Pagos raises $34M because the demand for ‘cost intelligence’ rises

Photo credit: Bloomberg/Contributor/Getty Images

With global digital payments revenue expected to reach $14.79 trillion by 2027, payments infrastructure has arguably never been more critical. But at the same time, the technology is becoming more important, and the associated costs and complexities are increasing. A recent survey shows that merchant satisfaction with their payment processors has plummeted, especially when major technical hurdles are encountered.

In search of solutions to these problems, Klas Bäck, Albert Drouart and Dan Blomberg formed Pagos, a payment intelligence infrastructure startup. Comprised of payment experts with Braintree, PayPal and Stripe backgrounds, Pagos transforms disparate digital payment data into actionable insights without requiring customers to switch payment processors.

CEO Bäck and Drouart have held senior leadership positions at Braintree/Venmo and PayPal for the past eight to nine years; Braintree/Venmo was acquired by PayPal in September 2013. For his part, Blomberg has founded seven startups and sold five over the past two decades.

“Payment processing is fundamental to customer relationships, revenue and a company’s bottom line, but managing it well is becoming increasingly complex,” Back told TechCrunch via email. “Most businesses don’t have the tools, data, or knowledge to design or implement an effective payment strategy; Even those who do often leave significant opportunities open. Pagos was founded on the premise that almost all businesses need help to make their payment execution more data-centric.”

Payment infrastructure providers are not exactly a dime a dozen, but there are a growing number of providers chasing the massive market opportunity. Headquartered in San Francisco, Streamline recently raised $4 million for its business-to-business focused payments product suite. Kushki is a much bigger player — the Ecuadorian payments infrastructure startup landed $100 million last year at a $1.5 billion valuation.

So what does Pagos bring to the table? Bäck claims it uniquely enables businesses to stream and store their payment data — including trade and fraud data — in one place. From a single dashboard, clients can visualize the data and track metrics including transaction, payment authorization and risk performance.

The Pagos financial monitoring dashboard. Photo credit: Paid

Pagos offers connections to payment processors like Adyen, Chase, Braintree, PayPal, Stripe, and WorldPay, as well as data collection APIs to allow businesses to stream payment data and custom metadata into the platform.

“Our promotional products bring together an organization’s data and expose APIs to enable developers and business stakeholders within an organization to refine their payment stack to address issues such as churn, risk and cost – ask Pagos for credential recommendations , where and how to send your transactions for maximum upside,” said Bäck. “Pagos is different because we are not trying to offer new sanitary facilities; We want them to make better use of the collection of vendors and partners they have, which might involve changing processes and systems to resolve issues.”

In terms of customers, Bäck says Pagos, whose platform has processed over a billion transaction events, focuses on companies that sell or bill their customers online and companies that serve them, such as fraud providers, payment orchestration platforms, acquirers and payment service providers , software-as-a-service verticals and marketplaces. Current clients include Adobe, Eventbrite, GoFundMe, Peek, and Warner Bros Discover.

“With Pagos, companies can see what’s going on in a batch of payments,” said Bäck. “Use cases include adding new payment partners and payment methods, identifying optimal payment methods and routes, tracking payments and chargeback metrics, and optimizing recurring bills to reduce churn.

Some investors see the value proposition. Pagos today closed a $34 million Series A round led by Arbor Ventures with participation from Infinity Ventures, Underscore VC and Point 72 Ventures. The company’s total revenue is $44 million, which Bäck says will be used to fund new hires in engineering, product development and “accelerating customer implementation.”

“Actually, we weren’t looking for additional capital. However, we were inundated with incoming investor interest and recognized a unique opportunity to grow our client base even faster, especially in today’s volatile economic climate,” said Bäck. “This opportunistic Series A round was significantly oversubscribed.”

As for the future, Bäck says he’s not overly concerned about the challenging macroeconomic climate for startups. He actually claims that the pandemic triggered a rush into e-commerce that, although it has since declined, has had a lasting impact.

According to Bäck, the pandemic has led to a measurable increase in the use of digital payments. The World Bank’s Global Findex 2021 database found that – in low- and middle-income economies excluding China – over 40% of adults who have made payments by card, phone or internet to merchants in-store or online did so for the first time times have done since the beginning of the pandemic.

“The backend financial infrastructure remains critical. Helping companies sell more and reduce their costs is gaining traction now more than ever,” said Bäck. “Over the last 9-12 months, many companies have put a special focus on reducing their operating costs. This is where Pagos is particularly well positioned to help – most companies can even get started without any integration work, making the return on investment extremely fast.”

Over the next year, Pagos plans to “greatly expand” the remote software, product, sales and account management teams within its 41-strong workforce, says Bäck.