Droplet

A hot new start-up based in the city centre has major plans to disrupt the UK’s financial industry by making payments free for everyone. We speak to Droplet to find out about its plans to make money mobile

 The internet has ripped through every industry in the economy, disrupting established practices, creating efficiencies, opening up new opportunities and making the unthinkable a reality. In many instances, the consumer is the winner, as costs are stripped away and prices fall. But not every industry passes on its savings as readily as the next. Indeed, some aren’t at all keen for users to fully embrace the flexibility that is offered by the online world. The financial industry is surely one of these. It still takes days to clear cheques, and switching accounts is slow and cumbersome. But for small businesses and retailers, there’s a particular issue when customers want to pay by card. Banks regularly hit them with charges, or even percentages of each transaction. For many, this means sacrificing important margin or refusing business at their doors.

DISRUPTER

 Droplet, a Birmingham-based start-up, aims to disrupt the cosy world of the financial industry by making all payments free. “We were looking for an industry that hadn’t really been affected by the web, and the financial industry came out top,” says Will Grant, co-founder of Droplet. “We saw the opportunity to make something really consumer focused. We want to change the way people interact with money, payment isn’t something you should get charged for.” The business was founded by Grant and Steffan Aquarone, who had worked together before and, even though they are only in their 30s, believed it was now or never if they were going to create something big. “We thought we could do something easy and comfortable that sells B2B, or we could have a shot at something more ambitious. Droplet has the potential to be really big.”

MOBILE PAYMENTS

 The concept is actually very simple; users download the Droplet app to their mobiles, create an online account and top it up with their bank cards. They are then able to make payments via their mobiles, with any retailer signed up to Droplet. The benefit for consumers is that they don’t need to carry cash around with them, or even bring their wallets. Everyone has a mobile and these are increasingly central to our lives – so why not use them to make payments? For retailers, the benefits are even clearer, as currently many are charged by banks for every sale they make via cards. For some retailers, this means card sales are not an option, for others it means they must sacrifice even more of their margins.

AVAILABLE

 Droplet’s app is currently available on iOS (Apple) systems, but is expected to be ready for Android phones this month (March 2013). At the time of writing, the business was still in Beta and the services can only be used in Birmingham. However, the reaction from businesses in the city has been very positive, and Droplet has signed up over 70 businesses in the city, including Urban Coffee and Hotel La Tour. The business, which is based at the Aston Science Park, has enjoyed considerable support from the business community. “Birmingham is a great place to start a business, especially with all the support and help from the business community,” says Grant.

NEW MODEL

 Droplet is currently in negotiations with the Financial Services Authority (FSA), from which it must get full approval before it can roll out nationally. As a financial product and organisation, Droplet is subject to stringent tests and regulations. Grant says its security is top-notch, and expects full authorisation to take place soon. Perhaps unsurprisingly, Grant isn’t keen to refer to Droplet as a bank. With its ever-increasing number of scandals, and overall negative reputation since the credit crunch, banking is arguably not the best industry to be associated with. Also, Droplet has a starkly different model to any existing bank. It is free for consumers, and retailers aren’t being charged for payments, either. How, then, does the business plan to make money? “We believe there’s a different model out there for this industry. Just look at Twitter, which is a billion dollar company, but is free for users,” says Grant. He explains that Droplet would be able to trade in data, providing retailers with valuable information about their customers. “At the moment, loyalty is restricted to the big companies such as the supermarkets. However, we think it would great to provide smaller merchants with user-friendly tools on a pay-as-you-go basis. Our data will be tracking payments and spending habits – that’s really useful.”