Co-Founder, Adi Ekshtain, is interviewed by Kunal Chopra, CEO of Kaspien, Inc. They discuss Amaryllis, the payments industry, Amazon, and much more. Check out what Adi had to say in the podcast below.
KUNAL CHOPRA: Welcome back to Master the Marketplace with Kaspien. Hi everyone, and welcome to another episode of Master the Marketplace with the Kaspien. Today we have a special guest on the show, Adi, who’s the co-founder of Amaryllis Payments and I’d love for him to really tell us a little bit about his company. So, Adi, why don’t you start by telling us a little bit about yourself and your company.
ADI EKSHTAIN: Thank you very much, Kunal. So my name is Adi Ekshtain, I started my career in payments 20 years ago. My first job straight out of college during the dot com boom back then, I was part of a very small team that invented mobile payments, which was the precursor to what, you know, today as Apple Pay and Google Pay. And back then, I don’t know if you remember what kind of phone you had back then, but we’re talking about phones, flip phones, Motorola, StarTec or versions of Nokia, if anyone remember. So definitely no smartphones, no apps, not even an app store. And we found a way to put an app on those phones. Actually, we put it on the SIM card of the phone. And then we partnered with Orange Telecom and we deployed a commercial solution where people could go to a grocery store, a restaurant, a pharmacy and pay for the goods with their phone. So that’s how I started. And from there, I went on to design numerous payment systems, won a number of awards, one of them from Steve Ballmer, then CEO of Microsoft, and another one for the best subscription billing system in the industry. And that’s how I started.
KUNAL CHOPRA: That’s fantastic. And then what got you to do, Amaryllis? And tell us a little bit about the company and what you folks do.
ADI EKSHTAIN: Amaryllis is a cloud based platform that lets companies embed payments, monetize payment and really become payment facilitators. And the reason we started the company is that we noticed a pattern in the market where companies kept building the same payment system in-house over and over again. And, you know, unlike, for example, CRM software, you wouldn’t build your own CRM software these days. You’re just going to go and procure or buy readymade software. So we decided to take all our knowledge, know-how and expertise and mold it into a technology stack that others can use so they don’t need to reinvent the payment wheel. And that’s Amaryllis. And really, it’s a cloud based platform mostly suitable for marketplace’s, enterprises, or well-funded startups that need a shortcut to this market. And they can operate in almost any industry. We have clients in e-commerce, retail, grocery delivery, ticketing, travel, and many more.
KUNAL CHOPRA: Fantastic. I mean, that’s OK for our conversation today, because a lot of the focus on this podcast is marketplaces. And we talk about how brands can scale their businesses on different marketplaces. And an integration with payments is sort of a critical aspect of the overall marketplace ecosystem. So maybe a question for you in terms of just, you know, this past year, which has been different when it comes to a typical year in the retail world, a lot of shopping has been online. People are working from home. How have you seen the payments landscape evolve as the shift as taken to more online? What is what has been your experience in what you are seeing out there, what you have seen out there?
ADI EKSHTAIN: We’ve seen tremendous shift in the industry, just like you said, the was shifts from brick and mortar to online. That was the obvious shift boosted by the pandemic. We also saw a shift to omni channel, for example, purchase online and pick up in-store online grocery deliveries. And we can touch on omni channel payments later. And I think we saw some less sensitivity for price over the ease of purchase and speed of delivery, at least in the beginning. And that’s still carry over till today, almost a year, almost a year later. And we also saw a tremendous shift of direct to consumer, if you remember, during the pandemic when Amazon stopped accepting non-essential products into its warehouses and for good reasons, and retailers realized that they cannot take and fulfill orders. And then they started migrating to other platforms, mainly Shopify. And it looks like this trend is here to stay and retailers and brands will continue maintaining this direct to consumer channel. So that’s for sure here to stay. And other trends I noticed is the pressure of free shipping. Consumers got spoiled with Amazon, obviously. So the question of retailer and merchant is can their model support and sustain free shipping? That’s a good question. And we also saw that customer acquisition costs are much higher, including cost of advertisements. And we saw a spike in November right before Thanksgiving and into December in Google advertisement. And definitely Facebook ads are almost back to their peak in the pandemic. So that’s also also a shift. And other things that I can mention is some booming industry’s. Definitely online education and online courses and the entire ecosystem that went parabolic with the pandemic, everything that the tools that help you produce courses, obviously online education or online course marketplaces that popped up and then the entire ecosystem of subscription management, marketing and so forth and other industries, everything that has to do with side hustle’s and obviously the B2B work from home industry, the zoom and Microsoft Teams and the like, and of course, also exercise at home, Peloton and other innovators that provide the train at home services. So these are the major shift that that I noticed in the market in the last year or so.
