April 30, 2025 • 19 mins
Meet Jeff Shea, the co-founder and CEO of Under who's revolutionizing how payments companies onboard merchants. Drawing from over two decades in payments and fintech, Jeff has created a digital account opening platform that's solving one of the industry's most persistent challenges.
Under helps payments companies streamline merchant onboarding through integrated identity verification, automated risk assessments, and simplified application collection. Serving over 100 payments organizations across the United States, the company primarily works with wholesale ISOs, payment facilitators, payment processors, and software companies that monetize payments. Jeff explains that their platform bridges the gap between disjointed point solutions that many companies currently cobble together, creating a seamless experience from lead generation through merchant approval.
The conversation takes a fascinating turn when Jeff discusses the future of payments and underwriting. He predicts continued growth in embedded and verticalized payments as more software platforms own their payment stacks. Looking further ahead, he believes payments will become increasingly commoditized, with differentiation coming from how platforms manage identity, trust, decisioning, and merchant experience. Most compellingly, Jeff references a McKinsey report predicting that traditional underwriting will disappear within a decade, replaced by artificial intelligence, deep learning, and machine learning. These technologies promise faster approvals for legitimate merchants while more effectively identifying problematic applicants.
Ready to transform your merchant onboarding process? Discover how Under can help you approve the right merchants faster while reducing risk at under.io.
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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, jeff Shea fromUnder.
So, jeff, welcome to the show.
Yeah, nice to meet you.
Speaker 3 (00:28):
Thanks for having me on Absolutely.
Speaker 2 (00:30):
So, if you don't mind , start out by telling the
audience a little bit aboutyourself, maybe where you grew
up, where you went to school,where you currently live, a few
things like that.
Speaker 3 (00:38):
Yeah, absolutely so.
I live in Charlotte, NorthCarolina.
I grew up and lived in Chicagofor most of my career, had a
chance to move a little bit outto the East Coast and we've been
loving it here.
Speaker 2 (00:53):
I went to school at the University of Illinois when
I lived out in that area.
Well, obviously, as theco-founder and CEO, you are very
well aware of all the goings onat Under, so tell our audience
what Under does.
Speaker 3 (01:03):
Yeah, so Under is a digital account opening platform
.
We help payments companiesonboard merchants faster, make
smarter and better underwritingdecisions.
We do that by streamliningidentity verification,
automating risk assessments andsimplifying really the whole
process around application andagreement collection and data
(01:24):
fulfillment.
Our goal is to reduce friction,streamline the process for how
accounts are onboarded and helpcompanies to make better
decisions.
Speaker 2 (01:33):
Okay, and who would your typical customer be?
Speaker 3 (01:35):
The most ideal customer would be someone that's
in the payment processing space, so this could either be a
payments professional or asoftware company that monetizes
payments.
We work with a broad spectrumof customers, but we work best
with those who take on liability, so they have some type of an
underwriting component into whatthey do, or they're really
(01:57):
focused on top of the funnel.
So that might be a wholesaleISO, might be a payment
facilitator, could be a paymentprocessor.
Speaker 2 (02:04):
Okay, and how big is the company?
Speaker 3 (02:07):
We have just over 100 payments companies that we're
working with across the UnitedStates.
We also do solutions forcompanies across some other
countries.
Primary offices located here inCharlotte, where I'm at, and
our engineers are in Austin,Texas.
Speaker 2 (02:22):
And you said you have customers across the world, so
obviously it's a potentially aglobal solution.
Speaker 3 (02:28):
Yes, yeah, we specialize in primarily only
advertised in the United Statesand in Canada, but we have had a
lot of interest acrossdifferent countries, more so as
you get into the software andpayment facilitation side of
trying to streamline these typesof solutions.
Speaker 2 (02:43):
And who would be your sort of ideal customer within
these payments companies?
Who are you typically talkingto?
Speaker 3 (02:51):
So just chatted about that a second ago.
Do you mean the individual atthe company or the actual.
Speaker 2 (02:57):
Yeah, like the role or the individual who do you
usually engage with there.
Speaker 3 (03:01):
Yeah, good question.
It varies.
Sometimes it's going to be thehead of product.
We get a lot of companies wework with that have already
started to try to solve thisproblem.
They're either learning rightnow how to build this internally
within their organization orthey're reaching out to try to
find some point solutions to getwhat they need done.
So sometimes we'll work throughthe product team, Other times
(03:21):
it'll be through the risk team,as everyone right now is really
focused on reducing risk loss,making better decisions, trying
to streamline those processes.
That would probably be our toptwo individuals that we connect
with.
Speaker 2 (03:34):
And how do you go to market?
Do you have a direct sales teamthrough partner channels?
