As stores try to resume business, investors are focused more on technology companies that offer a way to migrate from brick-and-mortar to multichannel.
Checkout.com’s $150 million funding round triples the e-commerce company’s valuation to $5.5 billion, and it follows an even larger $600 million bet on
The investments in Stripe and Checkout.com put dollar figures on the move away from static points of sale. The pandemic has acted as an accelerant, creating a need for merchants to digitize — quickly and without reinventing their entire business models.
“Checkout.com, Stripe, Adyen and other e-commerce payment providers are riding the wave of the online commerce surge created by the COVID-19 shutdown,” said Raymond Pucci, director of Merchant Services at Mercator. “But it’s become more than just e-commerce for them. As the recovery unfolds, these fintechs have positioned themselves to go beyond payment gateway services.”
Coatue led the Series B funding in the London-based Checkout.com, along with existing investors such as Insight Partners, DST Global, Blossom Capital and Singapore’s Sovereign Wealth Fund. The investment comes about a year after a $230 million Series A round, which at the time was Europe’s largest Series A investment in a fintech.
“Online was an opportunity to capture extra revenue, and that’s where some merchants have flourished. But now it’s become almost a security measure. You can’t have a resilient business without online,” said Bradley Riss, chief commercial officer at Checkout.com.
Since Checkout.com’s 2019 round the 8-year-old company has added more than 500 clients including Grab, Revolut, Careem, Glovo, Robinhood, Farfetch, Klarna and Remitly. Many of these firms — such as Remitly, Klarna, Revolut and Robinhood — have business models that fit economic shifts during the pandemic, such as
Checkout.com reports a 250% increase in online transactions between May 2019 and May 2020, and has made recent investments of its own, such as acquiring ProcessOut to add data analytics to bolster Checkout.com’s payment rails as the company looks to build its footprint in Asia Pacific and other markets. Checkout.com also acquired Australian startup Pin Payments in May, and recently joined
While Stripe’s recent funding included a potential move into merchant credit — and PayPal and Square make merchant credit a major part of their business — Riss said Checkout.com’s focus on enterprise clients meant it was not focused on credit for now.
But he did not rule it out. “As there is more movement of money across an organization that may encompass moving beyond payments as well,” Riss said, adding the new investment built Checkout.com's "war chest" and would bolster payments and merchant technology that needs frequent updating.
The coronavirus shutdowns didn’t just push more people into e-commerce; the pandemic also shifted digital transactions from a value-add to a matter of survival for stores. Even stores that had a website or a buy button didn’t necessarily have a robust way to perform business without access to a building or showroom. That’s left merchants with challenges such as selling and receiving payments online while applying for credit and adhering to new safety regulations.
The showrooms may be reopening, but a portion of consumers will likely avoid stores entirely or will be slow to come back. Channel flexibility and adding new ways to shop and pay have never been more important.
“There used to be a question as to whether digital payment players would be supplanted by the need for many merchants to support face-to-face transactions as well, but now that digital can take place anywhere on nearly any device, it’s possible that the need for traditional POS will decline — and that would change the game to a whole different arena,” said Thad Peterson, a senior analyst at Aite Group.
