Greg: My special guest this week is Brad Paterson. The CEO of Splitit. Splitit is an installment payment solution. They enable consumers to pay on their existing credit cards and split those transactions and pay over time. Their corporate headquarters are in New York and their tech center is in Israel. They are small but growing rapidly at over 300% year over year, and about 40% month over month. Splitit has a unique business and recently launched partnerships with Visa and Blue Snap. Brad grew up in a small town, just North of Sydney, Australia. He spent 12 years in Singapore and is now based in San Francisco. He has a passion for small businesses and helping them thrive and survive. Outside of work he’s a sports fanatic. We’ve got a great show this week. So, let’s get started.
Brad, thank you for being here and welcome to the Leaders in Payments podcast.
Brad:
Thank you for having me, Greg. It’s great to be here.
Greg:
Good. So, let’s just dive right in. Tell our audience a little bit about yourself, maybe where you grew up, where you went to school, where you currently live a few things like that.
Brad:
Sure. If the accent doesn’t give it away. I’m from Australia from a small town north of Sydney. I grew up on the beach, went to university around the same area. I spent a lot of my time in Sydney before moving to Singapore, where I spent probably 12 years in different roles in Asia. And I’m now residing in San Francisco in California, where I’ve been for the last four years, my wife and six-year old boy.
Greg:
Great. Let’s discuss Splitit. So tell the audience what Splitit does.
Brad:
We’re an installment payment solution. We’re unique because we enable consumers to make installment payments on their credit card. So, unlike many others in the buy now pay later space, we don’t issue credit or new lines of debt to consumers for transactions, we play in a very different space. We enable consumers to use their existing line of credit on their credit cards and to split those transactions and pay over time.
Greg:
Okay. And how big is the company?
Brad:
So, we’re about 60 employees we just announced $25 million in MSV merchant sales volume for May. So, annualized about $300 million in merchant sales volume. So still quite young growing, but growing rapidly. We just announced we’re growing at over 300% year, over year, about 40% month over month. So, we’re small. We have headquarters in Israel and New York our tech center is in Israel. Corporate headquarters are in New York. We also have small offices in London and Australia.
Greg:
Okay. Are there certain verticals that you focus on more than others?
Brad:
Again, we’re very different to all those we’re focused on the higher average order value segments or home wares, furniture, outdoor sporting goods, thinking of people buying exercise equipment, bicycles. For example, Canyon is one of our bigger brand merchants. And the reason we got there is we realized that as we were searching for product market fit and refreshing our strategy in doing so, we realized that the merchants and we focused really on e-commerce, the merchants’ number one opportunity and challenge I look to solve is improving website conversion, cost conversion, and we learned very quickly through talking to and spending a lot of time with our customers and looking at consumer behavior and the data price is the number one driver of shopping cart abandonment. So, sticker shock. I get into the cart. Do I really want to spend $800 now on a bicycle $2,000 on a bicycle, if you’re able to offer installments. And after that, now I have a six months at a reduced price per month. It dramatically improves conversion. And where we add an extra layer of benefit is because you’re using your existing credit card. There’s no application, there’s no interest, there’s no additional fees, we’re simply running on top of the payment network rails and running a typical transaction. So that increases conversion even more dramatically. So, we like to think of ourselves as a conversion company within the payment space.
Greg:
Gotcha. And I read recently that you partnered with Visa and Blue Snap, obviously two different partnerships, maybe talk about those and the value they’re bringing to the industry.
Brad:
We’ve announced a number of different partnerships. Visa and BlueSnap, as you said, also Stripe, a number of other payment gateways. And before that a number of marketplace or commerce platforms, Shopify, Magento. Our intention here is to build out our presence in the ecosystem. So the merchants and consumers anywhere can see better fidelity, better access, better distribution of installment payments through Splitit through partnerships, such as Visa it’s to help us improve the quality and the fidelity of transactions in the background and partnering closely with Visa who built an installment API for us to distribute that to them globally and integrate that through our platform. And also to ensure that consumers, when they make installment transactions, they can see this is the first of six installment transactions with this merchant through Splitit and ensuring that consistent across all cards and across all networks. It’s something we’re very focused on. So that’s more of the product and architecture. And then you look at typical distribution deals and ensuring they’re very easily integrated, easily accessible for merchants through payment gateway commerce platforms, such as the BlueSnap partnership. We recently, you know, it’s very important as well. The integration and simplifying the use for merchants is very critical to accelerating.
Greg:
I assume, as with almost any company in the payment space, you’ve got competitors. So, what differentiates you from your competitors?