How do you get these customers?
Speaker 3 (03:41):
We do primarily outbound.
So we're pretty active in thespace and we attend the
quarterly ETA events.
We also go to the annual show.
Sometimes we have a presencethere so we'll connect with our
customers or potential customersin person.
We do a lot of outbound reachouts and strategic partnerships
that help get us in touch,partnered with some of the
processors which have also kindof connected us through the
(04:03):
individuals that are there.
Of the processors which havealso kind of connected us
through the individuals that arethere.
We do have a web presence.
We get a little bit of directresource from online but it's
not as heavy of a search termfor people looking to solve
these problems, so it's reallymore of when they're in that
focus we try to be available.
Speaker 2 (04:18):
So it's kind of interesting.
So maybe we can peel back theonion a little bit on that,
because I find it interesting.
There you mentioned a lot ofthem are trying to build this
themselves, like what problemsare they running into, and then
why do they turn to you?
Speaker 3 (04:32):
Yeah, I mean honestly , some of our favorite customers
to work with are the ones thathave already started development
on trying to solve this.
You know, I've been in paymentsfor a really long time for a
really long time and I thinkmost people that have have all
learned the struggles ofonboarding accounts, whether
it's from kind of the earlymanual processes of collecting
different applications andworking through that, or maybe
(04:55):
it's a little further down thefunnel where they're looking at
making decisions.
But this is not a new problem.
It's been around for a longtime and I think most of the
larger groups and payments arefamiliar with this and
interested in solving thatproblem.
One of the paths that we findis they'll bring on some
development resources andthey'll try to work internally
to build an internal system.
(05:16):
Sometimes it's a little bitmore complicated than it seems.
Most payments companies I'mfamiliar with have pretty
distributed teams.
They have a network ofindependent agents.
They'll have a ISV orpartnership channel, they might
have an inbound channel, theymight have a web or a W2, like
beat on the street channel andeach one of those operates a
(05:37):
little bit differently, has asmall to large connection and
understanding of their customerlarge connection and
understanding of their customer,and that adds a lot of
uniquenesses, particularly whenit comes to agents and
independent contractors and ISOs, who really operate on their
own, have their own pricingstructures.
The more of these variablesthat are put into place makes
creating a holistic solution forthis a little bit more
(06:00):
difficult.
Where we found companies havebeen the most successful is if
they focus on one specificvertical, so that might be a
certain MCC with a certainchannel, as opposed to doing
something a bit more broad.
Speaker 2 (06:13):
Well, how do you differentiate yourself against
your competitors out there?
Speaker 3 (06:17):
So when we think about competition, it falls into
a couple of buckets the twomost common scenarios.
One is the one we were justtalking about.
People try to build thisthemselves and they're really
looking at trying to useengineers to develop and create
their own internal solution, andI think the big difference
between us and that scenario isthis is all that we do.
So we've been able to invest apretty significant amount of
(06:40):
capital that we've raised fromour investors to build out this
platform, and we'll continue toinvest and improve this product
at a level that's more realisticthan what I think an individual
payments company would think ofas the appropriate amount of
investment for this type of asolution.
So we feel that long term,because of the time we've been
in market and the continualimprovements of the platform,
(07:01):
that we have something that'sreally special there.
The other scenario we run intois where companies put together
a series of point solutions.
So they may grab a form builderlike a job form or a PandaDocs
and then pair that with anelectronic signature tool like a
DocuSign, and then that'sprobably integrated or
semi-integrated into their CRMMaybe they're using Salesforce
(07:23):
or HubSpot or something likethat and then generally they'll
have a few point.
Solutions for identityLexisNexis is very popular,
gaiax is very popular, and nowyou have three or four different
systems that don't exactlycommunicate well together, but
they solve individual pieces ofthe pie.
And then you have a human onthe other side that's trying to
(07:44):
kind of take bits and pieces ofthat data and make You're just
focused really on the front end,the onboarding.
Speaker 2 (07:52):
You're not doing any kind of risk analysis or
anything.
Speaker 3 (07:55):
So currently we live from when a lead is a we call it
like a lead or a warm lead allthe way until a merchant account
is approved and we do all ofthose steps in that process,
from lead generation documentand electronic signature and
application creation, top of thefunnel, management, identity
verification, underwriting,approval, etc.
(08:16):
That's where we stop today.
We don't yet then managepost-approval risk management,
transaction monitoring, thosetypes of things.
A lot of that is on our roadmapfor where we're looking to go
as a company, but we've beenprimarily focused on the front
end, as you mentioned.
Speaker 2 (08:31):
So where do you see sort of the payments industry
and you can definitely answerthis based on your area of focus
, but where do you see it headedin the next, say, three to five
years?
