June 9, 2025 • 23 mins
The future of payments is shifting dramatically as consumers demand more options and businesses seek better ways to assess risk. John Gordon, CEO of ValidiFI, takes us deep into how bank account behavior data is becoming the missing puzzle piece in understanding consumer reliability beyond traditional credit scores.
Gordon explains how ValidiFI sits at the critical intersection of compliance and fraud prevention, helping businesses meet NACHA's WEB debit rule requirements while gaining valuable insights into consumer payment patterns. By analyzing factors like bank account changes, previous negative balances, and account relationship patterns, ValidiFI provides powerful signals that predict payment outcomes and identify potential fraud before it happens.
What truly sets this conversation apart is Gordon's perspective on consumer financial empowerment. He notes how payment preferences are evolving rapidly, with account-to-account transfers growing yearly and programs like Target's RedCard demonstrating the power of bank-account-linked payment methods. The conversation explores how real-time payment networks and non-credentialed bank verification are creating new opportunities for businesses to offer seamless, secure payment experiences that consumers actually want to use.
Ready to rethink how you validate customer payment information? Listen now and discover strategies that go beyond basic compliance to deliver real business value while meeting evolving consumer expectations.
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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, john Gordon, theCEO of Validify.
So, john, thank you so much forbeing here.
Speaker 3 (00:28):
Well, thank you for having me.
I appreciate the opportunity.
Speaker 2 (00:32):
Absolutely so.
Speaker 3 (00:33):
if you don't mind, start off telling our audience a
little bit about yourself maybewhere you grew up, where you
went to school, where youcurrently live, a few things
like that.
Sure.
So I am a native Atlantan.
There aren't many of us.
I grew up in Marietta, Georgia,went to the University of
Georgia and I now reside stillin the Atlanta metropolitan area
, north of the city, Lived hereall my life, with the exception
(00:55):
of the time that I was in schoolin Athens, and we're a rare
breed, those native Atlantans.
Speaker 2 (01:02):
You definitely are and, by the way, I went to
Auburn so we can have thatbanter at some point.
Speaker 3 (01:07):
Well, I married an Auburn Tiger, so I can
commiserate to an extent.
Speaker 2 (01:14):
Yeah, I have a quick Georgia story.
So when I was a kid, I actuallywent to a football game there
and was lucky enough to go inthe locker room before the game
and I met Herschel Walker.
Lucky enough to go in thelocker room before the game and
I met Herschel Walker, so thatis something.
Yeah, that's royalty, yeah,yeah, it was a cool thing.
So, anyway, not paymentsrelated, but a cool personal
story.
So let's go ahead and talkabout Validify, so tell the
(01:36):
audience what Validify does.
Speaker 3 (01:55):
So Validify is we're a data.
As a service company, weprovide data really focused on
the intersection between aconsumer's bank behavior was as
being additive to what you getwith traditional consumer credit
scoring methods.
So the frequency with which aconsumer changes their bank
account, the PII, the paymentperformance of bank accounts,
(02:19):
when was the last time they werein a negative position, how
many consumers are associatedwith an account, how many
accounts is an individualconsumer associated with All of
these things send very strongsignals that help us to identify
potential fraud, assess therisk associated with that
(02:40):
consumer and predict paymentoutcomes.
So Validify is really centeredaround that effort in helping
our clients comply with Notch'sweb debit rule and then realize
all of the opportunities forreduction of risk,
identification of fraud thatcome along with that data of the
(03:02):
consumer and their account.
Okay, and who are your typicalcustomers?
So our customers really run thegamut.
It's financial serviceproviders, lenders, essentially
any company that takes ACHpayments.
So the web debit rule says thatyou have to validate that an
account is open, valid andfacilitates ACH.
(03:24):
That rule went into effect in2021.
In 2026, it will be upgraded toinclude a fraud aspect and our
clients are people who areeither doing ACH disbursements
or taking ACH payments and we'rehelping them comply with that
rule.
And we're helping them complywith that rule, but, at the end
(03:44):
of the day, what they tell us isif I'm going to that effort,
you can help me by identifyingpeople based on their risk
profile or based on how theybehave.
That will help with selectingthe right product for that
consumer, arriving at the rightcredit line for that consumer.
So our clients could beautomotive companies, lenders,
(04:13):
real estate companies, insurancecompanies, who are both taking
consumer payments and makingdisbursements All of the above,
really.
So it's a large, addressablemarket at the end of the day,
greg.
Speaker 2 (04:21):
Okay, and are you selling through partner channels
, direct or both Both?
Speaker 3 (04:27):
both.
So we have a sales force that iscalling directly into the
target markets and we'veverticalized that group for the
purpose of we want to learnright.
