Amin Shayan, CEO of littlepay | Episode 17

Greg: Hello, I’m your host Greg Myers and welcome to episode seventeen of the Leaders in Payments podcast. My special guest this week is Amin Shayan, the CEO of littlepay. Littlepay is a payment processing platform for the public transportation industry. It allows travelers to use a debit or credit card, which could be physical, virtual, on the phone or a wearable to get on a bus or train to pay for their ticket. Amin was born in Iran and moved to the U.S. at an early age. After the overthrow of the dictatorship in Iran his family went back to Iran, but as history would have it, things didn’t work out and they moved to Melbourne, Australia. It is a truly fascinating story. 

Amin became an investment banker in New York, which took him to London, then back to Melbourne where he became a part of the founding team at littlepay in 2016. Littlepay manages 70% of the bus payments in the UK outside of London. And more recently they are developing the payment system for the city of Helsinki transit and the city of Porto in Portugal and should be running some pilots in California later this year. Amin loves history, international affairs and keeping up with politics. And he is also a hang-gliding pilot. We have a great episode this week, so let’s get started…

Greg: Amin, thank you for being here and welcome to the Leaders in Payments podcast.

Amin: Hi Greg, great to be here. Thanks for having me.

Greg: Absolutely. Tell our audience a little bit about yourself, maybe where you’re from, where you grew up and went to school, maybe a few things like that.

Amin: Sure. It’s a bit of a convoluted story actually. So, I was born in Iran and when I was about two and a half years old, I moved to the U.S. with my parents. They were quite young university students and had received scholarships to get their PhDs at George Washington University in Washington DC. So I lived there for about five years. The only kid amongst the group of mid-20-year-old Marxist revolutionary student activists who would try to overthrow the dictatorship in Iran, the same dictatorship, ironically that had given them the scholarships to study overseas. So, I was there for a while and by the time my parents completed their PhDs, the revolution they were seeking actually happened and they kind of came to go back to Iran with dreams of building this new country. But unfortunately, the thing that they had in mind didn’t really go to plan as history has it to the country was hijacked by religious extremists, similar to the Taliban. It was a cultural revolution, universities were shut down, political perjures. My parents were blacklisted and couldn’t work, we had relatives who were politically imprisoned, and war broke out with Iraq, air raids, bombings, chaos, death, destruction. So very, very dark days. And we were there for about two and a half years at that time. And for people who don’t read much history, I think the closest popular cultural reference of what we went through is probably something like the Handmaid’s Tale, just with that different group of fanatics. So my parents decided that we had to get out of there and thanks to their qualifications, they applied successfully for permanent residency to Australia where my uncle had moved and because there was a war going on, the borders were closed during that time, we had to actually get smuggled out across the border of Pakistan amongst the local people and from there made our way to Australia basically with the clothes on our backs.

And from this point kind of the story gets pretty normal. After about seven different schools across four different countries I got my high school diploma in Melbourne, Australia. I also did my university degree and my MBA in Melbourne and did a few years work. And then I did the natural thing for the son of reformed Marxist revolutionaries and I became an investment banker in New York. And so I decided to, I’d been married by that time and moved to New York and I worked with JP Morgan in the tech media telco team for about five years and then moved with them to London for a few years. By that time I’d had two little girls and we felt it was time to kind of go back and raise them amongst their extended family in Melbourne. And I’ve been back here in Melbourne, the most livable city in the world ever since. So that’s my life story in three minutes.

Greg: Wow. That’s quite fascinating to say the least. We could spend an hour just talking about that. I’m sure.

Amin: I’m sure we could, over a beer.

Greg: Yeah, there you go. Let’s switch gears and talk about littlepay a little bit. Tell the audience what littlepay does.

Amin: Sure. So, littlepay is a payment processing platform for the public transportation industry. Our platform allows travelers to use a debit or credit card that could be physical, virtual on their phone or wearable to tap on and get on a bus or train to pay for their tickets. So, no more cash, no more proprietary smart cards, no more top offs or queuing at kiosks. That’s the basic premise of it. And we started off in 2016 and that was about two years after the city of London launched contactless across its network. And that was the first major global city to do that. And it was the moment the whole industry kind of realized this was the way of the future. Why do we have all these complex systems when we can leverage the existing payment rails? And the London system was an expensive proprietary system built specifically to that city’s requirements.

