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Add one more to the list of companies going head-to-head in the area of card payments by way of smartphone attachments: today, Berlin-based SumUp is opening up for business in the UK, Germany, Ireland and Austria, backed by an eight-figure Series A round, understood by TechCrunch to be over $20 million.
SumUp’s $20 million Series A investment comes from b-to-v Partners, Shortcut Ventures, Tengelmann Ventures and Klaus Hommels, the early Skype, Facebook and Xing investor. Before the $20 million round, SumUp had been bootstrapped by its founders, which include Daniel Klein, SumUp’s CEO, who was also one of the founders of PayPal competitor MoneyBookers (later rebranded as Skrill).
Similar to services like like Square, PayPal’s Here, iZettle, mPowa, Payleven and Intuit’s GoPayment, SumUp works by way of a free dongle that attaches to a smartphone or tablet — in its case an Android or iOS device — which can then be used with an app to read cards and take payments. And like the others, SumUp is targeting the large swathe of merchants and small businesses who currently do not have the facilities to take card payments. But if this sounds a little me-too and crowded, it’s clearly a space where investors still see a lot of opportunity for a startup to make a killing.
SumUp estimates that there are some 20 million small businesses in Europe today, but a large part of them are still only able to take payments by cash and checks because of the costs and infrastructure associated with traditional card payment services. Like others in the mobile payment space SumUp is banking on the growing uptake of smartphones — currently 32% penetration in Europe overall — and the increasing reliance on card transactions — they’re growing by 18% annually — to change that.
What is perhaps noteworthy about SumUp is that it is kicking off with a full launch — not a limited beta — in these four countries, with two of them, Germany and the UK, being some of the largest retail markets in Europe. The biggest competitor in Europe, iZettle, has up to now carved out some market share in the Nordics but is still only in beta in the UK; and of course Square and PayPal, the two biggest players in the U.S., have yet to enter the market here — although that seems to be something coming very soon.
[The launch today comes after a four-month closed beta in Germany, the UK, Ireland and Austria, which had been spotted early on by the German blog Deutsche Startups. The company has some 100 employees working in Berlin, Dublin and London.]
SumUp takes a 2.75% cut of every transaction made using its reader. It currently works with MasterCard, Visa and Europay and Stefan Jeschonnek, the MD and another co-founder, says that it’s currently in discussions with other card companies to extend that list.
You may recall that iZettle has been in a pickle in Europe over Visa cutting off its service because of the method iZettle uses to authenticate card users — iZettle requires a signature, which Visa says doesn’t meet its requirements. SumUp also takes signatures for authentication, but only on MasterCard transactions. For Visa customers get sent an SMS with a secure link, which they have to access on their devices to manually enter their full card numbers.
That sounds cumbersome, but Jeschonnek says SumUp is working on another method to speed up that process in future. “We are looking at different technology that we can use, and we are considering the chip-and-PIN solution [used by merchants who have payment terminals],” he says.
Another notable aspect of SumUp’s service is that the company is already developing the idea as more than just a point-of-sale card payment provision. Merchants have the option of using the app to preload several items that they sell, and that effectively turns SumUp into a kind of cash register.
This is, for now, limited to being used within SumUp’s own service, although Jeschonnek says it is also looking at how it might leverage APIs to offer this kind of functionality within merchant’s own apps.
“But right now we’re mainly focused on the problem of getting merchants to take cards,” he says. “We’re trying to solve a problem that still hasn’t been solved.”
Kiip — the San Francisco-based mobile marketing startup that has created a “rewards network” in which users see offers for free goods and services instead of mobile ads — is going international. The company has signed on the UK-based sushi chain, Yo! Sushi, to deliver offers for free food across apps used in the UK that have integrated Kiip’s service.
Although Kiip has had some of its U.S. customers serve ads outside of the U.S., this is the first time a non-U.S. company has signed on for the service, and the first time Kiip is sending out offers in the UK on a localized, London-only basis, to coincide with the fact that there are so many more people (and specifically Americans) in town for the Olympics. In a meeting this past weekend in a little coffee shop in London, CEO and co-founder Brian Wong told me this is just the beginning of many deals like this as Kiip ramps up its growth, on the back of a recent $11 million Series B round of funding.
