May 12, 2025 • 21 mins
Dan Battista, CEO and Partner at Factor4, takes us on an journey through the rapidly evolving gift card landscape. With genuine passion and deep industry knowledge, Dan reveals how Factor4 has grown from just 3 employees to 22 staff serving over 21,000 merchants in just a decade.
The conversation illuminates Factor4's remarkable approach to customer service – answering emails within 10 minutes and phones within two rings – which has become their true competitive advantage. Unlike competitors owned by large payment processors, Factor4 focuses exclusively on gift and loyalty solutions, allowing them to devote 100% of their investment and attention to perfecting these offerings.
Dan walks us through the transformation of gift cards during the pandemic era – from traditional plastic cards to essential digital solutions delivered via email and SMS. What was once a "nice-to-have" became a critical business necessity, pushing Factor4 to develop comprehensive omnichannel capabilities that seamlessly connect online and in-store experiences.
Particularly compelling is Dan's insight into loyalty programs as customer relationship management tools. When pandemic restrictions hit, merchants suddenly realized they had no way to communicate with their regular customers about changing hours, outdoor dining, or reopening plans. Factor4's customized loyalty solutions filled this gap, helping businesses build valuable customer databases while driving repeat business.
The conversation also explores Factor4's innovative approach to technology, including their development of iOS and Android apps that enable gift card transactions without additional hardware – simply using a smartphone camera to read barcodes. This adaptability has allowed them to integrate with over 50 different POS systems and expand internationally across ten countries.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:01):
Welcome to the Leaders in Payments podcast,
where we talk to C-level leadersfrom across the payments
landscape.
We'll be discussing theproducts and services that
impact the payment space today,as well as trends and
predictions for the future ofpayments.
We will also hear stories fromour guests about their journeys
to the top.
Speaker 2 (00:18):
Hello everyone and welcome to the Leaders in
Payments podcast.
I'm your host, greg Myers, andon today's show we have a very
special guest, dan Batista, theCEO and partner at Factor 4.
So, dan, welcome to the show,greg, thanks for having me
Appreciate it Absolutely.
So, if you don't mind, startout by telling a little bit
about yourself, maybe where yougrew up, where you went to
school, where you currently live, a few things like that.
Speaker 3 (00:37):
Sure, born and raised in the Philadelphia area, home
of the world championPhiladelphia Eagles, as of this
year, always been here, stayedhere.
Our office is still here atFactor 4.
I'm the father of four and I'vegot four stepkids.
So we were just in thegrandchildren stage at this
point in time in our lives.
We've got three grandkids, andfourth on the way.
(00:59):
I was in the paint industry for20 years before coming into the
gift card world back in 2003.
Been there for over 20 yearsnow, a variety of different
positions and companies, factor4 being the latest.
Like I told you, we're almostcelebrating our 10-year
anniversary here at Factor 4 ina couple of days.
So it's been great.
I still play golf.
(01:20):
I still play men's hardballOver 55 men's league.
Yeah, I got the aches andbruises to show that Nice.
Scraped some of my hands andstuff like that, but still play
baseball and just have a greattime.
It's a good time in life andthings are good, great.
Speaker 2 (01:36):
Well, let's talk about Factor 4.
So tell the audience what youguys do.
Speaker 3 (01:39):
So Factor 4 is a gift card processing company gift
and loyalty right.
So we do loyalty transactionsas well.
Started back in May of 2015.
We purchased a portfolio of ISObook of business from a former
company called Sparkbase.
Sparkbase was a wholesaleprovider, bought about 4,000
locations.
With a couple integrationsRealized, there was a real
(02:01):
opportunity.
We started with three employeesReally focused on two pieces of
the gift card world.
We know gift cards are reallylike an accessory product or
almost a hinge product when itcomes to merchant processing
sales.
So two things that reallymatter is the number of
integrations you have, theamount of terminals and POSs
(02:21):
that you work with and ourcustomer service.
So when a rep or a merchantprocessing salesperson is out
selling an account and they'reready to close someone, then the
merchant says, oh, you can domy gift cards too.
There's that deep breath.
We know they need an answer.
So we've really pushed thecustomer service side here.
We respond to emails within 10minutes.
(02:42):
We answer the phone within tworings.
We're here from 6 am to 8 pmEastern time.
So we really focus on thecustomer service side and in our
world, in the gift card world,I think it's second to none what
we do as far as customerservice and the amount of
integrations that we'vecompleted through POS and
payment terminals, we'vecompleted through POS and
(03:03):
payment terminals, maybe talkabout kind of the traditional
gift card of back, when it wasplastic, to more of the common
2025 gift card.
Yeah.
So it's really changed and I'lltell you that what we've seen.
We were most worried about thestandard plastic gift card going
away.
When all the technology andmerchant processing moved from
(03:24):
the swipe to the dip, right, wewere like, uh-oh, the swipe's
going to go away.
Right, that's going to be aproblem because it's a mag
stripe on the back of a plasticcard.
How are you going to process acard?
So what we did is we put abarcode, a printed number and a
mag stripe on every one of thecards plastic cards we print.
