nomod Raises $3.4M Seed Funding - Hardware-Free Payments

Addressing Digital Payment Access for Small Businesses

Micro and small businesses in developing economies continue to encounter difficulties in gaining access to digital payment solutions. This is largely due to two primary factors: exclusion from global payment networks because of their limited scale, and the substantial cost associated with acquiring necessary hardware from various providers.

Nomod: A Hardware-Free Payment Solution

Based in the U.K., the fintech company Nomod offers a solution by enabling these businesses to accept card payments directly on their smartphones, eliminating the need for costly card terminals. Recently, Nomod secured $3.4 million in seed funding, achieving a company valuation of $50 million.

Founder and CEO Omar Kassim explained to TechCrunch that payments will serve as the core driver for attracting merchants and developing a comprehensive financial operating system.

Expanding Financial Services

Nomod’s future plans involve providing merchants with access to essential financial tools. These include business accounts, debit cards, connections to local payment networks, and lending options.

This expanded suite of services is particularly crucial in key markets where Nomod aims to establish a strong merchant presence, such as Saudi Arabia, the United Arab Emirates (UAE), and Bangladesh.

Market-Specific Challenges

For example, in Saudi Arabia, access to bank credit is limited, with only 3% of over 1 million registered businesses currently having access. Establishing a business bank account in the UAE can take almost six months. Furthermore, card point-of-sale (POS) hardware is often prohibitively expensive for small and medium-sized merchants in Bangladesh.

Streamlined Payment Processing

Nomod allows merchants to quickly address these payment challenges. By simply downloading the Nomod application on their phones, they can begin processing in-person payments and utilizing payment links for their customers.

The platform supports a wide range of cards, including Visa, Mastercard, American Express, and UnionPay, as well as contactless payments via NFC and QR codes. Merchants are also able to accept payments in over 135 different currencies.

“A merchant can install Nomod, complete the signup process in just three or four minutes, and immediately start accepting both in-person and online payments using payment links,” Kassim stated during a conversation with TechCrunch.

Global Reach and Expansion

While Nomod initially focused on acquiring merchants in the Middle East and North Africa (MENA) and Gulf Cooperation Council (GCC) regions, the platform boasts a global reach. Merchants from over 40 countries, including those in Europe, the U.S., Australia, and Asia, can currently sign up.

Kassim indicated that the company is currently piloting the platform with merchants in Nigeria and South Africa, with plans for a full launch in both markets in the near future.

“We believe that accepting card payments is a fundamentally similar process regardless of location. Whether it’s in Australia, India, or elsewhere, the core action remains consistent. We are confident in our ability to expand into multiple markets concurrently, currently supporting merchant sign-ups from 44 countries,” Kassim explained.

Currency and Settlement Options

Currently, Nomod can onboard and settle merchants in the U.S., the U.K., and the UAE in their respective local currencies – dollars, pounds, and dirhams.

In other markets where currency fluctuations occur, such as South Africa, Nomod applies a foreign exchange (FX) cost. Kassim noted that as adoption increases in these markets, the platform will be optimized to acquire and offer settlements in local currencies.

A "Square Minus the Hardware" Approach

Nomod describes itself as “Square minus the hardware” in its Y Combinator profile, a description Kassim feels accurately reflects the evolution of payments since Stripe’s launch in 2010.

He suggests that if Stripe were launching today, hardware would not be a necessity. This perspective is shaped by the prevalence of wallet and token-based fintech transactions in emerging markets like the UAE.

Nomod is also listed as a partner for accepting in-person payments by Stripe.

“Many platforms are now seeing 60-70% of their online transactions originating from Apple Pay, indicating a growing trend of consumers actively tokenizing their payment information on their devices.”

Founder’s Background and Vision

Prior to Nomod, Kassim founded the e-commerce marketplace JadoPado, which was later acquired by Noon, a major Amazon competitor in the MENA region.

He subsequently engaged in consulting work before launching Nomod as a side project in 2018, inspired by the surge in fintech and neobank activity in the U.K. The initial version was a simple application allowing Stripe account holders to process in-person payments.

Developing this product provided Kassim with two key insights regarding the future of payments. He believes that plastic cards will be increasingly replaced by digital tokens or native wallets in consumer fintech, and that legacy hardware for merchants will be superseded by software-driven solutions.

“Currently, there isn’t a leading mobile software solution for payments globally. I see an opportunity to create a WhatsApp or Telegram equivalent for payment acceptance, including features like payment links and subscriptions.”

Growth and Investment

Since its official launch in March 2021, Nomod has onboarded nearly 4,500 merchants. The company’s total processed volume has increased 11.5-fold and currently has an annualized run rate of $7 million.

The company, a recent graduate of the Y Combinator summer program, received funding led by Global Founders Capital. Additional investors included Kingsway Capital, Goodwater Capital, and angel investors from Silicon Valley and around the world, including a partner from DST Global.