The Story of Pagos: Building the Payments Data Company That Even PayPal Needed

The Story of Pagos: Building the Payments Data Company That Even PayPal Needed

The problem became obvious in the most frustrating way possible. Klas Bäck’s team at PayPal had optimized their infrastructure. They had data proving they outperformed competitors. They should have been able to walk into customer meetings and win more volume.

Instead, they spent months trapped in data reconciliation hell.

“We could not have that conversation with a single one of our largest customers without months of comparing data,” Klas recalls. “What are you looking at? That data doesn’t look real. Are you sure that’s your right data?”

In a recent episode of Category Visionaries, Klas Bäck, CEO and Co-Founder of Pagos, a payments operations platform that’s raised $44 million in funding, shared how a PayPal frustration became a category-defining company.

The Payments Industry’s Dirty Secret

Every company selling or billing online operates with a massive blind spot. “There’s not a single company out there that are selling or billing online that are not finding it challenging to optimize their own payments infrastructure,” Klas explains. “That means that they are leaving money at the table.”

The irony cuts deep. These companies obsess over every other metric but ignore one of their largest cost centers. “Even extremely large companies that are maybe selling billions of worth of products on any given year, they will not accept not being data driven for anything else. Except when it comes to payments, there is often the data is incomplete, that is too old, that is not correct.”

This wasn’t just a PayPal problem. It was industry-wide dysfunction that nobody had addressed because “the payment industry operates in quite opaque world. Everything is complicated and people say a lot of things that they don’t sell and back up with back.”

The Conversations That Became a Company

The path from problem to company wasn’t linear. Klas and his co-founder didn’t have a dramatic founding moment. Instead, they had conversations. Lots of them.

Those conversations continued for months, gradually shifting from “someone should” to “maybe we should.” Then, without a clear decision point, they were already building. “We had just one day where we looked at each other and like I guess we are actually doing it now because somehow we had already passed into a world where were building and doing and we hadn’t really made a decision until after the fact.”

This accidental commitment reflects something profound about hard decisions. Sometimes the best way forward is to start building before you fully commit.

Building the Payments Data Company

The vision crystallized around a core insight: companies needed to understand payments performance like they understood everything else.

“We built the payments data company where we help people with analytics, visualization, baseline what their metrics are, track them over time and then give them tools to help them better execute,” Klas explains.

But building meant confronting the organizational chaos of payments ownership. “It could be in finance for traditional reasons, or it could actually be owned by product,” Klas notes. This fragmentation created both challenge and opportunity. Companies with dedicated payments teams immediately understood the value. But many had no clear ownership, which meant education had to precede sales.

The Market Nobody Fully Understood

The addressable market split into three groups. First came well-resourced companies already building in-house. “They have maybe built something in house that’s actually been the easiest group because they know what they want and we can show pretty quickly that we can do it better,” Klas explains.

These sophisticated buyers represented the build-versus-buy decision. The second group needed education about optimization opportunities. The third, and largest, didn’t yet grasp the complexity. “Payments, is a weird combination of a little bit of finance, lots of technology and very complicated domain knowledge,” Klas notes. “Like, surely it can’t be that complicated. It’s like, no, actually it’s very complicated and it’s hard to do well.”

Learning Through Early Adopters

The first customers shaped the product. “We have a lot of early adopters. So in a way we’ve been kind of forced to build out at least some sort of pilot version of some of the things that was more long term,” Klas explains.

When customers needed automation features that would take months to build, Pagos started with the simplest implementation. “We want to automate this. It should be in the online app that we have. But we can start if you let us send you a file of data once a week and then they became a daily file and then they became a streaming file.”

Each step validated demand while moving toward scalability. “Otherwise it would have been too big of a lift in the short term, but it was valuable for them, so were lucky enough to do it.”

The 100,000 Company Vision

Looking ahead, Pagos targets massive scale. “Our core focus is on companies that are selling and billing online and we are fortunate there are many of those. There’s probably in the core segment, maybe 100,000 of it in the US,” Klas explains.

The vision extends beyond adding customers to expanding within existing accounts. “You had two KPIs that you were saying was important for the company, but you really should have seven because that’s what your peers are having.”

This educational expansion works because Pagos has aggregated the wisdom of what actually works across their customer base. They’re selling the collective intelligence of payments operations best practices learned from production deployments.

The company is thinking globally from day one. “We want to build a global company from day one because that’s the world we lived in and we do have already. We haven’t chased them, but we have customers in Latin America and Europe and Asia Pacific.”

The goal is clear: “We want to build a product that all enterprise companies building and selling online are actually using.” As more companies realize they can’t afford to leave money on the table with suboptimal payments infrastructure, Pagos aims to turn payments from a blind spot into a competitive advantage.