Episode 5: Commercial Card Adoption in the B2B Payments Space

SPEAKERS: Ernest Rolfson, Dean M. Leavitt

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Ernest Rolfson  00:03

Hey, this is Ernest Rolfson, the CEO and Founder of Finexio. Welcome to B2B Cash Flow Conversations, the podcast dedicated to sharing insights and innovations in business to business payments, working capital and cash flow management, and Fintech entrepreneurship. In each episode, my guest and I tackle questions in the ever-evolving world of FinTech and payments, an industry that's rapidly evolving and of great interest to investors and businesses alike. Looking forward to having this conversation.

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Ernest Rolfson  00:32

Hey, so today we're meeting with Dean Leavitt, the Founder and CEO of Boost b2b payments solutions, which is at the leading edge of commercial payments. Dean here has over 30 years experience in the electronic payments industry. And prior to founding Boost, he's held senior leadership positions at several public and private payment companies. So good to be with you. Where do we find ourselves today?

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Dean M. Leavitt  01:05

We're out on the east end of Long Island.

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Ernest Rolfson  01:08

Wow, Love it. Love it. That's good. That's where I wish I were.

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Dean M. Leavitt  01:13

And where are you right now?

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Ernest Rolfson  01:14

I'm at my home in Charlotte. So it is it is the only difference between where we are is I can't hear the call of the seagulls. Just right outside your window.  So I guess we'll get to it. But I did want to say congratulations on the series C, I did see that press release, I guess a day ago was the press release.

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Dean M. Leavitt  01:41

Yeah, we closed on Monday. And there's been kind of a stream of press associated with it. We're super excited about our new partner Invictus Growth Partners out of San Francisco. So very excited about it and looking forward to two big growth plans.

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Ernest Rolfson  02:02

Absolutely. Well, can't wait to hear about them. But you've been at it for a while and you're getting more and more that institutional funding, which would indicate you're doing something very right. So I was glad to see that the other day, for sure. Why don't you just spend a few minutes telling us about your background? I know I referenced that 30 years, I'm not sure we'll be able to cover all 30 in detail. But what we what is kind of, I guess the formative pieces that have brought you on this journey to now running a FinTech company and one of the hottest spaces in payments globally. Right time right place for sure. What can you share?

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Dean M. Leavitt  02:50

Well, you know, I started an ISO about 13 years ago. And I guess it's funny how history often repeats itself, where I chose to focus in on entities that had not previously accepted cards as a form of payment. So we did quite a bit of work with hospitals, universities, municipalities, interestingly, supermarkets, which at that time, did not accept cards.

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Ernest Rolfson  03:18

The margins were not right. Is that right?

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Dean M. Leavitt  03:22

Well, the margin. It's interesting. So they thought, in the case of supermarkets, I'm proud to say I was kicked out of just about every supermarket chain in New York metropolitan area because the initial thought process on the part of the supermarket owners and managers was that the margins, the margins were not there. Where they would say, Hey, you know, you what I make 1% on a can of beans, you want me to do what? And, and it was really just, frankly, through persistence, and going back to them time and time again to finally present it. And we did this with several different supermarket chains, give us one lane for one month, you'll pay nothing we'll bring in the point of sale equipment on us, will process the transactions on us. Let it run for a month. And let's just see what happens. And sure enough, with no exceptions, every single chain, got back to us within the month and asked us to load up the lanes because they experienced a 38% lift in sales just by offering credit card acceptance on that one lane. People would buy a pack of gum or a People magazine or maybe an extra pound of Turkey. And what they were seeing is people were spending a lot more money on higher margin products as well. So the net effect was very significant. And it's interesting how you know you kind of fast forward to now when I started Boost 12 and a half years ago, it was really against the backdrop of the types of enterprises we work with right now, never considering utilizing or accepting cards as a form of payment for, you know, larger AP spend, as you well know. And history in certain respects does repeat itself. And in that in the early days at Boost, I was also kicked out of many impressive places, you know, offering up card acceptance as a form of payment. As far as what happened in between, I ran and owned ISOs, or I ran a credit card technology company focused in the wireless arena. So it's been a series of different types of companies all pretty much focused on electronic payments. And leading up to boost it's been a very interesting ride.

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Ernest Rolfson  05:59

I love the phrase the load up the lanes. I've never heard that in the payments industry. That's the best as you're either that or you're being thrown out. So I'd rather load up the lane then. Exactly, you know, you're grabbing at coupon books or something on the way out the door. How did the idea for Boost specifically come up? Because the b2b thing is still I am shocked at how there is so little investment in approach in this area and how misunderstood it is I'm sure you've got a whole train of thought around that topic. But when did you become aware that this b2b thing was a major unsolved issue? And you were like, I got to go. Focus on this.

