May 21, 2025 • 19 mins
Frank Arellano, founder and CEO of Revolv3, peels back the curtain on a staggering $600 billion problem plaguing the payments industry that few executives fully understand. False declines - legitimate transactions incorrectly rejected by payment processors - account for a shocking two-thirds of all credit card declines. For subscription-based businesses, this translates into devastating levels of involuntary customer churn.
Drawing from his 25 years of experience at companies like Ingram Micro and Experian, Frank explains how Revolv3's intelligent payment optimization platform tackles this challenge head-on. Unlike traditional payment gateways, Revolv3 analyzes over 100 different data elements in every transaction to build trust with issuers and dramatically improve approval rates. The results speak volumes: merchants using Revolv3's platform achieve an average 14% increase in approval rates and nearly 30% growth in total revenue from decline management alone.
What sets this conversation apart is Frank's holistic view of the payments ecosystem and its future trajectory. He predicts embedded finance and predictive capabilities will dominate the next few years, with increased focus on tokenization and regulatory compliance over the next decade.
For professionals entering the fintech space, Frank offers invaluable advice: understand how money moves throughout the entire ecosystem, rather than focusing on just one aspect.
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Transcript
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.
Greg Myers (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, frank Arellano,the founder and CEO of Revolve.
Frank Arellano (00:31):
So, frank, thank you so much for being on the
show today.
Thanks for having me, greg,excited to talk about payments.
Greg Myers (00:33):
Yeah, let's do it.
Before we get into Revolve andwhat the company does, maybe
tell our audience a little bitabout yourself maybe where you
grew up, where you went toschool, where you currently live
, a few things like that.
Frank Arellano (00:49):
Yeah, thanks, I was actually born and raised in
California, one that I thinkvery few traveled all over the
world but loved California stilllive here now.
Went to school in Cal StateUniversity, long Beach.
Grew up in Central California.
My parents were farmers Veryboring Could have been Iowa or
something like that so I didn'thave that typical California
experience growing up and assoon as I hit college I was
excited about culture and all ofthe action and activity.
(01:09):
So I've since made my home baseSouthern California, married
with three boys and live inLaguna Beach.
Greg Myers (01:17):
Great.
So my daughter goes to ChapmanUniversity, so I'm sure you're
familiar in Orange County.
Frank Arellano (01:22):
Yeah, I love that school.
My niece went there Aphenomenal program.
My old boss, the CIO at IngramMicro, is a professor there now.
Greg Myers (01:31):
Oh, okay, awesome.
Yeah, she's a junior going intoher senior year this fall and
we're out there every once in awhile, definitely head over to
Laguna Beach when we're there.
So that's great, I'm familiarwith the area.
Thanks for sharing that.
So let's go into the companyand talk about Revolve, so tell
our audience what you guys do.
Frank Arellano (01:48):
Revolve is a payment optimization platform,
so think about us like a paymentgateway right, your traditional
type of service that allowsmerchants to transact payments
through a number of differentacquirers.
We are a bit more intelligentin the way that we route that
traffic very dynamic, all withthe goals of generating more
value for the merchant.
(02:09):
So one thing you'll learn aboutis particularly companies that
start to scale or sell differentproduct lines across multiple
geographies is sort of approvalrates.
Approval rates have been goingdown quite significantly over
the past 10 years and I'mtalking mostly credential on
file type of business.
So we help optimize those anddrive incremental revenue by
improving those false declines,if you will.
Greg Myers (02:31):
And who are your typical clients?
What's your sort of verticalsyou go after?
Frank Arellano (02:35):
Yeah, great question.
We've got about 350 clients todate and I would say they vary,
right?
The one beautiful thing aboutpayments is it spans every
industry.
About all industries nowsupport subscriptions and
credential on file type ofbusiness.
We do a lot in the SMBmid-market space, primarily
because of the integrations orplugins that we have already
(02:56):
developed on front ends, likeSalesforce, Commerce Cloud and a
lot of the e-commerce solutionsout there.
Right, it makes it a very easyintegration or lift for a
customer If they choose to gowith Revolve.
It's a pull down on aconfiguration menu choose
Revolve, start transacting.
But we're also attracting anumber of the large scale
enterprises.
(03:17):
That's where we drive atremendous amount of value and
that's our background.
Most of the leadership teamcome from large enterprises like
that that have to deal withmultibillion dollar
subscriptions and trying toensure that you're improving
those churn numbers,particularly on the involuntary
churn side, as much as possible,and so we're getting a lot of
traction in that enterprisespace.
(03:38):
Now.
Greg Myers (03:39):
And you guys have been around since 2020.
Did I get that right?
We?
Frank Arellano (03:42):
started the company in 2020.
Most horrible time to launch acompany was when COVID lockdown
happened Launching in January,lockdowns happened in February,
so it took us a while to findthe right people and the right
team.
