Collecting money (payments) is a nightmare for many small businesses. As Matt Robinson, co-founder of GoCardless, explains, “As a merchant, card companies are a rip-off and the application process is eye-wateringly complex. If you’re paying for stuff, the user experience is dreadful — most check-out processes leave me on the verge of tears.”
GoCardless, recently backed by $1.5 million in venture capital, and an entourage of venture backed startups are tackling this problem head on. They aim to disrupt a “business as usual” payments ecosystem and help small businesses cut out the credit card middleman altogether. Do these startups stand a chance in challenging traditional payments industry leaders such as Visa, Mastercard and PayPal?
Despite challenges, the elimination of a traditional card networks’ cost and complexity is gaining traction. While concerns on security and barriers to innovation with banks and regulations are heeded, new payments startups are poised to go toe-to-toe with tradition – to the tune of $141 million in VC backing for companies like Square, alone — now processing $5 billion worth of transactions at an annualized rate.
A revolution may be underway and here are five startups that aim to shake up the payments industry and change the way your small business accepts and receives payments.
GoCardless is an API wrapper for bank transfer, which allows any business or individual to tap into the direct debit network. With a goal to provide simple online payments, small businesses can get paid directly from a customers’ bank accounts. No merchant account. No credit card fees. No hassle. With GoCardless, merchants can sign up and start collecting in seconds with fees of just one percent.