(03:46):
Now fast forward back to early2020, when we decided to have
the pandemic right andeverything was just crazy.
You know, the plastic cardproduct was what it was.
It was a good product.
That's what people wanted,that's what people did Post and
during pandemic.
You know you needed the e-card,you needed that SMS card, you
needed the digital card piece.
Whereas before it used to be avery much a nice to have, now
(04:07):
it's a must to have.
So what we see is our plasticcard product really is not just
an in-store plastic card product, but you can email a gift card,
if you need to, from a store,you can SMS gift card from the
store, and then we can build alink for you that enables you to
sell both a plastic card and ane-card right from your website.
So then we can build a link foryou that enables you to sell
both a plastic card and ane-card right from your website.
So those things are reallypretty much standard in today's
(04:31):
world, and what's nice about itis that we do all that
internally and it all integratestogether, so the card you sell
online can be redeemed in storeand vice versa.
It's all done together, so it'ssort of an omnichannel solution
that allows it to happen andyou mentioned the integrations
and partners.
Speaker 2 (04:47):
Is that your sole go-to-market strategy or do you
do any direct-to-merchant?
Great question.
Speaker 3 (04:52):
So when we took over the portfolio from SparkBase
back in 2015, it was 99% throughISOs.
That was the play right.
That was the book of business.
They wanted to white label it.
We can white label today stilland we can and we do for certain
people.
But what we found is that theISO and the POS was always sort
of like an afterthought asopportunity.
(05:12):
Many POS products come to usand say, hey, can we connect
with you Because we've gotenough software projects to work
(05:32):
on and the ability to connectwith you gives us a full service
gift card product from day one.
So we found that as a hugeopportunity and the opportunity
to go direct to merchants hasallowed us because of our
integrations.
We've got integrations withToast and Micros and all the
latest POS products and thatreally allows us to go direct to
merchant groups, smallfranchise groups, to handle
(05:53):
movement of funds and thingslike that.
Absolutely.
So I would tell you today we'reprobably 60% through partners
and 40% direct to merchant.
Speaker 2 (06:01):
And typically those are relatively larger merchants
that have the volume or thelocation.
Speaker 3 (06:06):
Franchise groups that are sort of growing, that you
know that one to a hundred rangethat are growing, that look to
need a partner that can behelpful and help them through
the process.
You know groups that may havedone business with us in the
past and say we're moving tothis POS, you might not be
integrated, we want to stay withyou.
Can you work with us?
That type of thing.
So really it's a wide varietyof different groups and again
(06:29):
our development pipeline, whichis just endless.
At this point I think we've got50 different POS integrations
we're still working on today,which is just it's mind-boggling
, greg.
It just really is.
Speaker 2 (06:43):
Maybe talk about that , because we were talking,
before coming on air, a littlebit about being in the payments
industry a long time and when Ifirst started there was Ingenico
, verifone, hypercom.
I mean that was probably 90% ofthe market and now a lot of
companies fintechs have builttheir own solutions and a lot of
POS system integrators like youmentioned some of them so maybe
(07:05):
talk about how that's changedover time.
Speaker 3 (07:08):
Yeah.
So one of the things we didearly on and again I would tell
you that if we were this smart,we would have been really smart,
but we weren't.
You know, back in the day andagain I use this is that there
was nothing worse than getting acall from a merchant saying my
terminal's down, I can't runtransactions.
And what we used to panic aboutis oh, we got to build a new
(07:28):
download, we get a terminal,we'd have to overnight it, and
things like that.
So early on in Factor 4, webuilt both an iOS and an Android
app and that app allowed themerchant to be able to run
transactions from any smartphoneand it's a free download.
So that app has really allowedus to sort of grow into those
(07:50):
POS integrations as well asthose payment terminals, because
a lot of those are built onAndroid-based products.
So when we have the ability togo on our Google Play Store and
download a Factor 4 app, thatapp really is the basis for a
lot of our differentintegrations and apps that we
can use.
And what's nice about it is thatapp.
(08:10):
You don't need additionalswiper, you don't need a piece
of equipment to plug in thephone.
It uses the camera on the phoneto read the barcode on the back
of the card.
So you don't need to swipe, youcan log in pretty simply.
You can run transactions on anyPC, on any phone, anytime, and
it's just like adding anotherterminal to that merchant.
(08:30):
So that's really been a hugehelp, for that Android-based
product has really been.
You know, we revise it forterminals like Point, terminals
like Pax and things like that.
But once you revise it it sortof works like a charm.
But it's a great base for theproduct.
Speaker 2 (08:47):
And you're US only.
Is that correct?
Speaker 3 (08:49):
No, we're in 10 different countries.
We're in South Africa, ireland,england, all through the EU,
canada, mexico and a variety ofdifferent places.
So yes global and that's comefrom integrations, typically
Like we're on Clover.
So we've got thousands ofmerchants that use us on Clover
Again, very interesting play,because obviously Clover has its
(09:10):
own gift card product.
But back to what we said before, Greg, if you try to call the
Clover gift card department andtry to call Factor 4, you're
going to get somebody on thephone to answer your question
with us and we're going to beable to solve their problem
pretty quickly.