Plus, building a paymentsecosystem is hard, as you can
imagine, right and the number ofcompliance things you got to go
through PCI, gdpr, ccpa, visaregistrations, like all of that
(04:05):
sort of stuff takes time.
So we spent a couple of yearsbuilding that platform, making
sure that we got it right and welaunched it live on February
2023.
Greg Myers (04:16):
Okay, and are most of your clients in the US, or
are they global as well?
Frank Arellano (04:19):
Yeah, most of our clients are US based, but
quite a few of them processpayments globally.
They may be a US based, butquite a few of them process
payments globally.
They may be a US entity, butthey sell products into Germany
or a place like that.
Greg Myers (04:30):
What do you feel like is your differentiator?
So how do you compete againstyour competitors?
What do you feel you stand outat?
Frank Arellano (04:36):
Yeah, our focus generally payments have been a
bit of a commodity, right, andit's interesting when I became
responsible for payments atExperian, as an example right, a
lot of focus on churn as acompany that had almost a
billion dollars in sort ofsubscription type of business
out there and lots of focus onthe voluntary stuff.
(04:57):
Right, is the product right?
Are we delivering the rightservices?
You know, if somebody ischoosing to leave us, can we
provide them with an offer tostay as a customer, all of that
sort of good stuff.
The interesting thing for me,and sort of running a company
like that, is that there's asignificant amount of this
involuntary churn and in somecompanies I've been with that's
been as high as 75% of theiroverall churn number.
(05:19):
Right, that's a lot ofopportunity out there.
So these are customers likeyourself that didn't choose to
leave but for whatever reason,we couldn't get your payment
approved and so we're kickingyou out from that sort of
service, right, our value is tofocus on getting those approvals
on the first attempt.
We do that by understandingsort of who the customer is,
(05:41):
what the merchant does, what theservices they sell.
Data matters across the board.
I talked to some executives whobelieve a 16-digit account
number and expiration date isthe most robust information you
can have maybe a billing addressor something like that and kind
of pray for the best andthere's over 100 different data
elements that make up thatpayment transaction.
(06:01):
Right, it's all about gettingtrust with the issuer and making
sure that they believe thatthat's great, buying that
service out of that country andfeeling confident that that's
who they say they are right.
Our goal is to keep thatconsumer fraud type of stuff out
, but deal with thoseinvoluntary false declines that
happen.
Just to give you someperspective, last year it was
(06:22):
$600 billion in false declinesand of all declines that
happened on credit cards, thatwas two-thirds of the declines.
That's a significant amountthere.
Right, these are validtransactions that should have
been approved and that's reallywhere our focus on and we
deliver on that.
Our merchants today get anincremental lift about 14% on
(06:43):
approvals and close to 30% ontotal revenue being generated
off of the decline management.
Greg Myers (06:50):
Are you yourself a SaaS platform, or how do you get
paid typically?
Frank Arellano (06:54):
Great question.
We are a SaaS platform and wehave a number of different ways
to sort of integrate with us.
We have the plugins that Imentioned right.
So if you're a SalesforceCommerce Cloud user, we have a
plugin for you to be able toconnect with us.
We have a full suite of APIs.
So if you have a bespokeinternal billing app or
something custom, you canintegrate to us Very sort of
(07:15):
easy lift, not too complicated,and then we manage all of that
data.
We can either manage thebilling record on the merchant's
behalf and so become thatbilling platform, or we can
simply act as a gateway.
If they want to keep and usetheir own billing platform, they
can send us the traffic andthen we optimize and route that
(07:35):
across a number of differentpayment processors on the back
end.
So we're integrated to all ofthe big ones out there and have
great partnerships with thelikes of WorldPay and Nuve,
addion, et cetera, and so it canhelp them not just route their
traffic based on who they'realready configured with, but
give them some advice and dataon other opportunities depending
(07:55):
on their product and theirgeographies they're going into.
Greg Myers (07:58):
So do you typically get your business from these
partners or do you also havelike a direct sales force?
Frank Arellano (08:03):
Both.
This is a great question, soquite a bit of it is organic,
just people hearing about ussearching for ways to make
improvements in their business.
Customer retention is a verybig goal across a number of
companies out there.
I'm learning as we're talkingto them.
There's a lot of sort oforganic SEO that hits our way
through these partnerships onthe processing side, as well as
(08:24):
some of the front endpartnerships.
There's some CRMs that areintegrated to us that we've done
some co-marketing with andstuff like that Get a lot of our
traffic that way as well.
Conferences and podcasts andthese type of things like that
are very important.
One is provides education outthere, what there seems to be a
lack of in the paymentsecosystem compared to sort of
(08:44):
other areas there, so that's allhelpful as well.
Greg Myers (08:48):
Yeah, it seems like there's a lot of discussion
around the broad topics andpayments, but when you get into
something specific like you,brought up some big numbers
right, those should be somethings people are really
focusing on.
