“There is a massive transformation in the financial industry that has just begun. We will witness the same changes that have characterized the music world in years past. Word of Jacob de Geer, Swedish entrepreneur who founded iZettle, a start-up that deals with digital payments already active in 11 countries and which is now preparing to land in Italy as well.
“Mexico is one of our fastest growing markets and cash is widely used there – said Geer during the presentation event held today in Milan -. Most countries are abandoning cash because it is very expensive for the state itself and regulation is moving in this direction. Then there is the convenience factor for tourists who hardly carry any cash anymore”.
iZettle has raised $150 million in multi-tranche venture funding with investors including Intel Capital, American Express, Mastercard, Index Ventures and Banco Santander.
Before founding iZettle, Jacob worked in performance marketing with Trade Doubler, and then founded two new companies, Ameibo (TV series buying and rental platform, and Tre Kronor Media (communication agency), both sold in 2010.
In the same year, he founded iZettle with the aim of helping his wife, who imported sunglasses and eyeglasses, to increase sales at fairs and markets. iZettle, which is based in Stockholm, today has 250 employees and registers 2 new customer companies a day (there are currently around 200) and 1 million active users. In Sweden already 50% of credit card terminals use iZettle.
The services offered are two: a payment system through special devices and an innovative form of financing. On the payments front, the devices allow for easier access to card payments thanks to a mini reader that transforms smartphones and tablets into cash registers. The peculiarity is that there are no registration costs, monthly or annual fees or minimum amounts for use. Only a fee ranging from 1% to 2,75%, depending on the number of transactions made. In other words, the more payments the seller receives, the less he pays.
On the credit front, iZettle provides micro-financing to small and medium-sized enterprises without applying interest rates but only fixed fees established on precise criteria. The loan is repaid without time limits through a percentage on sales. It is a "cash advance", based on estimates of receipts. Credit to SMEs is a market under served by the traditional banking system because it is generally considered too risky.
“The risk analysis is done in a different way compared to the traditional banking system – explained Geer – we use all the data we have on the trader, making an assessment of the real risk. In addition to traditional systems, we therefore also use real data through an algorithm that we have developed and which continues to improve. The financial industry, on the other hand, is old, it doesn't use data as it should and it doesn't innovate. And that's why they don't offer these services. However, we are not their competitors and we have already entered into partnerships, for example with Banco Santander. We extend the use of their payment tools and target a segment that they don't target. We are complementary".
