Open Banking led to a FinTech boom — As Brite raises $60M, account-to-account payment grows

The shift towards Open Banking payments, particularly in the European Union, played a pivotal role in igniting the FinTech revolution. These Open Banking standards empowered FinTech startups to create digital wallets, effectively morphing into financial entities, often referred to as “Neo Banks,” in practical terms.

As of today, digital wallets have secured the dominant position as the primary global payment method in e-commerce, commanding a substantial 49% share, as reported in the Global Payments Report by Worldpay. Simultaneously, account-to-account (A2A) payments have been gaining significant momentum, with the global transaction value surpassing a staggering $525 billion in 2022. This growth is primarily attributed to the availability of real-time payment infrastructure.

In response to this A2A surge, numerous startups have seized the opportunity, including Trustly from Stockholm, which has raised an impressive €23 million to date. However, Brite Payments, also based in Stockholm, has emerged as a formidable player, announcing a Series A funding round of $60 million led by Dawn Capital, a specialist B2B software investor. This round also saw participation from global VC Headline and existing investor Incore, both based in Sweden.

Before this round, Brite had secured seed funding from Agof Investments, a smaller non-institutional investor managed by Marcus Blom and Nicolai Chamizo (who serves as Brite’s Chairman and Incore’s CEO). Brite, founded in 2019 by former Klarna executive Lena Hackelöer, experienced a breakthrough year in 2022, claiming to have doubled its transaction volume and revenue, achieving profitability. Their platform is now operational in 25 European countries, excluding the UK, which is no longer part of the EU.

It’s noteworthy that Dawn Capital had previously backed Swedish fintech success stories like iZettle (acquired by PayPal for $2.2 billion) and Tink (acquired by Visa for $2.0 billion). Headline has also supported Pismo, a Brazilian payments infrastructure provider, which was acquired by Visa for $1.0 billion.

Lena Hackelöer emphasized that Brite’s payment platform has gained traction primarily due to its focus on instant account-to-account transactions, differentiating it from earlier A2A players. While the UK already boasts fast payment schemes, much of Europe has yet to adopt instant payments as the standard.

A multitude of A2A payment platforms now exist globally, each with its unique features. For example, Brazil introduced PIX, developed by the Central Bank, while Canada offers Interac Online, an e-commerce payment service collaboration among leading Canadian banks. India has the Unified Payments Interface (UPI), launched by the National Payments Council of India and the Reserve Bank of India in 2016.

Merchants favor A2A payment platforms as they reduce payment acceptance costs compared to credit cards and offer instant settlement of funds. Consumer preferences are also shifting away from credit cards towards newer options like direct credit card usage, digital wallets, buy-now-pay-later (BNPL) services, and other point-of-sale financing choices, with cryptocurrency remaining a minor payment method. With the proliferation of A2A payment solutions, this trend is expected to persist.

Josh Bell, General Partner at Dawn Capital, noted, “We are on the cusp of open banking 2.0. The prospect of real-time account-to-account payments becoming mainstream across Europe is on the horizon, and Brite stands to be the category leader.”

With this recent funding round, Brite is well-positioned to either scale up its operations or potentially engage in mergers and acquisitions within the industry.