Speaker 3 (08:42):
Yeah, so I think some of this has obviously been
happening more recently.
I think in the next maybe twoto three years we're going to
continue to see a big shifttowards embedded payments and
verticalized payments, and thishas been happening, as I
mentioned, for a bit of time.
Right now, More softwareplatforms owning their own
payment stack.
With that is going to come theneed to have better tools to
(09:03):
manage risk, compliance,underwriting, kind of
understanding how the paymentsecosystem works, and that's
really more of a continuation ofwhat's been happening over the
last four to five years here.
Longer term, I do thinkpayments does become
commoditized and in many waysthe real differentiator is going
to be how platforms can manageidentity, trust, decisioning and
(09:25):
the experience of really that amerchant has while they're
working through that process.
So I think it's just a littlebit more of an acceleration of
what we've seen in the earlystages here.
Speaker 2 (09:35):
And where does AI play into all this?
I have to ask because that's atopic that comes up in almost
every conversation.
Speaker 3 (09:41):
Yeah, absolutely.
I mean AI is, I think, going tocontinue to be a big piece of
this.
Mckinsey released a report thatunderwriting as we know it will
cease to exist in the next 10years and it will be replaced by
artificial intelligence, deeplearning and machine learning.
And you know kind of somerealistic scenarios of what that
(10:04):
looks like is, if you thinkabout how underwriting and
identity verification workstoday.
It's really a series ofdifferent data points that, as I
mentioned before, are probablycoming from these disparate
vendors.
So you'll run a kyc with alexisnexus, you'll do a little bit
of your own digging on google,you'll do a bank verification
through some method or another.
That'll be cross reference toyour you know word document, 12
(10:27):
page underwriting guideline ofthe then statements and you're
really just trying to like piecethese things together to see
where somebody fits in a puzzleand ultimately approve the right
merchants.
I think at scale, you see thatthese processors have gotten to
a point where they have a levelof comfort with their
underwriting.
Their one to two basis pointsof loss has been consistent over
(10:49):
a really long period of time,but it's been difficult for that
to ever get better and it'sbeen difficult for that to get
faster.
Often what's happening is it'sgetting slower because there's
more and more fraudulentscenarios, so there's more use
cases now that you have to testfor and it's become this really
additive system.
So I go through all that toreally show that artificial
intelligence can be incrediblyvaluable.
(11:11):
When you think about how itworks on data, you know AI is
essentially an algorithm workingon an incredibly large data set
which is creating feedback andpredictions and then editing and
adjusting from there.
So if you think of underwriting, you have an exorbitant amount
of data.
You now can start to make betterdecisions based on that data,
(11:32):
not relying on people to makethose decisions, or at least
recommendations coming from anAI agent that can dig into the
data and look at it a little bitmore holistically and then,
secondarily, you can follow thatdata over time to see what
happens to these merchants ifthey end up betraying, if they
end up creating risk loss, andthen use that to constantly
learn and you'll consistentlyget better and we should see
(11:54):
risk loss actually start to godown over time with the amount
of data that we have.
So I think it's really aroundthis kind of human in the loop
style process that you hear alot about with AI.
You've got computers now thatare going to do a better job
analyzing data and makingrecommendations, which is going
to allow a human to then come inand dig into those manual cases
(12:15):
or those pens and then have anautomatic process for the
remainder, and then a systemthat's going to continually get
better.
So that's a lot of what weleverage AI for today within our
company and where we're reallyexcited about seeing it make a
big difference and ultimately,helping customers approve the
right merchants faster and,equally important, not approve
(12:37):
the ones that are going to beproblematic.
Speaker 2 (12:39):
You mentioned something about the embedded
payments into software companies.
I want to double click on that.
Do you find that a differentselling into that market versus
your kind of ISOs and purepayments companies?
Is it all the same to you or isit a little bit different in
the nuances of the two?
Speaker 3 (12:58):
Yeah, it's quite different, to be honest, even
though it's a similar productand similar solution fit.
I think you just have twocompanies that operate in a
little bit of a differentperspective.
The payments companies know alot more about payments and
they've been in this space for along time.
They understand the dynamics,how things have gone in the past
(13:20):
, all the different distributionchannels, and I think there's a
big advantage to that.
At the same time, that createsa bit of a bias for how things
have always been done and howthey should be done.
Now you have a lot of softwarecompanies entering in the space
that don't really know anythingabout payments and their
background is let's streamlinethis, let's make it faster,
let's leverage technology.
So there's some pretty bigadvantages there and the fact
(13:43):
that they are more open toembracing change, new technology
, leveraging that to make thesedecisions.