KUNAL CHOPRA: That’s awesome. Very comprehensive. And do you think that these shifts that have happened in the last year, will they continue or do you think that we will revert back to some normal or maybe this is the new normal? What’s your opinion there?
ADI EKSHTAIN: I think it’s almost the new normal. Time will tell. I don’t think we are out of the woods yet. So we still need some time to see. But most of the things that I just mentioned are for sure going to be here for the next little while, if not for good. People are going to train more at home going forward. They are now used to ordering things online that they didn’t order before. Online groceries is a great example, either shipped directly to your door or a pickup at store, but not going in and picking up your groceries like you used before. That’s here to stay.
KUNAL CHOPRA: Yes. You know, one of the things that I like to do typically to try to understand trends is I like to see what startups are working on. And I like to go to, you know, Y Combinator. And I like to go to see in some of these accelerators and see what are they funding. And believe it or not, all the items that you mentioned are areas that they are funding right now. So, you know, and it’s, again, an indication that that’s where the venture capital industry is, also where the industry is going to go. And that’s why they’re funding some of these startups to facilitate all of these areas that that you that you mentioned are new trends in this industry. But you picked on you picked on one important area that I think is very relevant, which is omni channel. And they talked a little more about omni channel. And specifically, how will the payments landscape change as we see more brands looking at a omni channel like approach to sell online?
ADI EKSHTAIN: So let’s just speak about omni channel, especially when it pertains to payments so the audience can understand. So before Omni Channel, there was a single channel which basically meant that you transact with consumers via one payment channel only. Either retail or online, but only one. The next step in the evolution was multi-channel, where you had multiple channels to transact with consumers, but they were very siloed with very little interaction with one another. So you had the store, then you had the website, but the interaction with the store was only in the store and the interaction with the website was only on the website. And then Omni Channel is really at the top of that pyramid where you now join these multiple channels to work together to enable enhanced experience and interactions. And so that’s really omni channel in the way that we speak about. And I would say there are three things you need to pay attention to, especially where it pertains to payments and omni channel. First is that you need to leverage technology to deliver your omni channel vision. Omni channel payment processing requires flexible payment engines that can support all types of variations of transactions and you need to have that. Number two is that the consumer doesn’t really care about the integration behind the scene and all the complexity that that is involved. And number three is that probably the most important thing is data synchronization. And I’ll give a couple of examples for scenarios. So we need to synchronize data in between those channels to support different use cases. One typical use case is buy online, return in store, BORIS, in short. So there are questions like do returns showing online under my account, for example, or when a consumer go to a store and show up the email they receive from the online purchase to pick up, can you use that order number in your in-store system to look up the sale? So that’s BORIS. There is another scenario called buy online pickup in store, BOPIS, in short. So again, can you provide same day pickup? So I just bought something. I want to rush and go get it. Is it available there? Are the system connected to tell everybody that I can pick it up? And also when I do show up in-store, can you convert that online purchase into a card present transaction? Now I’m in store, I have my card at hand. Can you take my payment? You’re going to pay less fees if you do. But can you do that? Can your system support that? And then, of course, there is all the refunds and chargebacks. Can you refund to a different payment instrument I bought with one card? I’m showing up with a different one. Can you do that? Can you tokenized the cards across all your channels so I can have a unified experience? And then of course, everything that has to do with payables and inventory management. Can you take a sophisticated transaction that happens online or in an app that involves split fees where I’m paying for groceries, but behind the fees there is a fee to a delivery company, for example. Can you convert that also if I’m showing up and paying with my card present at your store? So these are really the challenges that we see with Omni channel that retailers need to pay attention to.
KUNAL CHOPRA: And to support all these use cases. I mean, is Amaryllis, for example, a company or similar companies that provide a one stop shop to be able to manage all of these?
ADI EKSHTAIN: So there are definitely companies and providers out there that. Amaryllis is definitely one of them. And we also support a model called payment facilitation that is up and coming, especially in the pandemic. So we can speak about that as well.
