I’m your host Greg Myers and welcome to episode 18 of the Leaders in Payments podcast. My special guest this week is Mark Stanfield, the President of Midigator. Midigator is a technology provider that helps merchants, ISOs and acquirers understand their disputes including chargebacks and how and why they happen and how to avoid them all in one place. Mark was born and raised in North Carolina and in the south and ultimately ended up at school in Idaho and currently lives with his wife and four kids in Utah.
Midigator was started by a direct marketing merchant that needed to understand and handle their disputes in order to scale their business. Fast forward and now Midigator helps businesses of all types across most every industry. What differentiates them is their focus on technology, consistently improving their product based on industry trends and taking a complete view of their client’s business. Mark has a passion for learning and provide some sage advice for those just starting their careers in payments. So let’s get started…
Greg:
Hi, Mark. Thank you for being here and welcome to the Leaders in Payments podcast.
Mark:
Thanks for having me, Greg. Really appreciate it.
Greg:
Absolutely. So let’s dive right in. Tell our audience a little bit about yourself, maybe where you’re from, where you grew up, maybe you went to school, where you currently live, a few things like that.
Mark:
Sure. So, uh, I was born and raised mostly in North Carolina and in the south. My dad was military, so we moved about every three years and I ultimately ended up at school in Idaho. And that’s where I met my wife and she is from Utah. So we now live in Utah. Have four kids. And just excited about life and the future.
Greg:
Great. So, let’s talk a little bit about the company Midigator tell the audience what Midigator does.
Mark:
So Midigator is a technology provider that helps both merchants and ISOs and acquirers be able to really understand and manage their disputes that happen. Not only chargebacks but also ways that they can avoid them and other technologies that are being introduced with prevention alert and collaboration tools from the brands. It just brings it all into one place so that there’s a simple way to access the data to understand what’s happening through analytics and hopefully have as easy of a workflow as possible. Some of it being automated and some of it having the ability to be self-managed if that’s important to the end user.
Greg:
How big is the company?
Mark:
You know, it was from an employee standpoint, we’re just a little over 80 people I believe right now. We’re a little spread out throughout the country. We’ve have a couple of offices, one in American Fork, Utah, and then one in San Diego. And then a lot of our people have worked remote for years. So we do have people scattered throughout the United States and even in Canada.
Greg:
Okay. Are there certain verticals that you focus on?
Mark:
So, when Midigator first started, it was built by a direct marketing merchant and their need was to be able to handle their disputes so that they could scale. They were processing about a hundred million in revenue annually. They were starting to expand outside the U.S. and it felt like that one of the major limiting factors for their growth was chargebacks and disputes and so they built the product for themselves and because of that, a lot of our merchants initially started out were in similar industries. Anyone that was doing subscription or monthly billing was a very easy a merchant for us to be able to work with. And today it’s expanded to really all verticals in and across card not present type of merchants in the last little while as we’ve seen different impacts from the virus, a lot of merchants who are normally card present have had to move to a contactless or card not present system. And so many of the merchants that we work with today fall in food delivery and digital games and any type of, I think product or service you can think of that’s working with cardholders typically has some sort of need or issue that we can help them to simplify and resolve so they can really focus on their core business.
Greg:
And you know you mentioned earlier acquiring banks and ISOs, so maybe talk a little bit about that relationship and what you do for those two organizations. Obviously they’re not merchants specifically, so maybe talk about that a little bit.
Mark:
Sure. So Midigator has always tried to be a thought leader in risk management. And I think what a lot of merchants sometimes miss is that when they receive a merchant account from either their ISO or even the acquiring bank, that’s a sponsors behind them that registered ISO and acquiring bank take full liability on that account. So anything, the merchant processes, any sales they process, any fees or chargebacks or refunds. If for some reason that merchant can’t meet that obligation, that obligation doesn’t banish, it actually rolls up to the ISO and ultimately rolls up to the acquiring bank. And so one of the reasons that we chose very early on to start to work with acquiring banks and ISOs was because there seemed to be this friction that occurs sometimes between merchants and ISOs and acquirers to where it was almost like they were on opposite teams, but in reality they’re on the same team and so we have a lot of ISOs and acquires that will resell our product today, helping their merchants have a better experience.
