Podcast: The importance of embedded financial payments

Whitney McDonald 0:01
Hello and welcome to The Buzz a bank automation news podcast. Today is August 22 2023. Joining me today to discuss embedded finance is co founder and CEO of wisetack. Bobby Tzekin.Bobby Tzekin 0:14
Hi, I’m Bobby Tzekin, I am co founder and CEO wisetack. And my background is over 20 years in FinTech at this point, a started in the early 2000s. at PayPal before FinTech was a term. So I spent seven years at PayPal as the company grew quite a bit. And after that, was head of product at three other FinTech companies, both in the payment processing space, as well as online lending. And all of that experience actually has led to co founded why stack because we sit at that intersection of payments and lending.Whitney McDonald 0:55
Great. Well, thank you so much for joining us for the buzz would love to kick things off with you kind of setting the scene here for embedded finance, what is the need for for this type of solution, the ability to pay over time? What does this bring to clients and express a little bit about what the need is for this market?

Bobby Tzekin 1:13
Yeah, we believe there’s two important trends that are driving consumers to adopt something other than a credit card to pay for purchases these days, which then is setting the stage for the embedded piece. So first, in terms of financial products, credit cards have been the most common and frequent way consumers will borrow in the US. And the reason why that’s changing is twofold. One, after the Great Recession, there was a regulation that prevents card issuers from marketing on campus and universities. And so now we have a much larger population of young people graduating without credit cards and going without a credit card for a long time. So that is requiring a new way for them to afford larger purchases before they really started getting the income that they’ll get later on in their career. So that’s one trend. The other really important one is everyone understands these days that a credit card is not a great way to borrow great way to pay if you pay it off at the end of the month. But it’s expensive to borrow. And everyone understands that. And so now that technology has allowed installment payment options to be present, everywhere, especially online, consumers are choosing that because they know it’s more affordable to spread your payments over time via these installment payments. And that I think sets the stage for Well, why is embedding these financial products important. And the other trend that contributes here is the adoption of SAS or software as a service by businesses pretty much every business, no matter the size these days, is thinking about or has already adopted some type of software to run their business. And those software providers themselves are embedding payment options. And the most common one usually the first one is credit card payments. If if the businesses are serving consumers, the software they use typically will offer credit card processing. And the next step beyond that, obviously, we just talked about the limitations of credit cards is Well how else can a consumer pay, especially for larger purchases? And that’s what wisetech does, we embed the seamless installment payment options. So the consumer can pay over time if it is a large purchase, and they don’t have to put it on a credit card.

Whitney McDonald 3:32
Now taking that a step further, I know you started talking through how wisetech accomplishes this, but maybe we can get into a little bit about the technology behind wise tech and how it’s how it works.

Bobby Tzekin 3:43
Yeah, absolutely. So as I mentioned, its most fundamental voi stack technology consumer can pay over time for a large purchase and how we’re different from others who may say the same thing is that we’re an API platform. So we do a few things differently. One is we’re incredibly easy for a developer to integrate into any software experience. So it’s a deeply embedded option. And that does a couple of other things. One is it makes it really easy for the business to get started. So the business, just the way everyone expects these days that if they’re running a business, they can very easily enable credit card processing for their customers. They can do the same thing with installment payments via wisetech. It is very easy it is embedded in the software that the business is already using. So it makes the startup cost go away for the business. We’re also because we’re embedded we’re very seamless as part of the purchase for the consumer, very customer friendly. So we from the very beginning focused on simplicity and customer friendliness, and that encompasses both the consumer as well as the business. And another way we differentiated is we in the past they focused on businesses that sell in the real world so not online purchases, not a website. They sell through but they are usually doing something involves an in person service. So we work with a lot of home services, businesses, like plumbing, electrical, H back, and so on just things around the home. And we also work with dental practices, we work with car repair shops and some other similar type of businesses that that again, serve their customers in the real world, not on the website.

Whitney McDonald 5:25
Now a little bit further into what you were just explaining, could you talk through, I don’t want to use the word embedded. But could you talk through integrating wisetech onto some of these claims that you were just explaining what does that entail?

