Vyne raises $ 15.5 million seed round to expand its merchant-centric open banking solutions – TechCrunch


Open banking – a new approach to payments and other financial services that disrupts traditional card-based infrastructure by connecting directly to banks – has a moment. After open banking startup TrueLayer, which hit a $ 1 billion valuation in its most recent round after a surge in its services, today is another open banking startup, Vyne, officially opens business and announces $ 15.5 million seed funding to support growth.

Funding comes from Hearst, Entrée Capital, Triplepoint, Seedcamp, Venrex, Founder Collective and Partech, with Alex Chesterman (founder of Rightmove and CEO of Cazoo), Charlie Dellingpole (CEO and founder of ComplyAdvantage) and Will Neale (founder of Grabyo. ). ) also participate. CEO Karl MacGregor said in an interview that the round was “massively oversubscribed”.

London-based Vyne has been quietly building its platform for merchants to help them build open banking-based payment services over the past 18 months, refining the tools based on feedback from early customers, that they recorded prior to today’s broader introduction. The sizeable round of seeds from strong investors is due to a number of factors. First, because of its early pull – the company says it is already processing millions of pounds of transactions every month in the UK and is currently growing 95% every month – in what (second) many believe it will be a big market in the coming years. And third, because of the family tree of its four founders:

MacGregor’s long résumé in financial services included years as a senior executive at Barclays (at Barclaycard), online betting company Ladbrokes (where he oversaw payments as well as fraud) and Worldpay. COO Damien Cahill worked for Worldpay and Amazon for years. CTO Adam Rowland was an alum from Worldpay, along with other positions in the financial services sector. And business development director Nick Daniel spent years in financial services at Logica (now part of CGI) and VocaLink (which was acquired by Mastercard for nearly $ 1 billion a few years ago).

With a lot of experience with card-based payment systems and card networks, it was the perfect knowledge base to understand why Open Banking was such an important innovation and why it was an opportunity to change a lot of today.

“Our key takeaway these years [of experience] was that payment cards aren’t that good for e-commerce, ”said MacGregor. “They were developed 40 years ago and are expensive and inefficient.”

He found that the annual cost of fighting fraud is now € 25 billion (there is a comparable figure in this report), and that’s before considering other friction-related issues when using cards for payments, such as:

Because of this, MacGregor said, many in the industry, including the co-founders of Vyne, saw “open banking as a great opportunity” to change the way people are paid. “This is a global opportunity and that motivates us,” he added.

MacGregor claims that implementing an open banking-based system can save a merchant up to 65% in costs due to the added speed and efficiency (and the need to pay fees to card networks).

TrueLayer’s value in the market as a pioneer in this area lies in working with a variety of banks, large and small, to help build the infrastructure and services to integrate their banking services into a wider network wherever they are could be used for direct payments and the provision of other types of financial information about their customers. It then took advantage of that critical mass to create the connectors for those who wanted to use these integrations to do things: create cash flows, authenticate users, and more.

As a later market participant, Vyne’s value lies in using some of this groundwork to then focus more on the merchant side of this ecosystem and make their open banking-based services smoother for their customers. For example, if a customer selects an open banking option for payment in an app, the customer is forwarded to the banking app to authenticate the transaction and the connection without any further information. “The UX has been greatly improved,” said MacGregor.

Primarily aimed at digitally native consumers as the most likely early adopters, Vyne also enables merchants to create QR codes and pay-by-link to complete transactions.

However, the fact that we’re still talking about early adopters speaks to the bigger challenges not just for Vyne but for all startups focused on open banking. Open banking is at its most mature in Great Britain, but even here it is still relatively young: It was not until the beginning of January 2018 that the regulations came into force follow slowly. Some even have speculated it can never arrive.

Britain’s catchy name Open Banking Implementation Entity (OBIE for short), a trade association for builders in this area, is predictably optimistic about growth. However, if the numbers speak for themselves, then there is a clear chance. The OBIE said in a recent report that there are now around 300 fintechs in the open banking ecosystem and that more than 2.5 million consumers in the UK use services made possible by open banking (this includes payments, credit lines, authentication services and more). And API call volume reached 6 billion in 2020, down from just 66.8 million in 2018. It’s rolling out, albeit slowly and not as internationally as what Open Banking is trying to replace.

“We believe this is the growth hockey stick that all VCs like,” said Megumi Ikeda, CEO of Hearst Investments, in an interview. “The second factor is consumer habits. You have switched to a cashless economy [but] Merchants are still operating on old bank lines … Open Banking helps merchants to catch up. “

Perhaps equally important, open banking is part of a larger evolution in the way personal data and information are used. If systems catch up for what we use them for, that can only be good.

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