GoCardless is a Y Combinator alum which created a simple way for online businesses to set up and accept direct debit payments. Why is this important, I hear you ask? Well, out there in the rest of the world, recurring payments are almost always driven by direct debit transactions from bank accounts, a market which is not well developed in the US, but happens to be highly developed elsewhere, especially in Europe. If you wanted a comparison, closest equivalent in the US might be Dwolla.
Today GoCardless has launched a brand new enterprise product, GoCardless Pro. This is specifically designed for larger businesses, to allow them to take recurring payments. The Guardian has signed up as an early user of the service, as has fellow fin tech startup Funding Circle.
It’s a significant move for the company, which took a $7 million Series B round led by new investor Balderton, with existing investors Accel Partners and Passion Capital also participating. So far the company has raised just under $12 million.
We caught up with CEO Hiroki Takeuchi for TechCrunch TV, who says the clunky software of old requires swaths of staff to manage these direct collections. GoCardless Pro allows businesses to automate these operations using the GoCardless API.
He says this move will put them directly into competition with traditional bureaus like Bottomline Technologies, a big global company which has acquired 50% of the UK Direct Debit market by buying up other legacy competitors. In the US, GoCardless might go against PayPal as well.
Kind’ve like a ‘Stripe for direct debit’, using a few lines of code via its API, GoCardless can let any business take recurring payments for things such as subscriptions from consumer or regular services from other businesses. The product is a something of a ‘no-brainer’ for SMEs because it costs 60% less than credit card based solutions.
Although it sounds simple enough this is disrupting the financial sector bureau, because in practice, processing direct debits can be horribly complicated.
Launched two years ago, GoCardless so far collected half a billion pounds per year from over 5,000 SMEs with 600% year-on-year growth. In other words it’s taken payments from more than 1% of the UK’s 64 million population. Not too shabby.