At the same time, they're alittle more naive, not knowing
the potential pitfalls of whatcan happen with these merchant
accounts.
So I think because of that youget different buyers, different
ways that they're looking atsolving problems, and there's
both pros and cons.
(14:04):
I think to that as we'vecontinued to dig in, but we are
excited about it because we, youknow as a company.
However the payments industryevolves, we're going to be in a
good position you know, whoeverthe kind of leaders are of
driving merchant accounts, byhelping them have the right
tools to make that process workbetter.
Speaker 2 (14:21):
A great explanation and I think you're spot on.
From my experience in bothsides Definitely makes sense.
So let's switch gears a littlebit and talk about you, maybe
walk us through your careerjourney, how you got there, how
you started the company, a fewthings like that, if you don't
mind.
Speaker 3 (14:43):
Absolutely so.
I've been in payments andfinancial technology for 20 some
years now.
Previously I had founded apayments company called Payline,
which scaled significantlybefore we exited.
We were a payment facilitatorand a wholesale ISO focusing on
vertical SaaS.
We started kind of before therise of PayFact, before that was
even a word.
I think it was aggregation atthe time when we built our
platform and we were competingin the early days with WePay and
(15:07):
early Braintree, before Stripeeven had gotten started.
And I think in that experienceI saw firsthand just how broken
and manual the onboardingprocess was and how many
different steps and people wehad to use to both bring
customers on, underwrite thosemerchants etc.
That really led us to build alot of maybe you can consider it
the first generation of underwithin our own company in those
(15:30):
early days and then use thatknowledge to design a platform
that's going to help movingforward.
I feel like I lucked into thepayment space.
I didn't know a lot about it 20some years ago when I joined in
and I'm very purposely stillhere today.
I really love the industry,have built a lot of great
friendships and contacts stillhere today.
You know, really love theindustry, have built a lot of
great friendships and contactsand I know without a doubt that
(15:51):
payments is continuing to leadthe charge of where you know
where the market is going.
There's a lot of opportunitiesfor anyone, from whether they're
an agent or whether they're aprocessor or a software company,
so it's a really great place tobe.
So we're excited to stay a partof it and, you know, continue
to build and hopefully solvesome big problems.
Speaker 2 (16:10):
Well, what are some things you're passionate about?
So, maybe one work-relatedpassion and one personal passion
.
Speaker 3 (16:15):
So, on a work-related passion, as you probably
wouldn't be surprised, it'sabout efficiency, so I'm
passionate about building toolsthat make complex systems more
accessible, giving accessparticularly to maybe the less
technical or smaller paymentsprofessionals to be able to
compete with the people that arereally driving some of the
innovation on the fintech side,and I think tools like ours and
(16:39):
others out there really makethat possible, so that we can
continue to empower thoseindividuals to have what they
need to be successful and grow.
On the personal level, I'mreally passionate about my
health fitness I've done a goodjob, I feel, of staying up to
date with that and also travel.
I love to spend as much time asI can with my wife and my son.
(16:59):
I've got a six-year-old boywho's really starting to get
active in sports and he's been ablast, so being outside as
often as I can and challengingmyself where possible doing that
.
Speaker 2 (17:10):
So you've been in payments for a while, sounds
like.
And you know, if someone cameto you and they said, hey, I'm
interested in joining paymentsor FinTech as a career choice,
maybe they're right out ofcollege, maybe they're in a
different industry and they wantto move into payments or
FinTech, what advice would yougive them to be successful?
Speaker 3 (17:26):
What advice would you give them to be successful.
So today I would say tospecialize.
When I started in payments, itcouldn't have been the polar
opposite.
I think everyone was ageneralist.
It's kind of a new market, thegold rush of sorts in payments,
and you would sell anything toanyone and everyone had a
relatively equivalent solution.
Today it's wildly different.
You need to be the best atsomething and I really think
(17:48):
specialization can come in acouple of ways.
You can focus on a specific MCCcode right, one MCC code as
opposed to hundreds, like we alla way to really get your hooks
in the door, because attritionis going to continue to be a
(18:11):
bigger and bigger problem andunless you're actually bringing
real value to these companies,you're always going to struggle
with that which could impactyour valuation and your ability
to grow and scale.
So it could also bespecialization of solving a
problem, but maybe not avertical industry.
So being at the best at doingone specific aspect of the
(18:31):
payment flow, I feel like ingeneral, that helps design your
ICP, it helps you to establishproduct market fit and it helps
you to truly be the best atsomething, which is critical in
any business, not just inpayments.
Speaker 2 (18:45):
So, jeff, we've covered a lot of ground about
you, about the company, theindustry.
Is there anything else you'dlike to add before we wrap up
the show?
