Earlier this year, we had the privilege of leading a AU$6.3m seed round in a company so early in its journey that it had no name, but today, in the thick of its preparation for public launch, Zeller has been born.

A quick note of thanks to Michael Starkey, Co-founder at Athena Home Loans for the introduction! It's great to be investing alongside Apex Capital again, who are co-investors in the round, and also our co-investor in Athena Home Loans.

Zeller’s co-founders, Ben Pfisterer and Dominic Yap, commenced their journey at the start of this year and are on a mission to improve the world of accepting in-person payments and business banking for merchants. We are excited to be joining the team.

Wait, but aren’t all payments moving online?

Card-based payments is a huge local market today, with ~$445 billion of in-person card payments taking place every year in Australia, and another ~$220 billion online. Both of those figures are continuing to grow.

Much of this has been driven by the strong trend away from cash payments, which has recently been accelerated by COVID-19. This not only includes debit and credit cards but also buy-now-pay-later, QR code-based payments and others. These methods have significantly reduced friction for consumers, especially with the introduction of Apple Pay and GPay via smartphones.

Unfortunately, managing these in-person payments has become expensive and cumbersome for merchants, not only regarding the implementation and ongoing management of different payment methods, but also due to the complexity of pricing through incumbents. Merchants want to spend their time engaging with customers, not wasting it setting up an integration on the phone with Amex or managing compatibility with their point-of-sale.

The existing providers have limited functionality, have outdated and poorly maintained systems and tend to stick to legacy or limited hardware. The existing providers aren’t customer-centric enough, as they are incentivised to focus on cross-selling other products.

As is the case with many other financial services, the large local banks have >75% share of all payment terminals in Australia.

Right team, right time

We believe that Australia is in an exciting phase of its journey towards becoming one of the world’s most prolific producers of high-quality tech businesses. Many important tech companies founded here, and abroad, have trained a growing pool of senior talent on how to scale businesses. We are now seeing a lot of these people choosing to start a business or join an early-stage company. This is a really important moment in the cycle that we’ve seen play out in Israel and other tech ecosystems, because it rapidly accelerates progress in the early stages of new businesses. This is absolutely the case with Zeller.

Before starting Zeller at the start of this year, Ben launched Square in Australia back in 2014 and was Country Manager through to the end of 2019 (also becoming Head of APAC in 2018). Dom joined him very early on at Square as Strategy and Growth Lead. Together they built a significant, successful business and multi-disciplinary team over the last 5 years, which contributed to a large part of Square’s global growth.

Ben spent a number of years at NAB and Visa focused on innovation in the card payment space, most notably leading the deployment and growth of contactless payments in Australia. He parlayed that into founding his own technology business, Kinetik Innovation in 2013, before joining Square. The relationships formed and knowledge from this time allowed him to successfully launch Square in a landscape dominated by incumbents, breaking down the payment barriers for small-micro merchants. Now it is the rest of the market that needs that same attention to help increase competition and drive innovation.

In addition to this deep domain expertise, Ben and Dom have the ability to scale something from scratch and surround themselves with super talented folks to go after their vision – we are already seeing this dynamic play out in some of the early hires they’ve made. In our view, this combination is critical to success in disrupting the financial services industry and has been a feature of previous teams we’ve backed in the space (Airwallex, Athena). This gave us the conviction to invest close to day one.

Enter Zeller.

Very soon, Ben, Dom and team will launch a product that gives merchants everything they need to get paid, access their money and manage their cash flow. Zeller’s complete payment solution has a simple application process that allows even complex business types to sign up online without needing to visit a bank. Rather than needing to maintain a variety of relationships with a number of entities, Zeller brings them all together so they can be managed with a few clicks. The money earned from in-person payments is available quickly and can be used to seamlessly pay vendors, disburse salaries, or transfer funds.

Importantly, Zeller will move the market from single-function terminals to best-in-class hardware driven by software. Adopting this approach also means that Zeller has an exciting innovation roadmap to keep payments evolving and, as hardware eventually disappears one day, they will be well placed to take merchants on that journey. In the meantime, merchants can much more easily adopt innovative, frictionless ways to engage with customers and work with a solution that meets all their current needs, yet sets them up with a range of new options to make their businesses run more effectively and improve their cash flow dramatically. Additionally, Zeller will offer better value as well as simplified, more transparent pricing. We look forward to watching the team unveil additional features over time.

One of the things we love about Ben and Dom’s vision is the inherent optimism about the future of physical stores and venues across a huge variety of business types. This is especially important at a time when COVID-19 is making life so difficult for small and large merchants alike. The other side of this pandemic will be one of the most exciting times for business creation in a very long time and we’re proud to help the team at Zeller launch products to help Australian businesses get back on their feet and support the next wave of entrepreneurs.

If you know of a business owner who is looking for a better alternative to business banking or is keen to simplify the way they handle payments, please send them here to join the waiting list.

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Square Peg Capital Pty Ltd (ACN 164 352 229) is an Authorised Representative of Victoria Capital Pty Ltd (ACN 159 228 314) AFSL 428989