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Dean M. Leavitt  06:49

You know, it's, it's, um, it was really over the years that I was kind of the latter part of the years that I was in the consumer, and of the space where having worked with, you know, most of the largest acquires and processors in the arena and seeing, you know, kind of a history of failed attempts by many of these larger players to get into b2b acquiring companies big and small, well funded, and not just a complete failure to tackle that. And it was really against that backdrop that I said, let me let me go after, let me first understand why there have been so many failures. And there's a business here, I just knew there was a business here. The spend among businesses just absolutely dwarfs consumer spend, by you know, five to one or something like that. So I started studying why there had been so many failures. And what became very apparent very quickly was that you know, what most of these companies were doing was taking B to C, Product Solutions, pricing constructs, marketing and sales strategies, all the way down the line, throwing them in a bag, writing b2b on it, and then going back to market going back..

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Ernest Rolfson  08:16

To market lipstick on the pig.

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Dean M. Leavitt  08:19

Lipstick on, well actually lipstick on a beautiful animal, but that just didn't fit in the same stall. Right. And by the way, that's no slim to pigs, pigs are beautiful.

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Ernest Rolfson  08:33

Absolutely, to some to their owners.

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Dean M. Leavitt  08:36

But no, I mean, it's, it was really about just fitting, you know, this kind of square peg into the proverbial round hole, right? And the primary reason is there is a dramatic difference between a consumer card based transaction and a b2b transaction. The card rails were never really designed for business to business transactions, they certainly were not designed to transfer the data associated with a business transaction where you have hundreds 1000s, sometimes 10s of 1000s of line item detail associated with invoices and all the sub data associated with the invoices. So they were just not built for that. And you know, the other thing is, there's a big difference in the commercial relationship, just the relationship between buyer and supplier, where if I walk into a shoe store and buy a pair of shoes with a credit card, I walk out with my with my shoes, and the next day, the merchant has the money, and then the next 500 people that come in behind me to buy that same pair of shoes at that same store have the exact same experience as I did. That is not the case in b2b land. The relationship that a particular supplier has across its customer base. is dramatically different. Maybe one customer buys a lot another buys a little, maybe somebody buys a lot of super high margin services where somebody else buys low margin product, maybe I've been a customer for 20 years, and this one just started working. So I'm as different as the relationships are between trading partners, and the contractual agreements that they have. That's also how different the, you know, the payment method, and terms associated with those payments need to be. And that was never really configured, or envisioned in in, you know, when the credit card industry was born 70 whatever years ago. So it was really against that backdrop, but I decided to start a company really just focused on b2b so that we can, you know, accommodate these relationships that businesses have with other businesses.

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Ernest Rolfson  11:00

Understood, understood. As it relates to Boost, and you mean, now, you're positioned really as one of the leaders in this area of commercial card optimization, right, one of the ways to help drive commercial b2b payments, acceptance, and for the issuers and for yourself monetization. Right? I think it's convenience for the corporate some both sides, but what is the evolution with boost? And we talked about new investment earlier? You know, sure things are going to evolve going forward. But has it evolved from day one for you? And how do you see this whole thing shaking out, because it seems like card is really going to continue on a terrific tear over the next five to 10 years?

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Dean M. Leavitt  11:52

Absolutely. So it's shifted dramatically. In terms of what we do for the b2b community, and how we've positioned ourselves, I started the company as an ISO, which was purely services driven, we did not have our own proprietary technology, we utilize the technology of our acquire processor partner. And it was really only after, you know, three or four years into that, that we started being asked to tweak this or tweak that or Gee, can you guys do this or that, where the existing technology just did not have that capability. So we started bringing our technology capabilities in house and we started, you know, building what was initially a very simple, you know, augmentation of the technology that our processor partners have. And it's since over that, you know, call it seven-eight year period morphed into our now being a full FinTech, where we are, it is our technology stack that in part differentiates us from most of the players in the industry. So it's really been a metamorphosis for the company, just based solely on the requirements. We heard more and more from the fields from our, from our customers.

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Ernest Rolfson  13:23

What were some of those? What are some of those kind of key requirements for b2b are some of the I guess software differentiators? Because a lot of people are like, oh, payments, that's a commodity or credit card processing? Oh, that's easy. But your argument as well now, boost, you're really differentiated by the software. And there's been some key things that the credit card companies have not been able to do that now you've spent your time and money and learning on the software side to be able to do can you speak to any of that, you know, or any unique elements you guys have going on there?

