On a corner of Finsbury Square, East London, where the hipsters of Old Street’s technology companies start to be replaced by suit and tie-clad City workers, sits a somewhat forlorn and half-empty office building. Rent is reportedly cheap there (by City standards) and a bewildered security guard seems unsure where my interviewees, the team behind online payments platform GoCardless, are to be found.
When I finally shuffle out of a half-hidden lift at the rear of the building, two of the company’s founders, Matt Robinson, 24, and Tom Blomfield, 27, tell me the office block is rumoured to be soon turned into a hotel, which will presumably leave them scouring the streets for new digs.
Given how things are reportedly going for the pair (and their co-founder Hiroki Takeuchi), GoCardless’s next offices are set to be rather swankier. Founded in January 2011, the start-up has grown by 50 per cent every month since its launch. Developed at Silicon Valley-based tech-accelerator Y‑Combinator, GoCardless closed an initial £1‑million funding round at the end of last year, led by Accel Partners and Passion Capital. Although the team won’t confirm it, it’s understood that a further round of (Series A) funding is likely to be announced soon.
GoCardless is an online direct debit platform which simplifies the collection of regular payments
A range of tech start-ups, including Twitter co-founder Jack Dorsey’s Square, Stripe and Braintree, are jockeying to reboot different aspects of payments. But US-based Dwolla and GoCardless are the key players in the race to build proprietary systems which aim to turn plastic cards, readers and other hardware into historical artefacts.
GoCardless is described by its founders as an online direct debit platform which simplifies the collection of regular payments. It charges users a flat fee of 1 per cent per transaction, capped at £2. The company partners with a number of online accountancy providers, such as Kashflow and Freeagent, plugging into their payment options.
A couple of factors have played into the GoCardless team’s hands. The first was the 2009 Payments Service Directive (PSD), which opened up payments in the EU to new, potentially disruptive suppliers. Another is fast-changing technology which web-based start-ups are best placed to exploit.
“The wave of tech companies now innovating in this area can leverage cool ways, like using social networks or browser footprinting, to tell whether people are who they say they are, which traditional payments companies wouldn’t be doing,” explains Mr Robinson.
GoCardless, for example, have built their own anti-fraud tool. “There are so many things like that we can do, but we’re not going to tell you about them, otherwise we’ll have to design some new ones,” he smiles.
Start-up business plans are rarely worth the printer toner expended upon them and GoCardless’s early iterations wrongly identified consumer-facing transactions, including card-based subscriptions to services like Spotify or LOVEFiLM as their focus.
“The problem is those services are already very competitive with their rates, which means you are competing over fractions of pennies,” says Mr Blomfield. “Rather than try to compete at mass-market payments, where we’ve really found a lot of traction is in smaller business or B2B [business-to-business] transactions. Our typical merchant [client] might be a web-hosting company that takes payment from a few hundred businesses, with the amounts varying every month. Until now that was an arduous, manual process. What we’re offering is ease-of-use and time-saving for a human being.”
Mr Robinson adds: “Not only could we add the most value there, we also realised it was a huge and underserved market. So it makes sense to stay really focused on it and smash it out of the park.”
GoCardless by numbers
Founded: 2011
Staff: 12
Investment so far: £1m
Participating merchants: 2,500+
Growth rate: 50% every month since launch.
