Initially known as the pioneer of online direct debit mandates management, GoCardless has prospered since nailing its colours to the Open Banking mast over the past couple of years. The latest $312m series G funding round follows 14 months after the previous $95m round, which raised GoCardless’ valuation to just under $1bn.
According to GoCardless co-founder and CEO Hiroki Takeuchi, “The rise of Open Banking presents a once-in-a-generation shift, one that will change the way payments happen all over the world.”
The first fruits of the GoCardless Open Banking strategy emerged last year in the shape of Instant Bank Pay, a one-off payment companion for direct debit arrangements. This feature can deal with situations such as: taking a first-time payment from a new customer while setting up a recurring payment mandate; collecting payment for additional services beyond scheduled payments - potentially very popular with accountant users; or collecting a direct debit payment that failed.
Since its launch, Instant Bank Pay has been used by thousands of UK and European businesses to process “millions of dollars of payments”, according to GoCardless small business vice president Pranav Sood. “The speed of adoption has been a big part of how we’re getting people excited about what we’re doing.”
Integrating payment tools
Integrating an Open Banking-powered account-to-account payments tool with its established direct debit app puts GoCardless in a unique position, he explained. The merchant-controlled “pull” mechanism of direct debit and one-off account-to-account “push” payments use different mechanisms to achieve the same aim. “Though they use different rails, what makes our proposition so compelling is we’ve combined the two things in a way that is simple and addresses the customer need to get paid better, faster and cheaper.
“Gravity, a trampoline company that uses GoCardless, is able take initial payments via the Open Banking tool, while creating a direct debit mandate at the same time”, Sood said.
Ecommerce platforms
As part of the cash injection Michael Rouse, former chief commercial officer at the international ecommerce platform Klaran and current Klarna chief technology have both taken positions on the GoCardless board. Permira holds a stake in Klarna and its investment in GoCardless follows a recent partnership under which Klarna chose GoCardless as its bank debit payments provider in the US. PayPal has taken out a similar payment partnership agreement with GoCardless.
Roadmap
Much of the latest investment will go into product. “It’s a huge opportunity for us to take a leadership position in multiple markets,” Sood added. The company is already working on a variable recurring payments solution and is exploring how it could use Open Banking information services to verify new direct debit mandates to reduce fraud.
“There is going to be more to come, some Open Banking and some to do with payment intelligence,” said Sood. “We’re very excited about what the next chapter of our growth looks like.”