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Dean M. Leavitt  13:56

Sure. I mean, it's, it's really a combination of the technology and the capabilities, the process, as well as the market positioning. So from a technology perspective, what people often when they talk those same people talk about how easy and how commoditized, the payments businesses, they're often focused on the movement of money. And while that's obviously very important when it relates to facilitating payments, right, buyers and suppliers. Equally important is the data exchange. And we spend a lot of time, effort and energy focusing on the data. And by that I mean, what is the data? What's the remittance detail, the invoice data and all of the other information associated with a particular payment? How is that exchange among the trading partners? Right? So historically, the acquiring business and to a large extent, it's still the case. They're not set up to provide the kind of data and in the type of formats that a supplier needs to ingest it. into their accounting or ERP system so that they can use that data, they convert that data into information that they can use to manage their enterprise. So one of the key components of our platform is, in fact being able to offer both sides of the equation because we also often report to the buyer of the cardholder. But a lot of our focus really is on the supplier, how do they need to receive that data so that they can use that information. And we spent a lot of time around that. And there's, as you can imagine, a broad spectrum of formats that suppliers need.

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Ernest Rolfson  15:42

You're talking for the listeners, this is about getting that data into their ERP. So they can do their accounting and reconciliation work. Right?

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Dean M. Leavitt  15:50

Exactly. Very often, when you look at other payment modalities, non digitized payment modalities, if a buyer sends a payer sends a supplier a check, it may be accompanied by you know, if it's a if it's a single payment that might represent you know, 1500 invoices, really companied by a stack of paper that somebody or some people will need to manually go through inter post and reconcile the transactions. That just doesn't fly with large end even not so large buyer supplier relationships. So getting that data that's associated with that payment to that suppliers accounting, or platform is really mission critical. So we spent a lot of time with that. Another interesting thing we focus a lot on is automation of the transaction itself. As virtual cards and commercial card products have become more and more popular by corporate buyers that want to pay their suppliers with a card. Larger suppliers have hundreds or 1000s of these coming in every day from their commercial customers. And having to feel those, unpack those emails as it's usually presented an email, extract the card data, extract the remittance detail, and then manually process these transactions into their credit card processing system or their ERP. Your accounting system is incredibly cumbersome. And that has really held back many suppliers historically, from agreeing to accept cards, because it's just too cumbersome. They're just not set up on the AR front to do that kind of thing. So one of the key technological components of our platform is converting all of those email based transactions into a completely passive experience for the supplier, which is commonly referred to as straight through processing STP. And 100% of the transactions that run across the boost platform are in fact, STP. So our suppliers, they don't do anything, they just sit back, and they receive the funds deposit into whatever bank account they've allocated for that activity. And they then receive the remittance detail, again, in a format and a delivery protocol. So that can flow right into their accounting system.

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Ernest Rolfson  18:21

That makes a lot of sense. Um, well, with the new investment now, are you going to continue on doing the same? Or is it about expanding the capabilities across that last piece you just touched on right across this kind of AR function? that's a that's a hotter space. Now, are you thinking geographic expansion? What are you what are you guys thinking about in terms of where you're going next?

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Dean M. Leavitt  18:46

Yes, and yes. Okay. You know, you're never done when you're afraid with building out your platform. You know, we have been expanding our capabilities from a transaction processing from a reporting perspective over the last several years, and that continues, that never really ends. We continue to add all types of functionality, rules based processing, which essentially means you have buyers and suppliers that in addition to any contractual relationship they may have with I'm gonna buy this much of that product or service for this price and these payment terms. In addition to that, it's what's the pricing associated with this payment? What's been agreed upon? What are the rules of acceptance? Yes, I the supplier will agree to accept cards, if I pay this for it, or if I only have to accept cards if I get paid within 10 days or only if the if it's below or above this transaction amount. There are rules that are established between partial trading partners We've built in all of those capabilities within our platform so that we can enforce those rules on the fly. So whatever the buyer and supplier have agreed upon, for the rules of engagement, the rules of acceptance of these commercial card products, our platform enforces those rules and adjudicates them on the fly. So that that the rule set associated with that continues to expand more and more. As you know, we hear about more requests from the from the community buyers and suppliers. So that's an area we're focusing a lot of attention on. You mentioned geographically, we're currently in 37 countries, we continue to add new regions on every quarter. So we're going to continue to expand that pretty dramatically. We've recently been hiring folks in in Australia and Europe, Brazil, Canada, many of the regions that we're operating in currently and those that we want to really expand, use an acceptance of commercial core products. And so it's a combination of building out our revenue team, building out our technology platform, and building out all the support associated with it to make sure that we can accommodate all the growth that we're anticipating over the next several years. So it's a it's kind of a multifaceted application of proceeds.

