May 28, 2022

Payments—receiving and making payments—remains a fragmented and challenging sector for merchants, marketplaces, and other parties doing multilateral business online, and as it grows from $1.5 trillion today to $2.9 trillion by 2030 in dollars – this complexity will also increase.

Today, the startup is coming out of the shadows with a solution that it believes will make it easier to create, manage, and (if necessary) modify these payment processes. Payrails unveils its CEO and co-founder Orkhan Abdullayev described as a “payments operating system” and has received a $6.4 million seed round led by Andreessen Horowitz in preparation for an official commercial launch later this year.

Abdullayev and his two co-founders Emre Tale and Nicolas Tuso previously worked together at Delivery Hero, an international food delivery company, where they jointly invented and built the company’s payment system from scratch. In addition to a16z, these seed investments for Berlin-based Payrails include several others in the city’s fintech, food tech and delivery ecosystem: HV Capital; Delivery Hero CFO Emmanuel Thomasin; Flixbus founders Jochen Engert, André Schwamlin and Daniel Krauss; And HelloFresh founder Dominik Richter knows it too.

The founders of Payrails took a fresh look at the idea of ​​their platform by testing it. delivery hero job In what you might call the hat-trick of the e-commerce world, the three-way marketplace consisted of independent and big-name restaurants, courier drivers, and millions of food-ordering consumers; And as an added layer of complexity, they were all calling and logging out of payment systems in real time, 24 hours a day, across dozens of markets, currencies, preferred payment methods, and more.

What they found about Delivery Hero is that there are several payment giants in the market these days that are creating some aspects of the system they need to work – Aiden, Stripe, PayPal, WePay (listed). part now). JPMorgan Chase), Dvarola and others – when it came to solutions that could handle global challenges in more than 50 markets, and do it quickly and easily, they failed.

“The challenge we faced was geographic, different payment solutions around the world, and we spent a lot of time looking for different solution providers. It was difficult for us,” he recalls. Most of the global solutions – from legacy companies – were difficult to modernize and build the kind of API structure Delivery Hero wanted to use, while the new solutions had too many geographical restrictions: in many cases they could not be extended to everyone. could. The market where Delivery Hero operated and “threw a few parties was not enough for us.”

Their conclusion was that they wanted to create “the necessary internal resources”, which is what Delivery Hero did (hundreds of developers worked on this alone, Abdullaev said). It also opened up opportunities: building a product to sell on marketplaces and other companies with a similar business model to Delivery Hero, whether on a larger or smaller scale.

The solution was to think of Perel as a kind of operating system that “summarizes all this complexity and sees the movement”. Abdullaev said. “Long term, we see ourselves as an infrastructure provider.”

What they mean by that is that it doesn’t necessarily position itself primarily as a point of sale provider or payment intermediary: it has created a platform that integrates and works with them through an API, making it easy to work and collaborate. . Wide selection of third party businesses (cash in and out), freelancers (cash out) and consumers (cash out) and a wide variety of payment methods depending on your location. Payment service providers can also be customers as they themselves enter the market as customers.

The areas it will handle in its system include payment routing, consolidated cash flow, and payment solutions through ledgers; The ability to track payments to prevent payment fraud will also be part of the initial service.

Its ultimate goal is to reduce the number of steps and subsequent delays that occur when moving money from one part of the system to another, so that the amount paid comes down to reconciliation and the overall pace of activity at the same time. distributed for improvement. and keep the company informed about how things are going in real time.

“We have created an operating system that allows you to create internal courses at its core, allowing cash and other payments from multiple service providers that can complete one transaction and transfer that money to pay others in different places,” he said. . Although not yet launched, he said the first service will focus more on cash rather than credit transactions, such as cash advances for merchants or drivers.

This seed round is another indication of how a16z is investing today. It continues to be active as a fintech investment category (a sector that also includes many of its crypto investments); And it’s betting on promising startups outside of Europe as it expands beyond Silicon Valley.

“As companies scale globally, they need an infrastructure that allows them to quickly and easily add payment gateways and payment methods to accept payments from their customers, as well as optimize their payment paths and authorization speed,” said Seema Emble, investment partner. This is stated in a statement by Andreessen Horowitz, who specializes in financial technology. “The Payrails team is well aware of the challenges associated with payments as merchants grow. The founders have a wealth of experience and track record in building solutions for this category, helping clients reduce complexity as they grow and grow.

“With their deep experience at Delivery Hero, one of Europe’s greatest technology champions, Perel’s founding team has a unique understanding of the challenges and costs associated with complex enterprise-wide financial transactions and has proven itself,” said Barbaud Namini Toe, partner in HV. capital, in a statement. “Based on the excellence of the team and their truly phenomenal offerings, we are excited to support them on their journey to becoming the FinOps solution of choice for large enterprises.”

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