The expansion comes at a time when Kiip is competing against a number of other companies that also deliver rewards instead of straight advertisements, like Foursquare and Groupon. The space remains wide open, says Wong, and “we have realized that we could become the trusted rewards provider out there.”
If there’s one thing that seems to annoy the otherwise mild-mannered Wong, it’s that Kiip often gets called a mobile advertising network. “We’re about rewards, not ads,” he told me, stretching out the r-word. He thinks ads, in their current state, have some major limits because of issues with usability and effectiveness. “When you see companies jamming ads into small formats, saying ‘let’s just shrink this billboard,’ it just doesn’t work,” he said.
Rather than trying to figure out how best to cram lots of information into a limited space, Kiip has moved the goalposts altogether and focused its use of small real estate directly on something that a customer can use immediately. While there are a number of apps on the market that push offers to users — Groupon and Foursquare being two examples — Kiip’s innovation of putting those rewards directly into apps by way of its network means that its offers go, in Wong’s words, “wherever you are.”
He says that up to now the engagement rates have been very encouraging. So far, Kiip has seen a 22% redemption reward rate, and 50% of its redeemers come back to Kiip for more. The majority of users, Wong says, are between the ages of 18 and 34, and Kiip sees a relatively equal mix between male and female users, with ads coming in from big names like Disney, Best Buy and Procter & Gamble.
The bigger picture will see Kiip trying to better match up rewards with increasingly relevant apps. Right now, the company is still in early-adopter phase with a lot of the activity focused around gaming — either in the form of actual mobile games or in areas like fitness apps, which have a natural gamification element to them. It is here that the Yo! Sushi brand fits in particularly well — the company has a kind of Japanese-manga-inspired branding that matches well with gaming design.
But down the road, there will be separate micro-networks around areas like female-focused apps and women’s consumer products; car apps and car-related rewards, and so on. And with the increasing push on location-based offers you can see how this, too, will also start to play a more prominent role with Kiip.
Looking ahead, Kiip is planning to announce more brand partnerships in the UK soon, and it is “on the verge” of rolling out its first campaigns in the middle east and Asia Pacific, with Kiip’s London office, led by Eamonn Carey, leading much of that growth.
Just days after releasing an API to integrate its payment platform into third-party apps, iZettle, known as the “Square of Europe” for its dongle-based iOS mobile payment system, has even more news: it has just completed a €25 million ($31.4 million) Series B round of funding as part of its bid to become the biggest mobile payments platform in the region. The round was led by new investors Greylock Partners and Northzone, with participation from others — including the eye-catching news that payment giant MasterCard is now an investor — along with other new backer SEB Private Equity, and previous investors Index Ventures and Creandum.
The funding takes the total investment in the company to $46.7 million, and Jacob de Geer, iZettle’s co-founder and CEO, says it will be used for product development, and to continue to build out its mobile payments service in Europe — currently available in Scandinavia and trialling in the UK. “Our priority is to get the UK fully launched, and then look at other major markets like Spain, Italy, France and Germany to continue building up our transaction volume,” he told TechCrunch in an interview. “We’re not interested in the U.S. They’re doing really well with Square and others.”
Since starting its first services in its home market of Sweden in August 2011, iZettle has picked up 50,000 merchants using its system — a far smaller number than the 2 million milestone revealed yesterday by Square. But iZettle says that potentially there are 20 million merchants in Europe — that’s the number who currently do not take card payments for their services, putting to one side targeting those who already can — who could be using its service to accept card-based payments.
In its focus on Europe, iZettle is going after a market that has yet to be tackled by PayPal’s Here (although it is looking at other payment routes), or Square (which is reportedly looking to enter Europe itself); but that does have others also looking to do more dongle-based mobile payments: they include mPowa, and a Square clone from the Samwer brothers that may be called PayLeven (that would be its third re-branding and the Samwer’s investment vehicle Rocket Internet has so far declined to comment to TechCrunch about what its strategy is in the venture — we’re asking again now).
iZettle is not disclosing its valuation on the back of the funding news today. Square, by comparison, has raised $141 million to date and has a valuation of $4 billion.
