As businesses grow into enterprise in scope, the level of sophistication of their payment system grows, too, and the challenge of handling these expanding needs is apparent.
Ori Hay, CEO of Amaryllis, and Viko Bargig, Vice President, Solutions Architect for Amaryllis, take these unique payment challenges and needs of the enterprise customer head on. They spoke with host Daniel Litwin on how they provide payment solutions on such a large and sophisticated level and why enterprise customers need specialized payment solutions.
Bargig said today’s global enterprise-level businesses offer a multitude of options for their customers, with varying platforms and payment options. To meet these needs, they require a payment management system that differs from what a localized business might need. And Bargig sees more and more companies shifting from localized to globalized.
“Today’s enterprise customers are using payments to generate more revenues and more profit,” Hay said. “Small businesses use payments as a commodity. They don’t recognize, in the beginning, how important for them to control the payment chain. This factor is why they outsource it to other companies.”
What do enterprise customers need to do to ensure they build the right payment solution for their needs?
“Each enterprise business should look at as many use cases as they can research to understand their needs,” Bargig said. “Then you have to decide which use cases you’d like to support in the near future and the far future.”
Building the solutions is easy once the decisions get made.
Meeting Enterprise Needs with Enterprise Payment Solutions
Hello everyone, welcome to the MarketScale Technology podcast. I’m your host Daniel Litwin, the voice of B2B.
Folks, thank you so much for tuning in to another episode of the podcast. For today’s topic, we’re going to be chatting about managing payment solutions as a business.
When you’re managing those payments as a business, often the challenges of scaling payment infrastructures vastly grow and become more complex as the size of the company also grows.
Everything from merchant onboarding to billing and transaction processing to payouts and risk compliance.
All of that as your company becomes enterprise in scope and scale, starts to become more sophisticated and the need for an end to end payment platforms to support enterprise business becomes more necessary.
On today’s episode of the podcast, we’re highlighting exactly what those unique challenges of enterprise-scale looks like for payment solutions and why enterprise companies need an enterprise-level solution in the first place.
For our guest insights today, I’m pleased to welcome two business leaders from Amaryllis. They’re a payment infrastructure platform that provides enterprises, ISVs and SaaS companies the solutions to define unique business processes and support their evolving commerce needs with payment solutions.
I’d like to welcome our two guests, Ori Hay, CEO of Amaryllis and Viko Bargig, Vice President Solutions Architect for Amaryllis. Ori, Viko, great to have you both on, how are you doing today?
Thank you very much, good morning.
I’m checking in with all my guests. it is a crazy time, how are you holding up during this pandemic? Everything okay, on your end?
Yes, we are good. We are used to working remotely, so it’s almost business usual.
All right, well that’s good to hear, same over here. Staying healthy, staying safe, and staying productive obviously, having great conversations with folks like you, so looking forward to our breakdown today.
Let’s go ahead and jump right into it. I want to start generally here, how has the market for payment solutions evolved in the last several years? And maybe more specifically, have more businesses entered the fray to offer solutions and have those solutions evolved, to meet the commerce needs of the industry? What’s the state of businesses offering these solutions today?
Most of the market has pretty much shifted from being one seller to many buyers, to more of a platform solution. We can see that on Amazon, eBay, or other platforms like AliExpress where everyone is shifting to more of a marketplace- we can call it an online mall.
In this case, instead of just managing your own business and selling your products, you became like a centralized store that is managing multiple sellers and multiple buyers. Based on this, everything is changing because you need additional resources, use cases, and requirements.
This is pretty much where almost all of the businesses are going, from being a small localized store to more of a globalized product that can offer many products and services to many customers with their own unique needs. Almost all of these businesses are changing from just being a localized small store.
There is a recognition that payment is a core part of businesses. The trends are moving from e-commerce, that was one seller to many buyers, into a platform economy, like the Uber’s, and Airbnb’s of the world. This opens a completely new business channel which we call payment facilitation. Companies manage not only the buyer but seller on their platform. It’s just evolving, the business is growing.
