In recent years, we’ve seen businesses in some offline sectors start their journey to go digital. Startups are proving increasingly critical in helping such sectors move into the online space. Additionally, there are companies that are helping close the digital divide but what about some existing technologies that need upgrading? This is exactly what the startup Silverflow intends to work upon.
The company has raised a notable seed fund of €2.6M to roll out the first cloud-native card payments platform. In an exclusive conversation with SC, Silverflow’s co-founders, Anne Willem de Vries and Robert Kraal, share more about the company, the initial challenges it faced and more.
Total funding reaches €3M
With the latest funding of €2.6M, Silverflow’s total funding till date is now at €3M. This funding round was led by UK-based seed-stage investor Crane Venture Partners with participation from INKEF Capital and notable angel investors and industry leaders from Pay.On, First Data, Booking.com and Adyen.
The Silverflow team currently consists of five members. The company’s founding team consists of co-founder and CEO Anne Willem de Vries, co-founder and CTO Paul Buying, and the co-founder and CBDO, Robert Kraal. Kraal previously joined Adyen back in 2010 as the COO and has over two decades of experience in the online payment segment. Similarly, De Vries also gained experience in card payments at Adyen, where he joined the cards acquiring team. The latest seed funding will enable the startup to double its team size by the end of this year by adding new developers and a commercial director.
An upgraded payments technology stack
The Silverflow platform has been in development for about two year now and it is slated to launch in early 2021. The platform is said to be the first cloud-native card payments platform that directly connects with card networks.
The company’s co-founder Robert Kraal notes, “Silverflow is the first card payments processor with a cloud-native platform built for today’s technology stack, with simple APIs, streamlined data flows, directly integrated into card networks. As a managed service, Silverflow provides the maintenance for connections and new product innovation that users have typically had to support in-house or work on long-term product roadmaps with suppliers. Based in the cloud, Silverflow is infinitely scalable for peak flows and also provides robust data insights that users haven’t previously been able to access.”
The current technology stack or infrastructure for card processing was developed about four decades ago. Shedding more light on the legacy technology stack currently in use for payments processing, Kraal says, “Working for a number of years in Paytech, we concluded that the payments tech stack needs an upgrade. Today’s card payment infrastructure is based upon 30 to 40-year-old technology and it is still in use across the global payment landscape. This legacy infrastructure costs time and money for consumers, merchants, payment-service-providers, and banks.”
“The legacy platforms also require a lengthy onboarding process, are expensive to maintain and are also not fit for purpose today, because they don’t support data use. Further, adding new functionality is a lengthy and expensive process, requiring the effort of specialised engineers which ultimately slows down innovation for the whole card payments system,” he adds.
Many companies tried to work around the legacy tech by adding an additional layer on top of an existing stack. But the base infrastructure remains the same and Silverflow recognised an opportunity in the processing layer, which is the deepest layer of the stack. This stack apparently didn’t receive any “real innovation for several decades”. Kraal says the company viewed this as a huge opportunity to change the ecosystem.
Early days and initial challenges
Silverflow started in early 2019 with Robert Kraal and Anne Willem de Vries discussing the company’s core idea. “After talking to Visa & Mastercard and several PSPs (payment service processors) we were convinced we were on the right track. However, we quickly realised that we needed a technical co-founder for a project like this. We were introduced to Paul Buying by one of my neighbours, with whom I was participating in a machine learning course for professionals,” reveals De Vries.
As for the challenges, there are always some issues companies run into while starting out. For Silverflow, it was the company’s upfront development that had to happen without any incoming revenue. The fact that their services could only be made live after it passed some certain number of certifications, which would result in a longer waiting period for the company’s services to be made available for their customers, posed a major challenge for the team.
“We bootstrapped the company with the founders, and made sure we would be able to build the company with our initial capital. Additionally, we needed to convince our partners, for instance, Visa and MasterCard, about our business model, making sure they would accept us to build a solution to their network.” says Kraal.
“ You cannot simply call Visa and Mastercard for connecting to their network. You need to get “access to the club”. We established this in April this year, which was also for us the trigger to raise additional capital,” De Vries adds.
Ensuring data privacy, Adyen’s role and more
Since Silverflow is introducing a new and upgraded technology stack, a bigger emphasis is being placed on user data security.
“This (user data) is one of our top priorities. Cardholder data is very highly regulated and you need to get a Payment Card Industry (PCI) certification to be allowed to work with cardholder data.” reveals De Vries. “This was one of the first things we did and Silverflow was PCI certified on 16 June 2020. We have chosen for the highest level of Certification (PCI-level 1) to ensure security is part of our system from day one. Our cloud service providers also ensure we keep a safe, scalable and reliable platform.”
Siverflow is being headed by people that have worked at Adyen for a long period of time. The online payments processing platform definitely influenced the startup. De Vries tells us, “Not everyone is aware of the problem Silverflow is solving. Unless one has built several integrations to acquirers during their career, they won’t be aware of the 30-40 years old infrastructure that is still in use. Second, to build this successfully, you need to have prior knowledge of the card payments industry to navigate all the legal, regulatory and technical requirements.”
Since Silverflow is launching its services in 2021, there are some tasks that are yet to be finalised. “We are finalising our direct connection into Visanet and Mastercard’s Banknet this month. The next step is to certify our processing platform with Visa and Mastercard. This will be done in November and early December,” notes De Vries.
Kraal adds that when both these tasks are finalised, the company will test its services for a couple of months to ensure everything works as intended. Soon after, by February or March next year, the startup expects to carry out the first live transactions via its platform.