So that's been really the edgefor us.
Speaker 2 (09:28):
Well, I think that's a good segue into the next
question.
What would you say are your keydifferentiators against your
competition?
Speaker 3 (09:34):
Yeah, and again it really.
You know, thinking about this,about what we did, was when we
took over this company, we knewthat there was a need for a
customer service piece.
Right, because most of ourcompetitors are owned by
merchant processors.
Right, because they own theirown gift card product.
Let's go back to Chase PaymentsAct, to GiveX, all those, all
(09:54):
the value techs, all of ourcompetitors are owned by a
processor.
So the typical residual on agift card product is about
one-tenth what it is on amerchant sales product.
So that product in the merchantprocessing world doesn't get a
lot of investment.
Well, in Factor 4's world,that's all we sell is gift and
(10:15):
loyalty.
So it gets 100% of ourinvestment.
That's the nice part about it.
So our integration list issecond to none.
So we can run a transaction.
We can have a group ofmerchants that have a Clover,
have a Micros and have a ToastPOS and they can run
transactions across all thosePOSs, those transactions across
(10:37):
POS.
So that's one of the bigdifferentiators for us.
And the other piece, greg, byfar, is our customer service,
our ability to solve a problemor to get somebody set up.
And hey, listen, I need thismerchant set up in an hour.
We can do that for you, and ourability we print some cards
in-house, we can turn thingsaround.
We can solve a problem thatjust helps that merchant
(10:58):
processing salesperson make it alot easier for them.
Well.
Speaker 2 (11:01):
I want to go back to the product for a second,
because you've mentioned loyaltya couple of times, so maybe for
the audience that may beunclear on what you mean by
loyalty, can you explain how?
Maybe that's a little differentthan gift card or what the two
are.
So yeah, loyalty is a greatproduct.
Speaker 3 (11:17):
Loyalty is one of those products that really
became one of those items thatpeople really need after the
pandemic.
Because when pandemic hit mostof the merchants didn't know who
their customers were.
They needed to get in contactwith that customer and say, hey,
listen, we're still open, we'reoften dining outside and things
like that.
So loyalty became a productwhere they really need to
(11:40):
understand who their customerwas, how often they were in
there, what they were spending.
So in our world loyalty is away to really help manage that
CRM for that merchant so theyknow who their customer is
Typically a custom product,right.
So something to say.
Loyalty products for a coffeeshop is not the same as a
loyalty product for a furniturestore.
(12:00):
Their average typically are waydifferent, their customer's way
different, their promotion isway different.
So we're able to sort of sitand talk to that merchant and
say, all right, what are youtrying to get out of it?
Are you trying to collect phonenumbers?
Do you want email addresses?
Do you want to send themrewards?
How do you want to do it?
There's all different levels toit.
So we'll take the time and sortof spend that time with the
merchant and sort of build thatloyalty program for them.
Speaker 2 (12:21):
When you step back and look at the payments
industry and obviously you cananswer this with the Factor 4
lens, but where do you see sortof the payments industry headed
in the next, say, three to fiveyears?
Speaker 3 (12:31):
It's amazing to me to always see the technology
getting better and better andbetter.
You know the toast of the worldand all the different
technology, the handheld Like Iwas just out of the country for
the last week.
It's amazing to see every timeyou use the credit card, the
(12:52):
person brought the credit cardterminal right to the table.
There's things like that thathave to get done.
So I think the more thetechnology continues to ramp up,
the better off it is for thepayments world and I think at
some point they're going to haveto take that legacy technology
and sort of start turning it off.
Payments has always sort of letit work until it dies and then
(13:15):
replace it.
It's time to sort of move onfrom that because it'll make
things more secure, make thingsfaster and more consistent for
the merchant.
Because the merchants are justsitting on old equipment and it
just tends not to be very goodfor them.
They get frustrated by it.
So I see a lot of the newtechnology In the gift card
world.
(13:35):
Plastic has seen its growth slow.
It's still growing.
Plastic gift cards still grow.
There's still a value in thatperceived value, right when you
give a gift.
Giving an emailed gift cardisn't always the best option.
There tends to be a little bitof feeling of it's not as
important.
So the plastics are still there, but we see the growth in the
(13:56):
e-card, the growth in therewards card, having the ability
to be able to send a $5 giftcard via email to 100,000
customers to get them to come inon the last three days of the
month, because it's anopportunity.
There's where the opportunitycomes in.
So there's a lot of marketingopportunities that we see
through digital, which is reallyhuge for merchants.
Speaker 2 (14:16):
Well, let's switch gears a little bit and talk
about you and you talked alittle bit about your background
, but maybe give us sort of yourhigh-level overview of your
background and professionalbackground and then maybe why
you did Factor 4, how you gotinvolved, why you decided that
was the place to be.
Yeah, so again.
Speaker 3 (14:34):
So I came out of college, graduated college, I
went to work for a local paintcompany that had 150 locations.
Did a whole variety ofdifferent things with them,
started with an accountingdepartment, had an accounting
degree, knew the bases inbusiness, did real estate site
selection, lease negotiation,ended up being a regional
manager of sales and stores forthe largest group they had.
