ConnexPay takes aim at bigger rivals


By offering customers both acquiring and issuing services through a single platform, payments gateway ConnexPay is betting it can draw business away from bigger rivals Stripe and Wex.   

The Bonita Springs, Florida-based startup, founded in 2017, is unique in its ability to both take in money from a merchant’s customer and make a virtual card payment out to a supplier or vendor, said ConnexPay founder and CEO Robert Kaufman. He spent nearly two decades at U.S. Bank, with much of that time focused on payments.  

The company, which has about 118 customers, targets “intermediaries,” or any company that sits between the consumer and the provider of a service or good, such as Expedia in travel or Amazon in e-commerce, he said. ConnexPay has focused largely on travel but also seeks to serve media and e-commerce sectors as well as ticket brokers and warranty providers, Kaufman said. 

Because the company handles both sides of the transaction, ConnexPay is effectively able to mass settle incoming funds with the outgoing funds, Kaufman said. That means it’s “a fundamentally less risky transaction that allows us to do it at a lower cost and pass the savings on to our clients,” he said. 

“It’s smoother, from a working capital perspective, for a lot of those businesses,” said Adam Hallquist, a principal with San Francisco-based FTV Capital. That growth equity investment firm led ConnexPay’s $110 million funding round last October. ConnexPay does “all the issuer processing themselves, so they have their own technology there, which is pretty unique,” Hallquist said. 

ConnexPay does, however, face competition from the likes of payments companies Stripe and Wex. 

Although Stripe offers both services just as ConnexPay does, Kaufman contends ConnexPay’s single contract and single set of APIs give it a leg up over Stripe, because clients don’t want to deal with two platforms and ConnexPay can be more dynamic in trying to solve clients’ problems. 

“Some of (ConnexPay’s) competitors are just very large organizations that aren’t focused on the middle market, where ConnexPay has been able to add some customers,” Hallquist said.

The startup also aims to set itself apart from bigger rivals through frequent technology enhancements, which ConnexPay does every two weeks. Bolstered by that October capital infusion, the company this year will transition to constant releases of those enhancements, Kaufman said.

That funding also has helped fuel the company’s international expansion plans. To support what Kaufman called aggressive growth in the U.S., U.K. and other parts of Europe, ConnexPay, which now has 90 employees, aims to add another 40 or so this year, Kaufman said. 

Investors see an opportunity for ConnexPay to add talented staff this year in light of recent employee cuts at other payments companies, including Stripe. “That’s a piece that we were really excited about,” Hallquist said.

The heavy travel culture in a populous continent like Europe makes expansion there an enticing opportunity for ConnexPay, Kaufman said. “There is a lot of travel spend in Europe, and so it’s a good market for us,” he said. He expects ConnexPay’s revenue outside the U.S. will be larger than its revenue in the U.S. within the next three to five years. 

Last year, ConnexPay generated gross revenue of about $100 million, having processed about $10 billion in payments, Kaufman said. On the acquiring side, ConnexPay makes money by charging a fee for each transaction it processes on its clients’ behalf, and on the issuing side, by keeping a slice of the interchange revenue, he said.

ConnexPay has raised $145 million to date, and Kaufman said the company doesn’t intend to raise money again. “We have plenty on our balance sheet and are profitable,” he said. The company is not looking to go public, he said.


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