And what I think is challenging here is as companies grow, they start to identify that they are an enterprise company and have enterprise needs. Maybe it isn’t immediately apparent that they need to change some of their backend infrastructures to match these enterprise needs, like payment solutions.
How do companies generally approach integrating their payment solutions today, based on the experiences that you have had as a payment solutions company?
Do they know to look for customizable solutions to match their specific needs or do they gravitate more towards a standardized in the box solution? And why?
What does that look like today?
If we look at different examples, the first one is ones that try to stay with what they already had before. Usually, those companies find out quickly that they can’t continue using the old solutions because they are not prepared for what they need.
For example, when you are selling your products and just managing your shipments and invoices, then start managing multiple sellers or multiple locations, you find out that you have different requirements, for each location.
For example, different taxes, and then you have different requirements for each seller. Some of them sell only services, some of them sell products, some of them have pre-orders. Then you need to apply the billing based on the shipment date or apply the billing based on the order date. So, it all becomes different from what you were used to. The first part is usually these companies find out for themselves that they need to change.
The second type of merchants or second type of solutions are those that are trying to go with some black box. In this case, it depends on how flexible you need to be. If the black box suits your needs, you’re fine with that until a time comes that you need your own specific use cases.
The third type knows from the start they will need to prepare and build everything based on what they need and what the future will be. For example, if you would like to be a global marketplace, let’s take Amazon as an example.
You need to understand all of the use cases, you need to understand that you will need different types of services to offer your merchants and your customers.
Some of the merchants would like to have capabilities to manage their inventory, some of your customers will need to have a different type of billing, some of them will need to connect to third parties for different integrations and services.
So all of that becomes pretty much a very heavy duty process that you need to follow and support because it’s not just about selling the product and receiving the money, it’s a completely different business than what you were used to when you were just a small store or an e-commerce website that was just providing products and solutions.
So, you mentioned Amazon, I think that is a perfect example for reflecting how e-commerce has shifted the expectations of scale for companies that want to have a global marketplace or an enterprise-level marketplace.
They’re now competing with the likes of Amazon on e-commerce or at least Amazon has sort of set the bar for scope and scale in e-commerce and now everyone sort of has to play off of that.
I think they’ve been defining how e-commerce has evolved over the last decade, so I want to get your thoughts on this. How do you think payment needs for enterprise companies versus smaller mid-size companies or just not quite enterprise level yet companies?
Enterprises are using payments to monetize, to make money out payments. This is a big difference; it’s monetizing and an enablement process they are using payments to generate more revenues and more profit.
Small businesses, who are using payments as a commodity play, don’t recognize in the beginning, how important it is for them to control the payment chain. This is why they outsource to other companies.
I think this is the real difference. You can start your first website to sell stuff in two minutes with a PayPal account. You don’t see an enterprise client using this solution, you will have much a greater solution and PayPal can be one of them.
It depends on your level of business and the way that you’re viewing the payment flow. For example, as a small business owner with a merchant underneath the platform, you would like to view the payment of the transactions and the actions that you’re performing, based on your own, let’s call it merchant view. So, you’d like to see the transactions that you perform, you’d like to see the products that you served, you would like to see your invoices, your date, your IDs, time zone.
The next level in the chain, which is an example of the place they would like to get to at a higher level, would like to see all of the merchants underneath them and they would like to see the billing activities.
They would like to see the commissions they collected, revenues, shipment costs, profitability, the billing that they are collecting, and the billing that they are paying out.
So, it’s more of a level in the hierarchy, each one of them needs to have their unique view of the system or unique view of the entire solution that they are offering and everyone has their own unique, let’s call it a unique portal, that they go into. They manage the product, they manage their billing activities to provide the financial information, it’s more of where you are in the chain and what you need to see.
So, everyone needs their specific data and that’s really where the business is evolving. Because if we look at maybe five or ten years before, you will see that it was completely different. You will look at your view, your data and you will say, okay, that’s how I’m working and that’s what I need.