They can manage and reduce their disputes and chargebacks, which gives them more processing opportunities. And it also helps the acquirer and the ISO to understand we have a merchant that maybe is having a problem versus we have a bad merchant. And sometimes if you look just that initial data, like a chargeback number, you can say, “oh my gosh, we’ve got a bad merchant, we need to abandon ship.” But if you look a little deeper in data that’s already available, again, if you can access it a little easier, you can see where the problem is stemming from and understand that, you know, okay, the company had a hurricane in the Philippines and that’s where their call center was and it was down for three days and therefore customers called and couldn’t get through. And that created a spike of chargebacks as an example. So our approach is working with both groups in the same boat, trying to help them both be able to scale and to grow their relationship with each other as well as be successful long term and processing payments for their consumers.
Greg:
Great. Makes sense. I found it quite interesting as a lifelong marketer, looking into the data, you guys have some capabilities to tell companies maybe even which marketing program that they’re running might be driving chargebacks or which price point, maybe if it’s a subscription based business. I thought that was pretty interesting. So maybe talk a little bit about sort of those types of things that you guys do. I think that would be an interesting topic to discuss a little bit.
Mark:
You bet. Yeah. We’ve always believed that if you’re only responding to chargebacks, that you’re basically pulling band aids on bullet holes and there’s so much information inside of the data that can really help you understand what’s happening today in your business that is within the business’s control to be able to affect. And so as we look at some of those data points, like marketing source, product type, or different marketing strategies that someone employs. So if they’re doing a pay per click SEO campaign or they’re using other outside affiliate marketers or they have television ads that are running, when they can start to see how they all look across, I guess the industry in general, are there particular vertical. When they can see how it looks from a baseline perspective with their own data, it starts to become pretty clear what is happening and where they need to focus their attention in order to be able to solve an issue. And it’s interesting that everybody measures their marketing source to a sales ratio, right? They want to know are my advertising dollars really providing a lift that I’m looking at? But when you look at the bigger picture of, well, how are those sources also generating disputes or chargebacks or alerts, how are they generating refunds? You can start to get a total health picture and that can really help you to make even better decisions on how you’re spending your dollars and how your revenue is getting, really how the bottom line is being affected.
Greg:
Sure. And as you know, the payment space is quite competitive. I know there are other solutions in the industry around chargeback management, but what makes you guys different? What would you say are some of your differentiators?
Mark:
I think the biggest one was the underlying and still initial focus on technology. Many of the providers in the space started as either merchants themselves or they were part of a call center and that environment to handle chargebacks because it was done manually, it was always done manually. And so, when Midigator first came out with the technology approach and being able to automate responses, but to have those responses actually be customized, not just boiler plate or templates, many people in the industry said it can’t be done. It’s not possible. It’s got to be reviewed by a human or else you know, you’re never going to win. And we were very quickly able to provide this service that eliminated many of the manual steps that were required to process disputes. And then also start to add additional prevention and deflection technologies so that merchants would have the opportunity to send information back to the brands before chargeback gets placed.
Or they could refund an alert that had come in to prevent a chargeback. Or they could decide, you know what? We’re going to get the chargeback and we’re going to fight it all based on data. And so when you think that it’s technology first and then the product that we actually provide in the solution is secondary, what that generates is a constant need for improvement and a constant need to look at how the market’s, what can we do better? How can we implement additional tools and make them effective so that the end to end solution that the customer or the acquirer is, is achieving that goal of running a profitable, stable business is being added to by their risk management strategy. And so that’s probably that the key of what we’ve done, and I guess the other side of it is that because our founders were merchants as they started, we have really tried hard to stay close to that mentality of understanding that I can stop 100% of chargebacks for any business by never having them take a credit card. But that’s not the goal. The goal is how do we optimize their payments acceptance while minimizing their risk. And so that balance of taking a complete look at the business as opposed to just one little sliver is something that we continually try to be aware of and improve and, and just think through. So that again, we’re on the same team as the merchant and they’re ISO and acquirers as opposed to only coming at it from one small viewpoint.
Greg:
Alright. So where do you think the payments industry is headed in the next say two to three years?