And it wasn’t really a flexible system, there weren’t many alternatives. So, we thought if we can build a cloud-based system payment processing platform with bank rate security, open architecture with APIs that could be adopted by different manufacturers of hardware devices, we could disrupt the industry. Now it turns out doing that is not an easy thing to do and it’s probably worthwhile explaining for your listeners who are interested in payments, kind of a little bit about the difference between public transit payments and retail. And there were three really key differences. You know, in retail the value is known at the point of your purchase. So if you go and buy an item of clothing for $50, the amount is entered and you complete the transaction in public transport, that amount is often unknown until you complete your journey. So, there are complex rules about fairs, zones, daily taps, monthly tickets that have to be applied.

The second difference is that in a retail transaction, time isn’t really that sensitive. You know, if it takes two or three seconds for your payment to go through the device, it’s not really a big problem. But in public transport, the standard is 300 milliseconds. One third of one second, or you’ll end up with a traffic jam at the gate going through to say, get on your train. And so what this means is you don’t really have time to kind of check if the person who’s tapping has money in their account. It’s an offline data authentication at the device. So there are all these questions about, well who manages that risk? How do you minimize losses? Who bears the costs if the guy gets on train and then doesn’t have money? And there’s a whole range of risk mitigation strategies that we’ve developed to address these kinds of issues.

And the third major difference is that in retail, if the transaction fails the vendor who you’re buying the item from also, you know, excuse me sir the transaction didn’t go through, can you try again? And you’ll typically do that and your transaction will then succeed. But in transit you don’t get that opportunity. If the offline authentication succeeds, you get a green light, you go on. If somewhere along the process the transaction fails, the network’s down, one part of the process doesn’t work, you’ve lost that. So we have to build a platform that has a persistent state throughout. If something falls over, we have to be able to retry that transaction because we don’t have access to the person and their card. So we realized as we were doing this, encountering all these problems, this is a very different architecture. It’s a very different kind of structuring of the existing rails to do a very complex set of transactions.

And it took us about 18 months to build the platform. We went live in Oxford, UK in a trial in the, it was July, 2017 and now we process about 70% of the buses in the UK outside of London and we’re now doing, we’re developing this year for the payment system for the city of Helsinki transit for the city of Porto in Portugal and hope to be running a few pilots actually in California by the end of this year. 

Greg: So, your focus is truly on transit only. 

Amin: Absolutely. We decided a few years ago when we started, it was a little bit different. We had kind of broad aspirations to do micropayments anything that had a small value payments, these complex kind of rules that might be associated with subscriptions and various things, but we realized that transit has so many nuances that where we could really make a mark for ourselves and gain traction in a very complex and competitive industry is really focused on this one sector developed something that that’s truly differentiate.

Greg: Yeah. And I would assume given what’s going on in the world today, the contactless type payments would be really improve your business or at least would be a big chunk of your business and people will pay more with their phone or you know, with a contactless card. I mean, are you finding that to be true?

Amin: Yeah, absolutely. I mean this has been a huge success from the traveler and customers’ point of view when it was launched in London in 2014 within four years it’s exceeding 50% of the transactions on that city’s transactions through their transport network. So the customers love it because you don’t have to carry an extra card, you don’t have to worry about topping up. If you’re a tourist in a new city and they’ve got this, you don’t have to worry about, well what do I do? You just go in and tap your card and you get on the bus. So, it’s a great customer experience and you know that just by the adoption rates. The U.S. is obviously a little bit further behind Europe on contactless. But I think this coronavirus situation is going to accelerate the adoption all around the world because people realize this is also a more hygienic way to transact.

Greg: Sure, absolutely. I’d assume that, you know, transit, it’s been around forever. So there’s got to be some competition in the space. So maybe talk about what differentiates you guys from your competitors.

Amin: Sure. So I guess the main competitors in this space traditionally have been transport ticketing system integrators and these guys are typically very big companies and at a very high cost, they would typically build a bespoke solution for a city and it would be tightly coupled proprietary hardware and software, very expensive to maintain and manage very big contracts through government tenders. And they were our kind of competitors. And contactless in transit is actually quite new. So there were a few guys doing that. Nobody was really addressing the small operators, regional cities, smaller cities who couldn’t afford those contracts. So, they were our competitors, but we went under the radar into smaller markets with, they were not really that interested. And then as we got success, they started productizing some of their products and offering them as products that people could take off the shelf.