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Ernest Rolfson  21:29

Nice what I want to just talk about you actually don't know that folks would know this, you actually have some phenomenal board members from the industry. Two of whom I know personally, I believe I think Chris MC Welton is still involved. Right and Myles Kilburn.

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Dean M. Leavitt  21:49

Yeah, so Miles is not on our board. Okay. Miles, formed Mosaic, Robin, and both Howard and Chris are phenomenal board members, incredibly supportive. They become good friends. We also with this, with this new investment from Invictus growth partners, William nettles will be joining our board as well, who also has deep industry experience, he was really the payment side. Yeah, he was the primary driver of growth and the acquisitive strategy of verifone over an 11 year period. So he knows payments quite well, and really looking forward to having him on the board. So it's a it's a great group. You know, and it continues to grow.

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Ernest Rolfson  22:44

Nice, nice what I wanted to it's great there in so many countries it would you say that this is still we're not still but the biggest barrier. And also the biggest opportunity, the most paper checks is the US. And that's where you see the most opportunity is that is that fair statement to say? Or? So? Am I thinking about it wrong?

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Dean M. Leavitt  23:11

Well, if it gets it's two slightly different, but obviously related issues. Yes. As it relates to the migration of checks to digital payments. Clearly the US is I don't know if you put it ahead or behind me the world in terms of still having, you know, I don't know, depends on what data you look at, you know, 50 plus percent sure, a b2b transaction, but still on paper check trillions..

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Ernest Rolfson  23:39

and trillion Plus,

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Dean M. Leavitt  23:41

Something like that. So, you know, clearly when we migrate spend from other payment modalities to card check is a big piece of that. And it might it probably represents, you know, the lion's share of that. But that's just a piece of the puzzle. You know, when we talk about other regions, it many of which, by the way, are ahead of the United States significantly as it relates to digitizing invoices, and just the general b2b payments, you know, landscape. for them. It's not just about checking migration, it's about automation, it's about process efficiencies, it's about you know, obviously, it's always to some extent about working capital on both sides of the equation. When you're dealing with a credit card product. You're talking about working capital DPO extension for the buyer. And very often what we try to do on a kind of a win is not only extend the working capital the days payable outstanding for the buyer, but we can also at the same time, reduce the days sales outstanding the DSO for the supplier, thereby increasing their working capital, as well. So that's really the perfect win by sandwiches. In between a grace period associated with a credit card product. So, you know, when you go outside the United States, I'm not saying there's no checks out there, some regions certainly do have quite a bit of checks. But it's not all about moving folks off checks and on to cards, there are so many other advantages for both buyer and supplier and financial institutions that are driving both sides of the equation in many respects, from the process, so it's a it's kind of a mixed bag.

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Ernest Rolfson  25:34

That makes sense. Is there are there any misconceptions around commercial card adoption and b2b? Whether it's the acceptance, you know, potential customers or partners of yours, but also just say, if I was wearing an investor hat or someone else's had, the number one question I always get is, like, if someone doesn't really know much is like, why would anybody pay a fee to take these payments? Like, that doesn't make any sense to me. But I'm just curious, because you're, if I understand correctly, you're doing direct sales and growing, that you also work with financial institutions, you're solving problems for them. But you're also working with these corporates on both sides. So are there some things you have to overcome there? Is there some knowledge gap? around it? And certainly, you're very a card centric solution. However, you're certainly speaking to concepts and, and modalities broader than just card. So and it would obviously, that would be important to your customer? Certainly.

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Dean M. Leavitt  26:40

Yeah. So the answer is, you know, getting back to the history repeats itself theme from earlier. Yes, very often the knee jerk reaction from suppliers that are not intimately familiar with, you know, kind of current day commercial part acceptance, or the capabilities that are out there is, you know, get out of my office, basically. You know, and because the perception, and we spent a lot of a lot of time during the day, you know, trying to get rid of those misperceptions. The misperception often is that, you know, ach and checks are free credit cards cost a lot. Right? Right.

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Ernest Rolfson  27:24

Right, it's free to just get 1000s of pieces of paper sent to your office and figure out what to do with them, it's just free.