So, whether it's we're followingwhere people make ACH payments
and if I give you kind of anexample of that, if that's all
right, greg?
(04:47):
Sure, absolutely.
We have a partnership with acompany called PDI that does.
We've done a press release andare working on a case study in
regard to this, and what they dois they enable payments to be
attached to loyalty cards forconvenience store programs, to
be attached to loyalty cards forconvenience store programs, and
what they utilize, validify foris validating the connection
(05:11):
between the consumer and thebank account that they are
providing.
What that does for theconvenience store is it allows
them to take advantage ofpayment channels that don't have
interchange fees, and ACHpayments have grown both in the
total volume of payments and theaggregate amount of those
(05:32):
payments every year for the last10 years, and there's now that,
with the emergence of thereal-time payments network and
FedNow, there's even greatervalue in that for our
prospective clients.
So we help them marry theconsumer to the account and
remove the risk and thepotential fraud scenarios.
Speaker 2 (05:53):
Okay, and I assume your business is mostly in the
US.
It is totally we only serve UScustomers.
Okay, and really the size ofthe customer doesn't matter,
right, it's really just aroundwhether they're accepting or
making ACH type payments, that'scorrect.
Speaker 3 (06:08):
We seek, as you would imagine, economies of scale so
that we work with some financialinstitutions who are enabling
this solution for their treasuryclients, so that they're
offering that compliancescenario and helping them offer
more secure payments and agreater variety of payment types
.
Speaker 2 (06:28):
Okay, okay.
And what would you saydifferentiates you guys from
your competitors out there?
Speaker 3 (06:34):
So we have a collaboration with JPMorgan
Chase, which grants us access toearly warning services data,
and if you want to validate bankaccounts, having partnerships
with a bank consortium and theworld's largest bank are two
great places to start, and socoverage is what differentiates
(06:56):
Validify.
Beyond that, the way that weoperate is we don't ask our
customers to pay setup fees ormonthly minimums.
We believe in performancepricing.
If what we do is working forour clients, our experience says
not only will they continue towork with us, they'll look for
more opportunities to work withValidify, and our experience has
(07:19):
also shown us that largely ourclients, or any clients, grow to
resent monthly minimums thatthey don't hit.
Now, if we have a client whocomes to us and says they're
looking for some exceptionalpricing, we might want to put
some guarantees in there, mightwant to put some guarantees in
(07:42):
there, but on the whole, wegenerally only ask for people to
sign up with our agreements andwork with us going forward, and
then that aligns our bestinterests with theirs.
Speaker 2 (07:48):
Okay, and within your clients, who do you sell
directly to?
Speaker 3 (07:53):
Is it the CFO office or, more on the technology side,
it's treasury chief riskofficer, chief compliance
officer and a credit officer aretypically the people that we
interface with most frequently.
Speaker 2 (08:06):
Okay, Okay, Well, when you step back and kind of
look at the payments industry asa whole, kind of where do you
see it headed in the next maybethree to five years and
obviously you can answer thatwithin the lens of what you do
but kind of your view of thefuture of payments.
Speaker 3 (08:18):
Well, I think we're seeing a leveling of the playing
field in the marketplace as awhole and it's largely noted as
consumer empowerment.
So I hear a lot about openbanking.
Open banking in the UnitedStates does not exist in the way
that it does in Europe as we'respeaking today, not exist in
(08:41):
the way that it does in Europeas we're speaking today.
I believe that, as consumershave greater choice and they do
and it's going to behooveservice providers to enable the
payment opportunities to meetthose consumers in the ways that
they want to pay.
An example of that would be Inever would have imagined and I
think you and I are roughly thesame age, greg when I was a kid,
(09:02):
layaway meant you went to Kmartevery week, gave them 10 bucks
and after a while you got thebicycle.
Nowadays you just agree to paythem later and they give you the
bicycle today.
So the buy now, pay laterscenario, which is the fastest
growing credit arrangement inthe country today, is vastly
different than what we've seenin the past, to the extent that
(09:25):
it's even now extended toDoorDash.
People are doing DoorDashorders and paying for
arrangements.
It's insanity to me when Ithink about it, but what it's
showing's showing is that theconsumer is going to have more
power and more say in who theyinteract with, what data they
(09:46):
make available to those endusers, and consumers are
demonstrating a willingness toshare certain data more data
than what they have in the pastbut only in exchange for an
interaction that they thinkdeems it necessary.
So an example of that would beif you sign up for a mortgage,
(10:06):
people are giving you two yearsof bank data.
