Listen: Streamlining to avoid friction and other payments pain points

In a world of instant gratification, consumers expect this of payment processes — and technology can help. Bonita Springs, Fla.-based payments company ConnexPay addresses pain points in the payments world and works to reduce friction, Chief Executive Bob Kaufman tells Bank Automation News in this episode of “The Buzz” podcast. For example, when booking travel, consumers are often left with multiple charges from various websites, including separate transactions for airlines, hotels and car rentals, which is “confusing for the consumer,” Kaufman said. Creating several pipelines for payments adds friction to the client journey, he added. “When I go to the grocery store, I don’t make one payment for my meat, one payment for my dairy goods and one payment for my cereals. … It’s one bundled fee,” he said. Amazon is one company that has embedded the payments process and owns the customer. Said Kaufman: “They pre-process your credit card 100% of the time and then turn around and issue a payment so they own you as a customer and can service you.” Listen as Kaufman discusses the role of tech in streamlining payments processing to improve overall user experience. Subscribe to The Buzz Podcast on iTunes , Spotify , Google podcasts , or download the episode . The following is a transcript generated by AI technology that has been lightly edited but still contains errors. Whitney McDonald 0:06 Hello and welcome to The Buzz, a Bank Automation News podcast. My name is Whitney McDonald and I'm the Deputy Editor of Bank Automation News. Joining me today is founder and chief executive of payments technology company ConnexPay. He is here to discuss the role technology can play in streamlining payments processing.Bob Kaufman 0:24 Thanks, Whitney for your time today. My name is Bob Kaufman, I'm the founder and CEO of ConnexPay. By quick background, I spent almost 20 years at US Bank don't hold that against me. And, and most of those years were in payments. Payments for for US Bank is defined as all their card issuing business, both consumer and commercial, as well as their merchant acquiring business, which is a division called Alibaba. And that, you know, helps companies accept payments from their clients. So it was really that background. That was the catalyst for me to start connected pay six years ago. Whitney McDonald 1:03 Now getting into connects pay, maybe just give us a little background of what it is that you do. Bob Kaufman 1:09 Yeah. So going back to my US Bank days, I saw firsthand the pain points that some companies go through to accept payments. And I'll give you a couple examples. In industries like travel, think think online travel agencies, companies, like Expedia tour operators, right. All these companies that help us book are our lifelong dream trips. Banks generally don't like doing business with them. From a payments perspective, they literally put them in the same risk category as online gambling and online pornography. And the reason they don't like doing business with them is what they call future delivery risk, meaning you book a flight or a hotel stay today and pay for it. And that trip may not happen for weeks, months, or even years from now. And so if something were to happen during that travel company and think back to the pandemic, a lot of them struggled, of course, it's going to be the bank that's on the hook to provide you your money back. And so it really results in in this high risk profile for these companies. And it makes it very difficult for them to run their business from a payments perspective, the same thing happens on the credit side, these companies don't have a lot of assets on their balance sheet, right? Because they're not manufacturing goods. And so for them to go to the bank and get credit is also very challenging. So connectivity was formed really to solve those pain points. And we target companies, I call them intermediaries, so businesses that sit between the buyer of a good or service and the ultimate provider of that good or service. So again, travel companies, insurance brokers, ticket brokers, ecommerce marketplaces, you know, heck, that's what Amazon does, right? They take your payment, and then separately make a payment to Nike or Adidas, or whatever you bought. And, you know, we can dive into this more, but we solve a lot of significant pain points for those types of companies. Whitney McDonald 3:12 Yeah, I'd like to get a little bit into the how of that where the technology fits in and how how tech can play a role in this payment processing and streamlining some of these points of friction that you were talking through. Bob Kaufman 3:25 Yeah, so the history here is, many banks from the early days, never really were in the acquiring business. They've issued credit cards for years, right Visa and MasterCard used to be owned by the banks back in the day, before Visa and MasterCard went public. And so for decades, banks have always been good at and a big part of their business is issuing credit cards to you and I and everybody else to make payments. They were never really in the business of acquiring those tended to be separate companies now rotate forward. Many banks have since acquired, acquiring companies, right businesses that help businesses accept payments. But they've always been two different things. I remember talking to a customer once in my US Bank days, and I said, Look, not only should you use US Bank as your provider to, to have credit cards to make your payments to your suppliers and vendors. But you should also use us to accept payments because we have this division called Alibaba. So at the same company, we can support you as it relates to taking payments from your customers, and making payments to your suppliers and vendors. Seems pretty basic, right? Well, he looked at me and he said, Well, that's great, Bob, but let me explain to you how this is going to go down. You're going to bring me a separate sales team to sell your merchant acquiring services. You're going to bring me a separate contract to sign you're going to bring me a separate technology to integrate into and when I need support, you're going to give me a separate phone number to call. Tell me again how it's the same company. And so that was the The day it hit me between the eyes that that really is how the payments ecosystem is set up not only in the US, but across the globe. There are companies like Chase Paymentech, US Bank stripe, I could go on and on, there are a whole bunch of businesses that offer services to both accept payments from your customers, and issue payments to your suppliers and vendors. But if you look under the covers, it's effectively what I just described, and effectively two different companies. So at Connects pay, I don't use this highly technical term, my CTO hates it, we smash the two together. So from the very beginning days in 2017, when we built this technology, we built it with a very specific mission. And that was to have one payment process that handles all your money in from your customers, and all your money out to your suppliers and vendors. And what it effectively does is it eliminates those risks that I talked about. And so we ended up saving our customers, often hundreds of 1000s, in some cases, millions of dollars and what they're paying today to accept payments, because it's