Payment facilitator Flint Mobile’s payments business was effectively shuttered on Monday (Feb. 15), seemingly a victim of a payments player coming into an already-developed market too late and with insufficiently deep pockets.
The beginning of the end happened on Feb. 5, when “Flint abruptly suspended all new signups and closed all card processing for current accounts. Users who tried to process cards were met with a message saying, ‘You have exceeded your processing limits,'” said an excellent report in Merchant Maverick.
A visit to the site late on Wednesday (Feb. 17) by PaymentFacilitator.com found a seemingly active homepage, but clicking on the Sign Up Now button delivered the note “New signups suspended. We are currently transitioning to a new platform. We appreciate your patience.”
Alas, it seems that patience will serve no purpose. Although it appeared that company executives, between Feb. 5 and Feb. 17, were indeed trying to find a way to keep the business going, it didn’t work out. PaymentFacilitator.com reached out to CEO Greg Goldfarb, Chief Marketing Officer Terrence Sweeney, Finance VP Jim Gross, Engineering VP Venkat Subramanian and Marketing VP Jiyoon Chung, but none returned e-mails or LinkedIn contacts seeking comment.
The Merchant Maverick piece said that a customer “email sent out on February 15th stated that Flint was ‘winding down’ operations and that the payments service would be discontinued on February 18th – a rather meaningless statement, considering all users I spoke to had been without service since the 5th anyway. Flint went on to say that they would be transitioning payments to Stripe beginning on February 16th. Lastly, they informed current users that on February 27th, Flint services would go offline for good. It’s not clear at this point whether they will actually continue to support the Flint app with Stripe integration beyond that date.”
The suggestion of the transition to Stripe is a hopeful sign, given that the alternative would have been that a lot of merchant customers of Flint could have quickly found themselves without the ability to process payments at all. Those merchants, though, would be awkwardly weak spots to negotiate should Stripe’s terms be not to their liking.
“When a PF closes, it is important that their bank have control of the funds and can ensure that the submerchants are being paid,” said Deana Rich, president of Rich Consulting. “The big risk is if the bank is not paying attention and the PF uses the funds for their operations, there may be nothing there to pay the submerchants.”
Jon Ziglar is the CEO of an Atlanta-based payment facilitator called Parkmobile. Ziglar said that he was not at all surprised by Flint’s financial troubles, given how thin the margins—and intense the competition—is in payments today.
“The payment space today is a very tough space” and it’s “already hugely competitive because Square opened up that market,” Ziglar said. “The payments industry is growing massively fast.”
He added that Square has been in the mobile payments space longer than almost anyone, has extensive industry and investor community connections and has the deep pockets from a well-regarded IPO. “Square has raised a ton of money and they are still losing money,” Ziglar said.
Although many still refer to the mobile payments space as nascent, Ziglar argues that it’s anything but. “It is not early in this space. It is established. When Square first came out, it was allowed to be less than great,” he said, pointing to security concerns. “That’s not allowed any more. It’s a different world. Flint’s model was simply not as good.”
The Flint approach, Ziglar said, was that “you don’t need hardware. Just do it with us,” a move that ended up delivering to Flint higher processing costs than Square. Flint “just missed the market. They were solving a problem that didn’t exist, namely that people didn’t like having a dongle on their phone.”