If they're enrolling for anonline program, most consumers
are viewing credentialed accessto their bank account as a
bridge too far, and so what weoffer is non-credentialed bank
data so that it's much lessfriction to the end user, and
(10:27):
what we are efforting to do isto enable bank data access for
our clients in the way that theconsumers are willing to give it
to you.
Is it a real-time micro deposit?
Is it that you provide me PIIelements along with your bank
account routing number?
Or, in certain cases where it'smerited, we have the ability to
(10:49):
facilitate credential to accessthe consumer logs into their
bank account securely.
Our client gets 90 days oftransactional data from their
bank account for which we canconduct cash flow underwriting
and give them back insightsaround that account Hugely
valuable data, but it's hard tobuild a strategy on that when
(11:12):
consumers aren't always willingto give you that level of access
.
Speaker 2 (11:17):
Do you think there's a day when, instead of pulling
out the debit or credit cardbuying something in a department
store, you're going to pay withyour bank account?
I mean, I know it's possible.
Today it's happening.
It's full of friction, stillright.
So do you see a day when thatbecomes even the most popular
way?
Speaker 3 (11:35):
I think it's growing.
Account-to-account payments isgrowing and you know, there's so
much generational informationthat's out that says millennials
don't like debt, they don'twant to buy homes.
Gen Z's the silent generation.
They're even less likely tointeract.
I think what we're seeing isthat consumers want the ability
(11:59):
to have as much opportunity topay in different ways as
possible, and I think what'shappened is traditional scoring
methodologies haven't changed in50 years, but the way that
consumers interact, secure andutilize credit has changed
dramatically.
So do.
I think it's possible,Absolutely.
(12:20):
I think we're rapidly headedthat way.
If you look at the Target redcard as a case study, those are
consumers attaching their bankaccount to that red card.
When that program started,people thought Target was crazy
because they were offering a 5%discount in exchange for that
enrollment.
But what they found is thoseconsumers spend dramatically,
(12:43):
exponentially more money on thatred card and they're fiercely
loyal to Target.
So they have created thisscenario where they've
eliminated the interchange,they've put themselves at the
center of the process andthey've created a recurring
customer dynamic that theypreviously didn't enjoy.
Speaker 2 (13:03):
Yeah well, they've enjoyed some money out of our
account with that red card,that's for sure.
Speaker 3 (13:07):
I know that I understand the dynamics, sir.
Speaker 2 (13:12):
So it's hard to have a payments conversation without
talking about AI.
So curious in your business,obviously very data-driven.
How much are you guysleveraging AI?
Have you always leveraged AI?
And it used to be calledmachine learning and we came up
with a new fancy name.
Just kind of curious yourthoughts on that.
Speaker 3 (13:28):
You know, we have always used machine learning in
analytics in our model builds,in the way that we do those
things.
Ai, to me, is a continuedevolution of the machine
learning.
It's not as net new as whatsome of the fear mongers would
have you believe it is.
That said, it puts an impetuson us from a security standpoint
(14:19):
to do.
A flip side of that coin is andyou asked me a question a
moment ago that I think AI sortof delves into.
As all of these processes andpayment options change, it
creates opportunity forfraudsters and AI is a hot topic
and an amazing tool forfraudsters to utilize in
(14:41):
perpetrating fraudulent eventsutilizing AI.
And it is a continually movingtarget to try and help our
clients, and that's why we helpour clients within the fraud
arena and we're very careful tosay we don't solve fraud.
We identify things that arepotentially fraud and help our
(15:02):
clients drive their underwritingor treatment strategies in a
way that they're addressing that, whether it's injecting
friction in the process byrequiring the end user to log
into their bank account, orwhether we're identifying things
that say that's a high riskbank account that a consumer has
(15:24):
applied or that account eventhas been applied with 300
different social securitynumbers have used that exact
bank account routing numbercombination.
You likely want to steer clear.
Speaker 2 (15:39):
Gotcha Makes a lot of sense.
So let's switch gears a littlebit and talk about you.
Maybe tell us your journey, howyou got to Validify, and a
little bit about your background.
Speaker 3 (15:48):
Sure, so since 1999, I've been working in what I
would consider fintech so it'stechnologies that financial
service providers utilize, and Istarted that in the electronic
bill presentment and paymentspace, where we would enable our
clients to make their billsavailable to the end consumer
(16:11):
via their website.
And over the course of time, Iended up meeting up with a
serial entrepreneur and he and Ihave worked together four times
now.
His name is Greg Rabel.
He started a company calledFactor Trust that I joined in
2008.
We sold that business toTransUnion in 2017.
(16:33):
I worked there for five years.
The investors in Factor Trusttook an interest in Validify,
which created an opportunity forme to join Validify.