fundamentally a lower risk transaction. And with lower risk become, you know, results in lower fees, just like you pay a higher interest rate for a high risk loan, than you would a low risk loan. And then we also solve credit problems, because we effectively give immediate access to your money from your customers. So there's not this three, four, or five or six day delay to get your money. And so, you know, during the pandemic, our vision is to transform lives by simply connecting payments. And, and when the marketing team put that word on the wall as one of the options. I looked around the room and I said, Who are you guys kidding? We were a payments company, how can we transform lives, we're not doctors. And then it hit me. During the pandemic, we did transform lives, because there's a whole bunch of these companies that would have probably been out of business, if it wasn't for Connexus pay that you know, help them significantly reduce their costs, streamline their processes, and allow them to continue to operate. Whitney McDonald 7:08 Now, in a world where everything is so instant, and the expectation, of course, is payments for it to be that way as well. How do you kind of change the outlook or get financial institutions to recognize the importance especially as customer loyalty is down and clients will move to different banks, depending on what capabilities that they have? Can you talk a little bit about how you encourage that that necessary shift? Bob Kaufman 7:37 Yeah, you know, you mentioned customer loyalty. And it's it's a, it's a topic that's near and dear to my heart. Many, many businesses, and I'll focus on travel here for a second again, because of the pain points I described, they actually don't even get involved in the payment stream. So again, imagine we'll just use Expedia as an example because we all know who they are. Imagine booking a flight on Expedia today. Because of these pain points, Expedia doesn't even process your card, they, they turn it over to the airline. So you just booked a flight on Delta Airlines through Expedia. And you chose Expedia for a reason, right? You you maybe wanted a package, you didn't want to have to go to four different websites, you wanted to compare choices. But when it comes to the payment part, they turn it over to the airlines. So now every time you need to make a change or a cancellation, they can't help you. And so I say to customers all the time, like this is a horrible way to run your business. From a customer loyalty perspective, you want to own that customer relationship, right? I believe Amazon is as successful as they are because they made that decision early on, they pre process your credit card 100% of the time, and then turn around an issue of payments so they own you as a customer and can service you. And unfortunately in travel, about half of all payments are are not done that way. It's literally just a pass through to the airline or hotel. And it becomes confusing the consumer. The Traveler often has multiple charges on their credit card, one for the airline one for the hotel, one for the car rental. I like to say when I go to the grocery store, I don't make one payment for my meat, one payment for my dairy goods, right one payment for my cereals. It's one bundled fee and that's really the way travel should happen. But unfortunately, because of some of these pain points, and not companies like connects pay available. That's what happens today. Whitney McDonald 9:41 Can you share a little bit about who connects pay works with Bob Kaufman 9:46 Yeah, so we we target what I'll call mid tier companies sort of five to $5 million a year in sales up to say a couple billion we have have about 100 clients today live on our platform. So we're not I like to say we like to service a small number of large companies as opposed to a large number of small companies. Last year, we processed about $10 billion in payments. We were profitable, you know, a lot of these financial technology companies out there that have ideas, you know, run at a loss for a long time, and we're learning right now, in the industry. That's, that's not a good spot to be. And so, you know, I'm proud to say we're, we're quickly doing very well, and able to help our clients in the process. Whitney McDonald 10:39 Now, a little bigger picture here, the payment space, sees new technologies, and the Fed now is on the horizon. Can you talk through a little bit about trends that you're watching in the space? Within payments? Bob Kaufman 10:53 Yeah, so I'll just maybe I'll take a step back in answering this question. Because I spent 20 years in banking, as I mentioned, and, and I saw it really evolve from, you know, there was a period in time where I felt, you know, banks, there's a lot of consolidation happening, and they were starting to, you know, the internet is, I'm going to date myself here. But you know, the internet's only 26 years old. I mean, if you think about, we live our life by it, but it's not that old. And so 20 years ago, banks were just kind of getting on the internet. And there was a fair amount of innovation happening. And then a bunch of regulation happened. And, and it really slowed down bank's ability to innovate. And that was really the start of fintech. And so, you know, now there's hundreds and hundreds of companies like connects pay, that effectively leverage banks to do their job, right. So for us, as a payments company, we have banks that sponsor us, to allow us to provide the services we do to our customers. And it's an interesting state of payments and banking, because now, I don't think there's any turning back. I mean, I think we might see, banks start to acquire more and more fintechs and bring it in house. But you know, again, the regulations are so strong, and it's probably going to get worse, with the challenges we've seen with SBB and others. So I think, you know, I think at least for the foreseeable future, will cease companies like connects baby the innovators in the space and, and it's to your point, it's, it's so needed, because consumers now expect it, you know, we have everything else so mediated in our lives, whether it's, you know, what show you want to watch or how we communicate with our friends and family, that we expect our payment processes to be the same way. And I will say this, there's still a long way to go in b2b, although we're getting better with consumer payments. Again, both kind of in and out with businesses, but you know, businesses paint other businesses believe it or not, almost half of payments are still on a physical check. Like I don't I don't even know where my checkbook is, as a consumer back I'm not sure I have one anymore. But but in the b2b space, that's still how a lot of payments happen. Whitney McDonald 13:18 You've been listening to the buzz, a bank automation news podcast, please follow us on LinkedIn. And as a reminder, you can rate this podcast on your platform of choice. Thank you for your time, and be sure to visit us at Bank automation news.com For more automation news.

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Listen: Streamlining to avoid friction and other payments pain points

Podcast discussion with ConnexPay CEO Bob Kaufman

The key to relationship building: Coupling embedded payments with data

Cybersquatting a bank security concern post-SVB

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