Challenge

Most people prefer to make purchases with debit/credit cards or digital wallets. However, business owners must pay to process digital payments, and in the UK, they usually wait three days for payouts to register as deposits in their bank accounts. Financial processing fees and the delayed payment model are especially hard on small business owners who are often strapped for cash to cover their overhead.

Lopay’s founders wanted to develop a payment processing app that would enable small businesses to keep more of their profits and gain faster access to their payouts. As a bootstrapped start-up that would be funding all development from personal accounts, Lopay needed to bring its app to market as quickly and affordably as possible. Platform scalability and flexibility were also key so Lopay could rapidly add new features, secure seed funding, and drive global growth.

Solution

Lopay’s founders chose Stripe as their payment processing platform. They had used Stripe in their day jobs for a decade and knew that Stripe’s infrastructure was reliable and scalable.

“Stripe’s simplicity really tipped the scales for us,” said Oliver Mahoney, co-founder and chief technology officer of Lopay.

With Stripe and the guidance of Stripe professional services, Lopay would be able to speed up time to launch, reduce development and operational overhead, and minimise risk and complexity. Stripe would manage payment processing, compliance, licencing, and card network rules. And with Stripe’s comprehensive solutions, Lopay could easily add features and expand support for users in other countries without modifying its API or establishing new banking relationships.

So Lopay’s founders locked themselves away in an Airbnb and in just five days, they developed and launched their initial app, leveraging the professional services team’s expertise to field questions and maintain their momentum. They built the app on Stripe Connect, allowing Stripe to manage user onboarding, confirm bank payout details, and facilitate PCI-compliant transactions. Lopay also adopted Instant Payouts, so users can choose to receive payments immediately, the next day, or weekly. Then, to enable its users to collect money via other PCI-compliant options, such as payment links sent in email and text messages, Lopay used Stripe Payments. Developers also enabled point-of-sale card transactions with Stripe Terminal.

Soon after its initial app release, Lopay added digital wallet and Tap to Pay capabilities with Stripe Terminal to enable contactless payments. Rather than inserting their card into a reader, customers tap, wave, or hover their card – or mobile device with an active digital wallet – near a Lopay user’s Terminal for a few seconds and their payment is processed. Developers also adopted Stripe Identity, a verification tool, to manage Know Your Customer (KYC) compliance.

Over time, Lopay realised that small businesses could benefit from more options for instant payouts. So in just six days, Lopay used Stripe Issuingto develop and launch a Lopay Visa rewards card. Completed payments immediately appear as balances on the cards, and Lopay users offset processing fees with the rewards points they earn every time they use their card. And because Issuing supports contactless payments, users can also link their rewards cards to their digital wallets and use them with Tap to Pay.

“Stripe Issuing removes a lot of complexities, including authorisations and transaction management. And since we already use Stripe, we keep our app reliable,” said Mahoney.

Results

Faster onboarding and lower costs

With Connect, Lopay can onboard users in minutes or hours rather than the days or weeks other financial processing apps require. Lopay also keeps its overhead costs low by partnering with Stripe, which translates into lower transaction fees for its users, who pay less than they would with other payment processing apps – including SumUp, Zettle, and Square.

Expanded access to instant payouts and enhanced revenue

Offering a Lopay rewards Visa card via Issuing is a win for all parties. Lopay users gain instant access to their payouts and earn a percentage of their card spending back in processing credits, which increases Lopay’s competitiveness and platform stickiness. Today, if users make a £100 purchase with their card, they won’t pay fees on their next £25 of customer transactions. Lopay also earns money when users sign up for and use their cards.

Today, 1–in–10 Lopay users actively utilise a Lopay rewards Visa card. And collectively, the Lopay card and app have saved users £3 million in transaction fees.

Growth brings seed funding

Because Stripe delivers 99.999% uptime, the Lopay app provides leading payment reliability. In 2022, one year after its initial launch, Lopay earned silver awards for FinTech Innovator of the Year and Most Impressive Growth from the UK Business Tech Awards. In just two years, Lopay grew its customer base from zero to 30,000 users. Already, these business owners have processed £500 million in card payments with Lopay.

By 2023, Lopay was onboarding an average of 1,000 new businesses every week. And in that same year, Lopay became the UK’s top payment processing app and secured a round of seed funding. In 2024, Lopay plans to offer its app internationally, including in Europe, North America, and beyond – enabling small businesses across the globe to realise the benefits of faster payouts and lower costs.