So I would think leading inthat kind of creating the
content and the messaging aroundthat is a great opportunity.
It sounds like you guys aretaking advantage of that.
Frank Arellano (09:07):
Yeah, the numbers.
We do a lot of POC or we'll doan analysis of the prior data
and help provide sort ofprojections.
And it's interesting to mebecause sometimes there's some
disbelief, right, I've had a CEOrecently that we projected in
their billion dollar company,right that increased the revenue
by 250K a month.
It's a lot of money, you know,a million dollars a year.
(09:31):
You know he was like wow,that's almost too hard to
believe sort of thing.
Right, but through some testingwe're able to sort of
demonstrate that uplift.
Who doesn't want that value,right, right?
Greg Myers (09:42):
I mean there are existing customers, right.
It's not even going to get newcustomers most of the time,
right?
Frank Arellano (09:47):
Which is hard enough, right the cost of
getting a new customer, and myunderstanding is it's
significantly more expensive toget back a customer that left.
Greg Myers (10:08):
Absolutely.
Frank Arellano (10:08):
So when you step back and kind of look at the
payments industry as a whole andobviously you can answer this
in the lens of what you do butwhere do you see the payments
industry headed, say, in thenext three to five years?
Embedded and predictive iswhere I see the future.
I mean, embedded finance isobviously being talked about
quite a bit.
The use of AI to help merchantscertainly everything's AI.
Now we're an AI platform, butit seems like everything is.
I think over the next two tothree years you're going to see
a lot of focus on retention, asI mentioned right, we're seeing
(10:30):
that now.
Margin recovery, viewingpayments as a cost center, a way
to sort of generate somerevenue, a lot of these retry
systems and dunning systems outthere.
They're creating a lot ofmarket share and they're
fantastic and focus on the rightthings.
But being able to optimize thatrouting entirely is going to be
key.
And then over the next 10 years, I think you're going to start
(10:52):
to see a lot more use of liketokenization, embedded finance,
regulatory compliance.
There's going to be a heavyfocus on that, particularly with
the new VAMP rules coming out.
So a system that can providesort of end-to-end value, not
just in sort of one vertical.
There are going to be thewinners, for sure you not just
(11:13):
in sort of one vertical.
Greg Myers (11:14):
there are going to be the winners, for sure, and
for you guys it doesn't reallymatter if, hey, some Bitcoin or
stable coins become a paymentmethod.
It doesn't really matter to you.
Basically, in your model, isthat correct?
Frank Arellano (11:22):
Yeah, in our model it's any sort of payment.
We do cards, we do ACH, P2P, itdoesn't really matter.
We can optimize across that andit's necessary.
I think most of our merchantsaccept lots of different ways.
We even pull into it.
We have a very robust dataanalytics program and we don't
do retail.
There's lots of great companiesthat do that.
Not something we're looking tojump into, but for some of our
(11:49):
customers that do both retailand a heavy e-commerce presence,
we pull all that data in thereand be able to provide them that
analysis and then ouroptimization will help
understand that retail data aswell and that helps generate
better response on thee-commerce side.
Speaker 1 (12:02):
Okay.
Greg Myers (12:03):
I know you've read the news the global and world
pay kind of thing.
Is there any implications toyour business or do you think
more of those kinds of thingswill happen in the future?
What's your thoughts on that?
Frank Arellano (12:12):
There's going to be more of that.
That happens.
Right, ft Partners publishedtheir report on this sort of
fintech space.
I was surprised how much theM&A activity is growing year
over year right 30% from lastyear and so I think we're going
to start to see a lot more ofthose deals.
Worldpay has been a phenomenalpartner of ours and we're super
(12:36):
excited about that sort ofmerger.
I don't know any details there,you know, but we're hopeful
that it's going to provide uswith a tremendous amount more
value because you got twofantastic companies coming
together and, I think, comingout of the FIS acquisition for
WorldPay.
You know there was perhaps alittle bit of hesitation there,
right, and sort of how you knowhow they're best going to move
(12:58):
forward, but hopefully thisprovides a clarity and things
start opening up again for us.
Greg Myers (13:03):
Okay, so let's switch gears a little bit and
talk about you.
Maybe walk us through yourcareer journey, how you got to
starting the company.
Maybe walk us through all that,if you don't mind.
Frank Arellano (13:12):
Yeah, technologists by trade.
Part of a couple amazingstartups early in my career.
Love that tremendously.
Three if you count the piecesof software I sold when I was in
college.
You know kind of gave me thetaste of entrepreneurship.
But after nine years it's a lotof work.
Right To be part of thatecosystem.
Even though we had good exits,I wanted to learn from some of
(13:35):
the best out there and kind ofjumped into corporate America
because I wanted that experience.
