A new payment network for the internet
This post initially went out as a company-wide email on 23rd April 2015. I sent this after we did some work to re-articulate our vision after a long period of heads down execution. A couple of things stand out on reflection:
1. Even after 4 years, it still feels like we are at the beginning of our journey.
2. This remains surprisingly close to our initial vision — just look at our name.
The internet has changed the way we do business. National borders are less of a barrier to expanding globally — Box.com can serve customers in Japan as easily as it does in the US. Crowdfunders like CrowdCube and P2P platforms like Funding Circle are reshaping the way businesses fund themselves.
However, the way we get paid remains the same. Most payments are still handled by card networks designed 70 years ago for paying in shops. Whilst thats okay for a lot of transactions, it doesn’t work at all in many instances.
Cards are simply too expensive for business to business transactions. This leaves the small guys chasing their customer for manual payments via cheque or bank transfer. Sky-high failure rates also make cards poor for subscription services — many businesses lose up to 10% of their customers each month because of this. Finally, sometimes accepting cards isn’t even an option — in Germany, for example, cards are only used for a fifth of payments.
To fix this, we are building a new payment network for the internet.
We’ve started by creating a really simple layer on top of Direct Debit. Whilst Direct Debit isn’t a new system, it is a great mechanism for recurring payments. It’s cheap because there are few intermediaries in each transaction. It’s reliable because payments are taken directly from your bank account.
Before GoCardless, Direct Debit was inaccessible and under-utilised. It was typically only available to the largest companies and it was hard to manage because the underlying processes are clunky and out of date.
Our technology has changed that.
By aggregating volume, we’ve been able to open up access to anyone, regardless of their size. By building simple APIs, we’ve enabled our customers to automate their processes, leaving them to focus on their business instead.
By creating technology to simplify Direct Debit and make it accessible, we have quickly grown into the UK’s leading Direct Debit provider. We now process over half a billion pounds each year for over ten thousand businesses across the UK.
We have also added new geographies, and have the early versions of an internationalised service. This gives us the foundations to create a new payment network for the internet.
We will do this in two steps.
First, we aim for the scale of the internet by creating a global Direct Debit network for recurring payments. We will take our learnings from working with banks, regulators, and systems in the UK & Europe to combine Direct Debit mechanisms from across the world.
Our technology has simplified Direct Debit in the UK by abstracting away the complexities of the system. We will take the same approach to our global expansion — transcending the differences between each country to create a coherent, elegant payment network.
Because of the slow nature of Direct Debit, we will continue to focus on recurring payments. In order to break out of recurring payments, we need to be able to speed things up — no one wants to wait 3–5 days to ship a product. This is our second step. We will do this by working with the existing networks to lobby for infrastructure improvements.
We are already seeing the world move in this direction; Australia is building direct debit into their new real-time payment platform, PSD2 (the new Payment Services Directive) encourages the emergence of new Direct Debit networks built on faster payment infrastructure. When these shifts occur our existing traction will put us in a unique position to take advantage of these developments. It will enable us to break out of recurring payments — creating a new way of getting paid for anything online.
In this world it will be easy for any organisation to get paid from anywhere. Small businesses will be up and running in minutes; large enterprises will enter new countries with ease; and new startups will grow with us. The barriers will be down, and our merchants will be able to stop worrying and focus on what they do best.
The internet has changed the world for the better, but somehow payments got left behind. Let’s be the ones to fix it.
If this sounds like something you want to be involved with, we’re hiring and would love to talk. Head to gocardless.com/jobs to see what’s on offer.