KUNAL CHOPRA: I mean, let’s jump into that. I’d love to learn more about what Payment Facilitation specifically is. And I mean, educate me, I’m not a payments guy, so. Yeah.
ADI EKSHTAIN: So payment facilitator or payfac, in short, is really a company that provides many payment processing services, so to speak. So they get the permission from a real payment processor to accept payments on behalf of the merchants. And in that process they get to decide who they are going to do business with so they can sign up their merchants very quickly and charge a fee for each transaction running through their system. So that’s the definition. And if we want to take a look at example, two very good examples are Mind Body and Shopify, so Mind Body, as you know, provide software to manage fitness, wellness and beauty services to over fifty thousand merchants, and Shopify is an e-commerce platform that powers online stores for maybe millions of businesses. If you look at them, the interesting thing is that both of these companies, after they started facilitating the payment of the customers, a large portion of their revenue comes from payment monetization, not from the sales of their software. And so if we are talking about the benefits of payment facilitation, this is definitely one of them. Other benefits are, first you create a new revenue stream and a new payment facilitator you get to tap to incharge a marginal fee on all payments of all merchants under your platform. So that’s a given. And second is that you speed up your merchant onboarding and that’s very important, especially for marketplaces, because today, if your platform enables payments for your merchants or the website or the stores, you either have to send the merchant to a third party payment processor to apply for what’s called the merchant account. Or you’ll need to collect all that information and pass it along to the payment processor. And that includes a lot of sensitive information like Social Security number, bank account details and so forth. So this process takes time, sometimes days, even weeks. And so obviously you can provide a much better experience to your merchant when you become the payment facilitator. And with the help of software tools like Amaryllis, you can onboard your customers almost instantly.
KUNAL CHOPRA: I see. Absolutely. And it’s very interesting and fascinating how this space has just evolved as trends continue to evolve in this space. So one of the questions that I had was around, you know, as we see again, more support for Omni Channel, all the scenarios around BORIS, BOPIS, that you talked about, as those become more mainstream, How would the internal operations for a company have to evolve and how, for example, I’ll give you a very simple example. In the traditional retail world, you have one manager managing the Amazon channel. You have someone managing the Wal-Mart channel, someone managing through wholesale brick and mortar. And those divisions don’t really talk to each other. Reconciliation has to happen across the board. And so how does the internal operations of a company need to change or evolve as we see the shift to more omni channel like experiences?
ADI EKSHTAIN: I think, number one, you need to bring in knowledge and create specificity. So the same person you used to only do, Amazon, just like you say, can now also do Shopify in tandem. At some point and that’s probably a question of scale you will need more than one person to handle on that. And then the other thing, just like you mentioned earlier about innovation, there are probably going to be more tools and innovative software that lets you merge those channels together, at least in a platform that let you manage them more easily. We already see that with restaurants and they have different delivery companies coming up, DoorDash and so forth. And there are now companies who are providing software that merges all those channels and let you streamline the order process.
KUNAL CHOPRA: I see, yeah, I think I think you’re right. I mean, with any shift in technology, with any shift in trends, you know, so important for companies to adapt internally. And so there’s this alignment across what’s happening externally and internally, and that’s lock and step together. So I think it’s important, at least for folks listening to this, to be open to changing internal operations to adapt to a changing competitive landscape as a whole. So Adi, one question around just the future of payments. I would love to get your opinion on this. Like, how do you see blockchain and some of these technologies impacting the space and specifically payment providers like yourselves? Where do you see that technology fit and be hearing so much about it? But I’d love to see if there’s any practical applications in your world.
ADI EKSHTAIN: So I assume you’re talking about Bitcoin.
KUNAL CHOPRA: Yeah, yeah, you know, Bitcoin or even the use of blockchain within the payment ecosystem as a whole. But, yeah, Bitcoin for sure.
ADI EKSHTAIN: So definitely Bitcoin and the blockchain technology, and it’s a trend and the hype that a lot of companies are still trying to figure out, what can they do with it? And so that’s number one. Number two block chain, as a payment instrument, I think with the adoption, it’s going to become more available, more people are going to own Bitcoins and more people are going to want to use it when they shop, especially online. So I think we’re going to see it more available. I’m not sure it can give a good fight to credit cards. It’s not going to be a credit card. It’s still the killer payment method out there. But maybe in some niches or some form of application block chain, they can become more dominant.