So you know, 25 years forcompanies like Ingram, micro and
Experian and consulting outthere I learned a tremendous
amount and I also got exposureacross a lot of different
functions within the business.
So everything from leadinge-commerce strategy to IT
(13:56):
architecture to runningoperations for a business, I
think was important to give methe insight to be able to look
at everything holistically as aCEO.
That was very valuable for me.
It was business school over anumber of 30 years.
How did you make the leap fromcorporate to starting the
company.
Greg Myers (14:12):
That was very valuable for me.
It was business school over anumber of 30 years.
Right, how did you make theleap from corporate to starting
the company?
Frank Arellano (14:17):
I always knew that I still had a little bit
left in me and just kind ofwaiting for that right moment to
the right business plan, theright investors, you know that
sort of thing.
And after leaving Experian andhelping them with payment
optimization there, I knew thatthere was an opportunity here.
I saw the numbers.
I did a bunch of marketresearch, like that $600 billion
(14:38):
false decline problem.
I mentioned what companies aredoing to manage their payments.
The expense that they're havingfrom an op-ed perspective just
to maintain and not even sort ofoptimize was significant.
So I knew I could drive a lotof market to the value.
Probably spent a good year, notfull-time, even sort of
optimized was significant.
So I knew I could drive a lotof market to the value.
Probably spent a good year, notfull-time, but sort of building
a business plan, creating somepartnerships with the issuing
(14:59):
banks, the processors.
I talked to lots of my contactsthere and saying I want to do
this company Like, give me somefeedback and some input.
So I spent a lot of time goingthrough that and then decided to
launch.
My original thought was youknow, I'm going to go find me a
CEO that can help me with this,I'll just be the founder or
maybe even the CTO or somethinglike that.
But honestly, just I love thecompany, I love what we do and
(15:23):
it just was a natural sort offit for me.
Greg Myers (15:26):
Okay, what are some things you're passionate about?
Maybe one work-related passionand one personal passion.
Frank Arellano (15:37):
The thing that excites me the most is that
conversation I mentioned earlierwith the CEO, who didn't
believe that the numbers werereal sort of thing.
It's doing that first month orthat second month and getting
that call going.
Holy cow, buddy, you were right.
This is amazing.
How can we send more value?
It's like that sort of thing.
That's probably the most fun,honestly right, Is the response
we get from the merchants andreally helping them through that
.
Personally, you could probablysee behind me here.
(15:57):
That's not a background, it'sreal.
I've always had technology orcorporate jobs and stuff like
that.
I'm a musician at a hobby butalso have done it professionally
.
I've written songs for over 800television episodes.
Greg Myers (16:12):
Oh, wow.
Frank Arellano (16:13):
Worked on the Coke commercial that was
launched this holiday season.
That's just a personal passionis music in general.
I think it also helps balanceme.
As an executive of a startup,you always look in ways to sort
of keep sanity and music is oneof those ways for me.
So you know, I play with anumber of different bands just
local gigs around town, have agood time and it's also kind of
(16:34):
a creative outlet.
Greg Myers (16:36):
Okay, awesome.
So, frank, if someone comes toyou maybe they just graduated
from college and they're lookingat building a career in
payments or FinTech and they saywhat do I need to do to be
successful in this industry?
What would you tell them?
Frank Arellano (16:49):
I would say learn the entire ecosystem right
, how money moves, not oneaspect of payments.
So pick a domain, go deep andthen start to branch out and
learn more.
Right, there's a lot ofopportunities there.
There's also a lot of disparatesolutions and I'm a big
(17:11):
believer in that.
If you look at it holistically,end to end, you're going to
start to see a lot of valueopportunities right, whether you
build it yourself or you helpyour company that you're with be
able to create some veryvalue-add type of services for
your customers.
I think that's the mostimportant thing.
And then there's also a greatecosystem out there.
I mean some of the networkingyou just go in some of these
conferences like an ETA right,which is less go to market
(17:32):
focused and more partnershipfocused.
For me, so many smart people inthe industry and I value that
tremendously.
And I think if you're a youngperson starting out and I know
they provide sort of access toit right A lot of these
conferences do free tickets forstartups or whatever it is you
know sort of thing, and that'sjust a great way to learn about
the business.
(17:52):
But also make those connections, because that's one of the most
important parts.
Greg Myers (17:56):
Okay, great.
So, frank, we've covered a lotof ground about you and the
company and the industry.
Is there anything else you'dlike to add before we wrap up
the show?
Frank Arellano (18:03):
I would say that .
So, if you're a manager all theway up to an executive and
payments are part of yourprocess, get as educated as you
can, because there'sopportunities out there for you,
for your company for sure and Iknow there's a lot of pressure
and focus and stress related tosort of macroeconomics and
things like that, but there'splenty of companies out there
that are able to help, and solook at companies like Revolve
(18:24):
as your payment consultants.
