Where is the embedded payments space heading in the next few years? Eric Frazier, CEO of Payrix, has some predictions. Host, Bob Butler, spoke to Eric about his payments background, the value Payrix provides SaaS companies and the future of embedded payments and global payment facilitation.
Eric’s background includes creatively designing and scaling businesses in the SaaS and FinTech space for the last 30 years. He believes in putting family first and treating everyone the same. He loves sports, travel and is a die-hard Ohio State Buckeye fan.
There’s an ongoing evolution happening in the SaaS industry where most providers realized that they must monetize payments, so according to Eric, it is no longer a question of if but rather when. And globally, embedded payments are gaining traction all over the world and quickly becoming a massive opportunity.
Payrix is on a mission to become the global leader in embedded payments and in doing so, acquired a company in Australia and have their sights set on further global growth to expand and evolve.
Most observers in the space have recognized Payrix as one of the most interesting companies in the industry. In 2021, Payrix saw 100 percent growth. In fact, Payrix has seen 100 percent growth over the last 4 years, as well as being recognized as an Inc. 5000 company and top 100 Fintech company.
According to Eric, payments providers in this space have also begun to look at other Fintech products such as lending, payroll, banking and insurance and how to offer additional opportunities to monetize these solutions.
Eric goes on to talk about exactly how Payrix scaled, grew, innovated and delivered high value solutions to their customers this year, as well as verticals that have high monetization potential. He wraps up by discussing the goals and plans for 2022 to achieve their mission, further their vision and support their SaaS clients to do the same.
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Full Transcript
Bob Butler
Hi, everyone. Welcome to PayFAQ, the embedded payments podcast brought to you by Payrix. I’m your host, Bob Butler. And today I’m going to be talking with Eric Frazier, the [former] CEO for Payrix about some of the highlights from the embedded payments space in 2021 and some of his predictions for global PayFac® and embedded payments in 2022. Hi, Eric, welcome to the show.
Eric Frazier
Thank you, Bob, happy holidays. Good to talk to you.
Bob Butler
You know we had you on the show when we first kicked off the series. But for our newer listeners, can you give us a brief overview of your background and Payrix?
Eric Frazier
Sure, happy to, from a personal academic perspective, I was an accounting major and went to graduate school, got my MBA. But that’s been quite a few years ago. I guess what most people would say that have participated in my career and been my teammates, is that usually, myself and a small entrepreneurial band of teammates will creatively design and scale businesses usually in the SaaS and fintech markets. We’ve done that for over the last 30 years. I think our calling card has always been that we build good brands by having high performance sales engines. And usually, I like to surround myself with people that, every morning or every afternoon, say things like, I was thinking about that problem, and I think I’ve got a creative solution, so entrepreneurial, creative cultures, with good people who like to have a good time and share my values, which are family first, treat everybody the same. And personally, I like to travel, usually outdoors. I love sports, and I’m a hardcore diehard Ohio State Buckeye. In terms of Payrix, this year has been a really special year, we were recognized as a top 100 FinTech company and an Inc 5000 company. You know, we’ve had exponential growth. And I think I’ll talk a little bit later about exponential growth while still maintaining the core values of your company.
But for those that don’t know us super well, we’re an end-to-end payment facilitator for vertical software platforms, where we try to maximize revenue for these companies and drastically reduce friction for their customers. We try to take SaaS software companies and in a very short order, professionally make them look and act like a payments company. And there’s a lot of reasons why you would want to do that. Not to sound immodest, but I think at this point, most observers in our industry would agree that Payrix is the most interesting company in the space right now. We are disrupting traditional distribution of payment models. We are a small talented group of people that have been, either, if you’re in our company, you are either a deep subject matter expert relative to payments, you’ve worked for a decade or two in payments, or you’re a very creative, innovative SaaS software expert. And so I mention that because we make our living every hour of the day, aggressively competing. And, again, not to sound immodest, but aggressively winning against companies like Stripe, which is not easy to do when you have a very small company. So we have a very simple vision. It is not modest. It is to become the global leader in embedded payments. And we want to be recognized for the passion of our people, the integrity of our platform. And we, this past year again, through exponential growth, we also acquired a company in Australia. We went to market as Payrix this year in Australia, and we have our sights set on other geo expansions around the globe.
Bob Butler
That’s fantastic. Our last interview with you still holds the place as our most popular episode. So we’re really excited to have you back. What insights can you share about what 2021 was like for the industry and what you predict for the outlook in 2022?