Bobby Tzekin 5:38
Yeah, we, we have focused on having a really simple API that I do think the best parallel is, these days, everyone expects it to be really easy to integrate card processing. So So there are a few components. One is for businesses, how do they get going and offer the payment option. So it should be really easy to provide some basic information and turn it on for for my customer experience. So we do that. Also, we embed reporting, so in the software that a business is already using, all their transactions that have been paid via wisetech will show up seamlessly in the reporting. So they don’t have to change anything around how they reconcile what their business did. And then the final part is, again, for their customers for the consumer, how easy is it for the consumer to pay. And so all of that we’ve made it really easy to put into a piece of software. So think if if I’m running a plumbing business, I’m using this piece of software to manage my entire business. It means dispatching my technicians to jobs in the field, it means managing my inventory of supplies, it means my orders my payments. And so why stacks embedded in there as a payment option. And anytime there’s a large, unexpected job, let’s say your pipes burst at home, and it’s an unfortunate thing is going to cost many 1000s of dollars to repair Well, you don’t have to panic about how you would pay for that because you can pay over time. And that option is available as the business comes out to do the work.

Whitney McDonald 7:15
I’d love to get into another use case here. I know that you just shared that great example. Maybe we can talk about another way that wisetech is in action. I know that you recently announced that you’re working with citizens, maybe you could talk through through that and what that entails a more specific type of use case. Yeah, I

Bobby Tzekin 7:35
can talk about both of those. So another very common example we have is imagine it’s it’s the winter and it is very cold and your water heater goes out or your your heater for your home. And it is obviously an emergency. When that happens, you didn’t plan for it, you call It’s a call a plumber, if it’s the water heater, they show up. And they look at your 15 year old water heater and they say, well, it’s on its last legs, I can repair it. And I’ll probably be back here next year. Or I can replace it with something better. Or you have another option, I can replace it with a really modern top of the line version that’s much more energy efficient is actually going to save you substantial costs in terms of the energy that it’s going to consume. And at that point, the merchant usually will will present a proposal that says here’s your options. And for the options of replacement or the top of the line replacement. There’ll be something that presents, okay, maybe it’s $2,000 for this option, or as low as let’s say, for example, $150 a month. And that allows the consumer to afford something better that over the lifetime will save them money, whether it’s through lower costs of repair or lower costs of energy, if they could just afford to make the better purchase in the moment. So it’s a win win. Because the business is able to do the right work and serve the consumer, the consumer is able to afford something better. They don’t have to revolve on a credit card and incur additional costs. And so then the consumer makes the choice. Let’s say they do elect to pay overtime so they can afford the better the better purchase. They can either proceed with that through the proposal that they received from the business, which often is digital, it can be emailed or texted to the consumer, or the merchant and the technician in the home via the mobile app that they use to manage their work and push a button and the consumer can attack text message to complete their payment. So all of that is part of the consumer experience. And then once the consumer starts the process, it takes just a minute to see what their options are to pay over time. And they can complete everything on their own device really quickly. So that’s the that’s the customer Ernie, that’s an example of how it works. And I’m happy to go into that more if it’s interesting.

Whitney McDonald 10:06
No, that’s great. And I kind of wanted to shift a little bit here into what I was talking about with the relationship with citizens, what what it means to be working with a financial institution, I know that there was also discussions that there was opportunity to further those types of relationships, maybe specifically talking about citizens here, and what that does, with with wisetech, and then other opportunities for other FIS to to work with other advice.

Bobby Tzekin 10:34
Yeah, from the very beginning, when we started the business, in our business plan, we said that we’re building a platform for financial institutions. And the reason for that is multifold. One is, as I mentioned, these are big shifts in terms of what’s available to consumers, we know that financial institutions need to play in that space of installment payments. So we knew that they’d be interested. On the other hand, these are large banks committed to serving consumers, and they have a really low cost of capital. So we knew it would be a win win to provide a technology that we’re great at making and running to financial institutions that are already committed to that business and have a low cost of capital. And so that benefits customers, and it benefits the financial institutions. And in terms of, if you think about citizens, they already have some big brand names, they’ve had a partnership with Apple for a long time, they’re partnered with Microsoft for purchases at the point of sale. So they really know the space, the reason why they partner with us, is because they reach a channel and a type of business that they can’t reach otherwise. And that is those developer integrations that bring them smaller businesses and real world businesses. And we’re really good at serving those merchants, we have a big merchant base that they want to have access to. And again, for us, we get a lot of benefit from being partnered with a large bank that is committed to this space. And we do, as you mentioned, we do have others in in process that we’ll be announcing, in the coming quarters. And again, it furthers the the example I started with that if if you think of us as a network of technology integrations and merchants, we always planned to bring the banks to this platform. And another parallel again, if you go back to the card processing world is on a smaller scale, think Visa and MasterCard that is a network of consumers and merchants that allows payments and financial institutions to be on that network. And that’s very much the vision for us. But we are not beholden to the card rails and have a lot more flexibility when it comes to the terms on which everyone can participate.

