SumUp attracts investment from Groupon and Amex
Groupon and American Express have invested in mobile payment startup SumUp, as the battle of mobile payment startups begins
The undisclosed investment follows a $20m Series A funding round in the second quarter of 2012 from b-to-v Partners, Shortcut Ventures, Tenglemann Ventures and business angels, and will be used to develop new services.
SumUp allows merchants to take debit and credit card payments with their smartphones. The company was set up in 2011 and offers customers a portable card reader and app, which users can use to charge customers via their smartphones.
The investment will be used to expand into new markets and develop new services, says SumUp CEO Daniel Klein: “We are now better equipped than ever to execute on our vision to help make small businesses more successful by radically simplifying payments, reinventing the point-of-sale experience, and ultimately helping enhance merchant-customer relationship.”
Groupon and Amex invest
Groupon’s investment in SumUp is interesting to note. Since going public, Groupon’s fortunes have been mixed, to say the least. In the last year, international sales have fallen by 18 per cent year-on-year. Is investing in promising new technologies, such as SumUp, a way for the company to recover?
According to Jason Harinstein, senior VP for corporate development at Groupon, this investment is about “sharing a vision”: “We share a vision to transform the way local merchants interact with their customers and have confidence in the SumUp team’s ability to execute against this vision. We’re pleased to have the opportunity to invest in SumUp.”
In reality, it’s probably just a marriage of convenience: for SumUp, Groupon opens the doors to an expanse of new merchants, while for Groupon, SumUp is a neat opportunity to start playing in the mobile payments space in Europe.
Who will come out on top?
Competition will remain fierce for mobile payment startups for some time. In addition to SumUp, there are a couple other players – iZettle and payleven – who are likely to all go head-to-head at some point in the near future.
While the market is still fragmented (and could become even more so before we see any consolidation), it is clear that credit card companies – Visa, MasterCard, American Express – are all taking notes, and buying their own slice of the market, which promises to become very lucrative. As well as SumUp, American Express is also an investor in iZettle; and MasterCard is also an investor in iZettle.
“We’re committed to delivering value to small merchants and helping them grow their business,” says Werner Decker, senior VP for merchant services in Europe at American Express. “We believe SumUp’s skill set and end-to-end payment solution, which offers ease of use, convenience and security, makes them well positioned to play an important role in mobile payments.”
The winner of the mobile payments battle will be the company with the widest reach – both geographically and through traction with users. SumUp’s approach is to go international fast: the startup’s services are now available in the UK, Germany, Ireland, Austria, Netherlands, Spain, Italy, France, Portugal and Belgium. Last week, SumUp also announced a partnership with Russian smartphone retailer and card issuer Svyaznoy group to help the company launch in Russia.
There is little indication as to which company will come out on top – but you can be sure it’s a space worth keeping your eye on.