In its latest fundraising pitch deck, Stripe has reportedly told potential investors that the payments pie isn’t a zero-sum game: there’s room for a lot more expansion.
ew Irish entrepreneurs are currently experiencing this more than Kealan Lennon. The founder of CleverCards has found itself in what may be one of the sweetest of sweetspots occupied by an Irish fintech firm in recent memory.
Thanks to years of due diligence, financial hoop-jumping and regulatory proofs, the former corporate financier has placed his firm close to the centre of Mastercard’s wave of trusted third party payment partners, allowing him to market CleverCards as a scaleable, customisable payment app.
His service lets anyone set up a virtual Mastercard with pre-set limits, controllable centrally from a company’s financial manager. It can be used for anything from expenses to tax-free Christmas bonuses. And because it’s a Mastercard, it can be spent just about anywhere on the planet.
“It took three years of intense effort to get that status,” he says, over a coffee in Dublin’s Skylon Hotel. “If I’d known then what I know now [about the hoops he would have to jump through], honestly, I’m not sure I would have had the fortitude to do it.”
When he initially approached Mastercard, the payments giant was sceptical.
“They laughed at me,” he says. “Not in any disrespectful way. In fairness, I had gone to them with my tongue slightly in my cheek. My pitch was that this would be integrated processing, kind of like an ‘Intel Inside’ thing. I knew it was a tall order. Anyway, I was sent away, but returned with a different tact. I had pitched to a customer what we wanted to do with Mastercard. They liked the idea but said that it was contingent on MasterCard and being able to do configurable cards. Once MasterCard saw the demand from the customer, we had the conversation again. And then we set out on that journey to get MasterCard to integrate. It was new territory for them and new territory for us, a completely unique relationship. And that’s why that was part of the reason why it took so long.”
With CleverCards, you can’t give that card away to somebody else
But do it he did. And he and his company now sit in a position few others occupy: a service company that can market itself as super-conductor for configurable Mastercards.
The result, he says, is thousands of companies now signing up to use his service, with a staggering 5,000pc increase in revenue in the latter part of 2022 and solid basis for a new fundraising round this year.
The lure of the bluest of blue-chip payment systems underpinning the service has also attracted some huge customers, including the UK treasury. CleverCards was used as a payment provider by the British state when it wanted to give top-up vouchers for fuel to citizens during the cost-of-living crisis. Because of the way Lennon’s system is configurable, the British were able to confine the valid recipients of the virtual top-up cards to 26 utility companies.
“We’re the only company that can do that configuration,” says Mr Lennon. “We can configure them right down to an individual merchant. Or to a category of merchants.”
CleverCards is far from Mr Lennon’s first rodeo. While he is best known in the Irish tech community as the founder and CEO of the greeting app firm Cleverbug, he has a long career in corporate financing.
CleverCards’ system works entirely on smartphones. A valid virtual card is either emailed or scanned (via a QR code), whereupon it is added to the phone’s ‘wallet’. Following some identity verification to prevent money laundering or scammers intervening, the virtual Mastercard is ready to go, defined by whatever limit or condition the sender has set.
“The way that the rest of the industry distributes cards is in the post,” says Mr Lennon. “The problem with that is it’s paper and plastic, so you can give it to somebody else.”
This, he says, would defeat the purpose of the virtual card’s intention, such as a fuel allowance or expense account for an individual.
“With CleverCards, you can’t give that card away to somebody else because it’s locked to your phone number. It never leaves your phone.”
Other than individual configurability, Mr Lennon says, the advantage to this is immediacy and scaleability.
If you’re on holidays and your regular card is lost, damaged or hacked, it can take a week to get a replacement. A virtual digital card can be blocked immediately, with a new one issued on the spot.
Similarly, he says, if your company is trying to organise an employee bonus scheme the week before Christmas, it’s not subject to the usual constraints of banks’ manual processes.
“If they want 50,000 cards, it’s 50,000 emails,” says Mr Lennon.
“In a plastic situation, Ulster Bank and Bank of Ireland and AIB are trying to manually open accounts all year. It takes time and paperwork. We’re able to do it with digital verification and in a much more distributed fashion. In the last 12 months, we’ve opened about 100,000 accounts. We had a 50-times increase in revenue in quarter four of last year. It has exploded for us.”
We had a 50-times increase in revenue in quarter four of last year
CleverCards charges a percentage for when the money is loaded onto the card, with an additional revenue stream from Mastercard. Mr Lennon also says that for bigger deals, involving thousands of employees or virtual cards, ‘platform license fees’ are also involved.
CleverCards currently employs around 30 people. But with such an expansion in its business underway, it hopes to double that figure by the end of the year. It is also now turning its attention to another funding round.
Despite a slight upturn in capital markets, it’s a tricky time to be looking for cash. Last year, it had targeted a figure of around €50m. Mr Lennon says that it will still probably seek “tens of millions”, but doesn’t have a firm figure in his head.
Current investors in the company, which was started in 2019 and landed a €10m round in 2021, include the former boss of Facebook Ireland, Gareth Lambe, as well as Green REIT co-founder Pat Gunne.
While the UK treasury has been a big user, it is recurring items such as individual expenses within companies that Mr Lennon believes might offer the richest vein of opportunity for CleverCards in the short term.
“Imagine ringing a bank and telling them that you’ve got an employee you’d like to get a credit card to, with an expiry date of one week’s time and a credit limit of two and a half grand. It doesn’t happen. We’ve taken all of that functionality and brought it under the control of the finance manager.”