The higher you go in the chain, it’s not just about you. It’s about you and the businesses that are earning underneath you and the entities that you are managing because you need to provide them with the appropriate solution to manage daily information while you’re managing your information, their information and the entities that they represent in the system.
So, since those payment solution needs have become so evident for enterprise companies to compete on a global scale, how should enterprise companies looking into their payment solutions and their infrastructure for them, how should they discern whether or not the solution is ready to even meets their enterprise needs? What are the most important factors to look for in that solution? And why does the distinction matter?
I think that in this case, each enterprise business should look at as many use cases as they can. Research and understand that they need to understand what type of solutions you’re offering to the merchants underneath you, your clients, and their clients.
Then you need to decide all of the use cases that you would like to support, again maybe in phases(maybe phase one, phase two, phase three) but you need to understand the use cases that you would like to support, now shortly and in the far future.
Then you can start building the solution that you need and of course, the more use cases that you have this makes the solution more flexible, more advanced, more complicated to build. And on top of all of that, it needs to be as easy to manage and as user friendly as possible.
So, I think it comes down to research, good development, good experience, and a good understanding of your needs and your customer’s needs.
I will add that the first thing they need to see is if the company can build the infrastructure to support enterprises and how long it will take to do it.
I think its crucial, enterprise solutions cannot be built over a year or even two years. What makes an enterprise solution is the depth that was invested through thousands, hundreds of thousands or millions of hours of development, experience, extreme use cases and building mechanisms to maintain, control and monitor the use cases.
This is not something everybody can do. If they do it, they will spend a lot of time to reach a point that it becomes an enterprise. Also, what is the history of the company? What is the history of the solution itself? Is it a spin-off or it’s something that was built and designed from the start to be an enterprise solution?
All right, I want to get into breaking down how enterprise needs differ for various types of payment solutions. Amaryllis offers a whole swath of different solutions and I want to highlight the main ones here and then really get into why the solutions need to be honed for enterprise needs.
So, we’re going to go ahead and go down the list here. We’re going to start with transaction processing. When you get to the enterprise level, how does transaction processing begin to become more complex? And why do you need an enterprise solution for that-in your opinion?
When we look at transaction processing from an enterprise point of view, it differs by the fact that you have many entities underneath you. You have many requirements based on geographical locations, countries, time zones. When you factor all of these different scenarios, you understand that you can’t just connect to a specific gateway or a specific creditor processor and be ready to go because it doesn’t stop there.
Some processors or some gateways will only support the U.S, some will only support
Canada, some will only Europe. So, it depends on the location, first of all, then it depends on pricing.
Each company will offer different fees and commissions for different types of transactions, so you need to take that into effect as well and then you need to check the marketplaces you provide the solution. How many transactions do they process? What is the type of those transactions that they process? When you look at that it affects the needs of how you will connect to them.
Then you have requirements of multiple sellers underneath a single MID (which is the merchant ID). So, you would need to support that as well. It doesn’t stop just with processing a transaction.
It revolves around the use cases and the needs for billing the specific transaction flows, which could be to a specific gateway or multiple gateways, based on the transaction amount, type, location, payment methods. It doesn’t even have to be just a credit card, it could be ACH, gift cards, or anything.
I will add that in our vision, you don’t even have to change your way of processing transaction.
If you need a specific gateway, it’s a limitation. You need to be able to maintain your current relationship and then add others.
As we do it, we don’t force you to change your gateway- we can be your gateway, or we have many ways of allowing you to keep your current transaction processing where it makes sense to you as an enterprise client.
A lot of the enterprise clients have already built huge platforms to do transaction processing. Some of them have business relationships for transaction processing. The first thing that comes to mind is don’t be limited by the solution they provide you. What we provide is a complete package of managing payments into a specific transaction processing service.
Alright, the next payment need is billing, pretty foundational to any global e-commerce or enterprise-level business, is billing. How do billing needs start to become more complex as they enter the enterprise space?
When we look at the billing requirements of each new enterprise model or even a simple store, it depends on the needs of the solution that they’re offering and the needs of the integrations that they have.
