With Brexit causing a major headache for prospective business owners, deciding on a location can cause all sorts of problems, including networking opportunities, rent costs and available consumer base. Many businesses opt to set up in London because of the easy access to other like-minded businesses, proximity to banks and airports for international trade and its vibrant and full lifestyle. London, however, may not be the best option, as Infomedia has discovered.

Based in the East Midlands town of Northampton, Infomedia provides fintech options to businesses and customers away from the buzz of the capital. Michael Tomlins, CEO, considers sitting outside of London as a benefit that all businesses should consider. 

Discussing Infomedia’s beginnings, Tomlins says, “My father founded the company in 1991 when direct-carrier billing (DCB) first became popular. Back then it was used internally by mobile operators to apply charges for bundled services like MMS and international roaming.

“I took over as CEO in 2009 at 30 years old and have since led the business to become a globally trusted brand and leader in our industry, which itself has undergone a huge transformation over the last few years. We turned over £30 million last year and are projected to turn-over £40 million this year.”

Frictionless payments

Infomedia sits between global brands like Intel, WWE and Hopster and mobile operators like EE and Etislat, among others, to facilitate more than 40 million transactions every year. Working with merchants as a strategic partner, they help them to effectively further monetise their customers on a global basis through frictionless payments.

“Similarly, we work with mobile operators on a strategic basis to help them profit from the rapidly developing mobile commerce industry, whilst providing them with all the people, process and technology they need to manage DCB as a service line – from merchant partnerships to billing processes and front-line customer service tools.

“Our annual revenue has grown on average 49 per cent year-on-year over the past five years. We’re particularly proud of this growth because we’ve achieved it whilst keeping our strict moral parameters regarding who we will and won’t work with. Whilst the functional potential of DCB has never been questioned, its reputation as an industry has suffered at times; as opportunistic firms have put revenue growth ahead of customer trust in industries like adult and gambling. We have intentionally walked away from these significant short-term revenue opportunities to focus our efforts on working with merchants that treat consumer trust as seriously as we do. We estimate that this has discounted our potential market by as much as 50 per cent over the last decade. We view our continued growth, even with this ‘moral discount’ as validation of our approach, vision and commitment to customer trust.

“In terms of funding, the business was bootstrapped with private family savings and ran organically for 20 years until March 2017, when we raised venture debt to deliver a management buy-out of our founder shareholders. We view this buy-out as a strategic platform upon which to realise our next chapter of global growth.”

What does DCB offer?

On the subject of DCB, Tomlins thinks the streamlined service opens up a whole new opportunity for businesses to utilise different payment options.

Tomlins says, “Put simply, DCB is a payment method that allows consumers to charge the cost of a digital purchase to their mobile phone bill rather than pay on a credit or debit card. It has historically been mostly used for charging digital content like videos or games, but is increasingly being used to charge for physical products too, particularly in markets with low credit card penetration and more relaxed regulatory landscapes like Japan, Turkey or the UAE, where you can purchase things like tickets or even a coffee with your phone bill.

“Merchants can accept payment with as little as one tap, for as little as 1p – so we are now seeing DCB open new business models for industries that have been historically limited by card payments, both on a one-off and subscription basis – like publishers, insurers and software firms who can start to accept micro-payments for their services more economically.

“Our own recent due diligence estimates that the global market for DCB will grow tenfold globally in the next five years to be worth more than $140 billion. Most industry analysts in our space also agree, with some estimating an even greater opportunity.”

The capital conundrum

Many people may think that setting up a technology company outside of the capital is tantamount to disaster. The perceived lack of networks and resources can be off-putting to new entrepreneurs, but Tomlins finds that a focus on the customer and the product is a surefire way to find success no matter where you set up.

“It can be a surprise for people to hear that we have grown our business organically from Northampton to become one of the fastest growth technology companies in the UK but it is an important part of our story. Our focus has always been on our clients, people and product – which we can thank for our success to-date. I find it hard to believe that the outcome would have been better or different if we were London-based.

“We are situated equidistant from Oxford, Cambridge, London, and Birmingham. We have a huge catchment area of fantastic talent, facilities, and events. We travel to these places to collaborate with great companies and great people in a way that many London based businesses may never think to. As far as client services goes, we trust our team to be wherever our clients need them, so whilst the core of our team spend most their time in Northampton, our client services teams are on the road quite often – both domestically and internationally.