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Dean M. Leavitt  27:31

Exactly, and then have somebody you know, go down to the bank and make the deposits and get in for that, etc. So, there are those misperceptions. And by the way, the misperceptions often have to do with not only the economics, which is often the case, credit cards cost 3, 4, 5, 6% and checks and ach and wires are free, but also the process, there's also c. Right. So yeah, very often, there's all these misperceptions that we deal with you know, quite a bit as far as the financial institutions are concerned, you know, it when I first started the company in 2009, the notion of utilizing hard products for these larger AP file based expenses was you know, really not there. So we spend quite a bit of time educating are those who are now our issuer partners, bank issuers, obviously, non bank issuers, like Finexio, and others, understanding really, how we can migrate a lot of that spend over two card products. So it's, it's been, you know, a long road of, of educating the marketplace that, you know, kind of had a mindset, early on, that these types of transactions were just not really made for card products. But what we've seen is, you know, a dramatic change. You know, when I first started the company, the notion of those large transactions being on cards was absurd, absurd.

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Ernest Rolfson  29:25

Talking about six, you're talking six figure transactions here. You talking 25,000?

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Dean M. Leavitt  29:31

Well, about a month and a half ago, we processed a single payment for $33 million.

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Ernest Rolfson  29:37

Wow. Yeah. unheard of.

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Dean M. Leavitt  29:40

And, and but on any given day, that is great. It was a good month, that day, but on any given day, we're processing, you know, multimillion dollar payments, for sure. buyers to suppliers on our platform. So that's been just a pretty Dramatic mind shift, I would say. So how the industry and the stakeholders look at cards as a, as an alternative to check and wire ach. So it's been a it's been an interesting road and yeah, it's I still think we're at the 10 or 20 yard line going a long way. You know, as of the 20 some odd trillion dollars out there b2b payments, just the vast majority of it is not yet digitized. So it's, we have a long way to go. But I think we've made some tremendous progress in terms of positioning ourselves in the marketplace, and educating the key stakeholders that this is a viable alternative, and that there is not such a disparity between the costs of other payment modalities and, and cards. In fact, in many cases, the efficiencies, you know, Trump, small t, Trump, the, you know, all of the other aspects associated with card acceptance. So it's a it's a continual educational process that, you know, we just made some great progress there.

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Ernest Rolfson  31:16

I'm sure you've talked about this in the past, but have some of those barriers and misconceptions gone by the wayside or lessened because of COVID. And, and is that acceleration? I mean, we've experienced digital transformation and advances due to businesses saying I need to get out of the check printing business almost overnight. I got people going in the office, they're printing manual checks that were in their mask, it's their checkbooks in my house, we got to enter like all that stuff has been happening. Has that been a talent for you? And is that going to continue? Because we're still not out of COVID yet? Is that? I mean, that's what we've experienced more on the AP side, I'm sure it's been positive for you, but love to hear how Yeah, how you think? Is it going to change the industry more going forward? Is it going to be easier going forward? Well, no change? I don't know.

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Dean M. Leavitt  32:08

Yeah. So I mean, the short answer is yes. It has had it has definitely served as a catalyst for a lot of the laggards that had not previously prioritized digitizing payments, either making the payments or receiving the payments, they've had no choice, you know, just like your customers have not been able to go to the office, write a check and put it in the mail. Wires have not been able to go to the office, pick up their mail, you know,

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Ernest Rolfson  32:39

Hard to go pick up that check when the office is closed.

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Dean M. Leavitt  32:42

Can't do it. Right. So um, so we've seen a tremendous amount of interest and actual execution of new accounts, new suppliers, new buyers, over the last 14 months. In fact, our business development team has been more active with a bigger pipeline than I've ever seen since I started the company. A lot of it has been driven by the pandemic, I think, do I think it sticks? Absolutely. You know, people tend not to go back to checks and tend not right back to earlier, less efficient payment methods, once they're hooked on the all the benefits of digital payments and specifically, you know, card products, right, where they are getting that working capital I mentioned earlier with the suppliers. And by the way, in this during the pandemic, it hasn't just been about the when of When can I get paid? It's also been about the surety of payment. There has been a lot of companies...

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Ernest Rolfson  33:46

where you talked about cash flow earlier, right? It's about am I going to get paid or not as they're gonna, you know, so hey, do I have to pay a fee but I'll get my money guaranteed tomorrow? Hmm.