Mark:
Well, card not present payments including contactless and mobile payments. Obviously it’s been the fastest growing a payment method for many, many years and with the current pandemic that you know the whole world is obviously experiencing it is only shined a light on how much room there is to grow and improve that process and that experience. So I believe that we will see additional payment and ways that merchants are able to not only accept payments but the cardholders want to be able to provide payment to those merchants in that form of a contactless card not present mobile type world and the need now to have better strategies in place for preventing both malicious fraud but also friendly fraud or family fraud, which is the majority of what merchants I think run into today that growing need is always going to be there. And so I believe what we’re going to see as a continued shift towards technology, a continued shift towards data metrics and decision based on that data and all facets of the business will be included in that picture. So that again, you’re not looking at it just from one small perspective. You’re looking at it in totality and being able to really understand how to make different moves in your business to become more successful.
Greg:
Absolutely. And you mentioned the pandemic and the Coronavirus, so maybe touch on what Midigator is doing to help support your employees and customers during the challenging times.
Mark:
Absolutely. So we have always been a remote company even though we have two main offices, again, San Diego and American Fork, but about two and a half years ago, I believe it was, we went one step further even to being more remote. And so even our employees that live in around that area, they typically don’t come into the office every day. We’ll have meetings that they’re able to come in for or summits that they’re able to join in person, but largely they’re working from home and remotely on a day to day basis. So that was of course a great benefit when everything occurred and different companies needed to figure out a way to work from home. That wasn’t really an issue for us because we’ve been doing it for quite a while already. For a lot of our merchants that did become a challenge. And so, they were trying to figure out how do we operate in this remote environment? And the ISOs and acquiring banks were doing the exact same thing. And so when you think about the security and the data protection that’s involved with banking in general, having that set up in a remote environment, it takes some thought process. So there were early on, I think a lot of people that were obviously having issues and scrambling to try to figure out how do we maintain a semblance of business and really hopefully excel through this process while we have these restrictions that are in place. And so Midigator has tried to be in close contact with both our merchants and our partners to hear what they’re facing. Hear what challenges there trying to come up with, offer any solutions or advice that we’ve been able to figure out over five years of working remotely.
And then of course the last two and a half being almost a hundred percent remote. And then also just providing some communication channels back and forth so that merchants can understand how the card brands are viewing their business today. And ISOs and acquirers can understand how their merchants are really affecting and are having to make changes in order to be able to be effective. And so it’s not that we had all the answers, we certainly don’t believe that, but we try to be as collaborative as possible and passing information as accurately as possible and also as in a timely manner as possible so that you can base your decisions based on, again, the latest and most accurate information that’s available in the market. I know that there was some early reports of different changes that were happening and how they were being implemented by the brands that almost were broadcast in a fear mongering fashion and we certainly want to make sure that we’re taking everything in context and that people are able to get the best and most accurate information so they can make decisions for themselves and their business.
Greg:
Sure, and I think that, communication is, is a pretty common theme with people that I’ve talked to is really reaching out and talking to your merchants and customers more than maybe you ever have before just to make sure, like you said, that line of collaboration and communication is always open.
Mark:
Absolutely. Yeah. I think that is the critical step today being able to realize that we don’t interact with a lot of our merchants face to face on a regular basis because of being remote and because of their being remote as well. But there’s normally conferences and different trips on sites that we’re doing that just we can’t do right now. And so trying to be, I think more aware of that and taking a proactive approach to reaching out to customers and partners has been something where we’re striving to do.
Greg:
Great. Great. Well I appreciate all that information on the company. So we’re going to switch gears a little bit and talk about you. So, tell the audience about your journey to your role there as the president of Midigator. How did you get there and what was your sort of past experience in order to lead you to this position?
Mark:
Sure. So I have always been fairly entrepreneurial minded and early on in my career ran several businesses that weren’t payment related, that were more sales and marketing driven. A lot of sales training and education is involved in those different roles. And it was in about 2001 when a friend of mine that I had worked with at a couple of different companies had wanted to start a medical billing company and it was sort of a hot topic at that point. And so we decided to do it and we went and did some training with a specific software that we were going to use. And as we came back and were thinking about how to present this to different providers, one of the things we wanted to do was to have a product differentiator. And my friend knew of a person who had written a platform that would allow the self-pay portion of the medical bill to be collected like over a few different payments.
