NEW YORK — Despite consumer’s growing preference for digital payment solutions, many businesses still pay their bills the old fashion way. An estimated 40% of B2B payments in the United States still involve paper checks and paper invoices. And that’s a problem that Israeli fintech startup Melio is working to solve.
Melio is the developer of a digital payment platform targeted at small and medium businesses in the United States market. The company is tapping into the B2B payment industry by providing convenient payment solutions. Their platform was launched in 2019, and it recently raised $110 million in funding. This was the latest success in a series of successful funding efforts, and the additional funding sent the company’s evaluation soaring to $1.335 billion.
“We see this fundraising as a great privilege and responsibility to support small businesses during these challenging times,” said Matan Bar, Melio’s co-founder and current CEO. Before joining the startup, Bar was a PayPal executive.
Melio’s latest round of funding was led by Coatue, a private NY-based hedge fund. Several investors from previous rounds also pitched in to help the company reach the $110 million mark, including Accel, Aleph, Corner Ventures, Latitude, LocalGlobe, and Bessemer Venture Partners. Melio was also part of the Google Startup Growth Lab in 2019, which was hosted in Tel Aviv.
The startup has experienced rapid growth in the wake of the COVID-19 pandemic, as lockdowns and restrictions forced businesses to adopt digital solutions. Businesses big and small were already trending towards relying more heavily on digital solutions, but the pandemic accelerated that trend, as it showed how unreliable physical payment options can be whenever everyday life is disrupted.
“Getting better control over cash flow and the ability to manage payments remotely, especially in a socially distant world, are key elements of a business’ health, and that process shouldn’t be complicated,” said Bar.
Melio has made itself attractive to companies by offering easy account payables services. This simplifies the paperwork process for small businesses, and it gives them the option to pay vendors with credit or debit cards. The Melio platform also makes it easier for businesses to manage and schedule payments, no matter which payment method they choose to use. The platform also can also integrate with popular accounting software Quickbook, further streamlining the daily operations of businesses that use it.
Access to the Melio platform is free, but credit card payments using the platform are subject to a 2.9% fee.
All of this makes Melio an attractive payment solution for all types of business, from brick-and-mortar businesses like bakeries and book stores all the way to digital-focused ventures, such as companies that offer press release distribution services.
Despite starting in Israel, Melio’s current headquarters is in New York. The company employs over 100 people, and the latest round of funding is expected to help it grow even more in the near future.