Leetchi, based out of Paris, is Europe’s largest social payments platform. This week, it added German to its language versions (alongside French and English) and brought Amazon on board as a first retail partner in Germany.
If LinkedIn should be worried about Geekli.st then PayPal should definitely be worried about new, more social players. US-based WePay, which brings in half of its traffic via Facebook, is actively targeting PayPal users, just raised another $10 million and is considering joining PayPal and Square in competition for the mobile payment market.
Leetchi is, at first glance, niche. CEO and founder Céline Lazorthes founded Leetchi in Paris in 2009 after struggling to raise money between a group of friends for a trip away. Organisers open a “pool” for funds, share it around their networks and collect donations, which can either be spent for free at one of Leetchi’s partner stores or transferred to a bank account using Leetchi technology with Leetchi taking a four per cent cut.
Leetchi now claims 300,000 users, 80 per cent from home base France, who between them make a new transaction every 30 seconds. Competition in Germany includes Berlin-based Friendfund (English-only), which turns collected funds into Amazon vouchers (free) or a PayPal deposit (three per cent charge).
The Leetchi team now numbers 20, including new country manager Julia Alunovic in Germany, and has raised a total of €5.6 million in seed, series A and series B funding from investors including angels Oleg Tscheltzoff and Xavier Niel, 360 Capital Partners and Idinvest.
Leetchi shames the slackers so you don’t have to
The average Leetchi pool closes at €400 across 12 users at about €33 each. That’s what you’d expect, given Leetchi’s main pitch is to help raise funds for gifts, parties and trips with friends. “There are always two or three people who don’t do it, who forget,” Lazorthes says. Running it through a website platform where payments are public to the rest of the group takes away that hassle – a service it seems users are happy to pay for.
The Leetchi Wallet Management API: “You have PayPal. People needed a social PayPal”
Leetchi’s Wallet Management API is where it really gets in the ring with PayPal and WePay. Websites, including crowdfunding sites (think Kickstarter) and peer-to-peer marketplaces (think Airbnb), started getting in touch to see if they could get access to Leetchi’s technology.
“You have PayPal. People needed a social PayPal and that’s what we wanted to provide,” Lazonthes says. She’s critical about the way PayPal runs even for websites that aren’t peer-to-peer. “PayPal is a black box for transactions. You can’t see the transaction, you can’t see if it’s been done, people might not have an account – they have to go out from the website to use it so the user experience is very bad.”
So Leetchi decided to make their technology available, at a two per cent transaction fee, for anyone to create group “wallets”, let users put money into the wallets, transfer it to others and to withdraw it. Yes, pretty much like a bank – or like Braintree in the US, used by Fab, Airbnb and Uber.
Lazorthes says 10 to 15 crowdfunding-type platforms switched from PayPal to the Leetchi API when it launched, including Ulule.
Paypal’s 100 million plus users are a pretty good buffer – and it’s probably got a closer eye on Google Checkout and Amazon Payments – but the rapid growth of WePay, Leetchi and others are a sign the online payment industry is due for a shake up. We’ll be watching.