Unlike other dongle-based mobile payment services like Square and PayPal’s Here which use a card’s swipe strip for processing, iZettle has focused on transactions (each charged a flat 2.75% commission on MasterCard, Visa and Diners Club; 3.75 for AmEx) using chips embedded in the cards: chips are now ubiquitous in Europe and are considered more tamper-proof than the strips. De Geer believes that will help the company bring on both more merchants and consumers to the service as it looks to take its offering mass market. “Security comes built into that,” he says.
Its unique IP — an interesting mix of software technology with hardware thrown in — is also what has attracted this latest round of investment.
“iZettle is the first and only company to develop an affordable chip-card reader and app for smartphone-based mobile commerce that meets all of the rigorous international security requirements,” Laurel Bowden, Greylock’s partner in London who is joining iZettle’s board of directors, said in a statement. “They’ve proved they’re ready to step up their game in this very complex and competitive industry.”
The fact that iZettle is based around the chip technology, and that it has a firm commitment to becoming the name synonymous with mobile payments in Europe, makes the company also potentially interesting as either a partner, or even an outright acquisition target, for those larger U.S.-based payment companies that are looking for a way of entering a new market.
De Geer says that the company has already even engaged in those kinds of conversations on a casual basis — but he emphasizes that nothing has advanced into more serious negotiations yet. “It’s not something that we’ve been pursuing actively at this point,” he says.
Aside from building its own user footprint and partnering with other, complementary mobile players, there is another direction that iZettle is likely to explore in the future: the idea of linking up its payments services with other parts of the mobile payment ecosystem, which includes services like product discover, customer loyalty programs, and other rewards services: after all it’s a natural progression to take a consumer from one function to the other, and it makes it much more likely that the consumer will complete transactions if you make it as easy as possible for him to do so.
iZettle has an interesting arrangement that could point to its first partner in such a new venture. It actually shares a Stockholm office with Wrapp, the mobile gift card aggregator that recently entered the U.S. market and has similar ambitions to become the default service of its kind across Europe.
“We are very interested in what Wrapp does in terms of gift cards. They are really disrupting with the gift card market, and that’s all they focus on so that makes them a good partner for what we could do,” says de Geer. “At the end of the day, for all of us, it’s all about adding value for our merchants.”
Mobile advertising company Placecast says that there are now 10 million active users on its ShopAlerts platform.
To be clear, many of those people probably don’t think of themselves as ShopAlerts users, because it’s a white label product — mobile operators and other customers can use the technology to power their own mobile offers programs, using ShopAlerts geofencing to deliver an offer when a customer is near a specific physical location (most likely a store). Still, it’s a sign that the technology is starting to attract significant consumer interest — especially since that 10 million number only counts consumers who have actually opted in to one of the programs and are now receiving alerts.
ShopAlerts partners include Telefonica’s O2, DDR, AT&T, Sprint, and T-Mobile. Advertisers, meanwhile, include The North Face, Starbucks, Loreal, and Subway. CEO Alistair Goodman says he’s starting to see some patterns emerge across the various ShopAlerts campaigns. For example, he says that one of the keys to a successful campaign is to make sure that the offers are unique to the program, so customers know they “couldn’t have gotten them somewhere else.” When asked about differences between geographies (Placecast operates in North America and Europe), Goodman says there aren’t many, but notes that European consumers seem more willing to sign up for more frequent offers.
In addition to sharing the user numbers, Placecast is also announcing two new hires: CFO Will Peppo, formerly CFO of Google-acquired payments company TxVia, and new UK head Westley Gillard, formerly head of business development at Velti. According to Goodman, Peppo’s hire in particular a sign of Placecast’s growing interest in mobile payments — Goodman doesn’t want to build a payments platform of his own, but he does want to integrate ShopAlerts offers with mobile wallet technologies from other companies, and we should expect news on that front soon.