Hiroki Takeuchi, co-founder of GoCardless
When I spoke to Hiroki Takeuchi at the beginning of 2019, he was bullish about the international potential of his fintech business, GoCardless. Founded by Takeuchi and Matt Robinson in 2011, the company enables businesses and their customers to quickly and easily set up recurring direct payments between bank accounts.
Fast forward to November and the company has made some real progress in internationalizing a product that was originally launched in the U.K. marketplace. In partnership with payments company, Transferwise, GoCardless has created what it describes as the world’s first global network for facilitating recurring payments via direct debits.
And in Tekeuchi’s view that could be good news for SME businesses that trade internationally. As things stand there are essentially two ways of setting up a recurring payment arrangement. One is to take credit or debit card details from the customer and agree a regular charge on the account. The second way - known as “direct debit” in the U.K. - is to arrange a regular transfer of money from one current account to the other.
Direct debits are favored by many companies because they represent a reliable and low-cost way of collecting money month by month. However, they have historically required the customer to spend a certain amount of time setting up the bank transfer arrangement and there can be resistance - sometimes it’s just easier to key in a card number. GoCardless set out to solve that problem by making the process as simple as possible. Companies seeking to take recurring payments from customers can place a tool on their websites or send a link to the same tool via email.
The Jurisdiction Problem
Fine in the domestic market, but what about international trade? The problem for businesses trading overseas is that each jurisdiction has its own banking rules, some of them relating to direct payments. The challenge facing GoCardless lay in extending its model into territories where different regulatory requirements applied. In January of this year, the business was already establishing offices in Europe and beyond in order to increase its reach..
Now the new partnership with Transferwise businesses to set up direct payments in 30 countries in multiple currencies using a single online interface. According to Takeuchi, the creation of the business will be something of a game-changer for certain types of business. “Until now, if you wanted to take recurring payments, you have had to use something like Visa or Mastercard,” he says. In his view, the card method is both expensive and subject to high failure rates. “This is a big problem,” he adds.
But in will the direct debit model manage to attract enough businesses and their customers? Takeuchi points to the company’s record to date. “We facilitate payments for about 50,000 businesses,” he says. “And we now process transactions worth about $15 billion a year.”
Specialist Partners
Much of that business is in the U.K. but Takeuchi says the partnership with Transferwise will make the service more attractive to international customers, not least because of the expertise that the latter company brings to the table. “Transferwise is specialist in foreign exchange,” he says.
Looking to the future, Takeuchi says international growth is a priority. “Our focus is on growing our presence outside of the U.K.,” he says. “We are looking to replicate the same kind of success in Europe, Australia and the U.S..”
As things stand, the company’s revenues are growing - from £12 million in 2017 to £20 million last year. But growth comes at a price. The company posted losses of £13.7 million in 2018, but with a Series E of more than £70 million completed this year, it is well funded.
And the partnership with Transferwise is creating new international opportunities and providing business with another payment taking options.