And here we are a couple ofyears three years into that
process.
Now we're a 40-person business.
We are profitable and growingand looking forward to the
(16:57):
evolution of these payments andthe continued opportunity that
ACH provides and helping ourclients combat both risk,
because a lot of the fraudthat's out there these days,
greg, is first-party fraud.
You know it's not all fraudranks.
Sometimes it's the willfulbehavior of a first-party
(17:18):
consumer, which is a wholedifferent ballgame when you're
trying to discover how thosethings occur.
Yeah absolutely.
Speaker 2 (17:26):
Well, what are some things you're passionate about?
So, maybe one work-relatedpassion and one personal passion
.
Speaker 3 (17:32):
So my work-related passion, because of the last 15,
17 years of doing this, is Ibelieve we've lost some effort
to deal in just the facts.
I'm going to give you anexample of that.
Last year, the credit bureausdecided that we would no longer
have medical debt as part ofconsumers' credit profiles.
(17:56):
Meanwhile, the CFPB, such as itwas then and then we all are,
the suspended reality that theCFPB is in now was holding out
for lenders, our clients, thatyou had to determine a
consumer's ability to repay,that you had to determine a
consumer's ability to repay.
So, on the one hand, we've gotthe information source
(18:20):
determining that we are notgoing to include buy now, pay
later transactions.
If it's detrimental to theconsumer, we're not going to
include medical debt.
They still owe the medical debt.
Then we have the regulatorsaying you should have known
better, mr Company, that thatconsumer could not afford that
product for which they applied.
So my passion is the fact that Ibelieve we've lost our ability
(18:45):
to operate with the right amountof information.
Help marry consumers who arenon-fraudulent into products
that offer them the best pathforward of success, in a
graduating sequence, so thatthose consumers have an
opportunity to repay and growfinancially At the expense of
(19:06):
all of that.
We are saying it's aboutinclusion, it's about allowing
consumers opportunities.
It's about inclusion.
It's about allowing consumersopportunities.
Well, not every consumer canafford a mortgage at every point
in their credit journey, and Ithink we have credit scores
today that are built on yourexperience, your debt ratio,
(19:26):
your utilization of products,but what we're missing is any of
the real-time aspect.
That is part of that what'shappening today, and so, while
credit scores are laggingindicators of behavior, I
believe there's an opportunityto fill in those gaps, and if we
do it thoughtfully, then welower the overall cost of credit
(19:48):
for every consumer, for everyconsumer.
So I guess, at the end of theday, I'm passionate about the
fact that information, realfacts and data still have a
place in the conversation, andwe shouldn't lose that.
So I hope that answers yourquestion, and makes sense.
Speaker 2 (20:06):
Yeah, it makes a lot of sense.
What about on the personal side?
What's your personal passion?
Speaker 3 (20:10):
So I have three children and I'm way over
married, so I spend a lot oftime with them and so I'm
passionate about my family, myfaith and I love football.
I love Georgia football.
I'm a huge fan of that, so ourwhole family enjoys sports, so
we do a lot of that as well.
Speaker 2 (20:31):
Great, great.
So, John, if someone comes toyou maybe they just graduated
from Georgia and they look atpayments in FinTech and they say
, hey, I want to build a careerin this space what advice would
you give them to help them besuccessful in their careers?
Speaker 3 (20:45):
I would tell them to be intentional about trying to
experience both sides of theequation the corporate payment
scenario scenario and then seeit from more of a ground view
smaller operation so that youcan understand the puts and
takes of how potentially a largepayments provider or a credit
(21:07):
bureau views the marketplace, aswell as how someone who's much
closer to their clients and asmaller, more focused
organization looks at it.
And I would tell them thatpayments is a great space
because it's constantly changingand there'll never be a day we
don't pay.
So as that changes, there isopportunity in that.
Speaker 2 (21:31):
Yeah, absolutely.
I think that's great advice.
So, John, as we wrap up theshow, is there anything else
that you'd like to discuss or goover before we wrap up?
Speaker 3 (21:40):
Not off the top of my head.
I guess I would leave it withthis.
As the web debit rule for 2026comes into being applied,
there's so much more opportunityoutside of just complying for
our clients that we are helpingthem identify opportunity with
(22:01):
their customers.
The ability to reduce fraud,the ability to mitigate risk all
by assessing the consumer'sbank account, and the consumers
are open and willing to sharingthat data to a far greater
extent than they are to log intotheir accounts.
And the emergence of real-timepayments is taking legacy
(22:25):
trusted processes like microdeposits and bringing them into
the speed at which we operatetoday.
So not everything.
Every application meets everyconsumer's desire.