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Dean M. Leavitt  33:57

Well, I mean, here's the beautiful thing about b2b You know, every buyer is a supplier and every supplier is a buyer right? So from our perspective, we can look at it and just kind of spider up and down right the web and continue to get more and more traction and transactional activity. But the reality of that also is that, you know, buyers during this pandemic have in many cases have had real cash flow, working capital crunches of their own, where their customers have been delayed in being able to pay them perhaps some have, you know, gone out of business. So the whole notion of cash flow of working capital has really just massive light has been shown on it over the last 14 months and one of the ways that these companies can combat that is by using credit products like a commercial credit card to kind of fill in the gaps of that working capital and make payments. You know, more of a Have a short thing. And that's, that's how I've had, you know, dramatic impact on the way buyers and suppliers look at commercial credit cards over the last year or so.

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Ernest Rolfson  35:11

Absolutely. Absolutely. I wanted to ask you two things. On some of these on some of this trend here is more like just barriers to entry here and just competition. It's it. You know, it seems like you're almost in a market of one. Sure you have a few competitors out there. Certainly, there's the biggest processors out there, the acquirers it's, we you touched on this earlier, right? where it's like, Can anybody do this? Why? You know, so it seems like, there's real barriers to entry around this. When I was starting out, everyone was saying to me, oh, PayPal could do what you're gonna do tomorrow? Isn't PayPal just gonna crush you? And I was like, pay pal doesn't know where A&P are in the in the alphabet, and they're not gonna have to worry about PayPal. But um, it seems like what you're doing is on one hand esoteric. On the other hand, it's actually not at all and everybody has to pay bills, and they're paying bills with credit cards. It's growing so quickly. Why haven't we seen more in this area? You mentioned, you've been around for 12 years. Now you're really hitting your stride. And in a global expansion? I mean, what's so really hard about this? And why some of these big FI's are turning to you to partner and some of the card networks and others. I mean, that that would be interesting. And your view on the competitive market. And sure everyone else that's out there is not as good as you is from what we'd expect to hear.

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Dean M. Leavitt  36:42

Well, thank you. I mean, it's, it's, you know, in many respects, b2b is hard. You know, it's just hard. It's hard. Because of the things we talked about earlier, it's hard because the relationships between buyers and suppliers are often very unique and need to be dealt with. On kind of,

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Dean M. Leavitt  37:05

it's kind of a scaling barrier to a degree right?

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Dean M. Leavitt  37:09

So even though the spend among trading partners is significant, you know, in it, and it really dwarfs what would be a consumer spend typically, in any given transaction? Oh, yeah. It's the fact that it's hard. And, you know, when I started the company, when it started Boost, I was actually on the board at that time of ETA, electronic transaction Association, which is really made up of most of the presidents and CEOs and CEOs of the largest acquires and processors, and I went around the room and asked, you know, I'm looking to start a b2b company, and I need a processor. And what's interesting, with the exception of one company, the response I got back was very similar and, and, and it kind of, to a large extent, remains the case today, the responses were that our DNA is, is really based on a consumer transaction. And it's a lot easier for us to replicate and airlift our current technology into places like China and Vietnam and Brazil and other places, merging markets. Yeah, emerging markets at it or other, you know, instead of kind of tweaking our technology, and our processes and procedures all the way down the line to accommodate this thing called b2b that we don't really understand. So while it's probably unfair to say that all processors and acquirers don't understand b2b, that wouldn't be the case. But it's still not the focus of them. It's just not their focus. It's not their core competency. They have systemic limits, and limitations in terms of how they can tweak. And, and, and really, in many cases, change platforms to accommodate these types of transactions. So it's hard and, you know, that's obviously been beneficial to boost to kind of start from scratch to build a technology platform that is built specifically for these types of transactions. You know, as far as the competitive landscape beyond that is, you know, there are certainly other players in the arena. You know, one differentiator, I would say, that that's consistently plays to our advantage is that, you know, historically, the credit card processing arena has been kind of bifurcated into two worlds, those that live on the AP side and those that live on the AR side. So on the AP side, you obviously have issuers of program managers and AP optimization companies, etc. The AR side, you have acquirers processors, ISOs, pay, fax, billing, companies, etc. Boost has always been a bridge between the two so our technology or our go to market strategy are Over processes and procedures are designed to serve as a bridge between AP and AR. And there are really no other players that do that. Currently, there are those that are very good at what they do on the AR side and those that obviously very good at what they do on the AP side. But really, nobody else serves as that bridge joining those two worlds together, as well as boost us. And we're very proud of that.

