On this episode of Payments Dialog, we speak with Spreedly solutions expert, Tyler Tyler Hodgins, about best practices for solutioning payments, nuances to consider, and how the Spreedly solutions team works with our customers.

Questions about your payments compliance needs and how Spreedly can help with Payments Orchestration? Reach out to us here.

Rough transcript of Payments Dialog:

Peter:

Hi everybody and welcome to another edition of Payments Dialogue. Really excited to have as my guest today, Tyler Hodgins, who's the solution architect here at Spreedly. And today we're going to be talking about building solutions and solution engineering at Spreedly and across Payments Orchestration. So, Tyler, welcome to today's episode.

Tyler Hodgins:

Hey Peter. Thanks for having me. How are you?

Peter:

I'm doing very well. Really pleased to have this chance to chat with you. So first off, what I'd like to get a sense of is, it's solution engineering, clearly when you're solutioning around payments, you need to have a lot of expertise in the payment space. I mean, that's vital to have that subject matter expertise and you're coming in with a ton of payments experience. I'd love to hear a little bit more from yourself about that background and what your experiences have been.

Tyler Hodgins:

Yeah, absolutely. I appreciate the intro there. About 10 years in the payments industry. So, I actually stumbled into it. I started working for a small ISO that partnered with a local bank in the Northern Virginia area. And then I stumbled into a company that's in the 3DS authentication space and that's where I spent about five years of my career. And that was more focused in on the prepayment authorization fraud aspect. So it gave me a visibility into that life cycle of the transaction.

And then from there, in the spirit of learning, I wanted to learn more about the full e-commerce flow and what else went into it from a merchant perspective. So I went to a full end-to-end management platform, all the way from checkout to fulfillment of the order when it's on your doorstep. So was still involved in the payments aspect from a merchant of record perspective, and then also dabbled into the order management and the fulfillment piece.

Really the overarching theme, and what I learned in that position, was there's a lot of nuances. There's a ton of nuances that go into fulfilling an order. You and I, as a consumer, it's pretty easy, click a button, but there's a lot of things that go on in the background.

And then, before I came to Spreedly, I really just wanted to get back in to the payments only space. I've had the fraud, I've had the card present back with the ISO. What really excites me being here at Spreedly is just our touch point into the entire ecosystem and helping merchants succeed. So hopefully that was a good background for you, but things have been great so far and it's really helped when talking to our client base.

Peter:

Yeah, that's terrific. Now you've come from that background to Spreedly and you're on the solution engineering team. Can you tell me a bit about what, what the solution engineering team does at Spreedly?

Tyler Hodgins:

Yeah, absolutely. So, we're building the team out now with the solution engineers. The layman's terms is we're the technical arm of whether it's the net new sale or supporting our current clients and partners. So we'll help out when talking to merchants, partners or platforms and making sure that the Spreedly solution is a fit and there's actually a value add there.

Peter:

Okay, great. Now, when you were talking a bit about your experience, it sounded like you were really emphasizing that full end to end transaction. The things we don't see when we click the submit button on the payment. How do you think that full transaction experience translates into your work here at Spreedly?

Tyler Hodgins:

So, it's allowed me to have that perspective of being hyper-focused. And it's hyper-focused on the merchant or platform or partner's needs in the sense of every millisecond counts, every API call and when you invoke that call counts. It's all about the experience.

I always like to take myself out when explaining to people who don't know the payments industry at all, think about the experience that you have on your side as a consumer. Things aren't working the way they should and you see the error messages or you see a spinning wheel, that causes a consumer not to go back to the site. And as I've learned in the industry, if you get somebody to that checkout page and they're putting in their details, whatever payment details, executing on that is super important, because then it builds into the lifetime value of them coming back. So everything from your pre-auth fraud checks to where you're routing the payment and being able to look under the hood and tell them when to invoke those is super important.

Peter:

Yeah. And what's interesting is recently we've been exploring a lot around digital goods as an industry. Especially now with the COVID situation, of course, there's just a lot more people that are getting entertainment online and doing other things online, so digital goods as an industry has exploded. And so what you're talking about with that, the experience of the payments experience being important, boy, that just gets magnified in a digital goods world, doesn't it? Because so much of the total transaction comes down to that payments moment, doesn't it? And it's so immediate.

Tyler Hodgins:

Yeah, absolutely. And I wouldn't say it's funny, but to see where the industry has evolved from and how everything's come to real time. When payments fraud came out, a lot of the focus was on post payment authorization. Let's manually look at something. Well, digital goods, you can't do that because you have to fulfill it right then and there. So now when I talk to merchants, it's like, "All right, we're doing our pre-auth fraud check, getting this back in a couple of milliseconds, now where are we going to route the transaction?" And I think with our digital goods, different regions too, and understanding where you need to connect into and being able to have a single API into a connection of multiple PSPS has allowed digital good platforms and partners to maximize the authorization rate.