Having a complete strategy andthat offers you compliance
really has a lot of lift for abusiness from an efficiency and
(22:50):
a cost reduction and a fraudelimination standpoint.
Speaker 2 (22:54):
Okay, I think that's a great way to wrap up this show
.
So, john, thank you so much forbeing on today.
I know your time is veryvaluable, so thanks for being
here.
Speaker 3 (23:02):
Greg, thanks for your time.
I really appreciate you havingme.
Speaker 2 (23:05):
Absolutely, and to all your listeners out there.
I thank you for your time aswell, and until the next story.
Speaker 1 (23:10):
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, john Gordon, theCEO of Validify.
So, john, thank you so much forbeing here.
Speaker 3 (00:28):
Well, thank you for having me.
I appreciate the opportunity.
Speaker 2 (00:32):
Absolutely so.
Speaker 3 (00:33):
if you don't mind, start off telling our audience a
little bit about yourself maybewhere you grew up, where you
went to school, where youcurrently live, a few things
like that.
Sure.
So I am a native Atlantan.
There aren't many of us.
I grew up in Marietta, Georgia,went to the University of
Georgia and I now reside stillin the Atlanta metropolitan area
, north of the city, Lived hereall my life, with the exception
(00:55):
of the time that I was in schoolin Athens, and we're a rare
breed, those native Atlantans.
Speaker 2 (01:02):
You definitely are and, by the way, I went to
Auburn so we can have thatbanter at some point.
Speaker 3 (01:07):
Well, I married an Auburn Tiger, so I can
commiserate to an extent.
Speaker 2 (01:14):
Yeah, I have a quick Georgia story.
So when I was a kid, I actuallywent to a football game there
and was lucky enough to go inthe locker room before the game
and I met Herschel Walker.
Lucky enough to go in thelocker room before the game and
I met Herschel Walker, so thatis something.
Yeah, that's royalty, yeah,yeah, it was a cool thing.
So, anyway, not paymentsrelated, but a cool personal
story.
So let's go ahead and talkabout Validify, so tell the
(01:36):
audience what Validify does.
Speaker 3 (01:55):
So Validify is we're a data.
As a service company, weprovide data really focused on
the intersection between aconsumer's bank behavior was as
being additive to what you getwith traditional consumer credit
scoring methods.
So the frequency with which aconsumer changes their bank
account, the PII, the paymentperformance of bank accounts,
(02:19):
when was the last time they werein a negative position, how
many consumers are associatedwith an account, how many
accounts is an individualconsumer associated with All of
these things send very strongsignals that help us to identify
potential fraud, assess therisk associated with that
(02:40):
consumer and predict paymentoutcomes.
So Validify is really centeredaround that effort in helping
our clients comply with Notch'sweb debit rule and then realize
all of the opportunities forreduction of risk,
identification of fraud thatcome along with that data of the
(03:02):
consumer and their account.
Okay, and who are your typicalcustomers?
So our customers really run thegamut.
It's financial serviceproviders, lenders, essentially
any company that takes ACHpayments.
So the web debit rule says thatyou have to validate that an
account is open, valid andfacilitates ACH.
(03:24):
That rule went into effect in2021.
In 2026, it will be upgraded toinclude a fraud aspect and our
clients are people who areeither doing ACH disbursements
or taking ACH payments and we'rehelping them comply with that
rule.
And we're helping them complywith that rule, but, at the end
(03:44):
of the day, what they tell us isif I'm going to that effort,
you can help me by identifyingpeople based on their risk
profile or based on how theybehave.
That will help with selectingthe right product for that
consumer, arriving at the rightcredit line for that consumer.
So our clients could beautomotive companies, lenders,
(04:13):
real estate companies, insurancecompanies, who are both taking
consumer payments and makingdisbursements All of the above,
really.
So it's a large, addressablemarket at the end of the day,
greg.
Speaker 2 (04:21):
Okay, and are you selling through partner channels
, direct or both Both?
Speaker 3 (04:27):
both.
So we have a sales force that iscalling directly into the
target markets and we'veverticalized that group for the
purpose of we want to learnright.
So, whether it's we're followingwhere people make ACH payments
and if I give you kind of anexample of that, if that's all
right, greg?
(04:47):
Sure, absolutely.
We have a partnership with acompany called PDI that does.
We've done a press release andare working on a case study in
regard to this, and what they dois they enable payments to be
attached to loyalty cards forconvenience store programs, to
be attached to loyalty cards forconvenience store programs, and
what they utilize, validify foris validating the connection
(05:11):
between the consumer and thebank account that they are
providing.
