Yolanda Redrup Reporter
Mar 29, 2022 – 5.00am
Sydney-based payment services software company DataMesh is the latest fintech to score funds from NAB Ventures , as part of a $12 million funding round.
DataMesh was founded by long-time payments technology specialist Mark Nagy, who was part of the team that led design and creation of the Commonwealth Bank’s Albert platform.
Its payments terminal management system helps banks, acquirers and card schemes (Visa and Mastercard) to enable all digital payments forms to easily support next-generation terminals such as unattended smart terminals, roaming devices and QR codes.
DataMesh founder and CEO Mark Nagy has spent his career working in payments technology.
Traditionally, this is tough for banks to do thanks to their legacy technology platforms, which can impede the adoption of newer technologies.
DataMesh’s modular software integrates with a bank’s legacy systems, allowing companies to gradually shift off their old architecture, or maintain both systems.
The capital raise, which is being positioned as a pre-series A raise, was also supported by existing cornerstone investor Peregrine Group. It is also a DataMesh customer, using its software across hundreds of fuel sites and retail outlets.
“DataMesh wants to solve the broken bit at the back end of payments – the core processing systems. The tech they have to work with is very dated and has some fundamental issues,” Mr Nagy said.
“We already have connections with the major switching platforms in the world and within weeks we can provide that connection.”
DataMesh also offers customer analytics – a feature that particularly appeals to its non-banking customers – using anonymous tokenised data to track people’s spending patterns and provide insights to companies about what is working well, and what their competitors are doing better.
Mr Nagy started working on the idea for the business in 2015 and incorporated DataMesh as a company in 2018. Its software was fully certified by 2020.
It began a full-scale roll-out in 2021, aided by Accenture, which has been helping craft its global expansion strategy and shepherd it through regulatory approvals.
By late 2024, Mr Nagy hopes to have its platforms deployed throughout south-east Asia and to have entered the US.
“It’s not sensible to think we’ll get all the banks over, but even if we could take 5 percent to 10 per cent, that is success beyond reality,” he said.
Critical to success
“With our model, banks don’t need to provide the switch, terminal or certification[of a new payments system], but they still get to keep the merchant relationships.
“They divest themselves of a huge cost, so the bank’s margin increases enormously.”
Critical to the early success of the business has been early DataMesh hires – COO Aaron French and CTO Jason Chisholm.
Both have more than 20 years’ experience in the industry, with Mr French having previously worked as head of merchant transformation at Westpac and head of product development at Commonwealth Bank.
Mr Chisholm has led core switching platform upgrades and set the switching and cards strategies at major bank and fintechs.
“I could say to these guys that I had three years of cash put away … I could pay them the money they were used to … they could still pay their mortgages and I could give them equity in the business,” Mr Nagy said.
NAB Ventures managing director Amanda Angelini said the bank was aware of the need to offer merchants flexibility in how they received payments.
“We see how DataMesh’s technology can give merchants greater opportunities and capability, making them a great fit for NAB Ventures’ portfolio,” she said.
Mr Nagy said the start-up had raised $25 million to date, and he hoped latest round would precede a $75 million to $100 million round toward the end of this year.
”We just acquired one large global banking customer … and I’m hopeful we’ll sign one in Australia in the coming weeks,” he said.
“With those projects comes known quantities, roll-outs and tenures, so we know exactly what the shape of the projects will look like [and how much they’ll cost”.
“One lesson I’ve learnt in life is to make sure you have enough cash in the bank to do what you want to do, and then some. I learnt that the hard way 15 years ago with another venture.”
Mr Nagy said having Accenture on board as advisers had “cost a fortune”, but it meant project costs were clearly defined and the professional services firm had picked up “so many things” he had have missed while building the company.
“Accenture understood what we’re trying to achieve, and they bought into the vision,” he said.
“We’re a boutique part of payments, not the sexy part … we’re beavering away in the background.”