Right, you don't have to havethe deep knowledge, but there's
others that do, and so reach out.
I'd love to hear from you.
Greg Myers (18:31):
Great Well, frank, thank you so much for being on
the show today.
I know your time is veryvaluable, so thank you so much
for being on today.
Frank Arellano (18:37):
Great Thanks for having me, greg, appreciate it.
Greg Myers (18:40):
Absolutely, and to all your listeners out there.
I thank you for your time aswell, and until the next story.
Speaker 1 (18:45):
Thank you for joining us this 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
(19:05):
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.
Greg Myers (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, frank Arellano,the founder and CEO of Revolve.
Frank Arellano (00:31):
So, frank, thank you so much for being on the
show today.
Thanks for having me, greg,excited to talk about payments.
Greg Myers (00:33):
Yeah, let's do it.
Before we get into Revolve andwhat the company does, maybe
tell our audience a little bitabout yourself maybe where you
grew up, where you went toschool, where you currently live
, a few things like that.
Frank Arellano (00:49):
Yeah, thanks, I was actually born and raised in
California, one that I thinkvery few traveled all over the
world but loved California stilllive here now.
Went to school in Cal StateUniversity, long Beach.
Grew up in Central California.
My parents were farmers Veryboring Could have been Iowa or
something like that so I didn'thave that typical California
experience growing up and assoon as I hit college I was
excited about culture and all ofthe action and activity.
(01:09):
So I've since made my home baseSouthern California, married
with three boys and live inLaguna Beach.
Greg Myers (01:17):
Great.
So my daughter goes to ChapmanUniversity, so I'm sure you're
familiar in Orange County.
Frank Arellano (01:22):
Yeah, I love that school.
My niece went there Aphenomenal program.
My old boss, the CIO at IngramMicro, is a professor there now.
Greg Myers (01:31):
Oh, okay, awesome.
Yeah, she's a junior going intoher senior year this fall and
we're out there every once in awhile, definitely head over to
Laguna Beach when we're there.
So that's great, I'm familiarwith the area.
Thanks for sharing that.
So let's go into the companyand talk about Revolve, so tell
our audience what you guys do.
Frank Arellano (01:48):
Revolve is a payment optimization platform,
so think about us like a paymentgateway right, your traditional
type of service that allowsmerchants to transact payments
through a number of differentacquirers.
We are a bit more intelligentin the way that we route that
traffic very dynamic, all withthe goals of generating more
value for the merchant.
(02:09):
So one thing you'll learn aboutis particularly companies that
start to scale or sell differentproduct lines across multiple
geographies is sort of approvalrates.
Approval rates have been goingdown quite significantly over
the past 10 years and I'mtalking mostly credential on
file type of business.
So we help optimize those anddrive incremental revenue by
improving those false declines,if you will.
Greg Myers (02:31):
And who are your typical clients?
What's your sort of verticalsyou go after?
Frank Arellano (02:35):
Yeah, great question.
We've got about 350 clients todate and I would say they vary,
right?
The one beautiful thing aboutpayments is it spans every
industry.
About all industries nowsupport subscriptions and
credential on file type ofbusiness.
We do a lot in the SMBmid-market space, primarily
because of the integrations orplugins that we have already
(02:56):
developed on front ends, likeSalesforce, Commerce Cloud and a
lot of the e-commerce solutionsout there.
Right, it makes it a very easyintegration or lift for a
customer If they choose to gowith Revolve.
It's a pull down on aconfiguration menu choose
Revolve, start transacting.
But we're also attracting anumber of the large scale
enterprises.
(03:17):
That's where we drive atremendous amount of value and
that's our background.
Most of the leadership teamcome from large enterprises like
that that have to deal withmultibillion dollar
subscriptions and trying toensure that you're improving
those churn numbers,particularly on the involuntary
churn side, as much as possible,and so we're getting a lot of
traction in that enterprisespace.
(03:38):
Now.
Greg Myers (03:39):
And you guys have been around since 2020.
Did I get that right?
We?
Frank Arellano (03:42):
started the company in 2020.
Most horrible time to launch acompany was when COVID lockdown
happened Launching in January,lockdowns happened in February,
so it took us a while to findthe right people and the right
team.
Plus, building a paymentsecosystem is hard, as you can
imagine, right and the number ofcompliance things you got to go
through PCI, gdpr, ccpa, visaregistrations, like all of that
(04:05):
sort of stuff takes time.
So we spent a couple of yearsbuilding that platform, making
sure that we got it right and welaunched it live on February
2023.
Greg Myers (04:16):
Okay, and are most of your clients in the US, or
are they global as well?
Frank Arellano (04:19):
Yeah, most of our clients are US based, but
quite a few of them processpayments globally.
They may be a US based, butquite a few of them process
payments globally.