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Ernest Rolfson  40:25

Nice, nice. Driving, before we talk about this, maybe the future are there some keys to driving more card adoption period? Is the answer, just lowering prices? That was always a fear, when I was at MasterCard around interchange rates, and level three and others was it's like, oh, well, you know, you don't want to give too much because folks are going to start complaining, the issuers are going to complain. And I know you've done some special things in the past on your website, and around, you know, there's always talk of custom interchange rates and other things. Now we've got same day ach coming out, the ACH for a fee product has been a big promotion by players like Fleetcor, avid exchange surrealist push that I'm very skeptical on that personally, it's kind of hard to charge a lot of money for an ACH that costs pennies from my experience, but when I hear what you're seeing around alternatives, or just the general barriers are driving card adoption, which I think today is probably the most important thing for Boost and Boost customers. I'd love to hear your thoughts on that.

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Dean M. Leavitt  41:42

Sure. So first of all, you're getting back to something I mentioned early in the conversation, you're often, you know, looking to, you know, get rid of preconceived notions of misperceptions. So that's, that's a common ongoing theme. For those that are not familiar with card acceptance, you know, you want to get them to a point these, you know, suppliers, that when they, if they make a decision not to accept cards as a form of payment, at least they've done it with accurate information that they use for their calculus for that decision. Right. So it's an ongoing educational process. Yeah, um, as far as competing products, like ACH with a fee that, you know, many players are coming out with. I mean, it's, it certainly has a place, it obviously doesn't accommodate those buyers, that needs some type of credit extension, once they hit that ach button, those that cash and money offers of the company, right? So certainly it doesn't, it really doesn't compete, you know, with credit oriented products, like a credit card. But I do think that as data becomes more and more important, as more and more entities utilize this data, you know, now you don't have to be a large multinational company to have an ERP platform, you know, everybody unformed everyone else. Right? So data is becoming increasingly important. So I think, you know, products, like a CH with a fee are definitely going to have a very important place in the marketplace. And what they're also doing, frankly, for those of us in the card industry or those that are kind of more card centric, is it has actually brought up the price of ACH transactions. And like I said earlier, I think there is kind of this equilibrium of pricing and harmony.

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Ernest Rolfson  43:43

What do you mean by that exactly, brought up the price of ACA transactions?

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Dean M. Leavitt  43:48

Well, I mean, there, to your point, people are now charging a significant amount upwards of 1%, right, or an ACH transaction that is delivered with all of the enhanced remittance detail. For buyers. It's obviously what the market is saying it is, it is worth something prior to receive this data, in a format that I can ingest, right, so at the same time, as you have ach, transactions as enhanced ach transactions, the price of those rising, you also to your point earlier have both publish rates that are that are being published by the networks coming down to accommodate b2b transactions. You have, you know, companies like Boost that are also getting very active with proprietary interchange rates. And what you're seeing is this kind of natural equilibrium of, you know, coming into this kind of price point of what a meaningful size b2b transaction should cost, right? Yeah, it's not quite that They're still evolving, but it's kind of a combination of all these competing products coming in together and forming that kind of this equilibrium price. That's my view anyway.

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Ernest Rolfson  45:10

Yeah, that makes sense. Well, that's um, how markets should work over time for time, right. So there are some market is meeting market is screaming. Yeah. Yes. Yes, that was so much of my and I wish I bought some back then when Bitcoin first came out all the crypto and Bitcoin people were saying, oh, payments is should be free, right? It should be that the proletariat is spoken and everything's moving crypto. And, and actually, it turns out, people are willing to pay if there's something of value, right, and folks are willing to pay over 3% for the card because of the security and the guarantee of the funds. And you spoken at length about the data. And you know, turns out someone is willing to pay that instead of just getting a piece of paper sent to them.

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Dean M. Leavitt  45:55

In some they are but I do see that price coming down significantly. I really do I see that evolving as the equilibrium price across different payment modalities?

Ernest Rolfson  46:06

For sure, for sure. So on that note, and I don't know what timeframe that's going to be, but I'm sure you're going to agree that there's more advancements happening around commercial payments. And I think one of the biggest trends here has been this explosion in FinTech and more of the of what you are one, but I think there's also this concept of this embedded finance, or more about having software type platforms, lead distribution for payments, products and services, and cash flow management tools, versus just the financial institutions, which has been the vestige of the past, I think very much you're a beneficiary of banks, just being banks and doing what they're doing and corporates is doing what they're doing. But do you see that the software distribution is possibly any sort of path for you? Or do you see software as being a way around margin expansion or preservation in the life of, you know, future payment costs reducing over time? I mean, maybe that's the wrong thread to pull. But I'm curious to hear your thoughts on just where the future of all of this is going, especially as the software investment around payments is going like crazy. And you can see the obvious connection point here.

