Byron Bay fintech Zepto raises $25 million for US expansion, amid digital payments growth

Byron Bay-based instant payments platform Zepto has closed a $25 million Series A fundraising round to expand its footprint globally in the increasingly crowded digital payments sector. 

The funding, led by AirTree Ventures and Decade Partners, will fuel international expansion, the startup said, beginning with New Zealand and then the US.

Launched in NSW’s buzzy beach town Byron Bay in 2018, the instant payment platform lets merchants make, manage and receive secure payments by connecting directly from the payer’s bank to a merchant’s bank.

The company, which began life as Split Payments before being renamed, was created by skydiving entrepreneurs and good friends Matt Cheers, Trevor Wistaff, Ian Lennie and Adrian Kennedy.

As younger generations increasingly eschew credit cards, payments between bank accounts without the need for a card or PIN — and that bypass Visa and Mastercard — are set to grow in popularity.

Chief executive of Zepto Chris Jewell said innovation among companies like Zepto across real-time payments and open finance was enabling merchants to “create a new paradigm” for customer experiences.

The raise will deliver “market-leading API tools to access and compose seamless payment experiences”, Jewell said.

The fresh funds will also power the startup’s investment into building additional functionalities within Australia’s open access payments infrastructure, which seeks to replace direct debit in coming years.

More than 100 Australian organisations, including banks, fintech companies and credit unions, use NPP (new payments platform), Australia’s open-access infrastructure for fast payment, according to the NPP website.

Zepto became the first non-bank approved as an NPP-connected institution in October, meaning it will be able to connect its clients directly to the NPP’s PayTo service that is set to roll out this year. PayTo is a new digital tool for merchants and businesses to initiate real-time payments from customer bank accounts.

The raise comes amid an explosion of the Australian fintech sector in recent years. It has grown from a $250 million industry in 2015 to a $4 billion industry in 2021, according to Fintech Australia.

Around 15 new fintechs entered the field in Australia in 2021, beefing up a field that includes now well-established unicorns including digital payments firm Airwallex, buy now, pay later (BNPL) company Afterpay (now owned by Jack Dorsey’s Block), insurance firm Cover Genius and SME payments platform Zeller.

Zepto said it has grown tenfold since 2018 and is now facilitating more than $4 billion in payment volume each month.

The company said it is on track to process more than $50 billion in payments in 2022, with customers including Binance Australia, Superhero, Novatti Group, Nimble, Powerpay, Till Payments, Bluestone, Rentbetter, Biz Pay and Get Blys.

The raise will also fund several strategic hires for Zepto as it sets its sights on the US.

AirTree Ventures partner James Cameron said the company was looking to capitalise on the upheaval of the global payments landscape, as open banking and real-time, bank-to-bank payments disrupt traditional banking.

“With open banking and the NPP, Australia has found itself at the center of this disruption — and Zepto is the leading innovator in this space,” Cameron said.

“With companies like Afterpay, Athena and Airwallex, Australia has shown that we punch well above our weight in fintech innovation globally.”