This Lithuanian fintech raises €1.5M to expand in EU; here’s how it plans to compete with card networks

Lithuanian fintech startup kevin. has launched its first-ever PSD2-based open banking API for mobile payments from pre-linked bank accounts. Also, the company announced that it secured €1.5M seed funding for the launch of its payment solution to new markets. “kevin.’s solution, which enables merchants to accept payments directly from bank accounts via an API for services like parking, taxis, car-sharing, deliveries and insurance, is the first time PSD2 has been used to directly compete with card networks for this type of payment,” says the company.

Resolves challenges in PSD2

Notably, PSD2 is the flagship open banking regulation in the EU. However, according to kevin., PSD2 has so far failed to move beyond e-commerce to areas of traditional card network dominance, such as mobile payments for services like parking, deliveries or mobility. For PSD2 payment initiation, several authentication steps are still required. But with kevin.’s infrastructure, consumers can expect payments for these services to be handled in the same convenient way as cards, claims the company.

“Requiring authentication every time a customer makes a €2 parking payment is not competitive, so service providers stick to cards, but there’s a downside. With a typical flat charge per payment of €0.07, plus an additional charge of around 1 per cent, companies providing low-priced services like parking can end up paying up to 10% to card networks per payment,” says Tadas Tamošiūnas, Co-Founder and CEO at kevin..

He went on to say, “kevin. lets users and merchants treat bank accounts like credit cards. Our new solution enables seamless, instant transactions that don’t need to be authorised every time a service – like getting a ride on a ride-hailing app – is ordered.”

kevin. claims that its new solution is the first time a PSD2-based open banking API has been used to directly compete with card networks for mobile payments from pre-linked bank accounts. As per the company, its solution enables companies and merchants to accept or receive mobile app payments directly from customers’ pre-linked bank accounts. This can be done via APIs for car-sharing, parking, deliveries, taxis and insurance.

It is all about convenience!

Well, the Lithuanian fintech assures convenience as it competes with the areas of card dominance. It lets customers link their account to a service provider’s app just once so that they need not authenticate each transaction. This is possible via an API, which works on the company’s licensed and secure infrastructure, which operates in the background similar to a card network. For the end-user, this experience is similar to that of a payment card.

Pavel Sokolovas, co-founder and COO at kevin., says, “This is the first time PSD2 has been used in the same way as a payment card for these kinds of transactions. Our focus from the very beginning was to build infrastructure using open banking to take on the card networks where they are traditionally strong.”

“This is a first step and shows that it is possible to use PSD2 not just for online payments, but also in sectors that currently depend on expensive acquiring methods. While we are taking on the card networks, we are also gaining their recognition – we recently won the Mastercard Lighthouse program in the Baltics,” he adds.

UniPark integrates kevin.’s solution!

In addition to being convenient, kevin.’s API also lets companies save money as the cost per transaction is claimed to be up to 10 times lower as compared to card networks. Eventually, one of the biggest parking operators in the Baltics, UniPark has become of the first companies to integrate kevin. in its app. As per the company, UniPark pays 80 per cent less for acquiring services per transaction than with a card network. This is possible as they need to pay a very small fee per API call instead of paying a relatively higher interchange fee.

Funding to expand into new markets

Besides launching a new PSD2 network, kevin. raised €1.5M seed funding from a number of European business angels from the finance and insurance sectors. The investment will let the fintech launch its first-of-its-kind PSD2 payment solution to new sectors and markets in Europe. To date, kevin. has secured €3.4M in funding, including €400,000 in pre-seed investment from Startup Wise Guys and €1.5M in angel investment.

Currently, kevin. operates across the Baltics, Poland, the Netherlands and Portugal and intends to enter 15 more European markets in 2021. It also eyes to establish bank connections to cover 80 per cent of customers in the EEA in 2022. Furthermore, a fraction of this funding will be invested in further product development with a POS solution on cards.