(14:56):
They sold to a national chain,sherwin-williams.
It was a good time for me toget out.
At that point my brother hadstarted another gift card
company previous to Factor 4,needed someone to for me to get
out.
At that point my brother hadstarted another gift card
company previous to Factor 4.
Needed someone to come on torun sales.
So he says come work with me.
So I did.
We got out of that in 2010.
I was my own ISO for five yearsselling merchant processing,
(15:17):
selling gift card, because thatwas really the basis of that
previous gift card company.
We were really an ISO whohappened to have gift cards
right, we were selling merchantprocessing and sort of giving
you the gift cards.
And then in 2014, sparkbase waslooking to build a version five
product of what they were doing, needed some money, wanted to
sell a piece of their business,they decided to sell it.
(15:37):
My brother and another partner,craig Davis, decided to take a
run at Factor 4.
So we opened the doors in Mayof 2015 with three full-time
employees, me being one of themand then weren't sure where we
were going, had about 4,000merchants and sort of figured
out what was next.
Fast forward and today we'reabout to move into our third
office.
In 10 years that's 8,000 feet.
(16:00):
We're 22 full-time employees.
We've got over 21,000 merchantsusing our service, got the
longest list of integrations outthere, and we just see the
opportunities.
As just it amazes me theopportunities that are endless,
the integrations opportunities,the new partners, merchants that
are looking to us.
Again, customer service reallyhas been key for us, as well as
(16:24):
the integrations, but we justhad some really good people.
Hard to believe it's been 10years.
I don't see any slow to thegrowth.
I just see it just moving on.
Speaker 2 (16:32):
Well, what are some things you're passionate about?
Maybe one work-related passionand one personal passion.
Speaker 3 (16:37):
Yeah, so work-related is.
The first thing is for us,especially when someone calls or
emails in.
For us, especially when someonecalls or emails in, I'm very
passionate about solving thatperson's problem before you
figure out why there was aproblem, right, and there's
always that, hey, listen, thisshouldn't happen.
Let's figure out what happened.
But that needs to be chaptertwo.
(16:59):
Chapter one needs to be hey, weneed to get you up and running.
We need to get you processtransactions.
Here are four or five differentways we can do that today,
whether that's overnight, yourterminal, download an app, run
the transactions for you.
Whatever we need to do to getyou holing up and running,
because most merchants we dealwith are owners.
They're Joe from Joe's Pizzaand he's got things to do.
(17:22):
So the more we can solve theproblem and then go back and
figure out why that problemhappened and then try not to
have that problem happen again.
Right, but that's really twoand three.
We really focus on that.
So that's a passion of mine,sort of get that done right,
then, and there High energy isall that I'm about.
Let's get it done, let's moveit on.
(17:44):
And family Family is my passion.
We've got eight kids between mywife and I and three grandkids
and growing all the time.
We've got one graduating downat UNC.
She's got her doctorate in twoweeks, so a lot of good stuff
happening.
It's great to see them all sortof thriving and growing Awesome
.
Speaker 2 (18:02):
So one final question If someone comes to you maybe
they just graduated from collegeand they're looking at the
payments or fintech industry andthey say, dan, I'm looking at
getting into this industry whatadvice would you give them to
help them be successful in thisspace?
Speaker 3 (18:17):
The payments industry is a very incestuous business.
So first and foremost I wouldtell you is that be fair, be
honest and always create somegreat relationships, because you
never know when thatrelationship is going to come
back around and you're eithergoing to talk to that person or
need that person, or ask forthat reference or have that
person as a customer again.
(18:38):
One of the things that's reallyimportant here is you can see
how the payments industryevolves and people evolve in it.
So that person you talk totoday may be a technical
assistant answering a call, butin three years they may be a
partner at a brand new ISO andin five years they may be a
partner in the largest ISO.
(18:59):
So you always have to rememberthat.
So always remember who you'retalking to, be kind, be
thoughtful, be considerate, behonest with them, help them
solve their problems and thenreally grow your LinkedIn family
right.
Connect with a lot of people,know who you're talking to,
because that's really going tohelp you.
And the second thing theopportunity in payments is huge.
(19:22):
It always will be.
As much as you hear the bigpeople stripe and square and all
that stuff.
There's nothing that beats ahandshake, a phone call, a
face-to-face meeting.
That's simply never going to goaway.
People are always going to wantthat.
There's that relationship thatyou can build.
So as long as you can careabout what the merchant needs
and help them solve a problem,you'll do well.
Speaker 2 (19:43):
Well, Dan, before we go, is there anything else you'd
like to mention before we wrapup?
Speaker 3 (19:48):
It's been a really interesting run here at Factor 4
, and I feel as though we'rehitting a point where we're
going to continue to grow.
And you know it's been amazingto see you know we've been
really lucky here with employeeshow they've sort of taken on
the task and sort of taken on it.
Like I said, we started withthree of us and there's still
two of us of the original threehere.
You know our people and howgood they are and how much they
(20:10):
care.
So whenever any customers ormerchants or partners or agents
call in, they can tell thereisn't a day that goes by here
that we don't get a coupleemails or a couple phone calls
saying, hey, you guys areawesome, you guys are great.
