Investments in Payments Startups Flattening in the U.S.

  • Ian Kar
  • August 1, 2014
  • 1
Payments has been a darling of venture capitalists in both Europe and the U.S., but there are signs that the two regions may be headed in different directions soon.
Adoption of advanced payments technology is considerably more advanced in Europe, with Host Card Emulation (HCE), Near Field Communication (NFC), and contactless payments seeing widespread usage.
Meanwhile in the U.S., there’s, well, Clinkle.
Matt Harris of Bain Capital Ventures commented on investments in payments in the U.S., telling Bank Innovation, “Payments got the most attention over the past year, and while there hasn’t been a dropoff in activity, it’s slowing down. It’s flattening, and it might even dip in three to five years.”
Meanwhile, Matteo Rizzi, managing director of London-based SBT Ventures, said that a plateau in the payments and mobile wallet industry might be happening in the U.S., but opportunities for virtual or physical mPOS, payments gateways, and complex payments infrastructures, is really strong in the E.U.”
Rizzi sees differences in the sizes of investments in the two regions. “I would say main different is more in size of deals and Series A investments,” Rizzi told Bank Innovation. “What in the E.U. is a Series A is often the size of a Post-Seed [investment] in the U.S.”
Rizzi went on to say that U.S. fintech is more advanced in some areas, and Europe leads the way in others. “In some fields, the market is actually more technologically advanced in the U.S., like the cards and loyalty business. In this example, the leader comes from the U.S. — Cardlytics — and [there are] many followers in Europe now.”
SBT Ventures, an investment arm of the largest bank in Russia, Sberbank, invests in both U.S. and European startups. SBT recently led the $8 million Series A round in Moven, the mobile money management service.
Moven CEO Brett King told Bank Innovation why he chose to go with a foreign investor. “SBT is connected to the largest bank in Russia,” King said, “so it doesn’t take a genius to figure out it would be massive for revenue and distribution and a huge partnership with their brand.”
Rizzi also expressed enthusiasm for the deal with Moven. “We invited in Moven, because we believe in the outsourced mobile/PFM (Personal Financial Management) infrastructure through financial institutions,” he said.
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