Eric Frazier
Sure, from my chair, I think that there is an ongoing evolution that is occurring within the SaaS industry. Subscription revenue was the original focus at one point. It was SaaS companies deciding whether they wanted to monetize payments. Now that question has long been asked and answered, and virtually all SaaS software companies are wanting to monetize payments. But now we’re moving on to the next evolution, which is, now you have this very sticky, collaborative relationship between a SaaS software company and their customers. We are the embedded payments provider inside of that sticky relationship. And now ourselves in the SaaS software companies are looking at, how can we solve additional business problems for their customers, such as other FinTech segments, like lending and banking and insurance? And how can you offer similar opportunities for additional monetization and value-added solutions for their customers. And when you think about the PayFac® solutions that are being offered by us and a couple other high end companies, you think about increasing revenue by customer by two to five times, eliminate the friction in the buying process. Because if not done, well, you have these ancillary solutions, whereas with Payrix, this is all white labeled under the brand of the SaaS software company and making that product stickier, meaning that the customers are less likely to leave. And then at the end of the day, it is very important to increase the lifetime value or the total enterprise value of that SaaS software company.
So that’s kind of domestically and as we look globally, we’re seeing embedded payments begin to gain traction in markets like Australia, and Canada, the UK and Europe, India, Singapore, and the likes. It’s quickly becoming a massive global opportunities. And some of the different GEOS are very nuanced. And you really need to have your game face on as you go into these expanded markets. Relative to the future, let’s say for the next two or three years, I would say that payment facilitation, PayFac® and embedded payments grows beyond this. First, I think we’re in the, let’s call it the first or second inning, it grows beyond that infancy, and it further penetrates small and medium sized SaaS vertical markets. I believe we’ll continue to see accelerated growth, very accelerated growth, of this distribution of a model for payments. And the reason why I think it’s so complicated is that you’re solving very complex use cases for these SaaS software companies. You’re processing in multiple global environments. How do you mix card-present, card-not-present with emerging payment types like Apple Pay or Google Pay? And you’re using this as a launching point. Then to go into further, as I mentioned, additional embedded FinTech solutions. So fundamentally, the question, I guess, be, who are the two, three, or four global platforms that will be trusted to process hundreds of billions of dollars of payments on behalf of the software company? It’s pretty interesting question. And then there, I look further, you know, we usually focus on two to five year runs. But if you think 10 years from now, I guess you would have to say there’ll be further consolidation, there will be a few leading platforms that will be embedding additional banking, payroll, insurance and lending services, with tremendous scale, innovation. And then you’ll be selling probably, if I had to guess, you’ll see a vertical focus and vertical focuses with centers of excellence about the very specific needs of vertical business management software systems.
Bob Butler
Hey, thanks for that. Eric. I couldn’t agree more. You know, there’s a lot to look forward to this upcoming year. Can you tell us what verticals you see adopting PayFac® models in the US and Australia in 2022 and beyond? And really what I’m talking about is in terms of demand, monetization, potential, etc.
Eric Frazier
You frame the issue quite nicely. Imagine that, Mr. Butler, I think from my chair, you’ll continue to see verticals with high demand for both card-present and card-not-present. It can be pretty sophisticated if you’re not deeply involved in these use cases that these guys are trying to solve. We focus on verticals that have high monetization potential such as practice management, things like medical and legal and dental and veterinary, billing, invoicing, messaging system companies, SMB retail, and restaurant, field management, registration and scheduling, just kind of brainstorming off the top of my head. Education, childcare, you know, and we have some really interesting companies right in the middle of all those verticals, it’s pretty interesting. It’s kind of like success begets success, because let’s say that you have six or seven companies that you’re really deep in helping figure out the most by solving the most complex business cases, companies like Dental Intelligence or Patient Now in our practice management fields or education, childcare, like Infinite Campus or Kangaroo Time. I mean, what you’re seeing as our platform continues to grow and evolve into this really interesting, organically grown business software that I’m not sure that we’re seeing anybody else grow quite like us.
Bob Butler
Now it sure is an exciting time for Payrix and for our clients especially. Can you tell us a little bit about how Payrix has helped clients take their software platforms to new levels and new heights and achieve their vision this year? And can you share a few examples, both the US and Australia if you have them?
Eric Frazier
Yeah, sure. From our perspective, again, it all starts with this explosive growth that we have underway. Again, 100% growth in terms of volume, revenue, and top and bottom line for the fourth year. So when you grow 100%, four years in a row, it’s imperative that what you’re really trying to do is to grow without your customers feel like you’re growing. In other words, you have to focus all of your attention on what they’re trying to do on an hourly basis, you need to bring new features, whether that be mobile wallet solutions, or the fact that we expanded into Australia, New Zealand, and then to Asia, and the next month into Canada, you have to scale your infrastructure at the exact time that you’re growing and solving the most complex business cases that are being presented in the marketplace. And as you’re rolling out implementation and wallet solutions, and again, in Canada, or you’re rolling out Account Updater, or you’re expertly delivering Apple Pay, you have to make sure that everything that you’re doing from a growth perspective is done in a way, whether it be sales or operations or integration or risks, you have to make sure that that is all being done with a customer first attitude. And you can’t be a pretender when you talk about that, right? Your customers see it every hour of every day. And by the way, anything that you do that falls short of your expectations and their expectations, it has the potential to disrupt and interrupt their business, right. So we play a very unique role. And I guess I would say in 2021, I’m proud to say that we scaled, we grew, we innovated, and we delivered a lot of high value solutions to what I think is the most interesting and creative SaaS software portfolio in the industry. Lastly, I don’t think it’s just the opinion of myself and my teammates. And I always talk to our team about we chase reference ability, if you chase reference ability, and your top customers will talk to your new prospects and say good things about you, that’s the way to grow a business. But in 2021, there were other folks that had a lot of nice things to say to us and we’re really proud. We were recognized for industry leadership and customer success by Daily Finance, the Financial Technology Report, Dallas Innovates, and Software Listing Site Cross Deck, which is again mentioned as a trusted vendor and a really quality choice. So I think that what we’re trying to do is to continue to scale at unprecedented rate. But do it in a way that feels like white glove treatment, and customer first, and so far, so good on that front.