So I think that's what makes adifference.
Speaker 2 (20:29):
And just seeing everybody sort of succeed here
has been really nice for us.
Okay, great.
I think that's a great way toend the show.
So, dan, thank you so much forbeing on today.
I know your time is veryvaluable, so thank you so much
for being here.
Thanks, greg, thanks for havingus, and to all you listeners
out there.
Speaker 1 (20:45):
I thank you for your time as well, and until the next
story, thank you for joining usthis week on the Leaders in
Payments podcast.
Make sure you visit our websiteat leadersinpaymentscom, where
you can subscribe to the showand where you'll find our show
notes.
If you enjoyed listening,please share on your social
channels as well.
Welcome to the Leaders in Payments podcast,
where we talk to C-level leadersfrom across the payments
landscape.
We'll be discussing theproducts and services that
impact the payment space today,as well as trends and
predictions for the future ofpayments.
We will also hear stories fromour guests about their journeys
to the top.
Speaker 2 (00:18):
Hello everyone and welcome to the Leaders in
Payments podcast.
I'm your host, greg Myers, andon today's show we have a very
special guest, dan Batista, theCEO and partner at Factor 4.
So, dan, welcome to the show,greg, thanks for having me
Appreciate it Absolutely.
So, if you don't mind, startout by telling a little bit
about yourself, maybe where yougrew up, where you went to
school, where you currently live, a few things like that.
Speaker 3 (00:37):
Sure, born and raised in the Philadelphia area, home
of the world championPhiladelphia Eagles, as of this
year, always been here, stayedhere.
Our office is still here atFactor 4.
I'm the father of four and I'vegot four stepkids.
So we were just in thegrandchildren stage at this
point in time in our lives.
We've got three grandkids, andfourth on the way.
(00:59):
I was in the paint industry for20 years before coming into the
gift card world back in 2003.
Been there for over 20 yearsnow, a variety of different
positions and companies, factor4 being the latest.
Like I told you, we're almostcelebrating our 10-year
anniversary here at Factor 4 ina couple of days.
So it's been great.
I still play golf.
(01:20):
I still play men's hardballOver 55 men's league.
Yeah, I got the aches andbruises to show that Nice.
Scraped some of my hands andstuff like that, but still play
baseball and just have a greattime.
It's a good time in life andthings are good, great.
Speaker 2 (01:36):
Well, let's talk about Factor 4.
So tell the audience what youguys do.
Speaker 3 (01:39):
So Factor 4 is a gift card processing company gift
and loyalty right.
So we do loyalty transactionsas well.
Started back in May of 2015.
We purchased a portfolio of ISObook of business from a former
company called Sparkbase.
Sparkbase was a wholesaleprovider, bought about 4,000
locations.
With a couple integrationsRealized, there was a real
(02:01):
opportunity.
We started with three employeesReally focused on two pieces of
the gift card world.
We know gift cards are reallylike an accessory product or
almost a hinge product when itcomes to merchant processing
sales.
So two things that reallymatter is the number of
integrations you have, theamount of terminals and POSs
(02:21):
that you work with and ourcustomer service.
So when a rep or a merchantprocessing salesperson is out
selling an account and they'reready to close someone, then the
merchant says, oh, you can domy gift cards too.
There's that deep breath.
We know they need an answer.
So we've really pushed thecustomer service side here.
We respond to emails within 10minutes.
(02:42):
We answer the phone within tworings.
We're here from 6 am to 8 pmEastern time.
So we really focus on thecustomer service side and in our
world, in the gift card world,I think it's second to none what
we do as far as customerservice and the amount of
integrations that we'vecompleted through POS and
payment terminals, we'vecompleted through POS and
(03:03):
payment terminals, maybe talkabout kind of the traditional
gift card of back, when it wasplastic, to more of the common
2025 gift card.
Yeah.
So it's really changed and I'lltell you that what we've seen.
We were most worried about thestandard plastic gift card going
away.
When all the technology andmerchant processing moved from
(03:24):
the swipe to the dip, right, wewere like, uh-oh, the swipe's
going to go away.
Right, that's going to be aproblem because it's a mag
stripe on the back of a plasticcard.
How are you going to process acard?
So what we did is we put abarcode, a printed number and a
mag stripe on every one of thecards plastic cards we print.
(03:46):
Now fast forward back to early2020, when we decided to have
the pandemic right andeverything was just crazy.
You know, the plastic cardproduct was what it was.
It was a good product.
That's what people wanted,that's what people did Post and
during pandemic.
You know you needed the e-card,you needed that SMS card, you
needed the digital card piece.
Whereas before it used to be avery much a nice to have, now
(04:07):
it's a must to have.
So what we see is our plasticcard product really is not just
an in-store plastic card product, but you can email a gift card,
if you need to, from a store,you can SMS gift card from the
store, and then we can build alink for you that enables you to
sell both a plastic card and ane-card right from your website.
So then we can build a link foryou that enables you to sell
both a plastic card and ane-card right from your website.