And again, in 2001 that wasn’t really a product that was widely available outside of the way the banks administer it. And so this product would allow, say a patient that had a $300 deductible with their providers and permission, they could break it up over three months and pay hundred bucks a month in an automatic withdrawal for their banking account via ACH or on their credit card. And the platform would manage that system and set up the payments and be able to make it just simple as possible. So as we went out and started talking with people about that product, people loved the self-pay portion of the product idea. They weren’t as interested in the billing side of it because they already had that in place in one fashion or another. But everybody wanted that, that other product. And so we began to shift gears and really focus on being that payment solution provider.
And as we were doing that, we had been outsourcing our credit cards to a third party and we thought, you know, it sort of makes sense to bring this in house, learn it and own it for ourselves. So it was, I think in 2004 I started to work more on that credit card piece and as we were bringing the credit card piece back together with the recurring billing platform on the ACH side, we got approached by Zions Bank and they ultimately ended up purchasing the company. They already had their own credit card processing in place and so they weren’t really interested in that side of the house. And I ended up staying on a credit card side to be able to work with merchants of all types, both card present and starting in 2005 card not present to help them be able to get merchant processing and to understand what was happening.
And that was the first time that I ran into chargebacks where merchants were having issues with their merchant accounts and the acquirers and ISOs were calling saying, we’ve got to figure out how to reduce their chargebacks are too high. And at this point, the threshold for Visa for chargebacks was 2% and I believe 200 chargebacks per month. Today it’s 0.9 right? And a hundred chargebacks for months for Visa. So it was even a little more wild west. And so we started to dig in to try to figure out why people are getting chargebacks and what was happening. And we were calling cardholders to understand why they called the bank and they didn’t call the merchant. And we were manually processing chargebacks with a room full of people. And I thought there’s got to be a better way to really do this. And so in 2007, the end of 2007 I left that company and started a chargeback software platform to be able to really automate that process and help to understand why they were having those issues and ran that company for about seven years and in 2013 decided to step away from that company.
It was going to go in a little bit different direction, and I went to work for Ethica, which is a prevention provider between issuing banks and merchants. They send alerts so that merchants can be able to know what a pending chargeback is going to happen and give them an opportunity to refund the transaction to avoid that chargeback from taking place. And I worked for them for about three years with acquiring banks and that’s how I ran into Midigator. Midigator was one of the partners that I worked with and what I loved about that solution was that they had that same technology mindset and that they didn’t want to just respond to issues or manage alerts. They wanted to understand why it was happening so that better decisions could be made and that fit really well with, I think that core vision that I saw many years ago and never quite was able to bring to fruition but felt like that, you know, with that platform there was that great opportunity and eventually there was this opportunity that was available and it worked out for me to move over and be able to, to join them.
Greg:
Great. So you’ve been around the chargeback world for quite a while.
Mark:
Yeah. It’s something that you, you kind of fall into at times and don’t ever fall out of. But I love it. I mean, I’m always learning new things. I don’t know that you can know everything about it and especially as many changes as have occurred over the last a couple of years, specifically being driven from the card brands and the future that they’re painting for how disputes are dealt with and managed. It’sreally exciting. I think that in the last two years we’ve seen more updates and changes to the technology and rules of chargebacks than we did in the previous 25 years before that. And so really is a time where that side of the business is growing up a holistically and it’s exciting to be a part of.
Greg:
Yeah. So talking about being excited about something, the next question is related to something you’re passionate about. So maybe talk about your passion within work and maybe something that’s not really work related.
Mark:
I think within work I kind of am constantly fascinated with understanding the process behind how successful businesses operate and how they run. And you know, specifically there’s so many processes and systems or tools that businesses will put in place for every aspect of their business. But when it comes to payment processing, it was always sort of an afterthought. Right. And we just sort of get by. And so as I’ve seen other businesses and worked with other businesses that have been merchants or partners that have been super successful, I’ve tried to really pay attention to what it is that is helping them to be successful. And how does that relate to risk management in general but also to other businesses at scale. So that educational aspect of what businesses are doing to be successful. And then just in general trying to learn as much as possible around risk and payments.
I typically am able to frequent a lot of the card brand and other acquiring bank and ISO risk conferences and hearing the challenges that are facing not just about card, not present payments, but holistically it starts to bring everything I think into a little bit better view of how the system really is so interconnected and operating. And so education and learning is probably my biggest passion that I try to focus on inside of work. Outside of work I’ve always been really excited and involved in different athletic and sporting things from coaching soccer to golf and basketball. And I really enjoy that side of, you know, figuring out how to help people reach their potential and help me to improve in the process. So it might be a crossover passion, but that is something that I really enjoy doing I guess is just figuring out how to make myself and hopefully other people that I’m involved with better, happier to feel included that there’s not any type of separation that they feel and working with me, I’m hoping that they feel like they are viewed as an equal peer regardless of the role that we work with one another.
