GoCardless, a Y-Combinator alum that has created a simple way for online businesses to set up and accept direct debit payments (that is, money that comes straight out of your bank account), is today announcing a $7 million Series B round that co-founder and CEO Hiroki Takeuchi says will be used to add more talent and to take on banks by targeting bigger enterprises. The funding comes as GoCardless is seeing rapid growth: launching in 2012, in 2013 it processed $200m of transactions and grew by 700%.

The Series B round was led by new investor Balderton, with existing investors Accel Partners and Passion Capital also participating, and it takes the total raised by GoGardless to just under $12 million.

GoCardless stands out among other YC startups for a couple of reasons. For one, it is one of the very few that is based outside of Silicon Valley — in its case, in London. (Among the others, the biggest is probably Songkick, also based in London, while other YC-incubated startups that may be based over here now are strategising about how to move back to California, and Lanyard recently got acquired by Eventbrite and moved back to Silicon Valley, Takeuchi notes.)

But Takeuchi says the reason for being here goes beyond the fact that the four co-founders hail from the UK (they are all Oxford grads).

“London has strength in the fin-tech space,” he notes, pointing to the city’s position as one of the world’s biggest financial centers makes it ripe not only for forging partnerships and finding investors, but also for picking up talent among the ranks of disaffected City workers. “It was a combination of that and banking regulations that made sense for our business.”

The other reason the UK makes sense is also the other main way that GoCardless stands apart from other YC startups.

In a world where much payment processing is run over credit card-based networks, GoCardless has created a simple, API-based solution that bypasses that for all businesses that center around recurring payments. And it is building that out in Europe, one of the strongest markets for direct debit transactions. In contrast, the market for this is far less developed in the U.S.

“In the U.S. people may look at you funny if you ask to pay for something by direct debit. People are wedded to their cards,” he says, “while in Europe it’s a widely-used mechanism to pay for utilities like gas and mobile phone bills.” Other types of companies include any service that you pay for by subscription.

Think of GoCardless as a kind of Stripe for direct debit, using a few lines of code to let anyone take a recurring payments. “What we are doing is similar to others disrupting the financial sector,” says Takeuchi. “Startups are taking on the banks in particular verticals: Wonga in loans, or TransferWise in FX, and us in direct debit.”

There are other ways of setting up direct debit payments today — namely, via your business’s bank. But Takeuchi says that the reason why GoCardless is better is because of its modern approach to enabling them. “We have built an easy to use tech layer on what is otherwise a horrible system,” he says.

As with the online payments API from the likes of Stripe or Braintree, or Square with its mobile-based payment option, GoCardless’s solution opens up the direct debit model to a vastly larger number of potential users. “If you are not of a certain scale you would not get access to using direct debit in first place,” he says, “but even if you did you would get a piece of clunky software with barely an API. You are talking weeks or months of development time and a manual process to oversee on a regular basis.” The old way of doing things can take up to five or 10 people to manage the process, he says. “Banks are notoriously bad at this.”

While this pitch certainly helps smaller businesses incorporate direct debit, what GoCardless has been finding (much as Square and others have found in their verticals) is that the ease of using this ends up attracting much bigger businesses, too. Takeuchi tells me that its largest customer today is 15 times bigger than that of a year ago.

Tim Bunting, a General Partner at Balderton Capital, who is joining GoCardless’s board as part of the investment, says that customer response played a big factor in attracting investment. “GoCardless is an exceptional team with the potential to radically improve the way payments are done for businesses. For us, the most distinguishing feature was the feedback from their existing customers, who stressed that the technology they have developed, and the technical team they have built, is world class,” he said in a statement. “We believe this technological advantage, the scalability of the GoCardless model and size of the market it operates in will allow GoCardless to play an important role in the future of online payments.”

It helps, too, that GoCardless is competitive on the fees front. Its pricing model ranges betwee 1% and 2% of transactions, based on volumes.

For now, GoCardless is mainly focusing on online transactions rather than mobile, and plans to really establish itself in Europe before looking further afield. The fact that it’s doing so well, attracting both customers and investors, sets up GoCardless as one to watch in the ongoing debate of whether its possible to start, build and scale a company away from the Valley.

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