Pin Payments is the quiet achiever in Australia’s payments space
The Australian payments space is worth billions, and right now there is a bit of a war going on. You have the large banks competing for market share alongside disruptors to the space like Braintree, Stripe, and Australia’s Tyro Payments, as well as integrated solutions like MYOB PayDirect. However, there is one payment solutions startup headquartered in Perth with a presence in Melbourne that has been growing rapidly under the radar, and 2016 is going to see it become much more of a household name.
Pin Payments, founded in 2011 by Grant Bissett and Dominic Pym, is a multi-currency payments platform with the goal of upgrading Australia’s ecommerce capabilities.
“We worked in software for 10 to 15 years before Pin Payments and noticed that over that time, the banks and the local payment providers offerings started to lag behind internet,” says Bissett. “We set about updating the payment capabilities for Australian small businesses. We feel like the banks aren’t going to do it and neither are the latest US entries to the market, so if we’re going to work in tech and live in Australia, we’re going to have to ensure that the payment capabilities are up to standard.”
That, at least, is the high-level reason that drew the pair to go into the payments space. What Pin Payments is currently focused on doing specifically is building very simple ecommerce tools, starting off with developer APIs and then extending this out to include mobile commerce applications like shopping carts and billing systems.
Right now the team consists of just eight people split across Perth (engineering) and Melbourne (sales and support). To date the company has received a number of different rounds of funding: a $300,000 round of seed funding, which was basically grant funding matched by Commercialisation Australia, and the more recent $3.1 million Series A round led by Vix Investments in October this year, bringing the total capital raised by the company to date to just under $4.1 million.
All customers are currently based in Australia, as that is the only location in which the product is currently operational, however as the startup begins to scale more aggressively in 2016, likely locations beyond our borders include New Zealand and Singapore.
Obviously, with giants like Braintree and Stripe also marketing hard in the region, Pin Payments faces some tough competition. However, Bissett believes there are major differences between all three companies that are perhaps not as obvious to users from the outside.
“There’s so much going on in payments and with these new generation payment facilitators that a lot of these products can look pretty similar from the outside,” says Bissett. “Everyone is heading in different directions and it’ll take Pin Payments some time to tell our story and have people understand how we are different to Stripe and Braintree.”
“What we’ve noticed is that we look after several thousand very small businesses and help them get online with payments, and we noticed that when they appoint the payments system as Braintree, Stripe or Pin Payments, they don’t use that system to enact the transaction. Users take it to their web developer or plug it in their shopping cart or they plug it into their billing system or online invoicing, whatever it happens to be. That highlights an opportunity around consolidating the capabilities around businesses with a need to enact the transaction and that’s the direction that we’re heading in.”
When you look at things that way, what Bissett is saying certainly makes a lot of sense. Stripe, for example, champions the commodification of merchant services, making traditional merchant services with banks obsolete. Braintree is extraordinarily strong from a technology perspective, providing users with a very sophisticated gateway stack. Pin Payments is not playing in that space per se; at least, that is not where its marketing efforts will be targeted.
The platform is being built for small operators that just want to sell something on the internet or just get their invoice paid, and it is creating very simple tools that will facilitate those transactions taking place.
“The invoicing side of things has been very interesting for us in that we have customers using Pin Payments connected to their accounting platforms. These are businesses that don’t think of themselves as being an online business. Some don’t do any business on the internet at all,” says Bissett. “They just know that if they put a payment button in their invoice, they get paid sooner. So the proposition for that is it’s just for helping their business to get paid sooner, which means they spend less time chasing the invoices. It automates the process that is taking up time and gets cash in the bank sooner.”
“That segment is interesting for us because there are so many of these businesses that can be assisted with what is a relatively basic tool.”
What makes this even more interesting from a growth perspective for the company is that with the 3,000 merchants it has on the platform and the 10,000 customers it currently has trialling the product, it has been able to form a very strong partnership with National Australia Bank (NAB). Pin Payments has set up the first payments facilitator of its type in Australia with NAB. It should be noted that Braintree and Stripe have the same relationship with NAB and it all comes down to these disruptors being able to introduce the bank to customers that it would never have been able to access.
“We’ve introduced NAB to over 3,000 very small merchants who they otherwise wouldn’t have been able to reach through their own processes,” says Bissett. “That’s our proposition to the acquiring banks behind the scenes; we help them out to access small businesses that are just not set up to take payments how payments have traditionally been done.”
This is what Pin Payments has on the cards over the next 12 months – accelerating customer acquisition. While its competitors may have successfully created a perception of being the “tech focused payment systems of choice” there are literally millions of small and micro businesses screaming for simple solutions and that is the play Pin Payments is looking to dominate.