For two and a half years, Celine Lazorthes and her team at Leetchi, a group-payment provider for gifts and events, struggled with the regulatory requirements needed to become an e-money issuer in Europe.

Lazorthes, the CEO and her business partner, Romain Mazeries, built Leetchi in 2010 in Paris. The company developed a system for fraud mitigation and legal compliance into the platform, and is now offering that platform as an application programming interface (API) to marketplaces and crowdfunding and collaborative consumption platforms. 

Storing money from users of crowdfunding sites within a personal bank account is illegal, Lazorthes said, and many crowdfunding platforms are set up by people who don't have much experience in payments and don't understand the legal ramifications of operating this type of business. "A lot of these companies don't even know they're doing anything wrong," she said.

The idea sprung from struggling to manage the money Lazorthes collected from fellow students for an annual party when she was in college. Leetchi allows users to personalize an online money pot for specific events or holidays and share the account with friends and family through email and social media.

The funds raised through Leetchi can be spent for free on the company's partner sites, which sell everything from technology to apparel to furniture. The recipient can also request to transfer the funds into a bank account by paying a fee of 4% for pots containing under 2,000 euros and 2.9% on pots containing greater amounts.

At first, the business-to-consumer company used a French banking partner to operate. Between 2013 and 2014, Leetchi's customer base doubled and the platform now has more than three million users.

The company's sharp growth attracted a scrutinizing eye from its banking partner.

"When we were small, the banks were happy to work with us; however, as we began to process more money, the banks began to view us as a competitor," said Lazorthes. "In effect, we were developing the customer relations which the banks should have been cultivating, and this made us a threat."

Leetchi's bank began placing more costs onto the business, and would stop and re-start their contract, Lazorthes said.  

"Dependence was high and the pricing was high," Lazorthes said, so the company set out to make Leetchi Corp. its own e-money issuer.

But the process of acquiring an e-money issuer license in Europe is not an easy task. Because Lazorthes and her co-founder were young (both were 27 when they first started applying for the e-money issuer license) and had no experience in payments or banking, the duo felt plenty of resistance.

"Not only did we have to complete around 200 pages of documents, we also had to prove we had enough capital to sustain the company and show that our team possessed the relevant technical and legal knowledge," said Lazorthes.

Plus, on average no more than one e-money license is issued per EU country annually, she said.

Leetchi Corp. was finally granted an e-money issuer license in May 2013, after which it launched Mangopay, which offers the Leetchi payments platform to other businesses in the form of an application programming interface (API). The company works closely with Credit Mutuel Arkea and uses Payline, authorized by the Banque de France, to process payments.

Today, companies that use the Mangopay API can accept 10 different currencies through credit or debit card payments, bank transfers and local payment or e-wallet systems. Users of Mangopay get a dashboard to manage payments and a system for refunds, plus Mangopay handles all the regulatory and legal compliance.

Marketplaces can be accepting payments within two days using the Mangopay API and its software development kits (SDKs), said Lazorthes.

Generally Mangopay charges 1.8% plus 18 cents for euro transactions and 2.5% plus 20 pence for transactions in pounds. The company doesn't have a fee for setup or chargebacks.  

Crowdfunding platforms and other marketplaces are targets for payments technology providers because they evolve more quickly than a large company could. Zipmark has seen success targeting its digital check payments platform to marketplaces and Balanced, like Mangopay, provides a payments API to marketplaces and crowdfunding sites although Balanced targets U.S. merchants.

APIs have become a popular way for businesses to quickly start accepting payments, without the time and cost investments associated with building a platform in-house. In the U.S., Stripe built its business by providing this technology to developers at large and small companies.

At the end of January, Mangopay opened an office in the U.K. at Level39, London's largest technology accelerator. About 30 of the 400 total companies using Mangopay are based in the U.K. About 50% of Mangopay's users are businesses based outside of France, coming from 14 different countries, she said.

The company also has an office in Luxembourg.

One of the biggest marketplaces will begin using Mangopay in February, said Lazorthes, declining to name the client. 

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