Speaker 3 (18:52):
No, this has been wonderful.
I appreciate you having us onthe podcast and getting a chance
to tell our story a little bit.
If anybody's interested inlearning more about what we do,
they could go to our website.
Probably be the best fit.
Speaker 2 (19:04):
It's underio underspelled, as you expect it
U-N-D-E-R.
Well, jeff, thank you so muchfor being on the show today.
I really appreciate it.
I know your time is veryvaluable, so thank you so much
for being here today.
Yeah, I appreciate it.
Thank you so much, and to allyou listeners out there, I thank
you for your time as well, anduntil the next story.
Speaker 1 (19:22):
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
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, jeff Shea fromUnder.
So, jeff, welcome to the show.
Yeah, nice to meet you.
Speaker 3 (00:28):
Thanks for having me on Absolutely.
Speaker 2 (00:30):
So, if you don't mind , start out by telling the
audience a little bit aboutyourself, maybe where you grew
up, where you went to school,where you currently live, a few
things like that.
Speaker 3 (00:38):
Yeah, absolutely so.
I live in Charlotte, NorthCarolina.
I grew up and lived in Chicagofor most of my career, had a
chance to move a little bit outto the East Coast and we've been
loving it here.
Speaker 2 (00:53):
I went to school at the University of Illinois when
I lived out in that area.
Well, obviously, as theco-founder and CEO, you are very
well aware of all the goings onat Under, so tell our audience
what Under does.
Speaker 3 (01:03):
Yeah, so Under is a digital account opening platform
.
We help payments companiesonboard merchants faster, make
smarter and better underwritingdecisions.
We do that by streamliningidentity verification,
automating risk assessments andsimplifying really the whole
process around application andagreement collection and data
(01:24):
fulfillment.
Our goal is to reduce friction,streamline the process for how
accounts are onboarded and helpcompanies to make better
decisions.
Speaker 2 (01:33):
Okay, and who would your typical customer be?
Speaker 3 (01:35):
The most ideal customer would be someone that's
in the payment processing space, so this could either be a
payments professional or asoftware company that monetizes
payments.
We work with a broad spectrumof customers, but we work best
with those who take on liability, so they have some type of an
underwriting component into whatthey do, or they're really
(01:57):
focused on top of the funnel.
So that might be a wholesaleISO, might be a payment
facilitator, could be a paymentprocessor.
Speaker 2 (02:04):
Okay, and how big is the company?
Speaker 3 (02:07):
We have just over 100 payments companies that we're
working with across the UnitedStates.
We also do solutions forcompanies across some other
countries.
Primary offices located here inCharlotte, where I'm at, and
our engineers are in Austin,Texas.
Speaker 2 (02:22):
And you said you have customers across the world, so
obviously it's a potentially aglobal solution.
Speaker 3 (02:28):
Yes, yeah, we specialize in primarily only
advertised in the United Statesand in Canada, but we have had a
lot of interest acrossdifferent countries, more so as
you get into the software andpayment facilitation side of
trying to streamline these typesof solutions.
Speaker 2 (02:43):
And who would be your sort of ideal customer within
these payments companies?
Who are you typically talkingto?
Speaker 3 (02:51):
So just chatted about that a second ago.
Do you mean the individual atthe company or the actual.
Speaker 2 (02:57):
Yeah, like the role or the individual who do you
usually engage with there.
Speaker 3 (03:01):
Yeah, good question.
It varies.
Sometimes it's going to be thehead of product.
We get a lot of companies wework with that have already
started to try to solve thisproblem.
They're either learning rightnow how to build this internally
within their organization orthey're reaching out to try to
find some point solutions to getwhat they need done.
So sometimes we'll work throughthe product team, Other times
(03:21):
it'll be through the risk team,as everyone right now is really
focused on reducing risk loss,making better decisions, trying
to streamline those processes.
That would probably be our toptwo individuals that we connect
with.
Speaker 2 (03:34):
And how do you go to market?
Do you have a direct sales teamthrough partner channels?
How do you get these customers?
Speaker 3 (03:41):
We do primarily outbound.
So we're pretty active in thespace and we attend the
quarterly ETA events.
We also go to the annual show.
Sometimes we have a presencethere so we'll connect with our
customers or potential customersin person.
We do a lot of outbound reachouts and strategic partnerships
that help get us in touch,partnered with some of the
processors which have also kindof connected us through the
(04:03):
individuals that are there.
Of the processors which havealso kind of connected us
through the individuals that arethere.
We do have a web presence.
We get a little bit of directresource from online but it's
not as heavy of a search termfor people looking to solve
these problems, so it's reallymore of when they're in that
focus we try to be available.
