Kabbage Set To Launch Payment Processing Services

Kabbage is planning to launch a payment processing service by the end of the year in an attempt to compete with PayPal and Square.

The Atlanta-based startup will offer tools so that its clients, mostly brick-and-mortar businesses, will be able to accept card payments in-store and online, Kabbage’s President Kathryn Petralia said in an interview, according to Reuters.

“The monoline businesses have a hard time succeeding long term,” Petralia said. She added that Kabbage hopes the service will deepen its relationship with customers.

“We have seen a huge pain point around cash flow management,” she explained, pointing to high monthly fees and lengthy contracts of payment services by other providers. She says that Kabbage can help companies avoid long credit card reader application processes because it already has information on their business.

Last year, Kabbage raised $250 million from Softbank Group Corp to help it add lending products and other types of financial services. In addition, Kabbage sells its lending technology to large banks that want to offer credit online.

In April, it was revealed that Kabbage was making plans to acquire Orchard Platform Markets, a provider of lending data and services. Several sources said that Kabbage plans to use Orchard’s technology, and Orchard co-founders Matt Burton and David Snitkof both joined Kabbage in leadership roles when the deal was closed early this month.

In March of last year, there were rumors that Kabbage was looking to pick up a new round of equity funding for the purpose of acquiring rival SMB lender OnDeck. In 2016, Kabbage had also entered a strategic partnership with Banco Santander SA to provide loans to small businesses in Britain.

The company also announced that it has priced the largest asset-backed securitization of small business loans in the online lending industry, so it will be selling about $525 million worth of loans to investors, which Kabbage says will allow it to up its loan volume to around $2.7 billion.