Payments remains a very fragmented business around the world: depending on where you're buying or selling something (and whether you are selling online or offline) you will have different "standard" payment methods, currencies and settlement schemes and more. Today, a startup called Kevin that's taking one piece of that puzzle -- payments made from account to account, an alternative to payment card payments that bypasses those rails -- and making it easier and more ubiquitous to use through the development of a whole new set of payments infrastructure that integrates directly with banks, is announcing a significant Series A of $65 million to double down on its business after some strong initial traction.
It has already picked up 6,000 merchants in 12 markets in Europe, starting first with electronic point of sale, and more recently with an integration with physical POS terminals. Its plan is to be available as a payment option across some 35% of European electronic point of sale terminals by the end of this year, and then 85% the year after that, "same as any card scheme," said CEO Tadas Tamosiunas in an interview.
The U.K. will be later this year, but at the end of this year will be 35% of European EPOS terminals and then 85% next year same as card scheme.
The round is being led by Accel, with Eurazeo and previous backers OTB Ventures, Speedinvest, OpenOcean and Global Paytech Ventures also participating. Harry Stebbings of 20VC; Ilkka Paananen, CEO & co-founder of Supercell; and Amitabh Jhawar, ex-CEO of Venmo are some of the individuals also investing in the round. Kevin has now raised $77 million and it is not disclosing its valuation.
Lithuania-based Kevin was co-founded by Tamosiunas and Pavel Sokolovas (COO), who said in a joint interview that the plan will be to use the funding to continue building out its technology and to hire more people to break into more markets, starting first with covering all of Europe.
Kevin is technically styled "kevin." -- including the full stop. Tamosiunas said that the choice was made for a few reasons: first "Kevin" as an everyman name, the idea being that this is a technical payments solution that will be useful for everyone; second the full stop to imply that it's the first and last name you'll need to know in the business; but third, as a conversation opener. "It gives us an opportunity to tell our story," he said simply.
That story is one that will be well known to merchants and others working in payments and commerce: every country has different payment systems at both the frontend and backend of the process. Account-to-account payments, which essentially debits money directly from the buyer and deposits it into the account of the seller, has long been one of those options, and often represents a much cheaper and direct alternative to card payments and the fees those incur, when someone isn't already using cash.
The problem is that much of pre-existing account-to-account payments infrastructure is very clunky, not built around APIs, and thus hard to expand and integrate into any new services, both those in physical stories as well as those that are "electronic point of sale", which might be in a store but could just as easily be in, for example, an app to pay for time at a parking lot.
"But account-to-account is a cheaper process and so we had a huge opportunity to solve that, especially in EPOS," said Sokolovas. Years in the building, Kevin had a lot of naysayers initially, skeptical that APIs could be built to integrate with banks, which have traditionally been slow to embrace them and open up their services to others. There are exceptions, of course, such as the open banking efforts we've seen in the United Kingdom, but by and large it's a fragmented and still-arcane area. "Now we are one and only company on the market that has a technical solution behind that."
There are now other companies catching on -- for example the POS terminal giant Worldline is working on a solution to accept account-to-account payments, Tamosiunas said, but it will take years to build, he claimed.
The bigger theme is that e-commerce remains a big and fast-growing area, but in the shift back to physical movement post-the peak of the COVID-19 pandemic, focus is also changing. "Everyone is looking how to improve sales offline, at the point of sale," Tamosiunas added.
The disruption that Kevin is going for here is not just that it's opening and modernizing a process that has been around for years, but has been hard to use; but it's also giving merchants, consumers and everyone else involved in any transaction a more direct way of enabling a particular payment. Being more direct means it's also cheaper, which is also a significant part of the pitch: it means that anyone opting for this option can make better margins on transactions. Conversely, it's also cutting a lot of the traditional players in the payments ecosystem out of the equation, another kind of disruption.
That is what has caught the eye not just of investors but potential strategic partners and would-be acquirers of the startup. The founders wouldn't go into detail about who has been knocking on their door but you could imagine other big players in payments tech old and new (including Stripe, Adyen, PayPal and maybe even the big credit card rail companies) might be among those interested in picking up this tech in a diversification play. For now, Kevin has declined even to work with them as strategic investors, in order to stay neutral and not tied to any specific platforms.
"Tadas, Pavel and the Kevin team are powering the future of payments with their next generation payments infrastructure," noted Luca Bocchio, a partner at Accel, in a statement. "Offering a fast, seamless payment experience, with reduced costs and increased authentication rates, the time for A2A payments is now and Kevin has already had impressive momentum with its offering. With the launch of its unique POS payments product, the opportunity ahead is huge and we’re looking forward to partnering with the team on their journey.”
One interesting twist here will be whether and how Kevin and those like it will be integrated with mobile wallets.
Today Kevin operates in services when a merchant has integrated its tech into their own point of sale, whether it's physical or electronic and in an app. But Wallets like Apple Pay or Google Pay today only work with cards. Given how so many card transactions are now being supplanted by NFC-based payments using people's phones, it could potentially limit how much Kevin can grow if it cannot also offer an alternative to consumers to pay this way.
Coincidentally, Apple just yesterday was called out for anticompetitive practices by the EU over how it opens (or doesn't as the case may be) its NFC-based wallet technology to other parties. That will be one to watch, and one that could have a big impact on how Kevin grows in future.