Speaker 2 (04:18):
So it's kind of interesting.
So maybe we can peel back theonion a little bit on that,
because I find it interesting.
There you mentioned a lot ofthem are trying to build this
themselves, like what problemsare they running into, and then
why do they turn to you?
Speaker 3 (04:32):
Yeah, I mean honestly , some of our favorite customers
to work with are the ones thathave already started development
on trying to solve this.
You know, I've been in paymentsfor a really long time for a
really long time and I thinkmost people that have have all
learned the struggles ofonboarding accounts, whether
it's from kind of the earlymanual processes of collecting
different applications andworking through that, or maybe
(04:55):
it's a little further down thefunnel where they're looking at
making decisions.
But this is not a new problem.
It's been around for a longtime and I think most of the
larger groups and payments arefamiliar with this and
interested in solving thatproblem.
One of the paths that we findis they'll bring on some
development resources andthey'll try to work internally
to build an internal system.
(05:16):
Sometimes it's a little bitmore complicated than it seems.
Most payments companies I'mfamiliar with have pretty
distributed teams.
They have a network ofindependent agents.
They'll have a ISV orpartnership channel, they might
have an inbound channel, theymight have a web or a W2, like
beat on the street channel andeach one of those operates a
(05:37):
little bit differently, has asmall to large connection and
understanding of their customerlarge connection and
understanding of their customer,and that adds a lot of
uniquenesses, particularly whenit comes to agents and
independent contractors and ISOs, who really operate on their
own, have their own pricingstructures.
The more of these variablesthat are put into place makes
creating a holistic solution forthis a little bit more
(06:00):
difficult.
Where we found companies havebeen the most successful is if
they focus on one specificvertical, so that might be a
certain MCC with a certainchannel, as opposed to doing
something a bit more broad.
Speaker 2 (06:13):
Well, how do you differentiate yourself against
your competitors out there?
Speaker 3 (06:17):
So when we think about competition, it falls into
a couple of buckets the twomost common scenarios.
One is the one we were justtalking about.
People try to build thisthemselves and they're really
looking at trying to useengineers to develop and create
their own internal solution, andI think the big difference
between us and that scenario isthis is all that we do.
So we've been able to invest apretty significant amount of
(06:40):
capital that we've raised fromour investors to build out this
platform, and we'll continue toinvest and improve this product
at a level that's more realisticthan what I think an individual
payments company would think ofas the appropriate amount of
investment for this type of asolution.
So we feel that long term,because of the time we've been
in market and the continualimprovements of the platform,
(07:01):
that we have something that'sreally special there.
The other scenario we run intois where companies put together
a series of point solutions.
So they may grab a form builderlike a job form or a PandaDocs
and then pair that with anelectronic signature tool like a
DocuSign, and then that'sprobably integrated or
semi-integrated into their CRMMaybe they're using Salesforce
(07:23):
or HubSpot or something likethat and then generally they'll
have a few point.
Solutions for identityLexisNexis is very popular,
gaiax is very popular, and nowyou have three or four different
systems that don't exactlycommunicate well together, but
they solve individual pieces ofthe pie.
And then you have a human onthe other side that's trying to
(07:44):
kind of take bits and pieces ofthat data and make You're just
focused really on the front end,the onboarding.
Speaker 2 (07:52):
You're not doing any kind of risk analysis or
anything.
Speaker 3 (07:55):
So currently we live from when a lead is a we call it
like a lead or a warm lead allthe way until a merchant account
is approved and we do all ofthose steps in that process,
from lead generation documentand electronic signature and
application creation, top of thefunnel, management, identity
verification, underwriting,approval, etc.
(08:16):
That's where we stop today.
We don't yet then managepost-approval risk management,
transaction monitoring, thosetypes of things.
A lot of that is on our roadmapfor where we're looking to go
as a company, but we've beenprimarily focused on the front
end, as you mentioned.
Speaker 2 (08:31):
So where do you see sort of the payments industry
and you can definitely answerthis based on your area of focus
, but where do you see it headedin the next, say, three to five
years?
Speaker 3 (08:42):
Yeah, so I think some of this has obviously been
happening more recently.
I think in the next maybe twoto three years we're going to
continue to see a big shifttowards embedded payments and
verticalized payments, and thishas been happening, as I
mentioned, for a bit of time.
Right now, More softwareplatforms owning their own
payment stack.
With that is going to come theneed to have better tools to
(09:03):
manage risk, compliance,underwriting, kind of
understanding how the paymentsecosystem works, and that's
really more of a continuation ofwhat's been happening over the
last four to five years here.