Whitney McDonald 12:54
Yeah, that’s really helpful. And I know you kind of gave us a little bit of a sneak peek of your you’re working with others. But it’s all just about kind of growing that network is what I’m getting from what you’re what you’re saying citizens being one, but like you said, there’s there’s others in place to again, grow that grow that network that’s speaking of what you’re working on, for the remainder of 23. I know you said a couple of other partnerships, announcements coming in the coming quarters on the tech side, or even just on the embedded payment side things that you’re working on for the rest of the year or excited about for the rest of the year. Yeah,

Bobby Tzekin 13:33
there are quite a few things. That’s a big category, onboarding the financial institutions and ensuring that that important pillar of the business is really serving the the large banks. That’s an important part. And as we talked, we’ll have more specifics to share soon. The other part is we are growing the network part, we are growing our integrations we are growing our network, our Merchant network and merchant base. And so all of that comes with plenty of work where we’re constantly looking to make the product simpler and better so that it can reach more customers. We’re growing quite fast. And that comes with its own set of things we have to do. Overall, I’m very excited that our net promoter score has stayed really high. And we do we do organize what we do around customer happiness. And from early days, our net promoter score has been just just around 80. And so that that’s how we prioritize what we do. And it’s focused on what are the little things we can do in the product that makes it that make it ever easier for the consumer to pay and then for the merchant, to use us. So we have a long list of those. And so just supporting the growth of the customer base generates a decent amount of work. And currently I would, I would say those are the main two areas, the financial institutions and the growth of the customer base that we are focused on.

Whitney McDonald 14:58
You’ve been listening to the As 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

Transcribed by https://otter.ai

Whitney McDonald 0:01
Hello and welcome to The Buzz a bank automation news podcast. Today is August 22 2023. Joining me today to discuss embedded finance is co founder and CEO of wisetack. Bobby Tzekin.Bobby Tzekin 0:14
Hi, I’m Bobby Tzekin, I am co founder and CEO wisetack. And my background is over 20 years in FinTech at this point, a started in the early 2000s. at PayPal before FinTech was a term. So I spent seven years at PayPal as the company grew quite a bit. And after that, was head of product at three other FinTech companies, both in the payment processing space, as well as online lending. And all of that experience actually has led to co founded why stack because we sit at that intersection of payments and lending.Whitney McDonald 0:55
Great. Well, thank you so much for joining us for the buzz would love to kick things off with you kind of setting the scene here for embedded finance, what is the need for for this type of solution, the ability to pay over time? What does this bring to clients and express a little bit about what the need is for this market?

Bobby Tzekin 1:13
Yeah, we believe there’s two important trends that are driving consumers to adopt something other than a credit card to pay for purchases these days, which then is setting the stage for the embedded piece. So first, in terms of financial products, credit cards have been the most common and frequent way consumers will borrow in the US. And the reason why that’s changing is twofold. One, after the Great Recession, there was a regulation that prevents card issuers from marketing on campus and universities. And so now we have a much larger population of young people graduating without credit cards and going without a credit card for a long time. So that is requiring a new way for them to afford larger purchases before they really started getting the income that they’ll get later on in their career. So that’s one trend. The other really important one is everyone understands these days that a credit card is not a great way to borrow great way to pay if you pay it off at the end of the month. But it’s expensive to borrow. And everyone understands that. And so now that technology has allowed installment payment options to be present, everywhere, especially online, consumers are choosing that because they know it’s more affordable to spread your payments over time via these installment payments. And that I think sets the stage for Well, why is embedding these financial products important. And the other trend that contributes here is the adoption of SAS or software as a service by businesses pretty much every business, no matter the size these days, is thinking about or has already adopted some type of software to run their business. And those software providers themselves are embedding payment options. And the most common one usually the first one is credit card payments. If if the businesses are serving consumers, the software they use typically will offer credit card processing. And the next step beyond that, obviously, we just talked about the limitations of credit cards is Well how else can a consumer pay, especially for larger purchases? And that’s what wisetech does, we embed the seamless installment payment options. So the consumer can pay over time if it is a large purchase, and they don’t have to put it on a credit card.