And that's the other thing that the solution engineering team's doing is a lot of times we're in these meetings with the business teams and taking a look at specific regions. It's not only the tech bit, it's also who do you want to go and route your transactions to, what makes the best possible use case for you.

To your point earlier in the question, COVID. I mean, you've seen some stats out there of five years worth of growth in five months, is I think what people were quoting. Tell me that doesn't maximize what you have to do and efficiency in a card not present space. So even if it's a one or two per cent increase on your authorization rate, because you're going to a local PSP or the best possible solution is huge. So a lot of our day to day is really taking that consultative approach and building a relationship with the merchant or platform to help them out.

Peter:

Yeah. It's so true. Isn't it? You can just imagine it. Well, I've definitely heard it from some of our merchants that we engage with and the platforms we engage with, and I'm sure you hear it all the time too, where flexibility was key. I mean, they were just getting frustrated. So many payments leaders were getting frustrated by the fact that, boy, the business is coming to us and saying, "We've got to go online. We've got to do card not present more," if they hadn't been doing it or hadn't emphasized it. Or they had to adapt their strategy online in the digital commerce world. And the payments infrastructure has to be flexible, right? It has to be flexible to adapt to that. So I imagine you're hearing that all the time.

Tyler Hodgins:

Yeah, absolutely. I think, to expand upon our team as well, it's not just the solution engineers. So the team that I'm on here at Spreedly is our solution and services. So that's not only me, the solution engineer in front of everybody, but there's people behind the scenes as well. So we have our professional services team with the customer engineers. We also have our implementation team. So to take a step back, to answer your question, with all the moving pieces and how quick and adaptable you have to be, we have that team that helps. So I found myself in scenarios of, I need to get live in this market if I'm going to compete. Okay, I get it. You don't have the technical resources. Let me talk to our team, figure out...

And the cool thing about our customer engineering and our professional services team is payments is complex and the different fields that you send through in the API calls matters. That can drastically change your interchange rate, your approval rate. Those guys know what best practices are and what our clients should be putting into those API calls. So it helps us actually get out to our clients best practices.

I think too, part of the solutioning and discovery that I get to be a part of with our clients translates downstream. So we have a dedicated implementation team as well, where I hand the project off to them and they're doing the Xs and Os. So, is everything being fired off at the right time? Is it going to the right endpoint? And how fast can we get you to market? Because, the quicker you can take advantage of that higher approval rate, the more money in your bank account.

Peter:

Yeah. That's for sure. So, speaking of that timeliness. I know I hear from customers where they're saying, "Hey, we're trying to get into a new market," or "we're trying to launch a new product," or "we've just M&A'd and brought in a new company." That time really matters, them being able to get out fast. So when do you get engaged with customers? When does the team get involved in that process?

Tyler Hodgins:

Yeah, absolutely. That's a great question. So I usually like to let the business people and the sales folks do their thing first, make sure that there's a fit, make sure from a business perspective there's a buy-in, let that traction happen. So I would say on average, probably after the second meeting. It's funny, I just was about to say, "when the first onsite happens," but we don't do that anymore. So around the second or third meeting, I'll jump in.

Really the way that we like to operate is the business keeps pushing forward, making sure that the fits there and then let the technical teams talk through, and then both of those lanes merge together. Then what we'll usually do is we'll actually bring in our implementation team. If we know it's a sure fit and the partnership's going to happen, we'll bring the implementation team on pretty early on to make sure that they have a fundamental understanding of the merchant's wants and needs, because at the end of the day, the more that you have the tech aspect flushed out in payments, the quicker you'll implement and go live. So it's really important to have some of those conversations early on because there's different payment methods, there's different tender types, there's a gift cards. So what are you doing with that? So there's a lot of different players within the ecosystem.

Peter:

So speaking of all these different players, I think one of the advantages in payments orchestration is that as your level of complexity rises, then your ability to manage those complexities rises as well. So payments orchestration allows you hide or to control those complexities. What are some of the complexities that you run into in your practice as you're dealing with merchants and platforms?

Tyler Hodgins:

Yeah, absolutely. So I think global expansion is first and foremost, then having to get into new markets. I think here at Spreedly, we've seen a ton of success in the Latin market and where we've been able to expand there. But we all know that you have to, not have boots on the ground, but you have to have local relationships. And I think where we've done a really good job at Spreedly is establishing those relationships with key players that allow our merchants actually to start transacting down there quickly. And if they were not to have a partner like Spreedly, it's tough. You really have to learn the different nuances and governances of the different regions and how and where to accept payments. So I would say governance is huge.

