How one startup coordinates your payments

They didn’t have a choice before. It’s very similar to other stories in technology. You probably connected to one PSP to start with, when you were small, and then as you grew, you added more functionality. So maybe you connected to something like a Stripe, and then six months later you go and add PayPal. Then you maybe add a firm, and then you go global, and you need to do that. Traditionally, companies have grown organically by just adding more and more of those connectors. And accordingly, their payments teams have got bigger and bigger, and you’ve got some companies now that (have) nothing to do with payments, but have 300 plus payment people, payment teams, because they had to grow this group organically from that setup. As I spent a lot of time talking to retailers, and I realized you’re all building the same thing, you’re all building independently with custom code. This makes no sense. Let’s build a tool that does this.

We work with them as partners. We’ll sit above the PSP or gateways. The gateways themselves will be the ones who are connecting to the acquirers, and the acquirers will be connecting to the Visas or Mastercards. So, we’re higher in the process when it comes to motion integration. As we’ve grown, those schemes have become increasingly more interested in Gr4vy because they now say, “Look, I could create this new product, and I could go to every PSP in the world and launch it, or I could go to Gr4vy, which is connected up to most of those PSPs, and launch it, and then I get access to those merchants and all those PSPs.”

Most U.S. retailers are going to need to process cards, right? They need to accept cards because that’s what consumers want. We will make it easier for them to integrate other payment types as well. Things like open banking in Europe or pay-by-bank in Australia. We support over 400 different alternative payment types. So, yes, we make it easy as a merchant to add other things, to give the consumer choice, perhaps to give them pricing advantages. But we can’t solve the problem of how much acquirers are charging for Visa or Mastercard transactions or Amex or whoever else, because that’s between them and their acquirers. We don’t touch the money. We’re a technology event.

Usually, when a merchant comes to talk to us, it’s because something has happened with their status quo that makes them reconsider what they’ve got. When we started Gr4vy four years ago, I talked to a venture capitalist who said, “In North America, most retailers are single acquirer. They have one acquirer. That’s it. Why would anyone need Gr4vy?” If you saw the stats that came out recently, 60% of North American merchants are considering having a second acquirer right now. So, we’ve seen that trend change very rapidly over the last few years, where just having one source for everything is changing now. Merchants have realized having two not only increases your chance to get a successful authorization, it gives you increased negotiating power, gives you the ability to optimize, etc, etc. What we’ve seen is that fundamental change among North America merchants, where they’ve realized that having more than one is a good thing, and it gives us more choice and more power.

This is a huge market, in my view. I was at MAG (Merchant Advisory Group) conference earlier in the year and on stage a very senior member of MAG said that every merchant here will be using orchestration in the next five years. I think the market is ginormous. I think you have specialization in orchestration. I don’t think there’s going to be one winner. I think you’re going to end up with a similar situation you have today, where there’s some orchestrations that specialize in SMB (small-medium business). There’s orchestrators that specialize in enterprise-large merchant. There’s going to be some specific to travel and airlines, some are specific to gambling and gaming. I mean, it’s a huge, huge market, but yeah, we have competition. We have people doing similar things in different ways. But my largest source of competition is the in-house team who wants to keep on doing it the way they did it. That’s my biggest competition.

A lot of people call themselves orchestrators. The term has been slightly co-opted in that it got very trendy, very quickly. A lot of companies decided they did payment orchestration when they weren’t really doing anything different than they’ve ever done in the past. The difference between us, where we do pure-play payment orchestration, is what we do in infrastructure — give control to the merchant — is very different than a gateway that has connections to multiple payment types. They’ll call themselves an orchestrator because they can do Visa, Mastercard, Affirm and PayPal. That, in our view, is not orchestration. That is a gateway. But it sounds better in your marketing message to call yourself an orchestrator. There’s a small (group), maybe 11 or 12 globally, payment orchestrators that do what we would call pure-play payment orchestration.

We have got two main parts of the business. We have very, very large retailers, merchants, and that’s kind of where we sit. We work with the larger end of the industry that have the harder problems to solve, and we’ve designed a platform to be very flexible and work for that particular segment. So, we would see ourselves sitting in the large, midsize enterprise space. The second side of our business is we actually serve platforms who serve merchants. We’re working with other payment service providers. We’re working with (independent sales organizations), we’re working with software platforms and people who want to get into the payment business to provide them with infrastructure so they can do that.

At the moment, it’s early days, but I think the chances of us making it to IPO and not being acquired are pretty slim, because we’re becoming increasingly that sort of important piece on the chess board.