So those things are reallypretty much standard in today's
(04:31):
world, and what's nice about itis that we do all that
internally and it all integratestogether, so the card you sell
online can be redeemed in storeand vice versa.
It's all done together, so it'ssort of an omnichannel solution
that allows it to happen andyou mentioned the integrations
and partners.
Speaker 2 (04:47):
Is that your sole go-to-market strategy or do you
do any direct-to-merchant?
Great question.
Speaker 3 (04:52):
So when we took over the portfolio from SparkBase
back in 2015, it was 99% throughISOs.
That was the play right.
That was the book of business.
They wanted to white label it.
We can white label today stilland we can and we do for certain
people.
But what we found is that theISO and the POS was always sort
of like an afterthought asopportunity.
(05:12):
Many POS products come to usand say, hey, can we connect
with you Because we've gotenough software projects to work
(05:32):
on and the ability to connectwith you gives us a full service
gift card product from day one.
So we found that as a hugeopportunity and the opportunity
to go direct to merchants hasallowed us because of our
integrations.
We've got integrations withToast and Micros and all the
latest POS products and thatreally allows us to go direct to
merchant groups, smallfranchise groups, to handle
(05:53):
movement of funds and thingslike that.
Absolutely.
So I would tell you today we'reprobably 60% through partners
and 40% direct to merchant.
Speaker 2 (06:01):
And typically those are relatively larger merchants
that have the volume or thelocation.
Speaker 3 (06:06):
Franchise groups that are sort of growing, that you
know that one to a hundred rangethat are growing, that look to
need a partner that can behelpful and help them through
the process.
You know groups that may havedone business with us in the
past and say we're moving tothis POS, you might not be
integrated, we want to stay withyou.
Can you work with us?
That type of thing.
So really it's a wide varietyof different groups and again
(06:29):
our development pipeline, whichis just endless.
At this point I think we've got50 different POS integrations
we're still working on today,which is just it's mind-boggling
, greg.
It just really is.
Speaker 2 (06:43):
Maybe talk about that , because we were talking,
before coming on air, a littlebit about being in the payments
industry a long time and when Ifirst started there was Ingenico
, verifone, hypercom.
I mean that was probably 90% ofthe market and now a lot of
companies fintechs have builttheir own solutions and a lot of
POS system integrators like youmentioned some of them so maybe
(07:05):
talk about how that's changedover time.
Speaker 3 (07:08):
Yeah.
So one of the things we didearly on and again I would tell
you that if we were this smart,we would have been really smart,
but we weren't.
You know, back in the day andagain I use this is that there
was nothing worse than getting acall from a merchant saying my
terminal's down, I can't runtransactions.
And what we used to panic aboutis oh, we got to build a new
(07:28):
download, we get a terminal,we'd have to overnight it, and
things like that.
So early on in Factor 4, webuilt both an iOS and an Android
app and that app allowed themerchant to be able to run
transactions from any smartphoneand it's a free download.
So that app has really allowedus to sort of grow into those
(07:50):
POS integrations as well asthose payment terminals, because
a lot of those are built onAndroid-based products.
So when we have the ability togo on our Google Play Store and
download a Factor 4 app, thatapp really is the basis for a
lot of our differentintegrations and apps that we
can use.
And what's nice about it is thatapp.
(08:10):
You don't need additionalswiper, you don't need a piece
of equipment to plug in thephone.
It uses the camera on the phoneto read the barcode on the back
of the card.
So you don't need to swipe, youcan log in pretty simply.
You can run transactions on anyPC, on any phone, anytime, and
it's just like adding anotherterminal to that merchant.
(08:30):
So that's really been a hugehelp, for that Android-based
product has really been.
You know, we revise it forterminals like Point, terminals
like Pax and things like that.
But once you revise it it sortof works like a charm.
But it's a great base for theproduct.
Speaker 2 (08:47):
And you're US only.
Is that correct?
Speaker 3 (08:49):
No, we're in 10 different countries.
We're in South Africa, ireland,england, all through the EU,
canada, mexico and a variety ofdifferent places.
So yes global and that's comefrom integrations, typically
Like we're on Clover.
So we've got thousands ofmerchants that use us on Clover
Again, very interesting play,because obviously Clover has its
(09:10):
own gift card product.
But back to what we said before, Greg, if you try to call the
Clover gift card department andtry to call Factor 4, you're
going to get somebody on thephone to answer your question
with us and we're going to beable to solve their problem
pretty quickly.
So that's been really the edgefor us.
Speaker 2 (09:28):
Well, I think that's a good segue into the next
question.
What would you say are your keydifferentiators against your
competition?
Speaker 3 (09:34):
Yeah, and again it really.
You know, thinking about this,about what we did, was when we
took over this company, we knewthat there was a need for a
customer service piece.
Right, because most of ourcompetitors are owned by
merchant processors.
Right, because they own theirown gift card product.
Let's go back to Chase PaymentsAct, to GiveX, all those, all
(09:54):
the value techs, all of ourcompetitors are owned by a
processor.
So the typical residual on agift card product is about
one-tenth what it is on amerchant sales product.
So that product in the merchantprocessing world doesn't get a
lot of investment.
