Paystone Raises $23.8M to Empower Service Businesses

Paystone Secures $23.8 Million Investment

Paystone, a company specializing in payments and integrated software solutions, has recently obtained a further strategic investment of $23.8 million, equivalent to $30 million CAD. The investment was provided by Crédit Mutuel Equity, the private equity division of Crédit Mutuel Alliance Fédérale.

Company Background and Evolution

Founded in 2008 as Zomaron, a payment processing firm, the Canada-based organization underwent a rebranding process in 2019, emerging as Paystone. Currently, the company delivers electronic payment processing and customer engagement technologies to businesses, with a particular emphasis on service-based enterprises, as stated by CEO Tarique Al-Ansari to TechCrunch.

Investor Perspective

Léa Perge, an investor with Crédit Mutuel Equity in Canada, communicated via email that Paystone’s dedication to assisting businesses in their growth was particularly compelling. She highlighted the company’s concentrated focus on service-oriented industries as a key factor in the investment decision.

Addressing an Underserved Market

Al-Ansari observed that while many competitors concentrate on product-based companies, the service sector often receives insufficient attention. The requirements of service businesses differ significantly, and unlike retail, their primary need isn’t online sales.

Instead, they require a robust online presence and effective digital marketing strategies to connect with potential customers. Their priority is discoverability and the creation of compelling content that demonstrates their value proposition.

Beyond Traditional Rewards

Paystone facilitates marketing efforts through content creation, review management, and the implementation of loyalty and rewards programs. However, Paystone’s approach to rewards differs from conventional spending-based systems.

The company rewards specific customer behaviors, such as referring friends or submitting reviews. Al-Ansari terms this approach “payments as a benefit.” He explains that referrals and reviews enhance a business’s visibility, while valuable content builds trust and credibility.

Financial Standing and Funding

This latest funding round brings Paystone’s total capital raised in 2021 to $78.8 million, comprising both debt and equity financing. The company previously secured $54.9 million in January, a substantial portion of which remains unused, according to Al-Ansari.

Investment Timeline and Strategy

Although not actively pursuing additional funding, Al-Ansari had engaged in discussions with Crédit Mutuel Equity, formerly known as CIC Capital Canada, before the onset of the pandemic. Those initial talks were temporarily suspended.

Crédit Mutuel Equity renewed its interest, and considering Paystone’s talent acquisition goals and its acquisition strategy – having already completed five acquisitions – Al-Ansari decided to accept the additional investment. This provides the company with greater flexibility in hiring and further developing its capabilities, as well as capital for future acquisitions.

Expansion into the U.S. Market

Paystone made its initial foray into the U.S. market this year and plans a formal launch later in 2021. The company currently supports over 30,000 merchant locations across North America, and Al-Ansari anticipates an increase of 5,000 locations this year.

Currently employing 150 individuals, Paystone expects to add another 50 employees by year-end.

Revenue and Growth Projections

Al-Ansari forecasts accelerated growth throughout the remainder of the year. The company processes approximately $6 billion in credit card transactions annually and is projected to generate $55.7 million in revenue this year. Its profitability is sustained by residual income stemming from its initial bootstrapping phase.

Future Vision

“Our aim is to become the leading resource for service businesses seeking to establish a digital presence for accepting payments and implementing loyalty and rewards programs,” Al-Ansari stated. “We will achieve this by strengthening our market position and expanding our platform with the tools our customers demand.”