In America, electronic payments are a mainly controlled business structure whose esoteric ins and outs can make your eyes glaze over. But for those who expert its complexities, it can be extremely profitable.
Finix, a 3-year-old, 30-person start-up based in San Francisco city, raised $17.5 million in A capitalize from Bain Capital Ventures, Visa and Insight Partners, among other investors. It aims to help industries manage and monetize payments by becoming their payment processors. In the same way, Twilio’s white-label software lets Uber users seamlessly call their driver through the app, and simply as Marqeta lets Door Dash control how debit card transactions are processed, Finix lets companies own and control their payment processing.
Before founding Finix in 2016, Richie Serna, 31, did a stint in consulting at Booz & Company in New York. When he was considering moving to San Francisco to join a payments start-up, he talked to a few friends who worked in venture capital. “Don’t quit your job,” they said. “You can’t code, and your parents aren’t rich.” He tried it anyway, teaching himself to program. He left the first start-up, Balanced, after two years to launch his venture, teaming up with Sean Donovan, 36, who had worked at payments processor Vantiv (now World pay) for 14 years, ever since he was 18. The pair took a couple of years to build the product and got their first buyer in 2018.
At this time, merchants have many options for funds processors, ranging from going directly to traditional payments behemoths like World pay and Fiserv to using a service like Square, PayPal, and Stripe. Traditional processors take a small reduce of each transaction on high of the precious “interchange” revenue that Visa and MasterCard collect when they charge merchants 1.5% to 2.5% for each card swipe. Matt Harris, an accomplice at Bain Capital Ventures who led the Finix investment, estimates that traditional processors let you recover from 0.10% to 0.25% of transaction volume, while Stripe allows you to maintain 0.25%.