The fintech startup for contactless card payments Phos secured €2M pre-Series A round led by the international payments platform CM.com which provides cloud software for conversational commerce. The funding will be used for expansion in the US market and for growing the development team. Founded in 2018 by Ivo Gueorguiev, Antonina Martinova, and Valeri Valtchev, Phos is the fintech startup that developed the world’s first Software Point of Sale service, softwarePoS, which allows merchants to accept payments directly on their smartphones.
According to Jeroen van Glabbeek, CEO of CM.com, the investment in Phos and the ensuing partnership between the two companies aligns with the mission of CM.com to offer omnichannel communications and payments solutions from one platform. He has shared that together they could provide a mobile payment solution that is affordable, easy to use, and accessible for merchants regardless of the size of their business.
The all-in-one solution that turns phones into POS and ATMs
The main problem that Phos solves for merchants is that it allows them to meet the rising customer demand for contactless payment without facing the challenges of working with complex, expensive, and multiple different software and hardware payment systems. The value-added comes from the fact that the SoftPoS solution allows merchants to digitize their processes and provide their customers with alternative payment options, thus increasing sales and boosting customer loyalty.
The Software Point of Sale does not require any additional software for payment transactions and accepts the card payments directly on an NFC-enabled phone or another Android device. Buyers just have to use their card or phone at the back of the merchant’s device and then enter their PIN or choose to pay with Google or Apple Pay. Besides being less expensive and simpler than the traditional merchant payment solutions, Phos also provides its users with valuable industry knowledge on regulation and compliance, including the Payment Card Industry Data Security Standard (PCI DSS).
Serial fintech entrepreneurs
The story of Phos is tightly connected with the two other fintech ventures of Ivo Gueorguiev, Antonina Martinova, and Valeri Valtchev – the regulated e-money service provider Paynetics and the first licensed Bulgarian digital wallet Phyre. Founded in 2012, Paynetics quickly developed into a service provider that offers vendors the full spectrum of payment solutions including acquiring, digital wallets, issuing, and account management. The team later started their other venture, Phyre, which allowed customers to pay with their smartphones.
Expanding on the concept of Phyre, the idea for Phos was born upon the realization that if smartphones can be used as a method of payment, they should be able to accept and conduct contactless card payments as well. After developing their prototype, the team then consulted with Visa and Mastercard, which recognized the benefits that such a solution would bring to card issuers. After two years of intense work on creating software that meets the requirements of card schemes and has high safety levels, Phos verifies its security levels of the largest security lab in the world, Brightsight. Having the ambition to scale globally right from the start, the co-founding team registered the company in the UK.
How did Phos get here and what follows next?
The startup has so far raised a total of €3.3M in two rounds – the latest corporate round led by CM.com and a €1.3M seed round led by the Sofia-based New Vision 3 (NV3) in March 2020. The team has also managed to earn as clients big international financial companies such as the Dutch challenger bank bunq and the London-based Stanchion Payments. In 2019, the startup won the Elevator Lab fintech program of Raiffeisen Bank International. Phos has also earned a license that allows it to operate globally and has been certified by VISA and Mastercard laboratories for its functionality and high levels of security.
In light of the new partnership between Phos and CM.com, it is expected that the SoftPoS service will be used by the Dutch company at the Dutch Grand Prix next month, turning it into the first large-scale cashless event. According to CM.com, the solution of Phos fits perfectly with the event and hospitality industry because it helps sales representatives make faster transactions and reduces the queues for the customers.
Now, Phos will invest the raised €2M in expanding its development team in order to prepare for entering the US market and closing a Series A round later this year. Additionally, the product of Phos which has so far worked only for contactless transactions below €25, will start supporting payments above €50.