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Ditch your checkbook: Plastiq nabs $10M so that you can pay for anything with a credit card

Above: iZettle card reading hardware.

Image Credit: iZettle

Payments startup Plastiq closed new $10 million round of funding today to enable people to pay with their credit cards anywhere.

The startup’s service essentially replaces things that require paper checks, wire transfers, money orders, or ACH (Automated Clearing House) payments with credit cards. For a small fee (between 1.89 percent and 2.89 percent of the transaction in Canada), people can use their card instead. Some banks, such as Bank of America, already offer services that mail paper checks to landlords and other merchants, but Plastiq is taking a more universal approach.

Co-founder and chief executive Eliot Buchanan told VentureBeat that he got the idea when he was in college at Harvard University (explaining the company’s Boston headquarters) and realized he couldn’t pay for his tuition with a card and had to write checks.

And although the company’s website lists tuition, taxes, utilities, and rent as examples, Buchanan says that Plastiq can really be useful for whatever payments customers have to make and traditionally cannot use a card for it.

“The most interesting to me is that customers are bringing new examples every day about where they’re using Plastiq for,” he said.

Plastiq is currently only available in Canada, but the company has been doing tests with U.S. customers, and plans to officially launch in the U.S. in late 2014. Plastiq chose to start with the Canadian market as it is quite similar to the U.S., and some of its partnerships allowed it to roll out it product more quickly in the U.S.

And while it seemed a bit odd that Plastiq is only available in the browser, though mobile-optimized of course, Buchanan said that because of the nature of the transactions people use the service for (larger, more important payments), he’s found that customers feel more comfortable using Plastiq on their desktop computers.

“The primary goal of this round is … really around talent and people,” said Buchanan. Plastiq’s team is currently at about 20 people, but it plans on growing to 30 or 40 by year’s end, and much of it will be on the support and operations team to help handle the planned U.S. launch. Plastiq also plans on relocating its headquarters from Boston to San Francisco by the end of the year.

Khosla Ventures led the round, with additional participation from previous investors Atlas Venture and Flybridge Capital Partners. Khosla partner Ben Ling will join the board of directors, while partner Keith Rabois will join as an advisor to the company.

Plastiq was founded by Daniel J. Choi and Eliot Buchanan, who met at Harvard’s Innovation Lab. Plastiq previously raised $6 million as its second institutional round of funding, and this new round brings Plastiq’s total funding to $18.35 million to date.

 

More information:

Khosla Ventures is a venture capital firm run by people who listen to, analyze, and advise entrepreneurs. We manage a main fund that supports early- and late-stage investments and a seed fund for developing very early-stage experiments... read more »

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28 comments
Brandon Plascencia
Brandon Plascencia

would never pay an extra fee if i dont have to. I think it's a pretty bad idea

Kevin Moore
Kevin Moore

 The difference is that Plastiq opens up traditionally non-credit card merchants for payments like college tuition, rent, utility bills, income taxes, etc. WITHOUT having to have a new credit account with a PayPal or Square. You just use your current credit card. Seamless. Try paying your college tuition or income taxes with PayPal or Square and tell me how that works for you. 

Tony King
Tony King

Did they speak to the Royal Bank of Scotland about 'look/feel/function"?

Marty Wins
Marty Wins

This is nuts.  Other countries with a little more regulation in the financial sector (eg. Australia, UK) haven't used checks since the 80s.  This problem only exists because these archaic forms of payment are allowed.  


That, and low minimum wage.  

When it becomes cheaper for banks to automate payment between each other than to pay a ton of people to push paper you will find that the consumer experience vastly improves.  


Not just that, but security is horrible on Credit Cards without chips.  Some countries are starting to ban credit cards *without* chips but most of ours don't even *have* chips.


When people travel here and find out about the U.S. financial system it's embarrassing because virtually every other country in the developed world has a system that processes payments much more quickly and easily.  


It's high time we get with the times!

Jason Curry
Jason Curry

This is interesting.  I'm pretty familiar with other services out there that might sound similar, but are not.  Plastiq would allow you to pay any bill with credit card, e.g. rent, or a bill for some other vendor which doesn't accept credit card payments.  The major different between Plastiq and Paypal, Square, Square Up, if I'm getting this right, is that the latter three require the recipient to have an account on that platform.  I'm guessing that Plastiq sends an ACH or even a check along to the final vendor once the Plastiq user has made payment with credit card.  So it seems similar to bill pay you can setup in online banking, but you can pay with any credit card vs the money coming from checking or a credit card account at your bank.  If 1.89 is the fee they'll charge, that's pretty good.  If I want to pay my property insurance by credit card they charge 3.5%.



Jimi Atherton
Jimi Atherton

Checks are fun to write. Ditch the creditcards

Seagyn Davis
Seagyn Davis

Ummm, this has been running in a live environment in South Africa for months now??

Jonathan Kroopf
Jonathan Kroopf

So, It's like Square, but more for payments.....huh, actually it's just like Square, but 4 years too late

TC Erol Arman Ertürk
TC Erol Arman Ertürk

Izettle exits already for couple of years.How can this startup be the onlyone:-)

Ck Yap
Ck Yap

Based on my understanding, square up, PayPal & others allow merchant to accept card payment. Plastiq on the other hands enable people to pay with their credit cards anywhere. so, u pay using your own credit card to the Plastiq and Plastiq will wire the money to the recipient thus eliminate Cheque. It is arguably better than Cheque because you pay the money to the bank at the end of the month & you don't have to carry the cheque book (instead, this Plastiq device. LOL)

Chris Smith
Chris Smith

Venmo is the easiest and best! No need I even be physically present

Jesse Weigert
Jesse Weigert

I'm curious how they are different than Paypal, Square or PopMoney, or what advantage they have over the free bill pay that most banks and credit unions offer for free.

Giuseppe Frustaci
Giuseppe Frustaci

I don't get what the difference is between this and other services. How does the recipient get their money?

Scott Conley
Scott Conley

Pretty sure this concept has already been done with square....