Square Competitor Payleven Adds Funding, Looks to Cater to Chip-and-Pin Regulations

Today London and Berlin-based payleven, a Square-like mobile POS provider for SMBs, announced today that it secured a ‘high single digit USD million’ investment round led by an undisclosed investor. Incubated at Rocket Internet, which is headed by the very successful yet often controversial Samwer brothers, the company is looking to use the funding to debut and grow its new chip-and-pin reader. Last year Visa Europe decided that iZettle, another mobile POS solutions provider, could no longer accept VISA transactions done via customer signatures, so the company wants to use its new reader to gain traction over the competition.

According to co-founder Ian Marsh, roughly 70 percent of credit card transactions go through Visa, and although iZettle and other mPOS solutions like mPowa did find a way around Visa’s regulations, offering a web-based solution requiring several steps for customers to go through, payleven has been working closely with Visa to ensure it meets the right standards to launch a new solution to streamline the process. In February the company will be looking to launch a new Bluetooth-enabled card reader equipped with chip and pin technology that meets several regulatory standards: instead of a Square-like dongle that plugs into a smartphone’s headphone jack and is paired with a smartphone, it would let customers key in their pin number  on the actual device.

“Square is a magnetic stripe-based solution…there’s three main technologies basically in Europe for mobile payments. Swipe and sign, chip and sign, and chip and pin,” said Marsh in an interview with BetaKit. “Europe is a chip and pin ecosystem, there are some other players out there who’ve launched with chip and sign, which allow you to take a normal card transaction through Amex and MasterCard, but doesn’t allow you to take Visa. Now Visa Europe has come out very strong saying we only want mobile payment solutions to be chip and pin.”

The security reasons behind Visa Europe not accepting signatures as validation for a customer’s true identity are obvious in that signatures are easily forged, however, their regulations have significant implications for merchants who want to adopt mobile readers. BetaKit was told by Marsh that if a fraudulent activity occurs in a swipe and sign or chip and sign transaction and a bank refunds the customer, the merchant is then held accountable as liable for the purchase amount. However, with chip and pin technology, the laws are such that merchants have fulfilled their duties in validating a customer’s identity and are not held responsible.

The new payleven device will connect to mobile devices over Bluetooth, comes equipped with its own keypad, and is designed to comply with additional regulations that state that mobile POS solutions cannot have the customer type in their pin on the phone or tablet. Marsh said the reader will cost merchants under £100, after which they would only 2.75 percent on each transaction on a pay as you go model (the same transaction fee as Square). They would then download the app, enter the amount, the device lights up, is handed to the customer, who enters their pin, and their email if they would like the receipt emailed to them.

Already active in several European markets like the UK, Germany, and Italy with its existing mobile payments solution, the company sees the additional funding as a validation of its business model. Available on iOS and Android devices, payleven is out to prove that its more than a replica of Square, looking to tackle a European-centric dilemma, which it can be sure is something other mPOS providers are likely to catch up with sooner rather than later.

Humayun Khan

Humayun Khan

Humayun Khan is a Senior Writer and Analyst at BetaKit. A marketing graduate with honors, Humayun's work experience spans the fields of consumer behaviour with noted contributions in an academic paper published in the Journal of Consumer Psychology and market research consulting having coordinated projects for a major financial services client at Decode Inc. More recently he was involved in business strategy as a Business Analyst for an equipment rental outlet and prior in the National Marketing Department at Ernst & Young LLP. He is passionate about emerging and disrupting technology and its ability to transform and create entirely new industries.

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