The second thing too is speed to market. It piggybacks off of my first point, but more and more of the meetings that I'm in, it's managing those multiple connections. People just can't keep up. Even some of your largest companies too, the largest to small. So by providing some uniformity into having a connection endpoint helps you in different ways with your strategic play. A lot of times merchants will talk to us because they've had significant downtime at an endpoint. So being able to quickly switch over, they still have to control that, but guess what? You're only controlling the point into us, and then we're going to know just off of the token identifier, where to route next.

I would say we listen to our customers a lot. I think our team sits in a strategic spot within our company and that we have the client facing sales partnership, and then behind us is engineering and product. We're bringing in that voice of the customer back and what they want to see. So, how are we going to get more analytical within our dashboards or reporting and uptime? So those right now are consuming most of my conversations, is expansion and the ease, I wouldn't call it tech debt, but it's resources. They don't have the resources to do this expansion.

And then lastly, I think, one of our core things at Spreedly is helping reduce complexity as well as compliance. So the PCI reduction. I mean, I probably spend more time walking through our JavaScript library in the Iframe with clients on a call, than maybe talking about some other things. So that's a huge burden off of our clients as well.

Peter:

That's great. So you've mentioned both levels. You've mentioned some of the implementation side of things where looking at how they're executing on certain projects. And you've talked a little bit about the strategic. I think that that's one of the areas that I just want to just dive in on a little bit more, is around the strategy. You know, you coming with that experience of, you've been there, right? You've been in their seat and you know e-commerce transaction is a big and complex thing. So, what are the conversations you're having from a strategic perspective with merchants and when you're talking about not just what they do at the payments level, but how do payments fits in more broadly?

Tyler Hodgins:

I like that question because it's a forward thinking conversation that we're having with merchants. I think anytime you go into a business deal, it doesn't matter what industry you're in, you're signing up for partnership. And you want to know that person you're signing up to do business with is going to have that interest in you succeeding as well. And I think that's a core value of what not only our team brings, but Spreedly the company does as well. So those conversations, network tokenization, I see that, the smart routing capabilities that fit into our payment orchestration model are two of the main things that I get asked on daily with client calls.

I think, network tokenization, I can remember four or five years ago talking about network tokenization but it seems like it's finally starting to take off and what an exciting time. a lot of the questions with that is like, "Well, what is it going to do for me?" Well, the card networks do a lot to, dictate's the wrong word, but steer where we're going. So I think with network tokenization you're going to see a huge impact on fraud. So the card network has touch in on there. And then what we're seeing preliminary numbers is that two and a half, three per cent authorization increase, that excites merchants because it takes out a lot of the complexities that they may have with other third parties.

Hopefully that answers your question. I mean, those are the two that come to my mind. There's some other different nuances, but I think a lot of it is just getting multiple connections in that multiple PSP strategy.

Peter:

Right Now, one of the things that sometimes can happen is, someone that's used to a card present world, there's a bit of surprise when you go to card not present, that authorizations are different in a card, not present world. Any thoughts on that and why authorization rates matters so much in a card not present world?

Tyler Hodgins:

Yeah. I think that the sticker shock is interesting to them, or when they see that on paper. It reminds me back to when I was first getting started in payments. I don't know if you remember when Europe had EMV chip and pin. We didn't have it yet. So it's about security and the transaction. When you're card present, sticking your card into the terminal, now we're able to tap and pay. But they've really bolstered that technology when you're physically there in person, so it reduces the risk of fraud.

I think we've gotten much better. And I say we, because I feel like we're all part of this payments ecosystem and playing in it. But of being able to see both sides of the model. So you have the authentication, you have very good machine learning and artificial intelligent models. 3D Secure 2 is a huge step in the right direction of where we're going. But using that data and passing it over into the authorization space, the more data you have, the better intelligence you can have. So we're starting to see those rates increase over time but, yeah, in the beginning it was rocky roads, for sure.

Peter:

Yeah, for sure. So, this is all pretty exciting but maybe flipping the script a bit, from an excitement perspective what do you think merchants are seeing that's getting them excited these days? Obviously the growth in digital commerce is one thing but what else are you seeing that's really getting their blood flowing?

Tyler Hodgins:

Yeah. That's a really good question. I think it's having players out there such as Spreedly that can help them be strategic. I think when you have a business, your focus is on that business. To bring in payments experts, there's not a ton out there. It's a growing industry. But we're seeing MRC create an education panel and put courses together. I don't know if you remember back when CSI started taking off, but all of a sudden these colleges and universities had forensic school and then everybody was getting into forensics and it built up. We haven't seen that push to universities yet. So anybody that's getting into the payments industry is homegrown. So for a merchant to go out and hire a payments expert to figure out a strategy is not easy and could be expensive.