They may be a US entity, butthey sell products into Germany
or a place like that.
Greg Myers (04:30):
What do you feel like is your differentiator?
So how do you compete againstyour competitors?
What do you feel you stand outat?
Frank Arellano (04:36):
Yeah, our focus generally payments have been a
bit of a commodity, right, andit's interesting when I became
responsible for payments atExperian, as an example right, a
lot of focus on churn as acompany that had almost a
billion dollars in sort ofsubscription type of business
out there and lots of focus onthe voluntary stuff.
(04:57):
Right, is the product right?
Are we delivering the rightservices?
You know, if somebody ischoosing to leave us, can we
provide them with an offer tostay as a customer, all of that
sort of good stuff.
The interesting thing for me,and sort of running a company
like that, is that there's asignificant amount of this
involuntary churn and in somecompanies I've been with that's
been as high as 75% of theiroverall churn number.
(05:19):
Right, that's a lot ofopportunity out there.
So these are customers likeyourself that didn't choose to
leave but for whatever reason,we couldn't get your payment
approved and so we're kickingyou out from that sort of
service, right, our value is tofocus on getting those approvals
on the first attempt.
We do that by understandingsort of who the customer is,
(05:41):
what the merchant does, what theservices they sell.
Data matters across the board.
I talked to some executives whobelieve a 16-digit account
number and expiration date isthe most robust information you
can have maybe a billing addressor something like that and kind
of pray for the best andthere's over 100 different data
elements that make up thatpayment transaction.
(06:01):
Right, it's all about gettingtrust with the issuer and making
sure that they believe thatthat's great, buying that
service out of that country andfeeling confident that that's
who they say they are right.
Our goal is to keep thatconsumer fraud type of stuff out
, but deal with thoseinvoluntary false declines that
happen.
Just to give you someperspective, last year it was
(06:22):
$600 billion in false declinesand of all declines that
happened on credit cards, thatwas two-thirds of the declines.
That's a significant amountthere.
Right, these are validtransactions that should have
been approved and that's reallywhere our focus on and we
deliver on that.
Our merchants today get anincremental lift about 14% on
(06:43):
approvals and close to 30% ontotal revenue being generated
off of the decline management.
Greg Myers (06:50):
Are you yourself a SaaS platform, or how do you get
paid typically?
Frank Arellano (06:54):
Great question.
We are a SaaS platform and wehave a number of different ways
to sort of integrate with us.
We have the plugins that Imentioned right.
So if you're a SalesforceCommerce Cloud user, we have a
plugin for you to be able toconnect with us.
We have a full suite of APIs.
So if you have a bespokeinternal billing app or
something custom, you canintegrate to us Very sort of
(07:15):
easy lift, not too complicated,and then we manage all of that
data.
We can either manage thebilling record on the merchant's
behalf and so become thatbilling platform, or we can
simply act as a gateway.
If they want to keep and usetheir own billing platform, they
can send us the traffic andthen we optimize and route that
(07:35):
across a number of differentpayment processors on the back
end.
So we're integrated to all ofthe big ones out there and have
great partnerships with thelikes of WorldPay and Nuve,
addion, et cetera, and so it canhelp them not just route their
traffic based on who they'realready configured with, but
give them some advice and dataon other opportunities depending
(07:55):
on their product and theirgeographies they're going into.
Greg Myers (07:58):
So do you typically get your business from these
partners or do you also havelike a direct sales force?
Frank Arellano (08:03):
Both.
This is a great question, soquite a bit of it is organic,
just people hearing about ussearching for ways to make
improvements in their business.
Customer retention is a verybig goal across a number of
companies out there.
I'm learning as we're talkingto them.
There's a lot of sort oforganic SEO that hits our way
through these partnerships onthe processing side, as well as
(08:24):
some of the front endpartnerships.
There's some CRMs that areintegrated to us that we've done
some co-marketing with andstuff like that Get a lot of our
traffic that way as well.
Conferences and podcasts andthese type of things like that
are very important.
One is provides education outthere, what there seems to be a
lack of in the paymentsecosystem compared to sort of
(08:44):
other areas there, so that's allhelpful as well.
Greg Myers (08:48):
Yeah, it seems like there's a lot of discussion
around the broad topics andpayments, but when you get into
something specific like you,brought up some big numbers
right, those should be somethings people are really
focusing on.
So I would think leading inthat kind of creating the
content and the messaging aroundthat is a great opportunity.
It sounds like you guys aretaking advantage of that.
Frank Arellano (09:07):
Yeah, the numbers.
We do a lot of POC or we'll doan analysis of the prior data
and help provide sort ofprojections.
And it's interesting to mebecause sometimes there's some
disbelief, right, I've had a CEOrecently that we projected in
their billion dollar company,right that increased the revenue
by 250K a month.
It's a lot of money, you know,a million dollars a year.
