By Cara Waters
Fintech Zeller is banking on the demise of cash transactions and a push by Australian businesses to find alternatives to big banks to cement its place in the local payments services market.
The fintech which aims to be a one-stop shop for businesses for accepting and making payments and managing finances has raised a further $50 million in funding led by US venture capital fund Spark Capital alongside existing investors Australian venture fund Square Peg, Apex Capital Partners and Addition.
The latest raise brings the total amount raised by Zeller in the last year to $81 million and values the fintech at $400 million even though it only launched its terminals, merchant accounts and cards six weeks ago.
Zeller co-founder Ben Pfisterer has secured further funding.Credit: Arsineh Houspian
However, co-founder and chief executive Ben Pfisterer said launching the businesses amid a pandemic has proven to be the best possible time for Zeller to take the plunge.
“The displacement of cash is happening at an accelerated rate, in all my years in financial services I never thought a global pandemic would kill off cash but that seems to be what’s happened,” he said.
Mr Pfisterer added that Australian businesses were keen on an alternative to the services offered by the traditional players in the industry, with Zeller signing up 1,500 businesses in the six weeks since the launch of its products.
“For us it just shows the appetite is there with businesses back on their feet post-COVID and getting more savvy,” he said. “We have found 80 per cent are switching from incumbent providers.”
Zeller will use the additional funding to speed up the development of its business banking platform and expand its 75-person strong workforce.
“We just pressed the accelerator to start building the next set of products,” Mr Pfisterer said. “We are looking at all the different type of things you would expect from a financial services business in Australia it will include lending and different card products.”
Zeller has begun the process of getting a banking licence in order to eventually be able to offer all the services of a traditional business bank alongside the terminal, transaction account and payment cards it already offers.
Mr Pfisterer previously headed up payment provider Square’s operations in Australia before starting Zeller in 2020 with former colleague Dominic Yap.
He said Zeller fielded around 35 inbound enquiries from different venture capital firms before opting to take on the additional funding lead by Spark, which has previously invested in Twitter, Slack and Coinbase.
“We were looking for an understanding that what we are building is big and audacious and to take on incumbents requires a long term vision,” he said. “They also have an understanding of what we are doing and a real innovation and entrepreneurial mindset.”
James Kuklinski of Spark Capital said Australia’s business banking landscape was dominated by a small group of incumbents and was ripe for disruption through simpler, more transparent pricing, technology, and better customer service.
“The Zeller team brings decades of collective experience in payments, technology and finance, and we are excited to join them in levelling the playing field for business owners through access to smarter business banking solutions,” he said.
Meanwhile, Paul Bassat of Square Peg Capital said the launch of Zeller’s products had been a “really spectacular” first six weeks.
“It is only six weeks but with any launch you would much prefer to come out of the gate really quickly than slowly,” he said. “It just illustrates that there is a really big appetite for small businesses in Australia for the product Zeller is bringing to market. There has been a relatively low level of competition and innovation in merchant services for small businesses until now.”