July 31, 2015
Interview With PayStand CEO & Co-Founder, Jeremy Almond
More and more businesses are adopting SaaS technology platforms to streamline outdated processes, but when it comes to the movement of money, change has come slowly. A new breed of FinTech startups is trying to bridge the gap between cloud technology and finance, and giving aging companies a new lease on life in the process.
Let’s Talk Payments had the opportunity to interview Jeremy Almond, Co-founder and CEO of PayStand, to discuss his vision of a 0% B2B payments network and what’s needed to get there. PayStand’s Payments-as-a-Service platform is gaining adoption in larger enterprises, where its fixed-cost SaaS model can dramatically cut the fees and overhead currently associated with B2B payments.
LTP: To get started and give our readers a little bit of background, can you tell us a bit about your role at PayStand?
Well, PayStand is an early-stage payment startup where we have re-imagined both the cost model and underlying technology of business payments. As the CEO, I have the luckiest job in the world to work alongside an amazing team who are passionate about building a better financial system. I believe we are at an inflection point where the financial system is changing dramatically to be more like the internet—real time, lower cost, mobile-focused, global in reach, highly efficient, and fundamentally more democratic. I get to spend my days working with customers and our product team to help drive that change.
LTP: As technology evolves to improve the challenges businesses face, SaaS solution-based technology platforms are popping up left and right. What makes your service unique?
In the enterprise, we are seeing this massive shift to cloud SaaS solutions. With CRM, it’s companies like Salesforce or SugarCRM; with accounting and ERP, it’s companies like NetSuite or OneUp; with storage, it’s companies like Box, and the list goes on. The reason for this shift is that the IT staff is finding SaaS products to be faster to deploy, easier to maintain and have the added benefit of improving over time. Oddly, enterprise payments haven’t entered the cloud era yet; the technology is still very old (pre-Internet) and the cost model is sort of like a utility tax, where the more you use it the more you get charged. We think it’s about time cloud principles are applied to payments—it’s easy to get up and running; the business model is a fixed cost and the technology continues to get better over time. One thing PayStand is doing that other payment companies haven’t, perhaps because they are closely tied to the credit card companies, is to provide our customers with a payment gateway that is agnostic to payment methods. In addition to supporting credit cards, we let our customers accept eCheck (direct bank) payments, as well as eCash (bitcoin), if that makes sense for their business.
LTP: Many big companies have grown accustomed to the cumbersome pre-digital process. What has been the response on your end when introducing this next-generation payment solution? Do you find that there is much resistance to change?
You’re right. An amazing fact is that even in today’s digital economy, the majority of business payments in the US are still done through paper checks. The CIO and finance team is desperate to move those AR payments to digital, but nearly every solution requires both them and their partners to change their business processes, which is obviously incredibly hard. Rather than work against established routines, we provide a standalone payment solution that works out of the box. Many of our customers have migrated from analog to digital and mobile payments in just a few days, with minimal process change. For businesses with IT resources, we offer APIs, tokenization, white-label UIs and other tools so they can customize and integrate PayStand with other systems in their workflow.
LTP: What advice would you offer an organization that's seeking a digital payment platform?
Today, I think most organizations are faced with two poor options when they think about moving to digital payments. Their first option is to move to a card-based solution, which changes business process and has an untenable business model, charging a percentage of revenue. If you are a $500M business, giving 2% to a payment company to move 1s and 0s from your partner’s bank account to yours makes no sense. The second option is to try to build your own fixed-cost payment network using ACH, your IT team, treasury, your bank, etc., all just to replace your check receivables. Most businesses want to spend their valuable time and resources making their company better, not becoming payment experts. Instead, we believe organizations shouldn’t have to compromise, so PayStand essentially gives them the best of both worlds—an out-of-the-box digital payment system with a fixed cost.
LTP: Can you give our readers an example of how businesses have achieved immediate cost savings and huge gains in efficiency by moving to a digital payment method?
Sure, I’ll give you two.
The first is a household name beverage company; their entire distribution network pays them on delivery, exclusively through paper checks. The sales rep literally sits with every delivery truck and part of their job is to pick up checks along the route each day, drop them off at the regional office for someone in the back office to process—manually, every single day. If they are lucky, each of those payments clears and is on time, but many times that doesn’t happen and they have to track down payments and be collection agents. Goldman Sachs estimated that the cost for the time, the people, late payment loss, etc., is about $8 per check, and this company gets millions of checks, so it really adds up. We can take companies like this, leverage our mobile app to take eCheck payments instantly, cut their accounts receivable costs by over half and increase their time to cash usually by 2x or more. That’s a material value for an organization of this size.
The second is a top-tier payroll management company that processes paychecks for many cool brand-name companies. To run payroll, they had to collect money each pay cycle from every organization, then process it and issue checks for every employee at each organization. To run the cycle, it took a week and the cost was about 1% of the entire payroll, which is really expensive. With PayStand the whole process is digitized, the time to run the cycle is cut in half, and the cost is almost an order of magnitude lower by using our fixed-cost SaaS model.
LTP: Those are great examples, Jeremy. With innovative service providers like PayStand revolutionizing the way big companies operate, what is your vision for your company and the future of B2B interactions?
It’s an exciting time in FinTech, and we are just at the beginning. The Internet has changed so many industries, but maybe one of my favorite examples is what voice over IP did to the phone systems. Before the Internet, enterprises had this huge system called a PBX, where they were charged a really expensive rate-based fee from telcos (remember long-distance charges?), they had no choice in providers and the whole phone industry was basically commoditized. Then this thing called the Internet came around, and VoIP innovators said, Hey, let’s put calls over the Internet, put the enterprise PBX in the cloud, give you full control, dramatically reduce the cost, and use an open standard, essentially turning phone networks into software.
We are at the very beginning of the same tectonic shift in financial networks where payments are becoming digitally native, software-based, cross-border and completely open with emerging protocols like the blockchain. We think this open digital revolution coming to FinTech is bigger than just PayStand, but we believe we have a unique approach that gives B2B organizations a ramp to the digital payment revolution and a chance to dramatically improve their business.
LTP: Once last question, what do you think will replace the old phrase "the check is in the mail?"
What’s a check?
LTP: Click here for more information about PayStand and their B2B payment solutions. Thank you, Jeremy, for taking the time to discuss this topic with our readers.
PayStand is a next-generation payment platform that enables businesses to receive electronic payments without a percentage-based transaction fee. PayStand’s revolutionary Payments-as-a Service SaaS model leverages advancements in Internet, mobile, and blockchain technology to create an open payment network for businesses. PayStand is venture-backed by top-tier Silicon Valley firms and was named one of 2014’s most innovative new companies.
CEO & Co-founder, PayStand