Longer term, I do thinkpayments does become
commoditized and in many waysthe real differentiator is going
to be how platforms can manageidentity, trust, decisioning and
(09:25):
the experience of really that amerchant has while they're
working through that process.
So I think it's just a littlebit more of an acceleration of
what we've seen in the earlystages here.
Speaker 2 (09:35):
And where does AI play into all this?
I have to ask because that's atopic that comes up in almost
every conversation.
Speaker 3 (09:41):
Yeah, absolutely.
I mean AI is, I think, going tocontinue to be a big piece of
this.
Mckinsey released a report thatunderwriting as we know it will
cease to exist in the next 10years and it will be replaced by
artificial intelligence, deeplearning and machine learning.
And you know kind of somerealistic scenarios of what that
(10:04):
looks like is, if you thinkabout how underwriting and
identity verification workstoday.
It's really a series ofdifferent data points that, as I
mentioned before, are probablycoming from these disparate
vendors.
So you'll run a kyc with alexisnexus, you'll do a little bit
of your own digging on google,you'll do a bank verification
through some method or another.
That'll be cross reference toyour you know word document, 12
(10:27):
page underwriting guideline ofthe then statements and you're
really just trying to like piecethese things together to see
where somebody fits in a puzzleand ultimately approve the right
merchants.
I think at scale, you see thatthese processors have gotten to
a point where they have a levelof comfort with their
underwriting.
Their one to two basis pointsof loss has been consistent over
(10:49):
a really long period of time,but it's been difficult for that
to ever get better and it'sbeen difficult for that to get
faster.
Often what's happening is it'sgetting slower because there's
more and more fraudulentscenarios, so there's more use
cases now that you have to testfor and it's become this really
additive system.
So I go through all that toreally show that artificial
intelligence can be incrediblyvaluable.
(11:11):
When you think about how itworks on data, you know AI is
essentially an algorithm workingon an incredibly large data set
which is creating feedback andpredictions and then editing and
adjusting from there.
So if you think of underwriting, you have an exorbitant amount
of data.
You now can start to make betterdecisions based on that data,
(11:32):
not relying on people to makethose decisions, or at least
recommendations coming from anAI agent that can dig into the
data and look at it a little bitmore holistically and then,
secondarily, you can follow thatdata over time to see what
happens to these merchants ifthey end up betraying, if they
end up creating risk loss, andthen use that to constantly
learn and you'll consistentlyget better and we should see
(11:54):
risk loss actually start to godown over time with the amount
of data that we have.
So I think it's really aroundthis kind of human in the loop
style process that you hear alot about with AI.
You've got computers now thatare going to do a better job
analyzing data and makingrecommendations, which is going
to allow a human to then come inand dig into those manual cases
(12:15):
or those pens and then have anautomatic process for the
remainder, and then a systemthat's going to continually get
better.
So that's a lot of what weleverage AI for today within our
company and where we're reallyexcited about seeing it make a
big difference and ultimately,helping customers approve the
right merchants faster and,equally important, not approve
(12:37):
the ones that are going to beproblematic.
Speaker 2 (12:39):
You mentioned something about the embedded
payments into software companies.
I want to double click on that.
Do you find that a differentselling into that market versus
your kind of ISOs and purepayments companies?
Is it all the same to you or isit a little bit different in
the nuances of the two?
Speaker 3 (12:58):
Yeah, it's quite different, to be honest, even
though it's a similar productand similar solution fit.
I think you just have twocompanies that operate in a
little bit of a differentperspective.
The payments companies know alot more about payments and
they've been in this space for along time.
They understand the dynamics,how things have gone in the past
(13:20):
, all the different distributionchannels, and I think there's a
big advantage to that.
At the same time, that createsa bit of a bias for how things
have always been done and howthey should be done.
Now you have a lot of softwarecompanies entering in the space
that don't really know anythingabout payments and their
background is let's streamlinethis, let's make it faster,
let's leverage technology.
So there's some pretty bigadvantages there and the fact
(13:43):
that they are more open toembracing change, new technology
, leveraging that to make thesedecisions.
At the same time, they're alittle more naive, not knowing
the potential pitfalls of whatcan happen with these merchant
accounts.
So I think because of that youget different buyers, different
ways that they're looking atsolving problems, and there's
both pros and cons.
(14:04):
I think to that as we'vecontinued to dig in, but we are
excited about it because we, youknow as a company.
However the payments industryevolves, we're going to be in a
good position you know, whoeverthe kind of leaders are of
driving merchant accounts, byhelping them have the right
tools to make that process workbetter.
Speaker 2 (14:21):
A great explanation and I think you're spot on.
From my experience in bothsides Definitely makes sense.
