Billhop is a Swedish company which enables businesses and individuals to pay their invoices by credit card. In a recent development, the company has closed a €4M Series A investment round from financial technology VC Element Ventures.
Funding for financing
According to Billhop, the latest investment will be used for further product development and to strengthen Billhop’s sales, marketing and customer support functions. This is to keep up with the growing demand for working capital financing solutions, now accelerated by the pandemic-driven global economic uncertainty.
Element Ventures is a London-based venture capital fund investing in B2B financial technology companies. It has backed companies such as Duco, OpenGamma, OpenFin, Fenerego, nCino, Cloud9, Callsign and Axoni.
The origin story
Billhop was founded in 2011 by Erik Malm, Sebastian Andreescu, and Ingemar Sjögren. In an exclusive conversation with Silicon Canals, Andreescu talks about the inception of Billhop, the initial challenges, and future plans.
“Ingemar and I have known each other for the most part of our lives. Coming from finance and supply chain backgrounds, we were aware that cash flow problems and liquidity needs were common themes within the supply chain. We both met Erik – who has a background as an engineer and software developer – in 2013. Erik had been a CTO trainee at Telenor when he came into payments by working on the WyWallet project, which was an attempt by the largest telecom companies in the Nordics to create an e-wallet solution where customers could pay, for example, bus fares, and be charged on their phone bill,” says Andreescu
“Collectively, we started looking into why it wasn’t possible to pay suppliers with credit cards if you were an SME and we quickly realised that card acceptance within the B2B space was less than 20% worldwide. This is how Billhop was first born.”
According to Andreescu, since this solution was new and unique in Europe, creating the necessary awareness around it was a crucial initial challenge that the team had to overcome. “The first thing we knew we needed to tackle was educating the market and making people aware that we existed. Our solution was a new take on working capital that was pretty unique in Europe, so we had to break new ground when it came from everything to educating the market to infrastructure setup and putting partnerships in place.”
Modus Operandi
Billhop is the payment platform that enables businesses, enterprises and individuals to pay any invoice by credit card, regardless of whether the supplier accepts card payments. It is a Swedish Payment Institution licensed by the Swedish Financial Supervisory Authority (Finansinspektionen) with headquarters in Stockholm. It provides payment services on a cross-border basis under the Payment Services Directive.
“We created a payment platform where we connected the card infrastructure with the banking payout infrastructure, allowing businesses to pay all their suppliers irrespective of whether the suppliers accepted business cards or not. Simply put, we charge a card and transform it into a bank-to-bank payout – the cardholder gets all the benefits associated with using a card as a payment method and the recipient doesn’t need to change a thing in regards to how they get paid,” Andreescu explains.
The company claims that it manages the entire payment process without onboarding the end recipient of the invoice payment. “With most credit card issuers offering an interest-free payment period exceeding 30 days, Billhop’s clients are able to extend their payment terms without straining supplier relationships. Suppliers are paid on time and the client’s cash balance is preserved until their credit card statement is due,” the company mentions in a press release.
Growth & Revenue
According to the company, Billhop is currently being utilised by more than 50,000 European companies, including a growing number of Fortune 500 companies. Since the introduction of Billhop’s corporate offering in January 2019, transactions have accelerated by 500 per cent to-date, while the total transactions processed via Billhop, across all of its customer segments, exceeded €270M in 2020.
Talking about the revenue model of the fintech, Andreescu says, “Billhop operates through a buyer-funded model, where the user pays a transaction fee where the typical card acceptance costs are included. In terms of revenue streams, we charge an ad valorem fee (%) on each transaction. There are no fixed fees, administrative fees or other fees incurred when using Billhop.”
The Swedish fintech has recently doubled its team – with emphasis on commercial and tech. It currently has 22 FTEs – having grown from 11 FTEs during the last 6 months.
Andreescu says that Europe is still the company’s main focus in the mid term. “We are already offering the service to corporates across +20 markets in Europe and to SMEs across 5 markets. We will continue to cement our footprint on these markets as well as expand our SME offering to a handful of new markets in Europe over the next 12-16 months.”
Billhop was recently named among the fastest-growing companies in Sweden with a growth of 768 per cent during the last three years as well as Sweden’s ‘most disruptive company’, by Deloitte.