But nobody really has done this in a way that it has been agnostic to device. We tell our customers, pick the device you want on your bus and we’ll run your train and we’ll kind of integrate with that through our APIs. So it’s very unique proposition and I don’t think anybody directly competes with us yet. The other kind of category of competitors, people like NMI, who I know you’ve had on your program, they’ve kind of the retail payment processes starting to move to the transit space. But I think the difference we have with them is they are payments experts. And if you’re a customer that uses their product, you will see, you’ll go onto their portal and you’ll see your transaction history lines, authorizations, you won’t see the transit data that we catch. So we kind of straddle this expertise across both payments and transport ticketing. And that’s a quite a unique space that we’ve kind of found for ourselves and at the moment it’s kind of a bit of a blue ocean I guess in terms of how we’ve positioned ourselves. 

Greg: Yeah, that makes sense. Where do you see, and you can answer this sort of from either the payments perspective or even the transit industry perspective, but where do you see that heading in the next say, two to three years?

Amin: Yeah, it’s, I think contactless is going to be a big thing. It’s been ongoing for a little while, but as I said this, I think coronavirus will accelerate this and obviously it’s very important in our industry as well, mobile phones, wearables, they’re quite small share of the market, but they are growing and I think they’re going to accelerate significantly after this period. So that’s a bit of a shorter term, I guess I’d say an ongoing theme that you will see and we can see, you know, as a result over the last few weeks with transit volumes being down so significantly, a number of operators have actually said, look, we’re no longer going to accept the cash. The bus driver for example for his hygiene and risk of contagion, we just no longer going to do it. So, you’ll say contactless, we’ve seen contactless numbers as a share double in a month that would have taken a number of years to happen. 

And I think so you’ll see that in probably the U.S. more generally. We’ll probably see that it’s been very slow in the U.S., but we’ll probably accelerate at a more macro level. I think one thing that I’m always interested to watch for is what Google and Apple are going to do in this space. They effectively, when you think about it, they’ve got the security modules, the hardware, the communication network, all within their own ecosystem. So if they wanted to, they could really take a big bite out of the payment value chain. And I think they’re developing the building blocks to kind of do that. I’m sure they look at Visa, MasterCard with a combined market cap of about $600 billion and think, you know, I’d like a piece of that. And then at some point I think you’ll see, you’ll probably see a little bit of tension at a place where they are currently collaborating, but as time goes on I suspect they’re going to move, you know, come into competition with other more and more.

Greg: Yeah. Yeah, I would think so. And I’ve even seen just talking contactless in general, the, I think the card brands are starting to, I guess, analyze and figure out what makes sense for them and even raising some of the limits on the average ticket and things like that.

Amin: Yeah, absolutely. I mean in Australia where I live has been, but progressive in this area, we, I think we’re at like 90% plus contactless acceptance across the country. I haven’t really gone anywhere and not used contactless for a long time. And the limit here is like a hundred dollars and it’s been like that for quite some time. So, you get a lot of your transactions just tapping and going and it just becomes habitual. I think once you do it, it becomes quite habitual. And that’s why the card schemes like Visa and Mastercard, are very keen on the public transport industry because they know that’s, you know, at least before the virus came, people were getting on a bus or train they’re doing that multiple times a day. It puts the card at the top of the wallet once you get used to using contactless on the bus and train and then you’re going to go into the store and probably get used to using it there. And they saw that in London, once the London transport system started doing contactless, the uptake across the rest of the industry was quite rapid. So I think you’ll see that probably now in New York and Chicago where contactless is coming into the transit and probably in other cities as well.

Greg: Yeah, I’m sure. You mentioned the current situation with the covert 19 or Coronavirus that’s going on. How has that affected your company and what are you doing for your employees and customers to help with that situation?

Amin: Yeah, obviously the public transport industry has been hit very hard. We’ve seen travel numbers drop over 80% in our markets. And so, a lot of employees, drivers, operational staff at these transport companies have been furloughed in the UK or lost their jobs. And our heart really goes out to these guys. You kind of, people take it for granted, but once it’s not there, you realize public transport is really an essential part of the urban ecosystem. And hopefully it can rebound when confidence returns. But for us as a company, we’re a cloud native platform, working remotely has had very little effect on us. We’re still delivering two projects, as I mentioned for Helsinki and Porto this year, as well as a couple of smaller projects and a few other countries. So, our hope is that confidence does a return and I think when it does, contactless will play a bigger role than it did before this pandemic. And particularly in the U.S. which is probably five to seven years behind Europe in terms of contactless adoption. This will be a catch up phase and I think it’ll accelerate and hopefully we can come back out of this in a better place. But it’s it’s a really, really tough time for the sector and for players within the sector like us who obviously generate our revenues from the traffic.