What that does for theconvenience store is it allows
them to take advantage ofpayment channels that don't have
interchange fees, and ACHpayments have grown both in the
total volume of payments and theaggregate amount of those
(05:32):
payments every year for the last10 years, and there's now that,
with the emergence of thereal-time payments network and
FedNow, there's even greatervalue in that for our
prospective clients.
So we help them marry theconsumer to the account and
remove the risk and thepotential fraud scenarios.
Speaker 2 (05:53):
Okay, and I assume your business is mostly in the
US.
It is totally we only serve UScustomers.
Okay, and really the size ofthe customer doesn't matter,
right, it's really just aroundwhether they're accepting or
making ACH type payments, that'scorrect.
Speaker 3 (06:08):
We seek, as you would imagine, economies of scale so
that we work with some financialinstitutions who are enabling
this solution for their treasuryclients, so that they're
offering that compliancescenario and helping them offer
more secure payments and agreater variety of payment types
.
Speaker 2 (06:28):
Okay, okay.
And what would you saydifferentiates you guys from
your competitors out there?
Speaker 3 (06:34):
So we have a collaboration with JPMorgan
Chase, which grants us access toearly warning services data,
and if you want to validate bankaccounts, having partnerships
with a bank consortium and theworld's largest bank are two
great places to start, and socoverage is what differentiates
(06:56):
Validify.
Beyond that, the way that weoperate is we don't ask our
customers to pay setup fees ormonthly minimums.
We believe in performancepricing.
If what we do is working forour clients, our experience says
not only will they continue towork with us, they'll look for
more opportunities to work withValidify, and our experience has
(07:19):
also shown us that largely ourclients, or any clients, grow to
resent monthly minimums thatthey don't hit.
Now, if we have a client whocomes to us and says they're
looking for some exceptionalpricing, we might want to put
some guarantees in there, mightwant to put some guarantees in
(07:42):
there, but on the whole, wegenerally only ask for people to
sign up with our agreements andwork with us going forward, and
then that aligns our bestinterests with theirs.
Speaker 2 (07:48):
Okay, and within your clients, who do you sell
directly to?
Speaker 3 (07:53):
Is it the CFO office or, more on the technology side,
it's treasury chief riskofficer, chief compliance
officer and a credit officer aretypically the people that we
interface with most frequently.
Speaker 2 (08:06):
Okay, Okay, Well, when you step back and kind of
look at the payments industry asa whole, kind of where do you
see it headed in the next maybethree to five years and
obviously you can answer thatwithin the lens of what you do
but kind of your view of thefuture of payments.
Speaker 3 (08:18):
Well, I think we're seeing a leveling of the playing
field in the marketplace as awhole and it's largely noted as
consumer empowerment.
So I hear a lot about openbanking.
Open banking in the UnitedStates does not exist in the way
that it does in Europe as we'respeaking today, not exist in
(08:41):
the way that it does in Europeas we're speaking today.
I believe that, as consumershave greater choice and they do
and it's going to behooveservice providers to enable the
payment opportunities to meetthose consumers in the ways that
they want to pay.
An example of that would be Inever would have imagined and I
think you and I are roughly thesame age, greg when I was a kid,
(09:02):
layaway meant you went to Kmartevery week, gave them 10 bucks
and after a while you got thebicycle.
Nowadays you just agree to paythem later and they give you the
bicycle today.
So the buy now, pay laterscenario, which is the fastest
growing credit arrangement inthe country today, is vastly
different than what we've seenin the past, to the extent that
(09:25):
it's even now extended toDoorDash.
People are doing DoorDashorders and paying for
arrangements.
It's insanity to me when Ithink about it, but what it's
showing's showing is that theconsumer is going to have more
power and more say in who theyinteract with, what data they
(09:46):
make available to those endusers, and consumers are
demonstrating a willingness toshare certain data more data
than what they have in the pastbut only in exchange for an
interaction that they thinkdeems it necessary.
So an example of that would beif you sign up for a mortgage,
(10:06):
people are giving you two yearsof bank data.
If they're enrolling for anonline program, most consumers
are viewing credentialed accessto their bank account as a
bridge too far, and so what weoffer is non-credentialed bank
data so that it's much lessfriction to the end user, and
(10:27):
what we are efforting to do isto enable bank data access for
our clients in the way that theconsumers are willing to give it
to you.
Is it a real-time micro deposit?
Is it that you provide me PIIelements along with your bank
account routing number?
Or, in certain cases where it'smerited, we have the ability to
(10:49):
facilitate credential to accessthe consumer logs into their
bank account securely.
