Fintech Industry Soaring
Melio, which was founded in 2018, is a digital payment platform that aims to replace traditional payment systems that can take up to several days to complete but are still used among the majority of SMEs. The fintech startup allows SMEs to make electronic payments to other businesses via bank transfers, debit, or credit cards.
The platform also allows businesses to cut paper checks on their request. The business was founded in Israel but is becoming increasingly popular in the United States (US), where its user base rose by 2,000% last year. Matan Bar, a founder and CEO of the startup, said the company plans to focus on its growth in the US.
A new funding round was headed by the investment manager Coatue but also included previous investors Accel, Aleph, Bessemer Venture Partners, Corner Ventures, General Catalyst, and Latitude. The recent capital raised follows last year’s funding round that helped the fintech business secure $130 million in new funding. The company has raised $256 million in total so far.
The fintech startup also welcomed two strategic backers American Express and Salesforce, with the former using the company’s rails to allow its customers to pay other businesses.
The Chief Executive Bar was previously heading PayPal’s business unit that managed P2P payments. Following years of experience in the P2P payments sector, Bar founded the startup in 2018.
He said that Paypal represented ”the first time I experienced what the digitization of payments looked like as they were shifting from cash to mobile payments. Consumers were buying online instead of at brick-and-mortar stores, and even when they were getting physical items, they were paying online.”
However, he understood that this couldn’t apply to the businesses themselves, Bar said.
“There are still trillions being transferred via paper checks in the B2B space,” Bar said. “The space is way behind other payment areas. I would be talking with SMB owners who would be using fancy Square or PayPal point of sale devices, but when they had to pay, say, a coffee bean supplier, they stuffed checks in envelopes. That’s very intriguing obviously, and it triggered our interest.”
When it comes to product development, he said that the fintech startup has seen massive interest from partners to bring B2B payments to their products.
Fintech startup focused on SMEs Melio has secured $110 million in a new funding round, reaching a valuation of $1.3 billion.
About the Author
Luigi Wewege is the Senior Vice President, and Head of Private Banking at Caye International Bank. Outside of the bank, he serves as an Instructor at the FinTech School which provides online training courses on the latest technological and innovation developments within the financial services industry. Luigi is also the published author of: The Digital Banking Revolution.