Demand For Embedded Payments Soars As Finix Successfully Extends Series B Funding

The fintech world has been unevenly impacted by Covid-19 this year. Whilst bricks-and-mortar focused payment startups, such as Square, likely saw sector-specific dips in transaction volume whilst businesses faced forced temporary closures, e-commerce financial start-ups have experienced a converse boom in transaction volumes as people shop from home.

Finix, the digital payments and SaaS tool sits within the latter category, and last week signaled its certain growth after a successful extension of its Series B financing. Six months after announcing an initial $45 million Series B, Finix has just closed a $75 million round after a $30 million extension. The investment was led by Lightspeed Venture Partners and American Express Ventures.

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The startup’s total venture capital now sits at $96 million, of which $90 million was raised in the last year alone according to CEO and co-founder Richie Serna. Additionally, Finix’s transaction volume has more than quadrupled from Q2 2019 to Q2 2020. However, no details were disclosed for Finix’s revenue, revenue growth, new valuation, current profitability or number of customers.

Founded in 2016, the San Francisco-based startup is a payment processing infrastructure-as-a-service platform offering the back-end technology required for businesses to create their payments system in-house. Finix allows companies to bypass third parties such as Square or Stripe when receiving payments, as well as avoid the cost of building their own payment systems from the ground up. For startups, building an API alone with engineering talent would normally cost between $3 million and $5 million in up-front costs spanning two to three years before completion.

The global digital payments industry is currently a $4 trillion market. It is expected to grow to $6.7 trillion in the next year according to data from Statista. A report issued by J.P. Morgan in May emphasized that integrated payments (distributed via software) “should continue to grow at two times the market for years to come and is just about 10% penetrated in the U.S,” up from 8% six months prior.

Serna backs these predictions stating, “we all believe that in the next five to 10 years, the vast majority of software companies are going to be making the majority of their revenue from payments and other financial services. Companies already recognize the power of embedding payments into their software. They understand how it transforms their businesses, and that trend is just accelerating during COVID.”

While Finix’s staff included only 15 people at the time of its Series A raise in July 2019, today it sits at 85 people. The company intends to use its new capital to double their team over the next year. “We have a very very massive task ahead of us and…need to be able to go out and hire the best talent possible, find the best engineers and continue to build” Serna said.