In Mobile POS, SumUp Aims to Be More than the Sum of Its Parts

Germany's SumUp is preparing to break out from the mobile-payments pack.

In a crowded field of Square-like vendors (see iZettle, mPowa, Payleven, PayPal’s Here and Intuit’s GoPayment), the Berlin-based SumUp hopes to stand out by virtue of its executive experience, its strong partnerships and funding, and a more comprehensive role in developing its own hardware as well as its software and services.

“We feel we have an opportunity to take this to a whole different level,” says Daniel Klein, SumUp’s CEO and a former executive at U.K. online payments player Skrill (formerly Moneybookers). “We see this as something that will change the way merchants and consumers will interact for years to come.”

In many ways, SumUp—often referred to as Europe’s answer to Square—aspires to emulate electronics game-changer Apple Inc. more than mobile-payments pioneer Square. Apple typically creates all-in-one products to set itself apart from PC manufacturers that might require shoppers to seek out a keyboard or monitor on their own. Case in point: SumUp's new “Point of Sale Box” rental service includes a preconfigured iPad, stand, receipt printer and cash drawer, whereas Square's "Business in a Box" bundle requires businesses to provide their own iPad or smartphone.

Klein, who launched his company on Aug. 23, 2012, has a broad vision for SumUp and for the growth of mobile point-of-sale services as a whole. And so far, few could argue that Klein and company have been delivering on that dream.

In the past year, SumUp has expanded its services to operate in 11 countries: Germany, Belgium, the Netherlands, Spain, France, Ireland, Italy, Portugal, Russia, Austria and the United Kingdom—no small feat given the wide variety of currencies, payments protocols and regulations to contend with.

“That’s why there really isn’t so much competition [as we expand], there’s such a plethora of issues and complexities… market-entry barriers different from any other business,” Klein points out.

And along the way, SumUp has been finding favor—and funding—from payments and online heavyweights. In May, online deals company and payments upstart Groupon and credit card issuer American Express invested “double-digit millions” of euros into the company in a deal that was estimated by outsiders as worth as much as $20 million. In July, SumUp received another financial shot in the arm from BBVA Ventures, the venture capital subsidiary of Spain’s BBVA, which did not disclose the amount it invested.

"We chose to invest in and partner with SumUp due to three primary factors," says Jay Reinemann, executive director at BBVA Ventures. "First and foremost, we believe in the integrity and experience of the SumUp management team. The mobile POS market is still very nascent and requires the right team with regulatory knowledge, banking relationships and expertise in internationalization."

"Second, SumUp is focused on the global market," Reinemann says. "We need products that can meet the different requirements of our different markets and finally, SumUp's partnership model provides the bank with a better overall solution to service our customers."

On the heels of BBVA's investment, SumUp said it would soon offer its payment services in South America, a big market for the small businesses that mobile payment vendors are initially targeting.

But while it has been distinguishing itself, SumUp faces many equally ambitious rivals. Stockholm, Sweden-based rival iZettle has received funding from Banco Santander, MasterCard and even fellow SumUp backer American Express. And iZettle has already pushed outside of Europe, offering services in Mexico and Brazil.

Despite SumUp's features and international reach, its model is very close to Square's, making and selling portable card readers, software and services which transform virtually any mobile device into card-accepting payments terminal. SumUp earns a 2.75 percent fee per transaction.

SumUp “is one of many European mobile point of sale players,” says Zilvinas Bareisis, senior analyst for Celent LLC in London. “Square started this market and there are a lot of copycats and imitators.”

Given the widening field for mobile POS services, Bareisis says it will become increasingly difficult for companies like SumUp to differentiate based on their core services alone. Recent efforts to develop and sell a more comprehensive cash register and the possibility of adding a digital wallet and loyalty deals (presaged by the Groupon investment) may help boost SumUp out of the ranks of pretenders to the mobile POS throne.

In the meantime, Klein says SumUp will keep focusing on offering its products and services to small and mid-sized merchants, with an eye to breaking ground in new geographies and with new offerings.

"This is a very crowded and competitive landscape (and growing more so by the week) but there is also tremendous opportunity, particularly for those who are operating across multiple markets/countries which SumUp plans to do," says Denée Carrington, a senior analyst at Forrester Research Inc.  

"They've announced a much broader set of countries in the EU than iZettle or Payleven and they are planning to launch in Russia as well," she says.

SumUp is targeting smaller merchants, whereas Square is trying to also appeal to larger ones.

"Larger merchants have more complex needs and require a complex or flexible product offering," she says. "SumUp appears to be keeping things simple for now as they target primarily cash based merchants and enable card acceptance."