So, let’s start from the top. First of all, of course, when you process transactions, you need to pay fees for each transaction You need to pay interchange fees, processing fees(for processors), then you have your internal fees, which can be from the merchants themselves that are using your platform that they need to pay to you.
Then your merchants can have multiple levels of hierarchy, your merchants might have sub-merchants, or we call them sub-sellers. In this case, they have fees that are going between them
Then you would like to manage reserves, you’d like to manage fees on top of fees (transaction fees, scheduled fees, pricing deals). So, all of that comes in, the bigger you are, the more that you need, so it depends really on what you need as an enterprise.
You will probably need all of that flexibility and all of those billing use cases and again, those are just some examples.
It could be unlimited; it could be with priorities that you’d like to have some fees that go first and then additional fees that need to go to some agents or sub-agents. Some fees that can be automatically reversed, partially reversed, depending on the amount and percentage.
When you combine all of that, it becomes a really heavy requirement, which is more than just applying some transaction fee to a specific payment method. It’s more of an integration into your system.
So, it depends on the products that you’re selling, the category of products, and taxes. When it’s all combined, it’s a huge requirement. So, it’s not just about a small billing configuration or charging a fee for the transaction.
So, when you speak about monetizing payments, what does it mean? How do you monetize payments?
This is why billing is so important, you need to have two things- you need to be able to charge your client in a way that will make sense for him and be competitive.
For example, if there are two rideshare companies, they’ll compete not only on the passenger but on the driver.
If I know that there is a huge demand between 8:00 a.m. to 10:00 a.m. and if I can say to the drivers- if you drive between 8:00 a.m. to 10:00 a.m., I will give you a 50% discount on the fees that you are paying to me. This is the way to monetize.
You have a unique use case that will have a financial impact to compete and be more flexible- this is what to do with billing. You go and provide more and more detailed actions that will have a different financial effect to provide a better service on one hand and to compete on the other hand.
As your business becomes more enterprise in scope and the network of touchpoints with merchants, customers and distributors starts to grow, there’s going to be more data that comes with all of that. Which means reporting and analytics needs are going to become more important as that data is going to be needed to inform the future business decisions of the company.
How do reporting and analytics in payment solutions start to change, more specifically as a company grows and becomes more enterprise with its scope?
Reports are built on a specific structure, you need the structure of the data, you need to understand what is the data that you’re collecting, and then you need to divide it into specific tables. Based on these tables, you build a specific report that will make sense, regardless of how many touchpoints you have or how many integrations you’re connected to.
At the end of the day, each entity should have its balances and its actions, and all of these entities should combine with some logical hierarchy that creates management reports, financial reports, monitoring, and billing reports. Again, all of those reports should be divided into different sections- payouts, settlement, transaction fees, chargebacks and of course reconciliation.
Reconciliation is a way to manage not just reconciliation between your payment processor and your marketplace but even internal reconciliation between all of those touchpoints and all of those reports to make sure that everything is matched, everything is aligned and for you to be manage and to understand what you’re viewing.
And on top of that, if you add some dashboards and some nice UI, you have a user-friendly solution that you can log into, view all of the information and understand what you’re seeing, based on the structure and flow of the report. In addition, you can get information not only on the data that relates to you based on your user profile but on your department.
You can get notifications on the information that you desire to receive based on the specific needs of your department and the view that he would like to see. So it’s not just about reports, it’s reports, dashboards, notifications, different views, a combination of these reports and the flow between them and the data itself which should be displayed in a way that you as the specific level in the hierarchy should be able to view it and match it to your systems.
Whether it’s a CRM, SAP, or any other ERP solution you will be able to match, connect it, and understand what you’re viewing.
And last but not least, I also want to get more info on the risk and compliance of payment solutions.
As you grow in scope risk also increases and there will probably be more situations where you need to address that risk and enforce compliance, so could you give me some context on how risk and compliance needs for enterprise companies grow in their payment solutions and why an enterprise solution is needed to match those needs?
