Citcon, a smartphone wallet payment startup, has clinched $30 million in investment in a Series C series co-led by Norwest Venture Partners and Cota Capital.
Sierra Ventures and Sonae IM also entered the investing, making San Jose-based Citcon’s total boosted since its 2015 beginning to almost $50 million.
Citcon’s purpose is straightforward: to allow retailers to accept cash by smartphone wallet and different currencies “with the same comfort as they process regular credit card transactions today,” said CEO and creator Chuck Huang.
Before starting Citcon, Huang gave four years as a lead systems engineer at Visa. He managed the system architecture design and growth for several products, including its smartphone payment system and card-based rewards redemption program.
Citcon was built on the proposition that smartphone payments provide a “more customer-friendly, reliable and safer” contactless buying and payment practice for consumers and retailers. And that was before the COVID-19 pandemic stimulated the wave in contactless transactions.
Undoubtedly, Citcon is doing something precise. As 2021 draws to an end, Citcon’s annualized transaction amount is about $1 billion, drawing over a 300% year-over-year increase. Profit, too, has grown by the same percentage, Huang said.
The startup’s transaction technology is combined with POS and e-commerce platforms such as Toshiba, Oracle, Cegid, and Shopify. And it’s used at more than 30,000 retailers’ sites and locations, including L’Oréal, Tumi, Texas Instruments, Panda Express, Macy’s.
Citcon gives something that Apple Pay and Google Pay don’t, Huang said.
“Ours is software-integrated and so unlike with Apple Pay or Google Pay, you don’t need a bank or credit card connected to the digital wallets,” he emphasized. “We have a combined API for both smartphone and alternative payment methods (APMs).”
Huang said that traditional transaction infrastructure was not created to accept smartphone wallets, so dealers dealt with many implementations. However, since Citcon makes a single API combination for a dealer, it allows that dealer to accept over 100 smartphone wallets around the globe.
The trend of software-oriented wallets for digital transactions has stimulated globally over the last few years, Huang commented. And Citcon is poised to capitalize on that trend.
“China is an almost cashless society and its residents use this kind of wallet extensively, but it is gaining momentum all over,” Huang reported TechCrunch. For instance, the startup is running with PayPal/Venmo to allow this software wallet for its customers. It has also partnered with Klarna to produce a “buy now, pay later” system.
Looking ahead, Citcon intends to use its new funds to add to its current headcount of 100 and expand worldwide. It already has facilities in the U.S., Canada, Europe, and Asia. It’s eyeing “accelerated” overseas enlargement with a particular center on Latin America and Asia-Pacific.
Norwest Venture Partners’ partner Priti Youssef Choksi told her firm was first attracted to Citcon’s leadership crew. She called Huang and president and COO Wei Jang “thought leaders” in the world of transactions. The partners, she noted, are both residents of China and can produce an international view into how smartphone wallets can develop within the U.S.
“This is necessary because there are several key themes gathering around smartphone payments both in the U.S. and overseas,” she corresponded via email. For one, smartphone wallets have surpassed credit cards to become the most widely used payment method worldwide, with active smartphone wallets anticipated to grow from 2.8 billion in 2020 to 4.8 billion markets by 2025.
“In the U.S., they’re immediately gaining share given latest wallets (such as crypto, buy now, pay later programs and neobank wallets) are more popular among younger customers, and as the pandemic has forced consumers/merchants towards contactless transactions,” Choksi said.
She is also influenced by the company’s ability to have driven compliance challenges encompassing each wallet and country in which it functions.
“This is particularly significant given the regulatory scrutiny on payment flows in the U.S. and around the globe,” Choksi stated.
Cota Capital associate Ben Malka said his firm had been firmly following trends in alternative tender-type practice, both internationally and in the U.S.
“While we think we are still in the early innings, there is an enormous market opportunity to enable different payment models,” he replied. “We were fascinated with Chuck and his organization.
They have deep expertise in the payment industry and the right know-how to build a global transactions company.”