer alternatives to traditional banking services. PayClip allows merchants to offer consumers with interest free, structured payments. In simple terms, consumers can pay for their purchases in 12 monthly installments and that too with no interest. This is a differentiator for PayClip as compared to its competitors. Although PayClip does charge its merchants a per-transaction fee of 3.6% with no monthly fee and additional commission on installment agreements.
PayClip addresses security concerns with an SMS based two-factor authentication system. PayClip’s card-reader dongle readily accepts EMV enabled cards. PayClip is planning to use the fresh funds in further expanding its reach to more markets. However there are some noticeable aspects which may hinder PayClip in some way. The card-reader dongle costs $500 which is way more than its competitors in other markets. Moreover, the per-transaction fee of 3.6% might be high for and make merchants feel skeptic in adopting it.