London payments start-up Lopay expects to hit profitability in 2024, less than three years after launching, ahead of taking its challenge to bigger rivals like SumUp to new markets in Europe and North America.
Founder and chief executive Richard Carter told City A.M. that the firm had “very aggressive growth plans” for its offering to small and medium-sized enterprises (SMEs).
“We’re going to grow to Spain, Italy, France, Portugal and the United States within the next 12 months… and we should be profitable this year,” he said.
“Within three years, as a fintech, being profitable and then having an international growth plan is pretty cool – and something very different from venture capital funding pre-2022.”
A drop-off in fintech investment over the last two years, driven by higher interest rates, has forced many start-ups to focus on profitability instead of growth at all costs.
Lopay, which launched in January 2022, landed £6m in seed funding last October. The firm enables SMEs to take card payments from customers at lower costs than incumbent providers and gives them the option of receiving cleared funds in their accounts immediately.
Carter called Lopay “the world’s lowest-cost and highest-rated payments app”. The firm claims to offer fees less than a third of those charged by PayPal and half those of SumUp and Zettle – its three biggest rivals.
“There’s this strange collusion in pricing between these multibillion-valued players,” Carter said. “They’ve got quite comfortable at that price point, which they’ve probably raised a lot of money for.”
Lopay offers a free expense and reward card, which businesses can use to earn fee-free processing. “My objective is to get fees down to zero with an offers and rewards package that effectively offsets the payment fees,” Carter said.
The firm expects to process more than £1bn in card payments over the next 12 months and save customers roughly £13m in fees.
Carter said Europe was a particularly attractive market for Lopay as it does not yet have an equivalent to the UK’s Faster Payments Service for instant settlement and clearing.
“The UK’s probably one of the most competitive countries in the world for payments acceptance,” he added. “The concept of receiving funds instantly you could say is even more impressive in Europe because they haven’t had the infrastructure to support that experience.”
Lopay, which has amassed more than 40,000 active businesses, is also planning to expand its suite of products by launching an cash advance offering of up to £100,000 in the coming weeks.
“I want to be able to sell not just on price, but how I can help small businesses grow,” Carter said.