KUNAL CHOPRA: That makes sense. Yeah. I mean, I think that’s that’s a valid view. I mean, do you see consumer behavior change from the perspective of people actually using Bitcoin to make purchases online or wherever? You know, that’s a different dynamic versus it being used as a trading instrument or something these days? And and so will the consumer behavior change in terms of using Bitcoin as currency relative to credit cards? That is probably the most active instrument right now. And hard to replace is is sort of key, the key point here.
ADI EKSHTAIN: That’s right, looking at Bitcoin as a currency, it’s a very volatile currency. So if you go and shop online with your U.S. Dollars, the price is the price. If you come with Bitcoin, the price can be different in the morning than in the afternoon by 10 or 20 percent on some days. So that’s something that consumers definitely pay attention to.
KUNAL CHOPRA: Exactly. Exactly. So let’s talk a little bit about international, you know. I mean, a big trend we are seeing, again, from a consumer perspective is more global marketplace like support. So brands that that we support, for example, in the US, there’s demand for those brands in the U.K., the demand for those brands in parts of Asia. And I know Amazon keeps talking about a more global marketplace as opposed to trying to separate manage all these different countries separately. How do you see the payments landscape evolve globally and just over time as we see more globalization with a more integrated world happening?
ADI EKSHTAIN: I think it’s still complicated to go global, even for big companies. And the farthest you go, the more complicated it gets. And in some jurisdictions, you still need to locally domiciled entity in order to accept payments. And though there are a number of services out there that let you go global and stay local, but obviously for a fee. So there is definitely that’s one area I’m still looking for innovation. And maybe that’s one area where a marketplace give a big benefit to their merchants so a merchant that sign up with a marketplace and then the marketplace take care of that. You mentioned Amazon and the kind and take care of the fulfillment and shipment worldwide, taxes, how do you take payments in Singapore versus Portugal and so forth, kind of mask those problems. Of course, there is a price for that, but they definitely make things simple for merchants.
KUNAL CHOPRA: And does the Amaryllis platform support a more global company if a company wants to operate in multiple countries, will you be able to integrate in a more global structure?
ADI EKSHTAIN: So one of our advantages is that we are processor and acquirer agnostic, so we can work with any payment processor worldwide. And typically when clients come to us, they can point that in that direction and say, hey, we not only want to work in Singapore, but we want to work with Bank A and not Bank B, and just like that in any country and we take care of the technological integration and now to accept payments and make it simple for them.
KUNAL CHOPRA: So this is more of personal question for your company. I noticed on your website, I think you folks were in the City Accelerator, is that correct?
ADI EKSHTAIN: Yes, that’s correct. A number of years ago.
KUNAL CHOPRA: So I’d love to talk to me a little bit about that process. How is it going through, you know, just that startup phase, getting into an accelerator, growing your company? I think there are many entrepreneurs who also listen to our podcast who are Amazon entrepreneurs mostly, you know, but would love to hear from your entrepreneurial side of that journey and how has that been?
ADI EKSHTAIN: My Co-Founder, Ori Hay, he was managing that process, working with the City Accelerator. We had great relationship with the people there. We got into that class of companies and I think an accelerator is a very good approach to get you focused in a very short time on what you need to achieve and get results. And we definitely got that from City. And definitely when you work with the accelerator that is managed by City or other large organization, you get other benefits like meeting people worldwide, City is an organization that works everywhere. You get a lot of PR and media attention. So you can definitely use that benefit to then when you grow out of the accelerator, use that in order to go to market much faster and much better.
KUNAL CHOPRA: That’s great. That’s great. And how is that tech startup phase evolved into running a bigger organization, potentially in a more mature organization? Has the challenges has been has it been more difficult? Has it been easier now? How is that evolution been for you and your co-founder as leaders?
ADI EKSHTAIN: It never gets easier. It’s more a question of scale. We definitely grew up since we have about 50 people just in our I.T. department, building software, testing it, getting releases to market. And we’re dealing with different scale with a lot more customers and customers from different regions of the market. And so we grew up since then. When you are a startup, you focus on many things, but in a more narrow matter. And now when you are a more mature company, then you need to take care of business in a more professional way. And that’s where we are today.
KUNAL CHOPRA: Great, great, great. So, yeah, going back to kind of our core topic on payments, you know, one of the issues I know we’ve always faced here at Kaspien is just our finance teams internally trying to manage, you know, reconciliation with Amazon, reconciliation with Walmart. And so how does a platform like Amaryllis make it a lot more easier to support internal finance teams to just in terms of efficiency, in terms of quality, in terms of maybe speed, speed to completion. What’s your thoughts there?
