Former Square exec Ben Pfisterer is leading a Zeller start in better business payments with three simple steps.
Key Takeaways
- Launched on May 4, 2021, Zeller hit unicorn status in March 2022 with a valuation of $1 billion
- 1500 businesses signed up in the first month and now the number exceeds 22,000
- Systems built to expand globally, but huge opportunities still in Australia
Who would have the confidence to launch a face-to-face business payments service during Covid, when pretty much every business was locked down?
“It was the worst possible time technically, but we managed to grow in spite of that. With normal times coming back, our business is thriving,” says Zeller co-founder and CEO Ben Pfisterer.
The Melbourne-based company that launched on May 4, 2021, hit unicorn status in March 2022 with a valuation of $1 billion, with early investors including Square Peg, Apex Capital Partners, Addition, Spark Capital and Headline firmly backing the business banking solutions firm.
Zeller’s Pfisterer explains, “We wanted to solve for the problem of how could we become a business’s main financial institution and bring together all the capabilities that you would expect from a major financial company. We wanted to be that one company that provided all their financial services technology needs.
“Small businesses don’t get treated well by the big banks, they never have been. The services are historically too expensive and they are really not innovative. They don’t push boundaries. Now, competition is starting to push the banks, but historically, they had the market.
“My background is that I set up Square (now Block), the payments company, in Australia, ran that for six years, and I’ve been involved in payments innovation for too long to admit, so I know enough about what is broken and how to fix it. This was our unique opportunity to bring together a strong team and solve problems that businesses around Australia have been complaining about for a long time.”
The service focuses on three critical products: a next-generation EFTPOS terminal, a fee-free business transaction account, and a business Mastercard. “So you can do everything you need to do as a business that is starting or growing.”
The point of difference is the simplicity and fairness of the system, Pfisterer says. “You can sign up and switch over to us within minutes. You can pick up our terminal from Officeworks if you don’t want to wait a couple of days for free shipping.
“The only thing businesses have to pay us is a percentage of the payments taken on the terminal, everything else is free. Card payments are free, accounts are free, storing your money is free. We keep it simple so you don’t have to wonder about what your payments will be. You won’t pay more than 1.4%. It’s a super simple, transparent rate.”
Zeller has an Australian Financial Services Licence (AFSL) and it partners with Cuscal to hold funds.
“That all in one solution has never been done around the world,” Pfisterer says.
About 1500 businesses signed up in the first month and now that number exceeds 22,000 businesses from industries and sectors including retail, hospitality, health and beauty, and services.
“Bars, restaurants, clubs, cafes, find the integration really works for them, getting faster access to their money at a cheaper rate so they don’t have to pay as much for accepting cards and better reliability.”
“Unlike the incumbents that are dealing with legacy technology that falls over repeatedly, we don’t have that problem.
Ben Pfisterer, CEO at Zeller
All of their customers are in Australia, where Zeller sees “huge opportunity for more growth” but Pfisterer says, “We’ve built everything to go global, and we are looking at new markets, but we haven’t launched in any new markets yet.” An initial public offering might be considered in the long-term, he says.
“What we started with was three products merged into one, but there is a raft of financial services that any business needs to grow and thrive. For the past six to eight months we’ve been working on new products that we will be launching over the coming weeks and months. We want to be the one-stop shop for the financial services needs of businesses of any size and have a better solution available for them.”
Cash or card?
Zeller is building a reputation for having strong network reliability. Pfisterer says that pre-Covid, more people were using cash and cards interchangeably. Now, increasingly people are using electronic payments and some businesses only take electronic payments, making system outages a major headache for customers and business owners.
“If a terminal goes out, that is a massive problem for a business. The business is at a standstill. While no-one is immune to some form of outage, we have built our own tech stack from the ground up.
“Unlike the incumbents that are dealing with legacy technology that falls over repeatedly, we don’t have that problem. We’ve tried to solve for the problems that we knew were already there. If wi-fi goes out, you can change to a SIM card, you can swap networks as well. We have inbuilt into our systems a heightened level of reliability. Every time the others have outages, we just see our numbers grow because we are becoming known for our reliability.”
The company has been live for a year and a half and Pfisterer says they have done four raisings in that time. “We are growing exceptionally fast, and that continued investment is perhaps the best sign that investors are seeing what we are doing and when they look into the numbers, they see the growth rate there. Right from processing payments, our cost base is lower than anyone else so we can still make a margin on it, we’re making money all the way through.
“With the correction in tech that’s been going on in the past months, what investors are looking for more than anything are the fundamentals of the business. Those days of having a whimsical idea, or a future monetisation strategy, or slower growth than expected, that is not tolerated in today’s environment.”
Zeller is very much a different prospect to that, Pfisterer says, “which is why our investors have really liked our business model. We’re growing fast, our numbers are strong, and we’ve always been revenue generating from day one.”