Today Paystand announced that it raised a $20 million Series B round of funding. The startup uses blockchain in its corporate payments platform, but not as the method of payment. Instead, it uses blockchain to notarize B2B payments, certify payment requests and to trigger payments automatically.
The new investors are DNX Ventures, Battery Ventures, Epic Ventures, Commerce Ventures, and Wildcat Ventures. Existing investors Leap Global Partners, BlueRun Ventures and others participated. The company was founded in 2013 and previously raised $8.3 million.
“We’ve seen significant disruption in consumer payments from companies like Venmo, PayPal, and Square Cash,” said Mitch Kitamura, a managing director at DNX Ventures.
“However, U.S. B2B payments represent an even larger opportunity — currently over half of the $25 trillion in B2B invoices are still paid in paper check — yet no one stepped in to disrupt the market until Paystand. We are thrilled to be part of the team to help them realize the transformation in B2B finance.”
One of Paystand’s appeals is it does not charge per-transaction fees. Instead, there is a fixed monthly subscription, which we believe starts at $499. The company claims it can save businesses more than 50% of the cost of accepting payments because of the absence of fees. It also says businesses get paid much faster as the days sales outstanding is reduced by 60%.
It says its model is paying off as it boasts of average monthly subscription growth of 240% in the last year. It gained 80 new large enterprise customers and has 160,000 businesses using its platform.
“For too long, the B2B payments model has been inefficient and paper-based—and that’s a problem as most companies today become more digitized and software-driven,” said Neeraj Agrawal, a general partner at Battery Ventures. “Paystand’s technology helps companies in a variety of industries run more efficiently and cost-effectively automate customer payments, and we are excited to partner with management as they continue to scale.”
But the startup isn’t just targeting the U.S. In December we wrote that Japanese payment firm JCB had partnered with Paystand to address the Japanese market. JCB is the main card issuer in Japan and had revenues of $2.8 billion in FY 2018.