Well, in Factor 4's world,that's all we sell is gift and
(10:15):
loyalty.
So it gets 100% of ourinvestment.
That's the nice part about it.
So our integration list issecond to none.
So we can run a transaction.
We can have a group ofmerchants that have a Clover,
have a Micros and have a ToastPOS and they can run
transactions across all thosePOSs, those transactions across
(10:37):
POS.
So that's one of the bigdifferentiators for us.
And the other piece, greg, byfar, is our customer service,
our ability to solve a problemor to get somebody set up.
And hey, listen, I need thismerchant set up in an hour.
We can do that for you, and ourability we print some cards
in-house, we can turn thingsaround.
We can solve a problem thatjust helps that merchant
(10:58):
processing salesperson make it alot easier for them.
Well.
Speaker 2 (11:01):
I want to go back to the product for a second,
because you've mentioned loyaltya couple of times, so maybe for
the audience that may beunclear on what you mean by
loyalty, can you explain how?
Maybe that's a little differentthan gift card or what the two
are.
So yeah, loyalty is a greatproduct.
Speaker 3 (11:17):
Loyalty is one of those products that really
became one of those items thatpeople really need after the
pandemic.
Because when pandemic hit mostof the merchants didn't know who
their customers were.
They needed to get in contactwith that customer and say, hey,
listen, we're still open, we'reoften dining outside and things
like that.
So loyalty became a productwhere they really need to
(11:40):
understand who their customerwas, how often they were in
there, what they were spending.
So in our world loyalty is away to really help manage that
CRM for that merchant so theyknow who their customer is
Typically a custom product,right.
So something to say.
Loyalty products for a coffeeshop is not the same as a
loyalty product for a furniturestore.
(12:00):
Their average typically are waydifferent, their customer's way
different, their promotion isway different.
So we're able to sort of sitand talk to that merchant and
say, all right, what are youtrying to get out of it?
Are you trying to collect phonenumbers?
Do you want email addresses?
Do you want to send themrewards?
How do you want to do it?
There's all different levels toit.
So we'll take the time and sortof spend that time with the
merchant and sort of build thatloyalty program for them.
Speaker 2 (12:21):
When you step back and look at the payments
industry and obviously you cananswer this with the Factor 4
lens, but where do you see sortof the payments industry headed
in the next, say, three to fiveyears?
Speaker 3 (12:31):
It's amazing to me to always see the technology
getting better and better andbetter.
You know the toast of the worldand all the different
technology, the handheld Like Iwas just out of the country for
the last week.
It's amazing to see every timeyou use the credit card, the
(12:52):
person brought the credit cardterminal right to the table.
There's things like that thathave to get done.
So I think the more thetechnology continues to ramp up,
the better off it is for thepayments world and I think at
some point they're going to haveto take that legacy technology
and sort of start turning it off.
Payments has always sort of letit work until it dies and then
(13:15):
replace it.
It's time to sort of move onfrom that because it'll make
things more secure, make thingsfaster and more consistent for
the merchant.
Because the merchants are justsitting on old equipment and it
just tends not to be very goodfor them.
They get frustrated by it.
So I see a lot of the newtechnology In the gift card
world.
(13:35):
Plastic has seen its growth slow.
It's still growing.
Plastic gift cards still grow.
There's still a value in thatperceived value, right when you
give a gift.
Giving an emailed gift cardisn't always the best option.
There tends to be a little bitof feeling of it's not as
important.
So the plastics are still there, but we see the growth in the
(13:56):
e-card, the growth in therewards card, having the ability
to be able to send a $5 giftcard via email to 100,000
customers to get them to come inon the last three days of the
month, because it's anopportunity.
There's where the opportunitycomes in.
So there's a lot of marketingopportunities that we see
through digital, which is reallyhuge for merchants.
Speaker 2 (14:16):
Well, let's switch gears a little bit and talk
about you and you talked alittle bit about your background
, but maybe give us sort of yourhigh-level overview of your
background and professionalbackground and then maybe why
you did Factor 4, how you gotinvolved, why you decided that
was the place to be.
Yeah, so again.
Speaker 3 (14:34):
So I came out of college, graduated college, I
went to work for a local paintcompany that had 150 locations.
Did a whole variety ofdifferent things with them,
started with an accountingdepartment, had an accounting
degree, knew the bases inbusiness, did real estate site
selection, lease negotiation,ended up being a regional
manager of sales and stores forthe largest group they had.
(14:56):
They sold to a national chain,sherwin-williams.
It was a good time for me toget out.
At that point my brother hadstarted another gift card
company previous to Factor 4,needed someone to for me to get
out.
At that point my brother hadstarted another gift card
company previous to Factor 4.
Needed someone to come on torun sales.
So he says come work with me.
So I did.
We got out of that in 2010.
I was my own ISO for five yearsselling merchant processing,
(15:17):
selling gift card, because thatwas really the basis of that
previous gift card company.
We were really an ISO whohappened to have gift cards
right, we were selling merchantprocessing and sort of giving
you the gift cards.
And then in 2014, sparkbase waslooking to build a version five
product of what they were doing, needed some money, wanted to
sell a piece of their business,they decided to sell it.