Greg: Sure, sure. Well let’s switch gears a little bit and talk more about you. You mentioned already a little bit of your background. I think we got to maybe the JP Morgan position, but maybe talk about the rest of your journey and how you got to be the CEO there.

Amin: Sure. You know, when I left investment banking that kind of got tired of that being in the advisory space and I wanted to do something on my own and I had an idea for an app that I wanted to develop. Knowing that I wanted to kind of get back in the tech space. And after a little while I ended up doing some pro bono work for a MBA classmate of mine who had a FinTech startup and helped him raise a round funding from a venture capital fund. And the investment manager of that fund was a former payments guru and he had the idea for a little pay. So about two years later after I’d met him and helped with that fundraising, he asked me to come with him and help him set up a littlepay. So I joined as the COO, as part of the founding team.

And as I mentioned, the vision of at that time was quite broad. It wasn’t just about transit, it was about payments micropayments hence the name littlepay. But then after we kind of developed for about two years and we’d gone live, we’d spent quite a lot of money. We were a bit behind in our investment plan and it was clear the business needed to kind of pivot and focus. So there was a little bit of a change in direction and change in management and that’s the time where I took over as CEO and when I took the helm we decided to change course become much more narrow and focused on public transit. And I was quite lucky to have very patient investors that supported us through this transition. And we just focused on becoming a lot leaner, more agile, more focus and profitable and succeeded to do that over a number of years and then coronavirus showed up. So we’ve got to do it all over again.

Greg: Yeah, yeah. I think there’s a lot of people out there that are in that same position. Maybe talk about a couple of things you’re passionate about. So maybe one work-related thing and one personal thing.

Amin: Yeah, absolutely. My uh, you know, given the kind of background that I’ve touched on a little bit growing up, I’ve always been really fascinated by history, international fairs, politics. So I’m constantly, you know, my reading material is always reading history books and keeping up with what’s going on around the world. Very fascinated with all that stuff. So I think that’s just a natural passion of mine. I’m also a hang gliding pilots. So when I really want to get away from it all, I like to literally leave the two dimensional world and go up into the skies. And you know, from a work point of view I just love the collaboration of working with really smart guys who we’re a very technically capable company. We’ve got really smart developers and product people and people have kind of developed this very unique platform and it’s a privilege to work with these guys and I learn from them every day. And it’s kind of a collaborative effort of you know, building a business that’s been global from day one, based in Australia with our first customers in the UK and now moving across into a lot of different countries. And just the challenge of building that is keeps me excited about work every day. 

Greg: Sure. So, let’s talk about this hang gliding thing. So you literally jump off the side of a mountain.

Amin: Most of the time I actually aerotow, which is the hang glider gets tied with a rope to a back of a small aircraft. And so you aircraft takes you up and then you, I pulled the rope off at about 2000 feet and then you try to stay up as long as you can. Australia is a very flat country, so at least where I live, there’s not too many places where you can go and jump off a mountain. But it’s on my bucket list to come to Colorado and jump off a mountain one day.

Greg: Yeah. Okay. Well I’ll let you, uh, tell me all about that. Great. So another question for you. You’ve been around this space for a while and you know, FinTech and payments has become a place people want to actually have a career. So what would your advice be to someone starting out maybe just right out of college or wanting to have a career change and move into FinTech or payments? What would your advice to them be?

Amin: Well, the great thing about the payments industry is that it’s ultimately a very broad range of technologies. And it serves every single vertical market in the world. So whether you’re interested in a particular industry or whether you’re interested in machine learning, cryptocurrency, artificial intelligence, all of these kind of cutting edge things that come up all the time, these are all part of the payments industry. So it’s a great place to be able to learn a lot of different domains while at the same time being part of an industry where you can build networks and continue to build your career, you know, within one industry if you like. So I think it’s a right place to build a career. And I’d say if you’re smart, technical and you want to learn payments, end to end in a really small technical group, connect with me on LinkedIn and we can have a chat.

Greg: Great. Well is there anything else you’d like to add before we wrap up?

Amin: Well, it’s been great talking to you. It’s a fascinating industry and look forward to hearing what some of your other guests have to say.

Greg: Great. Well I really appreciate you being on the show today. I know your time is incredibly valuable. So thank you so much for being here.

Amin: Thanks Greg. Appreciate your time.

Greg: And to all you listeners out there, thank you for your time as well. And until the next story…