With inflation still stubbornly high compared to previous years and subscription service sirens like Netflix and Spotify continuing to beckon, consumers have understandably turned to alternative payment methods to manage their household bills. As a result, online prepaid payment platforms have benefited.
This is the bet placed today by Recharginga major European player in online prepaid payments, which has secured a €45 million loan facility with ABN AMRO to look at growing the market with a round of M&A, as well as moving into Fintech-style services that could eventually compete with some from the largest payment platforms.
Through a range of digital vouchers from brands such as Apple, Google, Spotify, Xbox and PlayStation, as well as cross-border remittances, Recharge is attacking the market from various consumer angles.
It says it already has strong cash reserves and is aiming for 30% year-on-year revenue growth in 2024, while aiming to reach revenue of more than €100m in 2025.
With the new funding, there will be a significant war chest for acquisitions.
In an interview with TechCrunch Recharge CEO Günther Vogelpoel said: “We see an opportunity to grow faster through M&A and there are many opportunities in other markets and sectors that we can consolidate, especially as this industry is still so young. ».
The prepaid card market in Europe grew at a CAGR of 7.6% during the period 2019-2023. Between 2024 and 2028 it is expected to register a CAGR of 9.1%, growing from over $251 billion in 2023 to $395 billion by 2028.
Most interestingly, Recharge’s application for an e-money license with the Dutch authorities suggests that it intends to build a more robust ‘Fintech’ style platform.
Vogelpoel said that Recharge is “very keen” to grow into the financial services space: “We are in the process of applying for an e-money license in the Netherlands, which will grant us a license for Europe. With that, we can start our own financial services.” He added that they would be in the market for a wallet-type or card-type company “that would fit well with our current customer base.”
But what about the technology aspect of this next phase?: “We are a profitable company,” Vogelpoel said. “We have over 30% growth in 2024 which has also boosted our profitability. So we have money in the bank to invest in our platform and technology.”
He said the move to holding larger funds for customers also makes sense: “If you have a wallet as a core product, then you can connect other services to that wallet as well as payments or cards that people could use to issue virtual cards… Neo banks We have a very good portfolio of services, but especially we meet the needs of our customers who love budget, control, as well as privacy and security.”
It’s these aspects of privacy and security that he believes could give Recharge an edge in the future, as prepaid often provides more privacy with some services.
In a statement, Bas Janssen, senior digital and consumer banker, ABN AMRO, said: “We see great promise in Recharge’s growth trajectory as they expand their reach into the global prepaid payments space.”
In 2021, Recharge previously raised a €10 million ($11.8 million) debt financing round led by London-based Kreos Capital, a $35 million Series B round led by new investor SmartFin, and €22 million from Prime Ventures in 2019.