Bob Butler
Well, clearly there was tremendous growth at Payrix this year, and we obviously have much more to come. What can vertical software providers and really the industry expect from Paryix in 2022?
Eric Frazier
I think it’s hard not to think in terms of geographic expansion, even a US domiciled company that looks and feels like a US company, when you peel back the layers of the onion, they’re doing significant business in Western Europe, or perhaps they had a product that really resonated in the Middle East, or they have an offering that they’re launching in the second quarter of 2022 in Asia. And so having the infrastructure, the banking license, etc., boots on the ground to be able to handle this geographic expansion is going to be a very big emphasis for Payrix in 2022. More to come on that. I think we’ve got some exciting thoughts. I think that we’ll want to push the boundaries in something that nobody quite frankly has done expertly in my 25 years in payments, which was the industry leading, best-in-class reporting modules we handle and everybody in payments handles terabytes of data and very complex ecosystems. So sometimes reporting can be challenging, particularly when you have the three legs of the of the three-legged stool, the SaaS company, ourselves in the acquiring industry, and then the end customer. So I will see innovations as it relates to real-time reporting and access, whether it be from your mobile phone or from the desktop, customer care excellence. I mean, when you’re onboarding hundreds of thousands of end merchants through thousands of SaaS software companies, you’re gonna need customer care excellence to scale to the level that we want to additional growth in terms of the methods of payments and new FinTech offerings. And I guess what you would expect from us is an obsessive-compulsive focus on making SaaS entrepreneurs lives easier, making it more profitable. And those platforms work so hard to build relationships with their customers, and we want to help them make those relationships even stickier.
Bob Butler
That’s fantastic. You know, any final thoughts you’d like to share with the audience as we almost get to the close of 2021?
Eric Frazier
Yeah, I guess, near the end of the year, and if I allow myself to reflect back on my career, and, and just some of the things that I’ve observed, I think that when you grow from a high growth company, you know, for lack of a better word, a startup, to a fully scaled global company, you know, in trying to figure out where the industry is going, and obviously, you’re gonna see ongoing consolidation, full-service providers, integrating back office and operations. When you see this lifecycle of a company that I’ve seen many times in my career, it’s an awe-inspiring thing, because you’re trying to grow with such velocity to satisfy such complex needs. But if you don’t manage your culture internally, then what do you really have? And I guess when I think back over my career, and I think about Payrix’s journey over the last couple, two or three years, you see a company that has a soul. And it’s growing in a way that all of us can be proud of. Now, this is very complicated space that we’re in, right, it’s different than that of other payment iterations that I’ve been a part of. And even for us, I’ve been in payments since the year 2000. I mean, I’ve been in payments, company, after company, after company have very complex ecosystems. And I’m struck by how innovative and how creative and how expert mode you need to be to compete in this PayFac® space. I think that we all graduated, and then we went to the master’s program. And this is kind of PhD level stuff. And I’m so impressed by the complexity of, of the ecosystem that we’re working in. And, you know, when you think about what it’s going to take to scale, over the next two, five, ten years, you know, to 1000 or 5000 SaaS partners, you’re never going to be able to win. And in that type of a complex ecosystem, unless you’re very innovative, you’re nimble, and you have experts, and I guess I would just leave it with, it’s no room for the weak or the timid. You really need to bring your A game every hour of every day in this environment, and I’m glad I’m gonna take a week off here at the end of the year, because it’s a pretty daunting task. But fortunately, I have what I believe is the best company, the best management team, the best employees, all working for the same goal, which is to be the best in the world.
Bob Butler
Eric, I couldn’t agree with you more. And I really want to thank you for joining us on the show again. I know we’re both big believers in sharing knowledge and experience. So really appreciate you coming online for the year-end closing show today. At Payrix we want to be the trusted resource for software providers who are out there trying to make sense of embedded FinTech solutions, like payments, lending and more. We’re here to help provide the resources and insight that these companies need to unleash their platforms full potential.
Thank you for joining us today on the PayFAQ embedded payments podcast brought to you by Payrix. For more information about embedded payments, subscribe to our show at payrix.com/podcast.