ADI EKSHTAIN: So you mentioned reconciliation. So as a definition, reconciliation is the process of matching the sales activity from your own platform, maybe with different channels, with the transaction activity you conducted, with the payment process or the platform that accept payments on your behalf and then reconcile all that with the funds that you actually get in your bank account. And that has always been a pain point in the industry for a couple of reasons. One is that the statements or information that you receive from your payment processor or your platform are very hard to reconcile back against the funds that you get in the bank account, there are always additional fees, they may put the chargebacks and deduct them from the number. So it doesn’t much of the sales anymore. There are a lot of challenges there. And also, if there is any mismatches between your platform and the processor, you’ll typically have to detect them on your own. So as an example, sometimes there are technical glitches and there is something called duplicate transaction where a consumer press the buy button now but for some where along the way they got charged twice. Typically, the payment processor, the platform will not notify you on that. It’s up to you to detect that. And what happens in real life is typically you will get the phone call from your customer telling you they got charged twice and that’s a little bit too late. It’s not a good customer support and some of them will not call you. They’ll call the credit card issuer and issue a chargeback, which is the last thing that you want to have. And so definitely platform like ours, like Amaryllis, we automate all that for our merchants, we reconcile all the transactions and we also alert them in real time if something happens. So they get the message right away that tells them this customer got charged twice within two seconds, same amount, same shopping card. You may want to take a look at that to see it wasn’t a problem. And within two minutes they can solve the problem. They can, even with our help, press a button and not charge the consumer the second charge, so it will never appear on the card. They will not even be aware that there was ever a problem. So we have a lot of tools and processes that we build over the years to first monitor for all these abnormalities and then when they happen, alert on that in real time and then also solve the problem in real time.
KUNAL CHOPRA: And related to this conversation, what’s your view on artificial intelligence and data science and its applications to the payments space as a whole? Where do you see that space getting involved?
ADI EKSHTAIN: I think A.I. artificial intelligence, which is another hype right now, I think it has a place in this industry again, just like Bitcoin’s, a lot of companies out there are still trying to figure out what they can do with it. And a lot of the solutions we see are not AI powered. They are human logic power at the end of the day. But A.I. can make a lot of impact, just as an example. And this is something we did already in 2005, running algorithms, machine learning algorithms that look at your entire dataset and find, for example, the fact that when you ship to a certain zip code in Ireland and the premise was that the shipment will arrive in five days. If those shipments are out on Monday, it takes 10 days. And if they are out on Tuesday, take 15 days, for example. So algorithms can find these abnormalities that you can take then look at and take action so you can improve your shipment in certain parts of Ireland, for example. Or you can see another example, a certain cards declined when people try to make certain kind of payments. So normally everything is smooth, but cards that are issued by a certain bank and the shopping cart basket is about 50 dollars and the purchase take place between 10 and 11 in the evening. Instead of 90 percent approval rate, it can drop to 80 percent, that 10 percent decline. So things like that definitely A.I. can tap into and get us information that we can’t normally see today.
KUNAL CHOPRA: Yeah, I think you’re right. A.I. Is one of those areas where there’s certainly a lot of hype and certainly a lot of applications that we see. but the industry as a whole is trying to figure out, larger organization, trying to figure out how they integrate A.I. into their operations, startups trying to figure out how do you build an A.I. for their first company. There’s certainly opportunity and the applications seem like they all make sense, and I think you’re right, and just saying that everyone’s trying to figure out how do we best utilize, you know, some of the opportunities that A.I. presents to us. Fantastic. Well, Adi, this was a fantastic conversation. I know I learned a lot. You know, if folks listening to us on the call right now, if they want to get in touch with you and your company to, you know, to work with Amaryllis, what’s the best way that they should do so?
ADI EKSHTAIN: They can head over to our website, AmaryllisPay.com, fill up a short form, will get in touch with them right away. I’m a mostly active on LinkedIn. You can connect with me there. Just search for Adi Ekshtain or follow me on Twitter @adiepay.
KUNAL CHOPRA: Fantastic. Well Adi, thank you again for this conversation and I certainly appreciate it. And thank you again, everyone, for a one hour episode with the Master the Marketplace. And we will see you again very soon next time. Thank you. Bye bye.