Our client gets 90 days oftransactional data from their
bank account for which we canconduct cash flow underwriting
and give them back insightsaround that account Hugely
valuable data, but it's hard tobuild a strategy on that when
(11:12):
consumers aren't always willingto give you that level of access
.
Speaker 2 (11:17):
Do you think there's a day when, instead of pulling
out the debit or credit cardbuying something in a department
store, you're going to pay withyour bank account?
I mean, I know it's possible.
Today it's happening.
It's full of friction, stillright.
So do you see a day when thatbecomes even the most popular
way?
Speaker 3 (11:35):
I think it's growing.
Account-to-account payments isgrowing and you know, there's so
much generational informationthat's out that says millennials
don't like debt, they don'twant to buy homes.
Gen Z's the silent generation.
They're even less likely tointeract.
I think what we're seeing isthat consumers want the ability
(11:59):
to have as much opportunity topay in different ways as
possible, and I think what'shappened is traditional scoring
methodologies haven't changed in50 years, but the way that
consumers interact, secure andutilize credit has changed
dramatically.
So do.
I think it's possible,Absolutely.
(12:20):
I think we're rapidly headedthat way.
If you look at the Target redcard as a case study, those are
consumers attaching their bankaccount to that red card.
When that program started,people thought Target was crazy
because they were offering a 5%discount in exchange for that
enrollment.
But what they found is thoseconsumers spend dramatically,
(12:43):
exponentially more money on thatred card and they're fiercely
loyal to Target.
So they have created thisscenario where they've
eliminated the interchange,they've put themselves at the
center of the process andthey've created a recurring
customer dynamic that theypreviously didn't enjoy.
Speaker 2 (13:03):
Yeah well, they've enjoyed some money out of our
account with that red card,that's for sure.
Speaker 3 (13:07):
I know that I understand the dynamics, sir.
Speaker 2 (13:12):
So it's hard to have a payments conversation without
talking about AI.
So curious in your business,obviously very data-driven.
How much are you guysleveraging AI?
Have you always leveraged AI?
And it used to be calledmachine learning and we came up
with a new fancy name.
Just kind of curious yourthoughts on that.
Speaker 3 (13:28):
You know, we have always used machine learning in
analytics in our model builds,in the way that we do those
things.
Ai, to me, is a continuedevolution of the machine
learning.
It's not as net new as whatsome of the fear mongers would
have you believe it is.
That said, it puts an impetuson us from a security standpoint
(14:19):
to do.
A flip side of that coin is andyou asked me a question a
moment ago that I think AI sortof delves into.
As all of these processes andpayment options change, it
creates opportunity forfraudsters and AI is a hot topic
and an amazing tool forfraudsters to utilize in
(14:41):
perpetrating fraudulent eventsutilizing AI.
And it is a continually movingtarget to try and help our
clients, and that's why we helpour clients within the fraud
arena and we're very careful tosay we don't solve fraud.
We identify things that arepotentially fraud and help our
(15:02):
clients drive their underwritingor treatment strategies in a
way that they're addressing that, whether it's injecting
friction in the process byrequiring the end user to log
into their bank account, orwhether we're identifying things
that say that's a high riskbank account that a consumer has
(15:24):
applied or that account eventhas been applied with 300
different social securitynumbers have used that exact
bank account routing numbercombination.
You likely want to steer clear.
Speaker 2 (15:39):
Gotcha Makes a lot of sense.
So let's switch gears a littlebit and talk about you.
Maybe tell us your journey, howyou got to Validify, and a
little bit about your background.
Speaker 3 (15:48):
Sure, so since 1999, I've been working in what I
would consider fintech so it'stechnologies that financial
service providers utilize, and Istarted that in the electronic
bill presentment and paymentspace, where we would enable our
clients to make their billsavailable to the end consumer
(16:11):
via their website.
And over the course of time, Iended up meeting up with a
serial entrepreneur and he and Ihave worked together four times
now.
His name is Greg Rabel.
He started a company calledFactor Trust that I joined in
2008.
We sold that business toTransUnion in 2017.
(16:33):
I worked there for five years.
The investors in Factor Trusttook an interest in Validify,
which created an opportunity forme to join Validify.
And here we are a couple ofyears three years into that
process.
Now we're a 40-person business.
We are profitable and growingand looking forward to the
(16:57):
evolution of these payments andthe continued opportunity that
ACH provides and helping ourclients combat both risk,
because a lot of the fraudthat's out there these days,
greg, is first-party fraud.
You know it's not all fraudranks.
Sometimes it's the willfulbehavior of a first-party
(17:18):
consumer, which is a wholedifferent ballgame when you're
trying to discover how thosethings occur.
Yeah absolutely.
Speaker 2 (17:26):
Well, what are some things you're passionate about?
