Harnessing the Power of Open Banking: Our Investment in kevin.
Card payments are expensive
Ever wonder why some businesses do not accept American Express? Or why some businesses do not accept card payments at all? The reason is interchange fees. These are the fees that the payment networks, like Visa, Mastercard, and American Express, charge to merchants in order to accept credit and debit card payments. And these fees are expensive for merchants, typically costing ~1% of transactions in most European countries. With card payments totalling more than €2 trillion across the euro area in 2020, interchange fee expenses stack up quickly for merchants.
Further, the rise of online shopping is only compounding the challenge for merchants as ecommerce card acceptance fees are typically higher than in-person retail. Card payments now represent 47% of all transactions in the euro area, up from just 20% in 2010.
COVID has only exacerbated the problem as it has supercharged the shift to ecommerce, with European ecommerce growing 10% in 2020. This is increasing the challenge for merchants as they face a host of additional complexities in ecommerce, including lower approval rates and greater fraud risk. Each of which increases their cost of accepting payments.
More than ever before, merchants are seeking payment solutions that:
- Increase approval rates across ecommerce, mobile, and retail checkouts;
- Lower their cost of accepting card payments; and
- Reduce their fraud risk
Open banking in the UK and PSD2 in Europe promised change. Open banking powered account-to-account (A2A) payment offered cheaper, more secure transactions that selected quicker. For years, there has been a lot of excitement about the possibilities of open banking, which have largely been unrealized thus far. That was until we met kevin.
To date, A2A payments failed to deliver on their promise because they struggled to change consumer behavior. The hurdle of a new payment flow at checkout has stymied adoption. kevin.’s unique payment infrastructure solves this problem and enables A2A payments for ecommerce, mobile, and physical retail sales.
We were instantly blown away by the kevin. product demo. kevin.’s ecommerce payment solution embeds in a merchant’s checkout flow and seamlessly redirects an expensive card transaction into an A2A payment made directly from a consumer’s bank account. It was the first time we had seen such a seamless A2A payment experience and we knew we had found a winning proposition.
But the innovative solutions are not limited to online payments. Remember that shopping thing we used to do in person? Where you actually physically visited a shop and paid for things in person? Well, kevin. is making sure we don’t lose the seamless payment experience we all got used to while shopping online when shopping in physical retail stores. Soon, kevin. will expand their offering to offer the same seamless A2A payment experience in person, enabling customers to pay directly from their bank accounts at the point-of-sale through existing card terminals.
Irrespective of shopping medium, kevin. Is ensuring consumers enjoy a frictionless checkout flow and merchants enjoy higher conversion, faster settlement, and lower transaction fees. kevin. is delivering on the promise of account-to-account payments.
Made possible by an incredible team
None of these innovations would be possible without an exceptional team. In Tadas and Pavel, we found a founding duo that isn’t short on talent or ambition, critical requirements if you want to build out an entirely new payments infrastructure for account-to-account payments. Tadas brings over 15 years of experience leading financial institutions and combines it with Pavel’s experience leading business development for multiple organizations for over 10 years. Together, Tadas and Pavel have assembled a talented team of over 100 people across nine countries.
The team at Speedinvest is humbled to join kevin. on this exciting journey, alongside our friends at OTB Ventures and OpenOcean. We are also delighted to welcome Javier Perez, the former President of Mastercard Europe, and his new fund, Global PayTech Ventures, and high net worth individuals including AmRest founder Henry McGovern. We are more excited than ever to be supporting Tadas, Pavel, and the entire kevin. team to build a new paradigm in payment infrastructure.
Can’t wait for the journey ahead — onward 🚀
For more, please visit kevin.