So, I think what excites them is now that they have players like Spreedly in the market, it helps them grow their revenue, helps them provide a seamless checkout experience for their customers and brings the customers back. And with the world that we have moved to, I shouldn't say that we're in, we've moved to it. Any point that you can drive home those extra percentage in revenue will help the greater business out. To shortly answer your question, I think it's having an easy technical solution to solve a very complex industry. So that's the biggest thing.

Peter:

Yeah. That makes sense. Speaking of that complexity reduction, one of the approaches that we've seen a lot of is merchants going online but leveraging platforms to do that. So you have thousands of merchants out there that are desperate to get online. Let's say restaurants or what have you. And an easy way for them to do that is not to try and cook up a digital presence on their own and cook up a digital payment strategy and e-comm strategy on their own, but rather to work with a platform. So platforms have been taking off like nobody's business, right? So what are some of the unique things that your team can do, or does do, to help out platforms as they're seeing this gigantic wave of merchants coming to them?

Tyler Hodgins:

Yeah. That's a great question. I appreciate that. I think it fits in back to the narrative of simplicity. So these platforms are able to create... and I'll get a little technical here, sorry, that's just my nature of being on the team. We'll create these tokens on behalf. So we're able to organizationally create these platforms and then have the merchants that live underneath and then have these identifiers. It's still a unique API calls for that platform and then we're able to route that transaction off of an identifier.

So, one, it helps the merchants get to market more quickly because they're using that platform. And, two, you want to talk about reducing the technical lift for the platform by basically just creating a token on their side and knowing where to insert that in the transaction request to us. And then from there, we're routing it on their behalf. So instead of a platform having to go out and they have hundreds of merchants who have different PSPs. Instead of having to build out all those individual connections, it becomes the connection point into all those connections, if that for layman's terms makes sense.

Peter:

Right. No, that makes sense. And you can see how that would dramatically reduce complexity for a merchant or a platform. And I imagine for a platform where they're looking to bring on new merchants and each of those merchants likely has their own payment service that they're wanting to use, it's essentially a bring your own gateway kind of approach, isn't it?

Tyler Hodgins:

Oh yeah. Bring your own gateway. We always put ourselves and at least for me, Spreedly's selling our solution to a merchant, and how fast can you do something? Well, think about our platforms. They have to go sell their solution to these merchants and if we're fast, they're fast. Faster to market. So we've seen a ton of a ton of success with that. We also are able to provide different flavors of our products as well. So that's the other thing too, when you talk about like the day in the life of the solution engineering team, it's figuring out what flavors. I continually on this call have referenced just the one API call. There's more that goes into it. We have a proxy forwarding service that can help out. We can build the gateway connections out for our clients.

One of our platforms came to us a couple of months ago and said, "Look, guys, I have a huge deal riding on this, but you guys aren't connected into this PSP." All right, let's talk. And then we figured out how to get that going in a very timely manner, that ultimately helped our platform win that deal. So, I think the underlying theme of where I'm coming from is partnership. It's all about open communication collaboration. The more you can develop that relationship early on in a process with a platform or merchant, the growth happens. You referenced that a couple of times with the digital transformation switching card not present, being that facilitator to them is pretty cool.

Peter:

That's great. Well, this has been terrific. I think maybe just to wrap up, I'll just ask you kind of a softball which is from a merchant or platform perspective or both, how do you think that the solutions and services team makes life easier for them?

Tyler Hodgins:

Yeah. I think we reduce a lot of the research heartache that they have to have in figuring out how things are going to work. I think we can act as a sounding board. The solution and services team, our leader Daniel has a good North Star for us, in the sense of we're getting to a value engineering aspect. And I think what we're going to make lives really easy is both on tech and business, and being able to show them the value and speed to market that we can bring. So as the next couple months progress here at Spreedly, we're going to have some pretty cool toolkits to help bring into those conversations and help show how we can help that business grow

Peter:

Well, terrific. Well, Tyler, this has been great. I really enjoyed the chance to catch up with you. Hear some more about your background and what you're doing here with the solutions services team at Spreedly. So, really enjoyed the chance.

Tyler Hodgins:

Thanks, Peter. Really appreciate the time.

Peter:

Absolutely. Well, thanks and thanks to the listeners for participating in today's session. We'll be having more and more discussions coming up in the future. So please stay tuned for the next edition of Payments Dialogue. Thanks again.