(09:31):
You know he was like wow,that's almost too hard to
believe sort of thing.
Right, but through some testingwe're able to sort of
demonstrate that uplift.
Who doesn't want that value,right, right?
Greg Myers (09:42):
I mean there are existing customers, right.
It's not even going to get newcustomers most of the time,
right?
Frank Arellano (09:47):
Which is hard enough, right the cost of
getting a new customer, and myunderstanding is it's
significantly more expensive toget back a customer that left.
Greg Myers (10:08):
Absolutely.
Frank Arellano (10:08):
So when you step back and kind of look at the
payments industry as a whole andobviously you can answer this
in the lens of what you do butwhere do you see the payments
industry headed, say, in thenext three to five years?
Embedded and predictive iswhere I see the future.
I mean, embedded finance isobviously being talked about
quite a bit.
The use of AI to help merchantscertainly everything's AI.
Now we're an AI platform, butit seems like everything is.
I think over the next two tothree years you're going to see
a lot of focus on retention, asI mentioned right, we're seeing
(10:30):
that now.
Margin recovery, viewingpayments as a cost center, a way
to sort of generate somerevenue, a lot of these retry
systems and dunning systems outthere.
They're creating a lot ofmarket share and they're
fantastic and focus on the rightthings.
But being able to optimize thatrouting entirely is going to be
key.
And then over the next 10 years, I think you're going to start
(10:52):
to see a lot more use of liketokenization, embedded finance,
regulatory compliance.
There's going to be a heavyfocus on that, particularly with
the new VAMP rules coming out.
So a system that can providesort of end-to-end value, not
just in sort of one vertical.
There are going to be thewinners, for sure you not just
(11:13):
in sort of one vertical.
Greg Myers (11:14):
there are going to be the winners, for sure, and
for you guys it doesn't reallymatter if, hey, some Bitcoin or
stable coins become a paymentmethod.
It doesn't really matter to you.
Basically, in your model, isthat correct?
Frank Arellano (11:22):
Yeah, in our model it's any sort of payment.
We do cards, we do ACH, P2P, itdoesn't really matter.
We can optimize across that andit's necessary.
I think most of our merchantsaccept lots of different ways.
We even pull into it.
We have a very robust dataanalytics program and we don't
do retail.
There's lots of great companiesthat do that.
Not something we're looking tojump into, but for some of our
(11:49):
customers that do both retailand a heavy e-commerce presence,
we pull all that data in thereand be able to provide them that
analysis and then ouroptimization will help
understand that retail data aswell and that helps generate
better response on thee-commerce side.
Speaker 1 (12:02):
Okay.
Greg Myers (12:03):
I know you've read the news the global and world
pay kind of thing.
Is there any implications toyour business or do you think
more of those kinds of thingswill happen in the future?
What's your thoughts on that?
Frank Arellano (12:12):
There's going to be more of that.
That happens.
Right, ft Partners publishedtheir report on this sort of
fintech space.
I was surprised how much theM&A activity is growing year
over year right 30% from lastyear and so I think we're going
to start to see a lot more ofthose deals.
Worldpay has been a phenomenalpartner of ours and we're super
(12:36):
excited about that sort ofmerger.
I don't know any details there,you know, but we're hopeful
that it's going to provide uswith a tremendous amount more
value because you got twofantastic companies coming
together and, I think, comingout of the FIS acquisition for
WorldPay.
You know there was perhaps alittle bit of hesitation there,
right, and sort of how you knowhow they're best going to move
(12:58):
forward, but hopefully thisprovides a clarity and things
start opening up again for us.
Greg Myers (13:03):
Okay, so let's switch gears a little bit and
talk about you.
Maybe walk us through yourcareer journey, how you got to
starting the company.
Maybe walk us through all that,if you don't mind.
Frank Arellano (13:12):
Yeah, technologists by trade.
Part of a couple amazingstartups early in my career.
Love that tremendously.
Three if you count the piecesof software I sold when I was in
college.
You know kind of gave me thetaste of entrepreneurship.
But after nine years it's a lotof work.
Right To be part of thatecosystem.
Even though we had good exits,I wanted to learn from some of
(13:35):
the best out there and kind ofjumped into corporate America
because I wanted that experience.
So you know, 25 years forcompanies like Ingram, micro and
Experian and consulting outthere I learned a tremendous
amount and I also got exposureacross a lot of different
functions within the business.
So everything from leadinge-commerce strategy to IT
(13:56):
architecture to runningoperations for a business, I
think was important to give methe insight to be able to look
at everything holistically as aCEO.
That was very valuable for me.
It was business school over anumber of 30 years.
How did you make the leap fromcorporate to starting the
company.
Greg Myers (14:12):
That was very valuable for me.
It was business school over anumber of 30 years.
Right, how did you make theleap from corporate to starting
the company?
