According to a Valuates report, the global payments market is expected to grow 8% annually over the next few years to $2 trillion by 2025. The market is dotted by several financial services institutions as well as dedicated payments processing firms such as Adyen, PayPal, and others. London-based Checkout.com is a smaller player that is making big waves in the market.
Checkout was set up by Dubai-based Guillaume Pousaz in 2012. Prior to setting up Checkout, Guillaume had set up NetMerchant, a cross-border payments services company, with a colleague from International Payments Consultants. NetMerchant focused on the US to Europe currency exchange. Guillaume worked on NetMerchant for two years but ended up splitting with the co-founder due to differences in their objectives.
By 2009, Guillaume had walked away from NetMerchant, and he had some savings. He knew there was potential in the cross-border payments market, and he bought a Mauritius-based company called SMS Pay. He asked the five-member team to build a new gateway and agreed to pay $300,000 over three years in exchange for its ownership. He also set up a new Singapore-based business called Opus Payments. Opus helped businesses in HongKong process payments from buyers around the world. In three years, Guillaume had his technology and he rebranded Opus to Checkout.com.
The first few years for Opus were tough. But focusing on the Chinese markets helped it significantly. In 2011, the company secured a contract with Chinese e-commerce player Dealextreme. The contract helped turn Opus profitable. Even after rebranding and securing the required regulatory approvals to operate in Europe, Checkout did not stop focusing on the Chinese markets.
In the next few years, it tied up with Chinese payments companies AliPay and WeChat to continue to make inroads into the market. Today, Checkout processes billions of dollars worth of transactions in 150 currencies globally and accepts more than 25 payment methods.
Checkout is one of those rare breed of startups that is growing rapidly while remaining profitable. It earns revenues by charging a flat fee along with a percentage commission for transactions made through its platform. Its customers include Deliveroo, Samsung, and TransferWise, to name a few.
Checkout is privately held and does not disclose its detailed financials. But it had reported that its European revenues had grown to $74.3 million in 2018 from $46.7 million a year ago. Gross profits in that market grew from $35.5 million to $46.7 million that year.
Checkout shot into fame when it raised $230 million in a funding round in May this year at a valuation of almost $2 billion. The round was led by Insight Partners and DST Global and had participation from Singaporean sovereign wealth fund GIC, Blossom Capital, and Endeavor Catalyst. The round was labeled as Europe’s largest-ever FinTech Series A round. Checkout raised the funding to drive international expansion and to showcase more credibility in the business.
Checkout competes with players like Adyen. But it believes that the market is big enough to accommodate multiple players. It is also very mindful of its growth trajectory. Checkout believes in wanting to pace its growth to close to 50% each year. It has an objective of delivering 50% growth rates for 10 years because it believes that “More than that and you get punished”.