Brad:
I like to say we don’t actually have competitors because nobody is really providing installments on cards agnostically, but typically we’re putting the same bucket as other people in the buy now pay later or the installment space. So what differentiates us is a lot of our peers in this space are issuing new credit to consumers for a transaction. And some of them revolving lines of credit, but this is new lines of credit issued by that institution. I think they do a great job. They’re serving a different type of consumer people that don’t have a credit card or might not want to use one. We’re serving over 2 billion people around the world that do have a credit card. Typically most of those people, 70%, it’s probably a little lower it’s 70% of that balance is unused and under utilized, and we’re hoping that money go to work for them. So we’re very focused on merchants and consumers, merchants targeting consumers with credit cards and the ability to spend that don’t need to go into new debt, the payment installments.
Greg:
Okay. Makes sense. I remember a long time ago, this goes back a ways, one of the, I think one of the first in this space was Bill Me Later goes a ways back – a little bit different than what you’re doing, which what you’re doing is very unique and interesting. Where do you see the payments industry heading say over the next two to three years?
Brad:
I think we’ve learned a lot in the last two months. I think the answer two or three months ago would have been very different to the answer now. It’s clearly a shift towards contactless. If I talk about in- person payments, if I look at wallets or areas of utility, which allow me to pay remotely, with the device that I have, we’re going to say dramatic shifts, dramatic shift. We’re going to see a shift away from cash faster than we ever have. I remember my time at Visa 20 plus years ago, the number one competitor we had was cash and moving away from cash, you will see more change in the next two years than we’ve seen in the last 20, in terms of that movement away from cash and clearly consumers want flexibility. We’ve seen a significant shift towards installment payments and to Splitit in particularly consumers, demand, flexibility, and control by increasing paying on their devices. They also want to pay on their terms. I don’t know if it’s credit, but I want to be able to spend that on their terms. We’re going to see increased personalization, increased control, put in the consumer’s hands. As we see them move towards different devices, different mediums that you use to make those payments finalize those payments.
Greg:
I guess it’s pretty logical to say that the amount of business moving from retail to online probably really is a good tailwind for you guys.
Brad:
It is. We decided towards the end of last year to shift focus, almost exclusively to e-commerce fortunately placed in that regard. If you can say a such thing as being fortunate, we do believe and do make a bet that consumer spending will move towards e-commerce. It’s probably happened two to three X at the right rate anticipated and it’s happening very quickly. The merchants we have seen the merchants or retailers, which are set up for e-commerce, ideally those exclusively because I’ve built the supply chain and the infrastructure for that channel are thriving, those that had a foot in the water or a toe in the water are now trying to get in quickly. They’re realizing demands. They’re somewhat playing catch up now. So, we’re trying to help everybody across the board, but we’re seeing those of us that are thriving in the current environment. I, we expect that to continue and not to change.
Greg:
Yeah. I think you’re right there. Where do you see the industry heading? Maybe in 10 years you get the crystal ball out and let’s hear what you have to say about 10 years from now.
Brad:
That’s a great question. Again, the answer would have been very different ultra personalization. I think ultra personalization. Now the emergence of wallets, how I use those wallets. I do see, I should say the device- based wallets with ultra personalization. I try not to talk too much about cryptocurrencies or blockchain enabled currencies, given the lack of exposure and experience there. And some of my peers are helping run some of those organizations now, but I do see new forms of currency coming with more stable and less, less reliant on certain countries’ economies. And I think we’re going to see, I do believe that we’re going to continue to see a breakdown of borders and global commerce start to really emerge in the years ahead and we’ll need to see improvements in logistics, but in doing so cross border payments, remittances, and to a certain degree, B2B payments will need to be overhauled. And whether it’s B to B, well cross border payments is overdue for some significant disruption.
Greg:
Yeah, I would agree with that. You mentioned a lot has changed over the last couple of months and no doubt about that. Maybe talk a little bit about what Splitit has done to help support your employees and merchants or customers. During the last couple of months.
Brad:
I have to tell you it’s a very challenging time, and it was really the fear of the uncertainty. One of the first things we did was we took stock and we started to make some decisions to look after the welfare of our employees and that team. And one of those decisions was assuring everybody that the last thing we will do is cut jobs. We’re lucky to be, you know, 60 to 70 employees. I’m not heavily burdened with employee expenses, but providing everybody that security to know that will be the last decision we make. And we’ll look to pull spending until we understood what was really happening. I think that provided a high level of confidence and support in the team that they could focus now on our customers. I don’t know, I think would always, I believe that your employees and your team are happy and satisfied. You’re focusing your customers is there, and we did that happened as people saw that their job was okay. So, everybody’s attention shifted quickly to supporting our customers. And we saw customers who were reliant heavily on your manufacturing in cities, which was shut down or countries, or to shut down, helping them think of me different ways, how we could support them. So, I think firstly supporting our team, build that confidence, putting that stability in terms of their belief in that job. And then that allowed us to really focus and shift our attention to focusing on our customers. And that hasn’t changed. I think the stability is there, but we’re growing much faster than we could have imagined hiring significantly. Now that customer centric to being customer first approach is really shown through in March and February and March is the bar started to kick in well, significantly in the months ahead.