Frank Arellano (14:17):
I always knew that I still had a little bit
left in me and just kind ofwaiting for that right moment to
the right business plan, theright investors, you know that
sort of thing.
And after leaving Experian andhelping them with payment
optimization there, I knew thatthere was an opportunity here.
I saw the numbers.
I did a bunch of marketresearch, like that $600 billion
(14:38):
false decline problem.
I mentioned what companies aredoing to manage their payments.
The expense that they're havingfrom an op-ed perspective just
to maintain and not even sort ofoptimize was significant.
So I knew I could drive a lotof market to the value.
Probably spent a good year, notfull-time, even sort of
optimized was significant.
So I knew I could drive a lotof market to the value.
Probably spent a good year, notfull-time, but sort of building
a business plan, creating somepartnerships with the issuing
(14:59):
banks, the processors.
I talked to lots of my contactsthere and saying I want to do
this company Like, give me somefeedback and some input.
So I spent a lot of time goingthrough that and then decided to
launch.
My original thought was youknow, I'm going to go find me a
CEO that can help me with this,I'll just be the founder or
maybe even the CTO or somethinglike that.
But honestly, just I love thecompany, I love what we do and
(15:23):
it just was a natural sort offit for me.
Greg Myers (15:26):
Okay, what are some things you're passionate about?
Maybe one work-related passionand one personal passion.
Frank Arellano (15:37):
The thing that excites me the most is that
conversation I mentioned earlierwith the CEO, who didn't
believe that the numbers werereal sort of thing.
It's doing that first month orthat second month and getting
that call going.
Holy cow, buddy, you were right.
This is amazing.
How can we send more value?
It's like that sort of thing.
That's probably the most fun,honestly right, Is the response
we get from the merchants andreally helping them through that
.
Personally, you could probablysee behind me here.
(15:57):
That's not a background, it'sreal.
I've always had technology orcorporate jobs and stuff like
that.
I'm a musician at a hobby butalso have done it professionally
.
I've written songs for over 800television episodes.
Greg Myers (16:12):
Oh, wow.
Frank Arellano (16:13):
Worked on the Coke commercial that was
launched this holiday season.
That's just a personal passionis music in general.
I think it also helps balanceme.
As an executive of a startup,you always look in ways to sort
of keep sanity and music is oneof those ways for me.
So you know, I play with anumber of different bands just
local gigs around town, have agood time and it's also kind of
(16:34):
a creative outlet.
Greg Myers (16:36):
Okay, awesome.
So, frank, if someone comes toyou maybe they just graduated
from college and they're lookingat building a career in
payments or FinTech and they saywhat do I need to do to be
successful in this industry?
What would you tell them?
Frank Arellano (16:49):
I would say learn the entire ecosystem right
, how money moves, not oneaspect of payments.
So pick a domain, go deep andthen start to branch out and
learn more.
Right, there's a lot ofopportunities there.
There's also a lot of disparatesolutions and I'm a big
(17:11):
believer in that.
If you look at it holistically,end to end, you're going to
start to see a lot of valueopportunities right, whether you
build it yourself or you helpyour company that you're with be
able to create some veryvalue-add type of services for
your customers.
I think that's the mostimportant thing.
And then there's also a greatecosystem out there.
I mean some of the networkingyou just go in some of these
conferences like an ETA right,which is less go to market
(17:32):
focused and more partnershipfocused.
For me, so many smart people inthe industry and I value that
tremendously.
And I think if you're a youngperson starting out and I know
they provide sort of access toit right A lot of these
conferences do free tickets forstartups or whatever it is you
know sort of thing, and that'sjust a great way to learn about
the business.
(17:52):
But also make those connections, because that's one of the most
important parts.
Greg Myers (17:56):
Okay, great.
So, frank, we've covered a lotof ground about you and the
company and the industry.
Is there anything else you'dlike to add before we wrap up
the show?
Frank Arellano (18:03):
I would say that .
So, if you're a manager all theway up to an executive and
payments are part of yourprocess, get as educated as you
can, because there'sopportunities out there for you,
for your company for sure and Iknow there's a lot of pressure
and focus and stress related tosort of macroeconomics and
things like that, but there'splenty of companies out there
that are able to help, and solook at companies like Revolve
(18:24):
as your payment consultants.
Right, you don't have to havethe deep knowledge, but there's
others that do, and so reach out.
I'd love to hear from you.
Greg Myers (18:31):
Great Well, frank, thank you so much for being on
the show today.
I know your time is veryvaluable, so thank you so much
for being on today.
Frank Arellano (18:37):
Great Thanks for having me, greg, appreciate it.
Greg Myers (18:40):
Absolutely, and to all your listeners out there.
I thank you for your time aswell, and until the next story.
Speaker 1 (18:45):
Thank you for joining us this 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
(19:05):
channels as well.
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