(15:37):
My brother and another partner,craig Davis, decided to take a
run at Factor 4.
So we opened the doors in Mayof 2015 with three full-time
employees, me being one of themand then weren't sure where we
were going, had about 4,000merchants and sort of figured
out what was next.
Fast forward and today we'reabout to move into our third
office.
In 10 years that's 8,000 feet.
(16:00):
We're 22 full-time employees.
We've got over 21,000 merchantsusing our service, got the
longest list of integrations outthere, and we just see the
opportunities.
As just it amazes me theopportunities that are endless,
the integrations opportunities,the new partners, merchants that
are looking to us.
Again, customer service reallyhas been key for us, as well as
(16:24):
the integrations, but we justhad some really good people.
Hard to believe it's been 10years.
I don't see any slow to thegrowth.
I just see it just moving on.
Speaker 2 (16:32):
Well, what are some things you're passionate about?
Maybe one work-related passionand one personal passion.
Speaker 3 (16:37):
Yeah, so work-related is.
The first thing is for us,especially when someone calls or
emails in.
For us, especially when someonecalls or emails in, I'm very
passionate about solving thatperson's problem before you
figure out why there was aproblem, right, and there's
always that, hey, listen, thisshouldn't happen.
Let's figure out what happened.
But that needs to be chaptertwo.
(16:59):
Chapter one needs to be hey, weneed to get you up and running.
We need to get you processtransactions.
Here are four or five differentways we can do that today,
whether that's overnight, yourterminal, download an app, run
the transactions for you.
Whatever we need to do to getyou holing up and running,
because most merchants we dealwith are owners.
They're Joe from Joe's Pizzaand he's got things to do.
(17:22):
So the more we can solve theproblem and then go back and
figure out why that problemhappened and then try not to
have that problem happen again.
Right, but that's really twoand three.
We really focus on that.
So that's a passion of mine,sort of get that done right,
then, and there High energy isall that I'm about.
Let's get it done, let's moveit on.
(17:44):
And family Family is my passion.
We've got eight kids between mywife and I and three grandkids
and growing all the time.
We've got one graduating downat UNC.
She's got her doctorate in twoweeks, so a lot of good stuff
happening.
It's great to see them all sortof thriving and growing Awesome
.
Speaker 2 (18:02):
So one final question If someone comes to you maybe
they just graduated from collegeand they're looking at the
payments or fintech industry andthey say, dan, I'm looking at
getting into this industry whatadvice would you give them to
help them be successful in thisspace?
Speaker 3 (18:17):
The payments industry is a very incestuous business.
So first and foremost I wouldtell you is that be fair, be
honest and always create somegreat relationships, because you
never know when thatrelationship is going to come
back around and you're eithergoing to talk to that person or
need that person, or ask forthat reference or have that
person as a customer again.
(18:38):
One of the things that's reallyimportant here is you can see
how the payments industryevolves and people evolve in it.
So that person you talk totoday may be a technical
assistant answering a call, butin three years they may be a
partner at a brand new ISO andin five years they may be a
partner in the largest ISO.
(18:59):
So you always have to rememberthat.
So always remember who you'retalking to, be kind, be
thoughtful, be considerate, behonest with them, help them
solve their problems and thenreally grow your LinkedIn family
right.
Connect with a lot of people,know who you're talking to,
because that's really going tohelp you.
And the second thing theopportunity in payments is huge.
(19:22):
It always will be.
As much as you hear the bigpeople stripe and square and all
that stuff.
There's nothing that beats ahandshake, a phone call, a
face-to-face meeting.
That's simply never going to goaway.
People are always going to wantthat.
There's that relationship thatyou can build.
So as long as you can careabout what the merchant needs
and help them solve a problem,you'll do well.
Speaker 2 (19:43):
Well, Dan, before we go, is there anything else you'd
like to mention before we wrapup?
Speaker 3 (19:48):
It's been a really interesting run here at Factor 4
, and I feel as though we'rehitting a point where we're
going to continue to grow.
And you know it's been amazingto see you know we've been
really lucky here with employeeshow they've sort of taken on
the task and sort of taken on it.
Like I said, we started withthree of us and there's still
two of us of the original threehere.
You know our people and howgood they are and how much they
(20:10):
care.
So whenever any customers ormerchants or partners or agents
call in, they can tell thereisn't a day that goes by here
that we don't get a coupleemails or a couple phone calls
saying, hey, you guys areawesome, you guys are great.
So I think that's what makes adifference.
Speaker 2 (20:29):
And just seeing everybody sort of succeed here
has been really nice for us.
Okay, great.
I think that's a great way toend the show.
So, dan, thank you so much forbeing on today.
I know your time is veryvaluable, so thank you so much
for being here.
Thanks, greg, thanks for havingus, and to all you listeners
out there.
Speaker 1 (20:45):
I thank you for your time as well, and until the next
story, thank you for joining usthis week on the Leaders in
Payments podcast.
Make sure you visit our websiteat leadersinpaymentscom, where
you can subscribe to the showand where you'll find our show
notes.
If you enjoyed listening,please share on your social
channels as well.
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