So let's switch gears a littlebit and talk about you, maybe
walk us through your careerjourney, how you got there, how
you started the company, a fewthings like that, if you don't
mind.
Speaker 3 (14:43):
Absolutely so.
I've been in payments andfinancial technology for 20 some
years now.
Previously I had founded apayments company called Payline,
which scaled significantlybefore we exited.
We were a payment facilitatorand a wholesale ISO focusing on
vertical SaaS.
We started kind of before therise of PayFact, before that was
even a word.
I think it was aggregation atthe time when we built our
platform and we were competingin the early days with WePay and
(15:07):
early Braintree, before Stripeeven had gotten started.
And I think in that experienceI saw firsthand just how broken
and manual the onboardingprocess was and how many
different steps and people wehad to use to both bring
customers on, underwrite thosemerchants etc.
That really led us to build alot of maybe you can consider it
the first generation of underwithin our own company in those
(15:30):
early days and then use thatknowledge to design a platform
that's going to help movingforward.
I feel like I lucked into thepayment space.
I didn't know a lot about it 20some years ago when I joined in
and I'm very purposely stillhere today.
I really love the industry,have built a lot of great
friendships and contacts stillhere today.
You know, really love theindustry, have built a lot of
great friendships and contactsand I know without a doubt that
(15:51):
payments is continuing to leadthe charge of where you know
where the market is going.
There's a lot of opportunitiesfor anyone, from whether they're
an agent or whether they're aprocessor or a software company,
so it's a really great place tobe.
So we're excited to stay a partof it and, you know, continue
to build and hopefully solvesome big problems.
Speaker 2 (16:10):
Well, what are some things you're passionate about?
So, maybe one work-relatedpassion and one personal passion
.
Speaker 3 (16:15):
So, on a work-related passion, as you probably
wouldn't be surprised, it'sabout efficiency, so I'm
passionate about building toolsthat make complex systems more
accessible, giving accessparticularly to maybe the less
technical or smaller paymentsprofessionals to be able to
compete with the people that arereally driving some of the
innovation on the fintech side,and I think tools like ours and
(16:39):
others out there really makethat possible, so that we can
continue to empower thoseindividuals to have what they
need to be successful and grow.
On the personal level, I'mreally passionate about my
health fitness I've done a goodjob, I feel, of staying up to
date with that and also travel.
I love to spend as much time asI can with my wife and my son.
(16:59):
I've got a six-year-old boywho's really starting to get
active in sports and he's been ablast, so being outside as
often as I can and challengingmyself where possible doing that
.
Speaker 2 (17:10):
So you've been in payments for a while, sounds
like.
And you know, if someone cameto you and they said, hey, I'm
interested in joining paymentsor FinTech as a career choice,
maybe they're right out ofcollege, maybe they're in a
different industry and they wantto move into payments or
FinTech, what advice would yougive them to be successful?
Speaker 3 (17:26):
What advice would you give them to be successful.
So today I would say tospecialize.
When I started in payments, itcouldn't have been the polar
opposite.
I think everyone was ageneralist.
It's kind of a new market, thegold rush of sorts in payments,
and you would sell anything toanyone and everyone had a
relatively equivalent solution.
Today it's wildly different.
You need to be the best atsomething and I really think
(17:48):
specialization can come in acouple of ways.
You can focus on a specific MCCcode right, one MCC code as
opposed to hundreds, like we alla way to really get your hooks
in the door, because attritionis going to continue to be a
(18:11):
bigger and bigger problem andunless you're actually bringing
real value to these companies,you're always going to struggle
with that which could impactyour valuation and your ability
to grow and scale.
So it could also bespecialization of solving a
problem, but maybe not avertical industry.
So being at the best at doingone specific aspect of the
(18:31):
payment flow, I feel like ingeneral, that helps design your
ICP, it helps you to establishproduct market fit and it helps
you to truly be the best atsomething, which is critical in
any business, not just inpayments.
Speaker 2 (18:45):
So, jeff, we've covered a lot of ground about
you, about the company, theindustry.
Is there anything else you'dlike to add before we wrap up
the show?
Speaker 3 (18:52):
No, this has been wonderful.
I appreciate you having us onthe podcast and getting a chance
to tell our story a little bit.
If anybody's interested inlearning more about what we do,
they could go to our website.
Probably be the best fit.
Speaker 2 (19:04):
It's underio underspelled, as you expect it
U-N-D-E-R.
Well, jeff, thank you so muchfor being on the show today.
I really appreciate it.
I know your time is veryvaluable, so thank you so much
for being here today.
Yeah, I appreciate it.
Thank you so much, and to allyou listeners out there, I thank
you for your time as well, anduntil the next story.
Speaker 1 (19:22):
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
channels as well.
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