And so anyway, that’s sort of off the books. What I try to do, I’m not a good athlete. I am not a good golfer, but every now and then you hit a shot that’s pretty pure. And I think that’s kind of what keeps you coming back. And it seems like there’s a lot of symbolism in that in life that you kind of maybe struggle in a lot of areas, but every now and then you do get something right and it gives you the next boost of energy and motivation to make it, to keep tracking or keep trying to improve and then come back.
Greg:
Yeah, that’s a great lead in to the next question. And you sort of mentioned it earlier, how you maybe fell into the chargebacks area. You know, early in my career in payments, no one really sought out a career in payments, but I think that’s changed over the last few years. All the investment that’s taken place, the FinTech movement, so to speak. So I think people are looking from a very early age, right out of college, at the payment space as a future career. So what would your advice be to someone maybe coming right out of college or maybe wanting to change from another industry over to payments? What would your advice be to those that are just starting out in this space?
Mark:
It’s a great question. One of the things that I often mentioned to employees that are just starting with us or even starting with another company, almost always they are coming from a background other than payments. There are those rare instances where they’ve been in payments for a while. But I always, I always like to ask how did they get started in payments? And I can tell you that I don’t know that anyone has ever said, Oh well I, early on in my life I knew that I was going to be processing payments and I always loved that as a child and went to school to study chargebacks and really got my degree. You know, and it’s just not there that in most cases and in most industries, minus obviously a select few people will get their degree and then they will, you know, find work and find what’s interesting to them and be able to fall into that passion.
So, what I try to let people know, and my bias I guess would be as that everybody at some point started at zero. And the fact that you know, you’re coming into this new industry, it’s growing, it’s exciting, there’s a lot of changes. Every day we’ll probably be a little bit different and because of the way there is a lot of flexibility and the way that rules are interpreted or administered across acquiring banks and ISOs and even understood, I think by the various brands you will constantly be challenged to learn and if you have that mindset of there is no dumb question, I’m going to learn as much as I can. I’m going to try to understand how the ecosystem works together. You know, even though I might only be involved with one aspects of payment that might not be related to risk or something else, if I can understand how it works totally, then as there are challenges or as there are potential products that get introduced, I think they can better kind of understand how to take advantage of those and of course that becomes a great asset for themselves and for their employer or company and or a merchant if they’re working in payments too. We have a lot of merchants that actually have a payments risk division. Right. Because of their size and same thing, right. So those people typically started in another industry and now are trying to figure out payments and the people that continually try to learn and grow and improve and understand the big picture I think are the ones that are always successful, have a great, great future in front of them.
Greg:
Right. I think that’s some great advice and some good wisdom there. Well, we’re about to wrap up. Is there anything else you want to add either related to Midigator or the industry or yourself or anything else you want to add before we wrap up?
Mark:
You know, I would just say one of the biggest challenges I think that the payments industry faces in general is a lack of collaboration. It felt like for many, many years that it was the brands against others or issuing banks against acquiring banks or merchants against cardholders. And I believe that over the last certainly 10 years and definitely the last two to five years, there’s been a big movement to really a collaborative effort to trying to understand how we really are all in the same boat and working together. And so as people get that opportunity to collaborate with different forums or risk groups or different opportunities, I would just recommend that they take it and be a voice of collaboration and try to learn as much as they can and share that knowledge with others so that we all improve. We often have heard, and I’ve joked that while we compete with various groups and other acquiring banks and ISOs compete against each other for business, nobody wants to compete on fraud or chargebacks. And so the idea of collaborating and trying to help each other, I think there’s a lot of marvelous opportunities out there. And if people will take advantage of that, I think they’ll find that will improve their personal experience and professional experience and also the ecosystem in general.
Greg:
Yeah, totally. Totally agree with that. Well, I know your time’s very valuable and I really appreciate you being here, so thanks so much for being on the show today.
Mark:
You bet. Thanks for having me. Really appreciate it.
Greg:
And to all you other listeners out there, I thank you for your time as well and until the next story…