So, maybe one work-relatedpassion and one personal passion
.
Speaker 3 (17:32):
So my work-related passion, because of the last 15,
17 years of doing this, is Ibelieve we've lost some effort
to deal in just the facts.
I'm going to give you anexample of that.
Last year, the credit bureausdecided that we would no longer
have medical debt as part ofconsumers' credit profiles.
(17:56):
Meanwhile, the CFPB, such as itwas then and then we all are,
the suspended reality that theCFPB is in now was holding out
for lenders, our clients, thatyou had to determine a
consumer's ability to repay,that you had to determine a
consumer's ability to repay.
So, on the one hand, we've gotthe information source
(18:20):
determining that we are notgoing to include buy now, pay
later transactions.
If it's detrimental to theconsumer, we're not going to
include medical debt.
They still owe the medical debt.
Then we have the regulatorsaying you should have known
better, mr Company, that thatconsumer could not afford that
product for which they applied.
So my passion is the fact that Ibelieve we've lost our ability
(18:45):
to operate with the right amountof information.
Help marry consumers who arenon-fraudulent into products
that offer them the best pathforward of success, in a
graduating sequence, so thatthose consumers have an
opportunity to repay and growfinancially At the expense of
(19:06):
all of that.
We are saying it's aboutinclusion, it's about allowing
consumers opportunities.
It's about inclusion.
It's about allowing consumersopportunities.
Well, not every consumer canafford a mortgage at every point
in their credit journey, and Ithink we have credit scores
today that are built on yourexperience, your debt ratio,
(19:26):
your utilization of products,but what we're missing is any of
the real-time aspect.
That is part of that what'shappening today, and so, while
credit scores are laggingindicators of behavior, I
believe there's an opportunityto fill in those gaps, and if we
do it thoughtfully, then welower the overall cost of credit
(19:48):
for every consumer, for everyconsumer.
So I guess, at the end of theday, I'm passionate about the
fact that information, realfacts and data still have a
place in the conversation, andwe shouldn't lose that.
So I hope that answers yourquestion, and makes sense.
Speaker 2 (20:06):
Yeah, it makes a lot of sense.
What about on the personal side?
What's your personal passion?
Speaker 3 (20:10):
So I have three children and I'm way over
married, so I spend a lot oftime with them and so I'm
passionate about my family, myfaith and I love football.
I love Georgia football.
I'm a huge fan of that, so ourwhole family enjoys sports, so
we do a lot of that as well.
Speaker 2 (20:31):
Great, great.
So, John, if someone comes toyou maybe they just graduated
from Georgia and they look atpayments in FinTech and they say
, hey, I want to build a careerin this space what advice would
you give them to help them besuccessful in their careers?
Speaker 3 (20:45):
I would tell them to be intentional about trying to
experience both sides of theequation the corporate payment
scenario scenario and then seeit from more of a ground view
smaller operation so that youcan understand the puts and
takes of how potentially a largepayments provider or a credit
(21:07):
bureau views the marketplace, aswell as how someone who's much
closer to their clients and asmaller, more focused
organization looks at it.
And I would tell them thatpayments is a great space
because it's constantly changingand there'll never be a day we
don't pay.
So as that changes, there isopportunity in that.
Speaker 2 (21:31):
Yeah, absolutely.
I think that's great advice.
So, John, as we wrap up theshow, is there anything else
that you'd like to discuss or goover before we wrap up?
Speaker 3 (21:40):
Not off the top of my head.
I guess I would leave it withthis.
As the web debit rule for 2026comes into being applied,
there's so much more opportunityoutside of just complying for
our clients that we are helpingthem identify opportunity with
(22:01):
their customers.
The ability to reduce fraud,the ability to mitigate risk all
by assessing the consumer'sbank account, and the consumers
are open and willing to sharingthat data to a far greater
extent than they are to log intotheir accounts.
And the emergence of real-timepayments is taking legacy
(22:25):
trusted processes like microdeposits and bringing them into
the speed at which we operatetoday.
So not everything.
Every application meets everyconsumer's desire.
Having a complete strategy andthat offers you compliance
really has a lot of lift for abusiness from an efficiency and
(22:50):
a cost reduction and a fraudelimination standpoint.
Speaker 2 (22:54):
Okay, I think that's a great way to wrap up this show
.
So, john, thank you so much forbeing on today.
I know your time is veryvaluable, so thanks for being
here.
Speaker 3 (23:02):
Greg, thanks for your time.
I really appreciate you havingme.
Speaker 2 (23:05):
Absolutely, and to all your listeners out there.
I thank you for your time aswell, and until the next story.
Speaker 1 (23:10):
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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