Greg:
Great. Great. Well, let’s switch gears a little bit and talk about you. Tell us about your journey to your role there as the CEO.
Brad:
I’ve had over 20 years’ experience in payments, you could argue, but I was lucky enough to stop my payments group Visa, starting in Asia Pacific. I’m working in the Australian team as well. Then, was lucky enough to join PayPal in the very early days Australian office. And then I worked in a number of offices and business across Asia Pacific focusing on the merchant side, I spent six years starting their Asian Pacific business and then helping lead the US business, the online QuickBooks business that led me to reconnecting with old colleagues to look at Splitit, and the value proposition and an opportunity I hadn’t seen since the early days of PayPal. And it was really about the benefits that I spoke about before. And also because we’re not issuing credit, we’re not doing any of this. Our ability to scale was significant. So it was an opportunity to build something I believe in to build a team of people that believed in that. And then for us to scale and execute, it was lucky enough to join, Splitit as the head of North America and quickly moved into the CEO role being asked to do so, being in that role now for nine months and what a learning to be hit with, the things that we’ve been facing over the last few months, it’s been fascinating. It’s very lucky to be surrounded by a great team and a great support network to get through that.
Greg:
Great. What are some things you’re passionate about? So maybe one thing that’s work-related and maybe one thing that’s not work related.
Brad:
I think work related – very passionate about small business. Stemming back all the way back to there’s one of my early roles, but getting really deeply involved in that at PayPal and then Intuit, small businesses are the backbone of our economies around the world. In most places, they’re offering what we would call in Australia. Somebody that’s really struggling to make ends meet, but it’s doing so for noble causes or for reasons. And how do we help those people thrive and survive? There’s been a focus and something I’m very passionate about. We’re looking to solve here at Splitit as well as how do we help small businesses. Outside of work I’m a sports tragic. You name a sport, I’ll probably be watching it whenever I have a spare moment, getting a little too old now to play my sports, a sports tragic that you can find me watching or talking about any sport at any time.
Greg:
Well, unfortunately you haven’t had a lot to watch lately.
Brad:
I know, I know. I know. Luckily the Last Dance and a couple of good replays and funnily enough rugby in Australia has just started again. So. we’re just starting to see some sports come back, funnily enough in my old hometown.
Greg:
Oh, that’s great. Yeah. And it sounds like things are starting to kick back up with, I guess the NBA’s going to kick back in at the end of July and the college teams are starting to report in. I think so. Hopefully we’ll get to see some fall sports anyway.
Brad:
I’m sure we will. All right. Things will start to feel a lot more normal. Fingers crossed all goes well heading into August and September.
Greg:
Yeah, absolutely. You know, when I started in payments about 15 years ago, no one really wanted to have a career in payments or you didn’t think coming out of school, Hey, I want to go into payments. But that certainly is changed I think over the last few years, I think a lot of investment in this industry, a lot of buzz around the word FinTech. And you know, I think people come out of college now and, or career transition from another industry and they look at payments or commerce or FinTech or whatever you want to call it. And they say, Hey, I want to make a career out of this. What would your advice, I mean, coming from someone that’s been in the industry 20 years, what would your advice be to someone just starting out in the industry?
Brad:
Great question. I’ve been asked this a lot recently and it’s made me think and reflected on a few areas. Firstly, is there not been a week I haven’t learned something new in payments. I have not learned something, then it probably means I’m not putting myself out there to learn, to really embrace the learning, really embrace the diversity and the fragmentation of payments around the world. So many different verticals and it’s just changing dramatically. Secondly is learning the infrastructure. Learn how money moves, learn the pain points consumers have no different than any product really very critically upon reflection is your ability to learn different industries. I’ve been fortunate enough to work very closely with a number of airlines around the world. A number of fast-moving consumer goods, manufacturing brands, services, digital, crypto learning, all these different industries, whether it’s merchant or industry verticals or technology and platforms, very few industries or very few professions. I think we will have such broad exposure because payments touches every part of our lives. I’d encourage everybody to, but do push yourself into areas that you might not be comfortable with because the learning is phenomenal across all these different aspects and spectrums, when any payment’s going to open those doors.
Greg:
Yeah, absolutely agree with that a hundred percent. I think that’s some great advice. Well, we’re about to wrap up. Is there anything else you’d like to add before we wrap up?
Brad:
No, thank you very much for having me. What an exciting time to be in payments to be in FinTech, more important and our customers need us then right now we’ve never made it more than what we are right now.
Greg:
Yeah. I love that. I agree. A hundred percent. Well, I really appreciate you being here today. I know your time is incredibly valuable, so I really appreciate you being on the show today.
Brad:
Thank you for having me, Greg.
Greg:
Absolutely. And tell you other listeners out there. I thank you for your time as well, and until the next story.
