What is it that is making the incumbents worried about the dynamic global payment industry? True, everyone has been talking about the reservoir of potential that the industry holds for some time now, but the developments in the space over the last few months present a good case for “disruption".
Let us take a look at some of the trends:
Record for the largest series A investment for a UK startup ever, is in "payments":
Recently, a UK based payment firm named Powa Technologies, which enables users to make payments using their mobile in about 3 seconds, got an investment of USD 20.7 mn. Earlier, the company had received USD 76 mn in year 2013. Thus, the company has got total series A investment of more than 96 Mn, which is largest for any technology company in UK!
In how many areas do you see 8 fold return to the investors and hundred million dollar exits?
Recently, Billionaire investor Dermot Desmond has pulled off one of his most stunning stock market coups netting almost €180m from the sale of his stake in listed online payments and money transfer group Optimal Payments. A few months ago, another private equity firm named Investcorp got a stake in a payments firm Skrill that gave it an 8-fold return to the initial investment it made. Very few industries can boast of such returns on investment.
Every batch of Y-Combinator and other VCs, angel funding firms, and accelerators comprises of larger number of payment firms than the previous batch:
Y-Combinator Startup GoCardless announced on 28th January 2014 that it had raised $7 Million Series B round that will be used to add more talent and take on banks by targeting larger establishments. This is just one of the examples. Payment start-ups have become one of the brightest up and comers in the Y-Combinator list over the last year.
Bitcoin hearing downloads:
The virtual currency rose to new heights after it got the backing of the Senate committee in November 2013. The recent ongoing hearing itself attracted the attention of banks, regulators, stakeholders and customers alike, throughout the world. The currency has been going through lots of scrutiny over the last few months, and the current meetings are being looked at with the hope of bringing the regulators, banks and other stakeholders on the same page.
Before the hearing, many government agencies expressed their point of views by writing to the Committee. Federal Reserve Chairman Ben Bernanke said earlier that they did not have any plans to regulate the virtual currency.
Some of the other funding and acquisitions in this space (indicative) :
Monitise – February 2014, Acquires Pozitron Yazilim in a $100 Million Deal
Kabbee - February 2014, Raised $9.01 Million
QuickPay – December 2013, Raises $5.5 Million
Coinbase – December 2013, Raises $25 Million
Shopify – December 2013, Raises $100 Million
Raise.com – December 2013, Raises $18.1 Million
The list goes on.
It takes us back to the reason why we created Let’s Talk Payments. The developments in this space are not just marketing gimmicks or media hype. The geeks are joining the party. And you know what -- when they party, they party well. We all need a good amount of change in how money is managed, transferred, stored and used for commerce. We need a better way to pay. The disruption started with Paypal, and then slowed down due to lack of right infrastructure and technology for new players. Now, with the democratization of data, its storage and the mobility of consumer, it has all started making sense. Time has come for massive innovation in this space.