Contactless payment company Paerpay has closed its largest funding round yet, accelerating its growth in the food services industry and beyond.
The Boston-based startup raised an oversubscribed $3 million seed round, CEO Derek Canton told BostInno. The round was led by $1 million from MassMutual through the MM Catalyst Fund with participation from Elevate Capital, MassVentures, Techstars, The Fund, Gaingels and Chingona Ventures. This round brings the company’s total funding to just over $4.2 million.
Canton launched Paerpay in 2017 while working at Hopkinton-based Dell EMC. Initially, the company’s product was a mobile app that allowed users to scan a QR code and make a payment at in-person dining locations. Canton left his full-time job in 2018 and joined MassChallenge to develop Paerpay.
The Covid-19 pandemic put a pause on Paerpay’s progress in early 2020. The company needed to pivot, and the idea for its next step came to Canton while trying to order food.
“I had this experience where I was ordering food from a restaurant and they required me to give my credit card number and my CVC number over the phone,” he said. “I know that 40% of credit card fraud happens over the phone, so I really don’t want to give this information. Why is this still a thing?”
Canton said he quickly learned that many restaurants haven’t adopted new, more customer-friendly point of sale systems, like those from Toast or Apple Pay, because of the cost, the hassle of getting out of a contract or the time required to implement and learn a new system.
So, Paerpay created a platform that doesn’t require any new hardware or applications and integrates with a business’ existing sales systems.
“If this is your first time ordering from your local pizza shop, they take a phone number down like they normally would, put it in the POS system, you will automatically get a text message where you can securely pay with Apple Pay, Google Pay, credit cards, Venmo, etc. without them really doing anything,” Canton said.
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After launching this new platform in May 2020, the company is serving fast food locations and restaurants nationwide. While Canton said he could not share the number of locations where the platform is used, he said Paerpay has done over 50,000 transactions in the last year.
Canton said this seed funding will be used to build out Paerpay’s eight-person team to 13 to 15 full-time employees by the end of the year. Funds will also be used for marketing and R&D to grow the business.
In addition to offering QR code payment for restaurants and text message payments, Canton said Paerpay is piloting its QR code at fast food chain drive-throughs to increase service speed. The company is also in conversations with people outside the hospitality industry, Canton added.
“What we’re thinking about is really remote payments and how we provide the best remote payment experience for operators, whether it’s in the restaurant space or beyond the restaurant space,” Canton said. “Really, the big vision for us is to become the Stripe for remote payments.”