Yes, so regarding risk and compliance, I think we should look at it from several steps. It starts with onboarding then we have something that we call progressive onboarding. After the progressive onboarding, you can look at the management of reserves and payouts.
So, let’s start with onboarding, in this case, you can have unique templates, that you can create for high-risk merchants, low risk, VIPs, new merchants, and many other use cases that you can think of. Once you create all of these templates, you should have some underwriting management system that you will be able to use to perform some KYC and modifications of the details of the merchant.
Once you’ve completed onboarding, you should be able to run the progressive onboarding, monitoring, and alerting based on specific scenarios and events that happened.
The number of transactions doesn’t just have to be at high levels. For example, the maximum number of transactions could even be at low levels so you can see that a merchant only processed one transaction today but usually processes 50 transactions. That’s another thing that you should check- the number and percentage of transactions, declines, chargebacks, and payouts.
That’s progressive onboarding, you’re not just checking the merchant when he comes into your system, you’re checking him while his performing actions within your system so you know exactly what is happening and then based on all of these alerts and notifications you can run different actions on top of the system.
For example, let’s say that you have a chargeback so you can stop the payouts. You have a merchant that is high risk so you can collect more reserves, configure different reserves, payout schedules, fees, and scheduled fees.
It’s not just about when they come in, it’s more about managing your merchant across the board from the moment they come in until they get paid for any transactions to be processed within the system. With the tools to manage reconciliation, alerts, and notifications.
I would also add virtual intelligence (VI) and artificial intelligence (AI) so you will be able to understand the logic and the flow of the merchant to configure and apply specific actions and procedures based on these scenarios.
I would like to add to the previous question regarding reports and this question regarding risk management.
From an enterprise perspective, you recognize that you have a solution that will enable you to implement your business processes, so you can monetize.
We spoke about the transaction processing and billing, once you become a big company, you will also need the tools to operate in a way that combines controls, reports, and risk alerts so the day to day operations will not become a nightmare.
You not only need to look for how an enterprise solution onboards your use cases and how flexible and configurable they are to support your existing needs but also how easy it will help operate the day to day. All these operational requirements fall within the compliance, risk, reporting, and other areas that Viko spoke about.
All right, Ori, Viko that just about wraps up our conversation for today.
I want to end on this note, often I like to end our podcast by being a little future-focused and trying to unpack some current market dynamics and how they might impact the various topics that we mentioned on this podcast. So, I want to end by getting your perspective on this.
What do you see as the biggest obstacle for integrating payment solutions at the enterprise level moving forward? And this can take into account, the pandemic that we’re dealing with, a broader recession we’re dealing with, how companies are adapting under these current market dynamics. How do you think that’s going to impact payment solutions for enterprise companies moving forward? And where does Amaryllis fit into that future?
I think for us it’s a great opportunity. When we started the business more than 10 years ago, our goal was to create a solution that will enable you to run your business processes. We saw that if you’re an enterprise client there is no alternative to develop it yourself.
So, the economics now are very, very clear. With the pandemic and all the cost reductions you need to make, developing it in house can take you 3 years and cost between 3 to 5 million. Maintaining it will also add another couple of million dollars a year. It doesn’t make sense.
I think the future is very bright, as the market is recognizing that on one hand payments are not a commodity play, so you need to control them and on the other hand you need to develop it yourself.
This requires you to build, manage, and invest in a team- this will be a long process requiring lots of capital and this is where we come in.
We’ll do 80% -90% of what you need. Saving our client from this huge investment and we are bringing them to the market 90% faster than if they built themselves.
All right, Ori, Viko, thank you both so much for joining us on the podcast today and giving us your thoughts on how to meet enterprise needs with enterprise payment solutions.
Again, we’ve been chatting with Ori Hay and Viko Bargig, CEO and Vice President of Solutions Architect, both for Amaryllis respectively.
Ori, Viko, thank you again for your time on the podcast, always a pleasure and if folks want to find out a little bit more about Amaryllis and want to get in contact, potentially for your services, where can they go?
They can go to our website, amaryllispay.com, or they can also contact Viko