Whitney McDonald 3:32
Now taking that a step further, I know you started talking through how wisetech accomplishes this, but maybe we can get into a little bit about the technology behind wise tech and how it’s how it works.

Bobby Tzekin 3:43
Yeah, absolutely. So as I mentioned, its most fundamental voi stack technology consumer can pay over time for a large purchase and how we’re different from others who may say the same thing is that we’re an API platform. So we do a few things differently. One is we’re incredibly easy for a developer to integrate into any software experience. So it’s a deeply embedded option. And that does a couple of other things. One is it makes it really easy for the business to get started. So the business, just the way everyone expects these days that if they’re running a business, they can very easily enable credit card processing for their customers. They can do the same thing with installment payments via wisetech. It is very easy it is embedded in the software that the business is already using. So it makes the startup cost go away for the business. We’re also because we’re embedded we’re very seamless as part of the purchase for the consumer, very customer friendly. So we from the very beginning focused on simplicity and customer friendliness, and that encompasses both the consumer as well as the business. And another way we differentiated is we in the past they focused on businesses that sell in the real world so not online purchases, not a website. They sell through but they are usually doing something involves an in person service. So we work with a lot of home services, businesses, like plumbing, electrical, H back, and so on just things around the home. And we also work with dental practices, we work with car repair shops and some other similar type of businesses that that again, serve their customers in the real world, not on the website.

Whitney McDonald 5:25
Now a little bit further into what you were just explaining, could you talk through, I don’t want to use the word embedded. But could you talk through integrating wisetech onto some of these claims that you were just explaining what does that entail?

Bobby Tzekin 5:38
Yeah, we, we have focused on having a really simple API that I do think the best parallel is, these days, everyone expects it to be really easy to integrate card processing. So So there are a few components. One is for businesses, how do they get going and offer the payment option. So it should be really easy to provide some basic information and turn it on for for my customer experience. So we do that. Also, we embed reporting, so in the software that a business is already using, all their transactions that have been paid via wisetech will show up seamlessly in the reporting. So they don’t have to change anything around how they reconcile what their business did. And then the final part is, again, for their customers for the consumer, how easy is it for the consumer to pay. And so all of that we’ve made it really easy to put into a piece of software. So think if if I’m running a plumbing business, I’m using this piece of software to manage my entire business. It means dispatching my technicians to jobs in the field, it means managing my inventory of supplies, it means my orders my payments. And so why stacks embedded in there as a payment option. And anytime there’s a large, unexpected job, let’s say your pipes burst at home, and it’s an unfortunate thing is going to cost many 1000s of dollars to repair Well, you don’t have to panic about how you would pay for that because you can pay over time. And that option is available as the business comes out to do the work.

Whitney McDonald 7:15
I’d love to get into another use case here. I know that you just shared that great example. Maybe we can talk about another way that wisetech is in action. I know that you recently announced that you’re working with citizens, maybe you could talk through through that and what that entails a more specific type of use case. Yeah, I

Bobby Tzekin 7:35
can talk about both of those. So another very common example we have is imagine it’s it’s the winter and it is very cold and your water heater goes out or your your heater for your home. And it is obviously an emergency. When that happens, you didn’t plan for it, you call It’s a call a plumber, if it’s the water heater, they show up. And they look at your 15 year old water heater and they say, well, it’s on its last legs, I can repair it. And I’ll probably be back here next year. Or I can replace it with something better. Or you have another option, I can replace it with a really modern top of the line version that’s much more energy efficient is actually going to save you substantial costs in terms of the energy that it’s going to consume. And at that point, the merchant usually will will present a proposal that says here’s your options. And for the options of replacement or the top of the line replacement. There’ll be something that presents, okay, maybe it’s $2,000 for this option, or as low as let’s say, for example, $150 a month. And that allows the consumer to afford something better that over the lifetime will save them money, whether it’s through lower costs of repair or lower costs of energy, if they could just afford to make the better purchase in the moment. So it’s a win win. Because the business is able to do the right work and serve the consumer, the consumer is able to afford something better. They don’t have to revolve on a credit card and incur additional costs. And so then the consumer makes the choice. Let’s say they do elect to pay overtime so they can afford the better the better purchase. They can either proceed with that through the proposal that they received from the business, which often is digital, it can be emailed or texted to the consumer, or the merchant and the technician in the home via the mobile app that they use to manage their work and push a button and the consumer can attack text message to complete their payment. So all of that is part of the consumer experience. And then once the consumer starts the process, it takes just a minute to see what their options are to pay over time. And they can complete everything on their own device really quickly. So that’s the that’s the customer Ernie, that’s an example of how it works. And I’m happy to go into that more if it’s interesting.

