Low-cost payments fintech Zeller has doubled down on its bet against the long-term viability of cash transactions, with the announcement of new funding overnight. The business is pushing in all its chips on the growing dissatisfaction amongst business owners with merchant services delivered by the big banks, as the startup looks to cement its place in the local payments services market.

As of this morning the Melbourne-based business announced a fresh round of capital injection to the tune of a A$50M investment, led by US-based Spark Capital. Existing investors the Australian venture fund Square Peg, Apex Capital Partners and Addition joined the fundraising round, which was closed in the week prior to Zeller’s 4 May launch.

Since then, the business has got off to a fast start, with investors obviously impressed with Zeller’s early growth significantly exceeding expectations. The business claims over 1500 Australian businesses have signed up in the first month, with a weekly payments volume growing 200 per cent during that time.

Zeller has now raised A$81M within 12 months, claiming the title of Australia’s most valuable pre-launch startup at A$400 million — despite the fact the business only launched its terminals, merchant accounts and cards six weeks ago.

Ben Pfisterer, Zeller CEO and co-founder, identifies the friction with the major banks as the catalyst for its fast growth. In a press release, he argued: “Our team hears how frustrated these business owners are by the lack of service and support they receive, and that they’re paying incredibly high fees for outdated EFTPOS hardware and underdeveloped banking technology.”

Zeller and their investors’ big bets on the demise of cash come at a time when other Australian unicorns see it as the future for younger consumers.

Buy Now Pay Later (BNPL) juggernauts Afterpay, ZipCo, Klarna and a host of others have built their exponential growth off the back of a change in spending trends, with emerging Millennial, Gen Z and Zoomer consumers preferring to pay with their own cash balances as opposed to signing up for credit cards.

Priced collectively at more than A$30 billion, with Afterpay and Zip making up the bulk of the valuation, experts have cautioned the trend is introducing a higher level of risk appetite to the Australian consumer landscape, with credit checks noticeably absent from the business model.

And it’s not like the market hasn’t been burnt before in this space, trying to unlock the value promised by future spending habits of younger consumers. Once a market darling, digital-only neobank Xinja decided to exit its banking business and return its ADI licence last year after a meteoric rise.

This included the return of A$500m in deposits across 47,000 accounts, in what it attributed to a tough capital raising environment during COVID-19.

Its original speed to market was as energetic as Zeller, with Xinja Founder and CEO Eric Wilson revealing at the 2019 innovation-themed e’ffect conference for SAP in Sydney that its entire core banking platform cost about $1.8 million to build and only took 11 weeks.

While big bets are being placed on both sides of the cash question, PayPal has decided to hedge its bets with a real commitment on both sides of the coin. In recent news the payments giant announced it will introduce both a credit card in partnership with Citigroup and a Buy Now Pay Later clone through its “pay in four” instalment option, available to Australian customers.

Whichever way the chips fall, there is serious money taking punts on both sides.

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