HOT COMPANY PROFILE: Mobile card-reader startup SumUp

UK director Florian Richter

SumUp launched in Europe last month going head-to-head with iZettle with a small card reader device that plugs into smartphones to take payments. It is hoping to target the millions of small businesses that do not yet take card payments, with point-of-service terminals still proving too expensive. Here, its UK director Florian Richter told StrategyEye how SumUp is looking to win the payments battle in Europe.

¤ What makes SumUp different from the competition?
If there’s a crowded space in terms of competitors, that means we actually are onto something and there’s high demand. The way that we feel we’re different is that our primary focus is really around the merchant, and enabling merchants to be able to build relationships with their customers.

Our founder and CEO, Daniel Klein, is the founder of MoneyBookers, now called Skrill, so he’s got a lot of payment and credit card background. He was looking into this model for a couple of years and found that now is the time to really drive this forward, because the landscape has changed quite dramatically over the last two years. In the UK every second person has a smartphone. But the problem is that many merchants aren’t economically able to have a card payment solution because the devices are very expensive. But the landscape changed, the hardware is actually available in everybody’s smartphones. This allowed us to say that the only thing missing is a highly secure card-reading facility. And that’s what our offering is.

¤ Who are your main competitors?

¤ What is your business model?
We make our money on the transaction fee that we charge to the merchant, which is 2.75%. We believe that we can expand our offering and expand our customer base over the next couple of months, hire more sales people, increase our online offering, and sign up larger partnerships. It’s all looking very good.

Obviously if you’re taking on the world, we might need [to raise] a bit more than what we’ve raised right now. You see the kind of money that the big boys in the US have been raising, and other players in the market. It’s common sense to say that this wouldn’t have been our final financing round, but I can’t say anything on the timeline.

¤ What is your biggest challenge?
Internationalisation. As you go on in the EU, you find that every market has a very different set-up. Just because you’ve cracked the home market, it doesn’t mean it’s going to be a walk in the park to go to, say, France or Poland.

It’s a different ball game and this is something that I think as European business, this is actually a strong USP that we have, compared to American companies. We get that. My experience is that [US firms] tend to be very much surprised that there are strong differences between European countries.

¤ What is the hottest trend in digital media?
Mobile payments. I really do think that this is the biggest trend right now. With what we’re doing, the adoption potential is big because every person in the UK has at least two plastic cards. There’s a much lower barrier for it to become a massive thing.

Although much is made of first-mover advantage, in some ways, it might not matter that SumUp isn’t the first to come up with the concept of a plug-in card-reader for mobile payments. Although Square rolled onto the scene in May 2010, it’s still very much a nascent sector and what Square has done in the US is help make the concept of mobile payments palatable to merchants and. With iZettle following suit in Europe, and the growing penetration of smartphones, SumUp may find it relatively easy to convince merchants of the benefits of its card reader. It’s a simple, disruptive concept that appears to be working, as evidenced by the USD6bn Square now processes annually in transactions.

But understandably competition is intensifying in Europe. Shortly after SumUp’s launch, Square clone Payleven expanded its operations beyond Germany to the UK, Poland and the Netherlands. Meanwhile iZettle closed a whopping funding round in June to fund its growth beyond the Nordics. Establishing dominance in the strongest European markets will be vital, and it is no coincidence that all three firms are now focusing on the UK and Germany as a priority. SumUp is not yet targeting iZettle’s home turf of Sweden or the surrounding countries, nor Payleven’s new territory of the Netherlands. That each firm is focusing on different markets for the most part suggests that no one firm will immediately dominate Europe the way that Square dominates the US.

The pedigree of its founder is another factor in SumUp’s favour. It needs to expand cannily and look to ease its way into markets which it understands and where competition may be less intense. Richter’s comments that SumUp is taking care to understand how European markets differ from each other in terms of regulation does suggest that the firm will take a careful approach to expansion. It must also avoid the security problems that iZettle ran into, but Richter claims that SumUp doesn’t give its card partners “anything to worry about”. The biggest concern for SumUp (and this is true of any of its competitors) is that a mobile payments solution other than a plug-in card reader will crack the mainstream, making its approach obsolete.

CEO: Daniel Klein
HQ: Dublin
Employees: Not revealed
Founded: September 2011
Launch: June 2012
Total raised: USD20m


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