Paying by card and via payment terminals (card machine) is something we encounter throughout our daily routines, whether a visit to a restaurant, the barista or the dentist. Trillions of dollars are processed by cards every year all around the world resulting in a multi-billion dollar addressable market with over seven million small and medium sized-merchants transacting in Europe alone. These merchants can be segmented into two categories: They have either been locked up by legacy players, including the likes of Nexi, Concardis or Barclaycard which dominate up to 80% of the SME market. Or they have been small enough to only switch from cash-to-card over the last decade.

At Dawn, we have been fortunate to back players disrupting those exact two market segments. Firstly, we backed Izetlle, which successfully exited to Paypal for $2.2bn in 2018. Izettle was part of the cash-to-card movement and helped transition a large amount of small (nano) merchants from cash-to-card (merchants less than €100k TPV). Izetlle lowered the barriers to adopting card machines and offered easy-to-use digital products as a next-gen technology player.

Secondly, we are fortunate to have recently backed Flatpay’s €45M Series B and €100m Series C growth funding rounds. Flatpay is one of Europe’s fastest-growing companies that is tackling the second segment, the replacement cycle of incumbents serving medium-sized merchants (over €100k in TPV). Flatpay identified a significant challenge faced by merchants across Europe: restrictive contracts characterized by opaque pricing, unsuitable products for daily operations, and subpar customer service. In response, Flatpay set out to disrupt this space by offering an all-in-one payment solution designed around transparent pricing, intuitive products, and superior customer support.

We recognize that next-gen players have leveled the playing field in terms of product differentiation and innovation, particularly across the nano segment. Yet, compared to the legacy players that dominate the majority of the mid-market, there is still a substantial gap among underserved merchants who need to modernize their technology. With the market's vast size and the large number of merchants, success will depend on efficiently reaching these customers and presenting a compelling value proposition. Flatpay has addressed this by implementing a highly effective distribution strategy through its field sales organization, recognizing the importance of in-person interactions for customers in this segment.

At Dawn, we are proud to have invested in Flatpay and iZettle - two leaders in the payments space - as we believe that merchants of all sizes deserve next-gen products, affordable solutions and freedom from the hidden costs and fees imposed by traditional providers.