“Our team is talented and loyal – and in return they get an amazing work-life balance, whilst working on innovative technology projects every day, with a global client base of some of the world’s biggest media and entertainment brands. We believe that being based outside of London allows our team to develop deeper relationships, which helps the business be more productive, innovative and collaborative.

“Our client base and non-exec board allows us access to tech hubs in Dubai and the Far East – broadening our horizons further. Our ambition is global but Northampton will continue to be our home office.”

Location, location, location

Only 50 minutes on the train to London Euston, it is hardly like Infomedia is a dispossessed island, unable to connect to the UK and the rest of the world. Tomlins enjoys the lack of territorial boundaries that the tech industry allows, as the team is encouraged to connect with businesses anywhere in the world. Tomlins says that the ubiquity of communication tech like Skype and the ease of air travel provides more clients outside the UK than within.

“I think that here in the UK we are coming to realise that tech hubs are rapidly growing across the country. More and more we have conversations with tech companies based in Birmingham, Cambridge, and Edinburgh. As a result, private equity, investment banks, and corporate finance are all starting to open offices in Birmingham, Manchester etc. – they are realising that there are great companies across the UK.

“The best way to attract investment is the same across the country; make sure the quality of your business speaks for itself. We were recently proud to be listed in the Tech Track 100 fastest growing businesses in the UK, no mean feat for a 25-year-old business. There is also much to be said for the traditional route of arranging meetings to get in front of the right people.

“We are a very ambitious business and have a clear vision for the way we want our business and industry to go. This ambition and clarity has attracted interest from many like-minded partners and investors alike, and long may it continue!”

The Brexit effect

Managing an international tech business has certainly become more of a challenge in the last two years. The EU referendum has caused a lot of businesses to stop and think about how to continue in the instability. Tomlins envisions difficulties ahead, but nothing that can’t be overcome.

“Uncertainty is a big issue for us and our clients, as with most other businesses with international customer bases. Other than uncertainty itself, we view Brexit as bringing two challenges to our door – regulation and talent.

“We exist within a complicated regulatory structure, where we need to adhere to standards set at a company, national, regional and global level. Much of the payments regulation that we adhere to in the UK is set by the EU, so Brexit means an uncertain future for any business impacted by payments regulation. For example, there is a major piece of EU-set legislation coming into force called PSD2, which will enter the UK statute in January (although is touted by some to be delayed). We will need to invest in our platform to satisfy these changes but have no knowledge whether it will be repealed, changed or replaced by other specific UK legislation in the near future. Our approach to mitigating this has been to work to our own compliance standards, which exceed what is likely to be mandated.

“We will also be sad to have a potentially less diverse talent pool from which to recruit. Diversity helps fuel our creativity and innovation – furthermore, as we look to expand internationally we may not be culturally aware and thus, less well positioned to launch in markets. A huge part of our industry and company challenge is breaking down geographic and cultural barriers to reach global potential and we believe that our own diversity as a company is crucial to achieving this.”

What does the future hold?

Excited by the future potential of Brexit and where technology may lead them, Tomlins’ path is leading him to a formula similar to the rapidly growing Asian market.

“If you look at other markets, particularly Asia, I think you can get a good idea of what the future of m-commerce is likely to look like globally. Last year, China’s mobile revenue hit $5.5 trillion, which is 50 times more than the size of America’s $112 billion market. Equally, in the last year alone, Japan’s e-commerce market was valued at $89 billion, with half of that coming from mobile.

“What China and Japan are achieving in terms of market size is large, in part, thanks to the commitment of merchants and mobile operators to work together to develop truly frictionless mobile payment processes. In China, payments innovation is being driven by social messaging service WeChat and AliPay – its PayPal equivalent. In Japan, DCB is the most popular payment method accounting for more than 50 per cent of all ‘online’ transactions.

“By comparison, in the UK and US, even though mobile devices have consistently driven the highest form of engagement compared to any other platform, it continues to experience the lowest conversion rates. It is clear there is an opportunity for brands and retailers across the world to deliver the same conversion rates on mobile seen in Japan and China if they can adapt to behavioural change. Fundamentally, consumers want the quickest and easiest payment processes.

“We are excited by the growth potential of mobile commerce globally, the role that DCB can play in facilitating that growth and the role that we can play as a company in continuing to push the DCB industry to meet its potential.”