Aussie fintech Limepay has raised $6 million to scale its tech giving e-commerce retailers control over their own payment platforms, and disrupting the old guard of buy-now-pay-later.
The funding comes from a group of sophisticated private investors, including the likes of Accor Asia Pacific regional chief Michael Issenberg, and deputy chief Louise Daley; Deputy’s head of strategy Lambert Kiang; and Telstra group executive Michael Ebeid.
Founded in 2017, Limepay allows merchants to integrate an online payments platform with their own branding, and to add their own buy-now-pay-later functionality if they wish.
Co-founder and chief Tim Dwyer tells SmartCompany he and the team actually closed the funding round before Christmas last year, long before the COVID-19 pandemic hit full swing in Australia.
But, rather than slow the business down, Dwyer suggests the changing economic landscape actually provides an opportunity for the startup.
“It’s been a unique time where a lot of brands are focusing heavily on that customer relationship,” he explains.
Chief revenue officer, and former Google director, Dan Peters tells SmartCompany he spent many of his 12 years at Google looking after retail relationships.
Merchants would talk about how important their relationships with customers were, he recalls. At the same time, they were onboarding third parties to manage their checkout processes.
Now, while many merchants are facing a downturn in business, they have the opportunity of time, Peters explains.
It’s an opportunity “to look at their infrastructure, their tech, their people, their platforms — and do the important work, using that time for that purpose”, he says.
All too often, e-commerce sites offer their customers “a menu board of payment options”, Peters says.
“It’s as if almost no thought has gone into why you would be offering all those options, and for who, and when … what’s the strategy behind it?”
Peters doesn’t share any specific revenue growth figures for the business, but he does say the startup is looking at “tens of millions of transactions through the pipe”.
There are about 40 customers live on the platform and “things are growing incredibly quickly”, he says.
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Up until now, the team has been working with small businesses, to prove out the MVP of the product. Now it’s time to bring a team onboard and start scaling.
“We spent the majority of the time, pre-fundraise, onboarding SMB customers to prove the value proposition and refine the technology, and we’ve certainly done that.”
Disrupting the disruptors
When asked if Limepay is out to disrupt the disruptors — the Afterpays, Zip Pays and Openpays that have come to be household names in the buy-now-pay-later space over the past few years — Dwyer says those are “the exact same words we originally started brainstorming”.
But it’s about more than offering an alternative option: Limepay is disrupting “in ways that are against their whole proposition”, the co-founder says.
“We’re about the brand. We’re about fading into the background until we’re needed,” he explains.
Brands, especially very large brands, spend a huge amount of time, money and effort on marketing, social media and brand building to capture the attention of their customers, attract them to their websites, and convince them to buy something. Then, at the very last moment, they hand them over to a third party payment provider.
For Dwyer, that made no sense.
“That’s where we see the greatest opportunity,” he says, adding that the business is about “connecting that customer back”.
Also, Peters stresses there’s a “fundamental difference” between what Limepay does and what Afterpay and Zip Pay do.
Limepay offers both a buy-now-pay-later option and an option to pay in full upfront.
“It’s a different business model,” he says.
Peters says some merchants tell him they’re seeing 50% or more of their transactions coming through Afterpay. While he’s not necessarily criticising one payment channel in particular, he says retailers should own their own channels.
“Most experienced merchants and retailers out there would be fairly horrified that one channel to market was becoming so dominant, and would see the threat in that,” he explains.
“You need to be in control of those,” he adds.
“We’re trying to put that control back into the hands of merchants.”
A shifting landscape
The COVID-19 pandemic is causing shifts in all kinds of industries, and retail is no different. But, the sector was under significant pressure before the coronavirus — and the economic pressures that come with it.
Like in many industries, the writing was on the wall; COVID-19 has accelerated change that was already on its way.
And, again, Dwyer says this change is about more than payment options.
“It’s not really about evolving the payment piece as it is about evolving the brand and customer connection,” he says.
“That’s really the overarching theme.”
The customer belongs to the brand or the business, he says. They should be buying from that brand or business, not from a third-party payment provider.
“They’re buying from Nike, they’re not buying from Afterpay”, he says.
“What we’re looking to do is really drive home that lifetime value.
“Those brands that can control that whole experience right the way through … they’re the ones that will have a competitive advantage over time.”
Over the past three or four years, Peters says payments have become a differentiator of a brand’s value proposition. Before this, “for the longest time, payments were transactional”.
Then, disruptors like Uber came along.
“All of a sudden, the payment experience is one of the most transformative experiences of your ride in an Uber,” Peters explains.
“When you get out of the car, and you just walk away, that’s actually kind of an eye-opening experience,” he says.
Limepay is similarly designed to offer as smooth a payment process as possible.
The BNPL space is “full of friction”, he says.
“You bounce out from one website onto another website, sign up to another plan, bounce back into the previous website, then you’ve got an account set up with seperate account log-in details,” he muses.
That, he says, will be a thing of the past.
“Anybody who has worked online and in e-commerce knows that friction is death,” he says.