Transforming Travel Through Payments Innovation: ConnexPay’s $110 Million Series C Funding
Following two years of lockdowns and travel restrictions brought by COVID-19, “revenge travel” has been sweeping the world as consumers look to make up for lost time.
Thus far in 2022, travel spending is up 11% vs. pre-pandemic in 2019, and 41% of people plan to spend “more” or “a lot more” on leisure travel in 2023—according to a recent survey by the American Society of Travel Advisors. Online travel agencies (OTAs) are positioned in the middle of this surge and must manage the challenging task of supplying travelers with tickets and reservations from travel providers who are understaffed and still suffering from lingering aftereffects of COVID-19. Many OTAs operate under an agency model, which means when travelers make bookings on their sites, the OTA then passes the consumer’s payment directly to the travel supplier (airline, hotel, etc.). Lack of control and visibility into the payment flow puts agency model OTAs in a disadvantaged position as the intermediary when addressing customer returns, cancellations, and chargebacks—all of which have become much more common since the pandemic. Furthermore, agency-model OTAs miss out on the opportunity to monetize those customer payments passing through their site.
Despite these challenges faced by OTAs on the agency model, the current experience under the merchant model—where customer payments are acquired by the OTA and issued to pay the supplier—is not much better. Being merchant of record involves multiple contracts with payment processors, managing different bank accounts, and holding prefunded accounts or lines of credits as a backstop for risk taken by payment processors. Also, the process to settle the acquiring payment from the consumer and then issue the payment to the supplier can take days, which burdens the OTA intermediary’s cash flow. These obstacles have left OTAs facing a tradeoff between flexibility and complexity.
That’s why ConnexPay is honored to announce our $110 million Series C funding, led by FTV Capital (with participation from current investors Panoramic and F-Prime Capital as well). Our innovative, proprietary technology enables commerce intermediaries to combine their payment acceptance and issuance processes into a single solution—with one platform, one contract, and one reconciliation. The solution empowers intermediaries to pay suppliers with virtual credit cards, which simplify the payments experience and return better rebates on transactions.
Plus, OTAs operating on the agency model that leverage the unified platform to become merchant of record gain greater control and flexibility over their business as well as a new revenue stream from monetizing the payment flow. OTAs that were already merchant of record gain value thanks to the simplified process and improved economics afforded by the unified solution, without the need to maintain a line of credit or prefunded accounts. By leveraging the acquiring payment settlement as a backstop for payment issuance, ConnexPay increases the overall speed of settlement and improves liquidity for its customers through providing them with immediate access to incoming customer funds.
Following ConnexPay’s founding in 2017, we rapidly gained traction in the travel market, but over the past 18 months additional commerce intermediaries across a wide range of industries (including online marketplaces, media & advertising, loyalty & rewards, ticket brokers & resellers, delivery services, insurance & warranty, and fintech applications) have also seen the value of ConnexPay’s unified payments solution. This $110 million equity growth investment will allow ConnexPay to expand our team and capitalize on the significant opportunities ahead, both within and beyond travel. This funding will also support our international expansion and investments in product development to enable additional currencies as we supercharge our next stage of growth.
We’re grateful for the opportunity to partner with Adam Hallquist, Chris Winship, and the rest of the FTV team. Their experience in financial technology and history as a very successful growth investor will help ConnexPay continue our aggressive expansion. Year over year, we’ve doubled our customer base and increased revenue by 5x while maintaining profitability. We intend to continue this trend backed by the FTV team.
Today, ConnexPay serves 70+ clients across various industries with best-in-class customer retention. We’re invested in the health and success of our customers, and as they capture additional market share, we grow as well. Additionally, as we continue to make improvements to our platform, our customers improve monetization of their businesses.
We look forward to leveraging FTV’s vast knowledge and expertise to help us achieve our ambitious roadmap of bringing a unified payments system to commerce intermediaries across the globe.