Whitney McDonald 10:06
No, that’s great. And I kind of wanted to shift a little bit here into what I was talking about with the relationship with citizens, what what it means to be working with a financial institution, I know that there was also discussions that there was opportunity to further those types of relationships, maybe specifically talking about citizens here, and what that does, with with wisetech, and then other opportunities for other FIS to to work with other advice.

Bobby Tzekin 10:34
Yeah, from the very beginning, when we started the business, in our business plan, we said that we’re building a platform for financial institutions. And the reason for that is multifold. One is, as I mentioned, these are big shifts in terms of what’s available to consumers, we know that financial institutions need to play in that space of installment payments. So we knew that they’d be interested. On the other hand, these are large banks committed to serving consumers, and they have a really low cost of capital. So we knew it would be a win win to provide a technology that we’re great at making and running to financial institutions that are already committed to that business and have a low cost of capital. And so that benefits customers, and it benefits the financial institutions. And in terms of, if you think about citizens, they already have some big brand names, they’ve had a partnership with Apple for a long time, they’re partnered with Microsoft for purchases at the point of sale. So they really know the space, the reason why they partner with us, is because they reach a channel and a type of business that they can’t reach otherwise. And that is those developer integrations that bring them smaller businesses and real world businesses. And we’re really good at serving those merchants, we have a big merchant base that they want to have access to. And again, for us, we get a lot of benefit from being partnered with a large bank that is committed to this space. And we do, as you mentioned, we do have others in in process that we’ll be announcing, in the coming quarters. And again, it furthers the the example I started with that if if you think of us as a network of technology integrations and merchants, we always planned to bring the banks to this platform. And another parallel again, if you go back to the card processing world is on a smaller scale, think Visa and MasterCard that is a network of consumers and merchants that allows payments and financial institutions to be on that network. And that’s very much the vision for us. But we are not beholden to the card rails and have a lot more flexibility when it comes to the terms on which everyone can participate.

Whitney McDonald 12:54
Yeah, that’s really helpful. And I know you kind of gave us a little bit of a sneak peek of your you’re working with others. But it’s all just about kind of growing that network is what I’m getting from what you’re what you’re saying citizens being one, but like you said, there’s there’s others in place to again, grow that grow that network that’s speaking of what you’re working on, for the remainder of 23. I know you said a couple of other partnerships, announcements coming in the coming quarters on the tech side, or even just on the embedded payment side things that you’re working on for the rest of the year or excited about for the rest of the year. Yeah,

Bobby Tzekin 13:33
there are quite a few things. That’s a big category, onboarding the financial institutions and ensuring that that important pillar of the business is really serving the the large banks. That’s an important part. And as we talked, we’ll have more specifics to share soon. The other part is we are growing the network part, we are growing our integrations we are growing our network, our Merchant network and merchant base. And so all of that comes with plenty of work where we’re constantly looking to make the product simpler and better so that it can reach more customers. We’re growing quite fast. And that comes with its own set of things we have to do. Overall, I’m very excited that our net promoter score has stayed really high. And we do we do organize what we do around customer happiness. And from early days, our net promoter score has been just just around 80. And so that that’s how we prioritize what we do. And it’s focused on what are the little things we can do in the product that makes it that make it ever easier for the consumer to pay and then for the merchant, to use us. So we have a long list of those. And so just supporting the growth of the customer base generates a decent amount of work. And currently I would, I would say those are the main two areas, the financial institutions and the growth of the customer base that we are focused on.

Whitney McDonald 14:58
You’ve been listening to the As 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

Transcribed by https://otter.ai