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Dean M. Leavitt  47:25

Yeah, I mean, you know, we as a FinTech software company, essentially. Yeah, we absolutely think that, you know, it's going in that direction. And while financial institutions obviously play a mission critical role, sure, they often have the customer, right, the buyer or the supplier with some form of a relationship be a treasury related, or whatever the case may be. They're always going to be in the game. But in terms of solving the needs of the marketplace, in terms of the things like we're talking about efficiencies, the kind of the ergonomics of these transactions, be it the automation, the reporting, generally, the data exchange and the transaction itself, the movement of money, you're seeing more and more FinTech’s come into that marketplace to create these efficiencies. And whereas, you know, the financial institutions used to kind of build it from within. You're now seeing a lot more of the kind of buy rent lease partner relationships, yes, across financial institutions and the FinTech community, they're just, you know, I mean, FinTech’s are just much more nimble. They can move much quicker in terms of accommodating the needs of the marketplace. You know, the large financial institutions, even the very best of them, the smartest of them, they just can't move as quickly as a FinTech can. And that's just a huge advantage in the marketplace. And you know, the market. If there's one thing that we're learning as Time marches on, is the markets not patient at all, and especially in the land of FinTech’s, right, where things can happen very quickly, and requests from the marketplace can be accommodated very quickly, right? They're just not going to be patient to let large behemoths get around to it when they can.

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Ernest Rolfson  49:27

No, no, people get very agitated around money movement needs.

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Dean M. Leavitt  49:36

Yeah, you know, it's, uh, you know, you talked about earlier, you know, real time or same day ach or, you know, we haven't frankly found that to be of real critical importance in our business. Yeah, our business tends to be made up. Our customer base tends to be made up of large enterprises that have contractual terms payment terms. With their supplier base, so if they have, you know, 30 day payment terms, whether they initiate that transaction on day 29 via card or day 30 for real time payment, it's really just not proven to be that relevant in our world, but it's gonna be very relevant in the small business arena in the gig economy. I mean, there's a host of different absolutely avenues where that's going to be so incredibly important.

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Ernest Rolfson  50:28

We don't see RTP replacing commercial card spend anytime soon, is the

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Dean M. Leavitt  50:35

Completely different animal, we could, um, you know, we see areas where we may be able to utilize the RTP rails for those that are listening real time payment rails for distribution of cash associated with a card based transaction. But we don't you know, we see it as a, we don't see it as a competitive product to our transactions at all. Yep,

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Ernest Rolfson  51:01

Yep. Well, before we go, any other thoughts, final closing thoughts or anything you'd like to add as a next step for you personally and/or Boost that wasn't already touched on?

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Dean M. Leavitt  51:14

Well, like I said earlier, where I feel we're at the 20 yard line going a long way. So we've, we've come a very long way. But we have a long way to go as a company as an industry. The opportunity is just absolutely massive. You know, if you talk about that $121 trillion of spend out there that has yet to be digitized. I mean, that's our that's our Tam, that's our target. It's certainly it's, it's early days, it's exciting days. As for Boost. I've never been more excited about our company. I have a team that is just absolutely the a team, the best team, you know, that I've ever worked with by far and continues to grow continues to expand in terms of different capabilities, different directions, different verticals. So it's a very exciting time for us. And you know, with this new investment, it's going to provide us with even that much more fuel to do what we're looking to do in terms of tackling more and more types of transactions. And, you know, just the amount of transaction flow on our platform.

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Ernest Rolfson  52:27

And the proverbial loading up of the lanes, if you will, up the lanes. Well, hopefully. Yeah, absolutely. Well, I hope that we can see each other I know you've we've got to run but um, hopefully we'll see each other before the end of the year here is this thing clears up maybe at the conference if you're up for it, or probably in the city before 2022. I'll look forward to that day for sure as to why as to what to normalcy, but look, we'll all hang on here for a sec, but great to have you. really insightful conversation fun. I definitely learned something. And hopefully the listeners did too. So look, we'll talk again soon.

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Dean M. Leavitt  53:07

Thanks for the opportunity.

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Ernest Rolfson  53:09

And best of luck to you. Thank you too. Thank you.

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Ernest Rolfson  53:16

Thanks for listening to B2B CashFlow Conversations. This is Ernest Rolfson, the CEO and Founder of Finexio. I welcome your questions and comments. You can reach me at podcast@finexio.com. You can also find us on Twitter @finexiopayments.  To subscribe, you can go to finexio.com/podcast. Be sure to check out my new episodes on Apple Podcasts, Spotify, or wherever else you listen to podcasts. Thanks and talk with you again soon.

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