Prepaid Payments Platform Recharge Raises €45M for Acquisitions

The Rise of Prepaid Payments Amidst Economic Pressures

Consumers are increasingly seeking alternative payment methods to effectively manage household expenses, driven by persistent inflation and the appeal of subscription-based services. Consequently, online prepaid payment platforms are experiencing significant growth.

Recharge Secures Funding for Expansion

Recharge, a prominent European provider of online prepaid payments, has recently obtained a €45 million debt facility from ABN AMRO. This funding will be utilized to pursue strategic mergers and acquisitions, as well as to develop fintech-inspired services that may challenge established payments platforms.

The company offers a diverse range of digital vouchers from leading brands, including Apple, Google, Spotify, Xbox, and PlayStation. Furthermore, Recharge facilitates cross-border remittances, targeting consumers through multiple avenues.

Strong Growth and Revenue Projections

Recharge reports substantial cash reserves and a 30% year-over-year revenue increase in 2024. The company anticipates exceeding €100 million in revenue by 2025.

This new financial injection provides a significant fund for potential acquisitions.

Strategic M&A and Market Consolidation

According to Recharge’s CEO, Günther Vogelpoel, in a recent interview with TechCrunch, the company recognizes an opportunity to accelerate growth through mergers and acquisitions. He stated, “We see an opportunity to grow faster through M&A and there’s a number of opportunities in other markets and segments that we can consolidate, especially as this industry is still so young.”

European Prepaid Card Market Growth

The European prepaid card market has demonstrated a compound annual growth rate (CAGR) of 7.6% between 2019 and 2023. Forecasts predict a further increase with a CAGR of 9.1% from 2024 to 2028, expanding from over $251 billion in 2023 to $395 billion by 2028.

Expansion into Fintech Services

Recharge’s application for an e-money license from Dutch authorities signals its intention to establish a more comprehensive “fintech-style” platform.

Vogelpoel emphasized the company’s commitment to evolving within the financial services sector: “We are in the application process of applying for an E-money license in the Netherlands, which will grant us a license for Europe. With that, we can launch our own financial services.” He also indicated an interest in acquiring a company offering wallet or card functionalities that align with their existing customer base.

Investment in Technology and Platform Development

Recharge’s profitability allows for continued investment in its platform and technology. Vogelpoel confirmed, “We are a profitable company. We have over 30% growth in 2024 which boosted our profit profitability as well. So we have money in the bank to invest in our platform and technology.”

The company believes that managing larger customer funds is a logical progression. Vogelpoel explained, “If you have a wallet as a central product, then you can connect other services to that wallet as well as payments or cards that people could use for issuing virtual cards… Neo banks have a really good portfolio of services, but we, especially, cater to the needs of our customers that love to budget, to have control, as well as like to have privacy and security.”

Privacy and Security as Key Differentiators

Recharge believes its focus on privacy and security will provide a competitive advantage, as prepaid payments often offer enhanced privacy features.

ABN AMRO’s Perspective

Bas Janssen, senior banker at ABN AMRO, stated: “We see great promise in Recharge’s growth trajectory as they broaden their reach within the global prepaid payments space.”

Previous Funding Rounds

Recharge has previously secured €10 million in debt financing from Kreos Capital and a €35 million Series B round led by SmartFin. Prior to that, the company completed a €22 million Series A round with Prime Ventures in 2019.