Greg: Hello, I’m your host Greg Myers and welcome to episode 19 of the Leaders in Payments podcast. My special guest this week is Charles Hogan, the president of Signature Card Services. Signature Card is a payment processing platform and gateway technology company. Signature Card serves all types of verticals and can speak the language of technology innovators and respond accordingly. Charles is a born and bred Los Angeles, California native. He’s been in payments for over 20 years and was a reconnaissance Marine for a number of years. Signature Card is well positioned and has retained all of their employees and has actually been hiring through the Covid-19 pandemic. The company has been focused on three pillars. First, the continued growth of their distribution channels. Second is focusing on their technology and gateway including new branding in the near future. And the third is M&A. Charles has a passion for creating value through innovation that shows up in real metrics. And he also provides some great advice for those just starting their careers in payments. So, let’s get started.
Greg:
Charles, thank you for being here and welcome to the Leaders in Payments podcast.
Charles:
Yeah, thanks. Great. Thanks for having me. Great to be here.
Greg:
Absolutely. So, let’s dive right in. Tell our audience a little bit about yourself, maybe where you grew up, where you’re from, went to school, maybe a few things like that.
Charles:
Yeah, absolutely. So am a California, Los Angeles native, actually born and raised and have been here all my life, although I’ve done quite a bit of traveling but stayed in the Southern California area. I have been in payments for over 20 years now. I have a marketing bachelor’s and a finance MBA from USC. Throughout that I spent some time in the Marine Corps. I was a reconnaissance Marine for a number of years and in fact before I got into payments I thought I was going to have a law enforcement career and was running down the path to be in the FBI. And so, I was going to school and studying accounting and thought that’s what my path is going to be and I ended up taking a job in payments to support myself while I was pursuing that endeavor. And in fact that was why I had gone into the Marine Corps to make myself more competitive for that process over the course of a handful of years, kind of just my life took another direction and had some success in payments in the early days.
You know, kind of what I think a lot of people would refer to as kind of the golden era of payments. Life was different and had some success and ended up becoming very entrepreneurial in payments and doing some other things and kind changed life courses. And so, like a lot of people I think stumbled into payments and then never left so to speak. And so started with Card Service International, probably a name most people would be familiar with, especially here on the west coast in payments and spend a few years learning the business and doing sales and then went out on my own. I started my own ISO, my own payments company a few years later and got connected with i-Payment at that time and was part of their plans for a roll up and was a participant in that transaction. And then spent some time in and around payments thereafter and finishing up some schoolwork that I had to do and got finished up my advanced degree and actually met Signature Card at that time and the team, the owners of Signature Card and spent a couple of years helping them do some stuff and work on their company.
So, I’ve met them almost 16-17 years ago now. Ultimately went back out on my own after doing some consulting projects with a few different companies in payments. This was in the early two thousands and my start was in late nineties and then started at another payments company in 2006 I believe, and got off the ground just in time for the economic debacle of 2007 and eight the world to fall apart. And so faced some serious adversity there, was able to kind of pivot and make it through those challenging times and ultimately develop kind of a successful small boutique payments company that was consulting oriented or slanted, if you will, within a few verticals and built that company up. And then from there watch the payments kind of landscape change and unfold and transition into more of an innovation and technology-oriented place.
And so, it got involved with a group and started and founded a company called Tranzlogic, which is a data and analytics company that leverages payments data to serve small and medium sized businesses and various verticals. So, helping them to identify and understand who their customers are and make decisions about those customers and help them to grow their business. And so, spent the better part of five or six years doing that, raising money and building technology and selling into and through the payment’s ecosystem. So got to learn payments kind of from a different vantage point and establish a number of different types of relationships, selling to and through the very kind of largest payments companies all the way down to kind of smaller mom and pop ISO. So, from the Vantic, TSYS and First Data’s of the world all the way down to smaller ISOs.
And then that company kind of had to take a pivot when Equifax got breached. They were one of our major vendors and a major data partner for us. And so that caused some ripples in the water for us. So, had to make a transition. And so that company, Tranzlogic persists today and serves customers. But it changed the landscape of the data industry that we were in. And at the same time serendipitously got reconnected with Signature Card who was a customer and is a customer of Tranzlogic and they were going through a transition in leadership. So, they had a president that was outgoing and needed some transition help and assistance. And so that was the beginning of my tenure at Signature. So, stepped in and helped them to kind of make this transition and put in place some plans and some leadership. And then that ultimately evolved and emerged into kind of the next phase for myself and for Signature, which I’m happy to share more about as we go into the conversation, but that gives you kind of the evolution over time and then we can happy to drill down wherever you’d like in any event.
Greg:
Absolutely. Let’s dive into Signature Card. Tell the audience exactly what Signature Card does.
Charles:
So, Signature Card is a payment processing platform company, so it’s both a wholesale ISO MSP for a couple of banks, Merrick and West America Bank, and soon to be one off-shore and it’s also holds gateway technology. And so, we operate as a gateway technology platform company combined with being a wholesale ISO MSP.
Greg:
Okay. And what would you say differentiates you guys from the competitors out there?
Charles:
That’s a great question. So Signature is a 20 year old boutique business that has a great reputation and a lot of experience in a number of segments, but it is also a technology company and I would say that we are differentiated in the sense that we are kind of Goldilocks to the payments and the payments innovation community. So, we’re able to serve all types of business types, verticals and companies, but we’re also able to speak the language of technology innovators and we’re able to respond so we’re not too large and we’re not too small. And so we’re able to get in sleeves rolled up and solve problems and be dynamic and essentially bring to bear what it is that a company, whether it’s a merchant or a technology service provider, an integrated service vendor may need in their solution that they’re trying to deliver to their end user customers. So really able to be dynamic and be a problem solver for them and have all of the tools and components integrated from end to end throughout the ecosystem that we can bring to bear to solve those problems, if that makes sense.
Greg:
Yeah, absolutely. Are there certain markets or verticals that you focus on?
Charles:
Yeah, so Signature Card, historically it’s kind of claim to fame has been that it’s been a special risk business for a number of years. So various types of verticals that it served that are otherwise challenging or difficult to place elsewhere. So maybe adult or adult related adult dating, although that’s a much smaller segment of our business today overall, and it is proportion, but we’ve evolved into other more challenging verticals over the years. For example, guns and ammunition. So, from a vertical service perspective, we’re able to be very liberal in our ability to approve and service business types. And then from a technology and an integration perspective, we’re serving various verticals in solving problems in these verticals in various ways. So, some include ticketing agencies or service businesses like home appraisers or golf courses or the like.
Greg:
Okay. And how big is the company?
Charles:
So, I would consider a Signature, probably medium-size in the ecosystem. We process billions of dollars per year in volume.
Greg:
Okay. And I did see, looked on the website, Yyou pretty much have the standard retail online e-commerce kind of merchants. Have you guys seen that shift that everyone’s talking about of more e-commerce online business than retail over the last couple of months?
Charles:
Yeah. Oh yes, definitely. Over the last couple of months. In terms of processing, I think it’s accelerating the channel convergence conversation with contactless payments, but I think that that has been a trend that was starting to really take hold prior to Covid. I think Covid is an accelerator in that, but yeah, we’re definitely seeing businesses more and more transcend channel, whether it be mobile or point of sale or internet related transactions. So that’s where we’ve really kind of spent a lot of our time and focus and problem solving in creating our gateways and feature sets within the gateway and the ability to report across, serve all the different types of technologies that are necessary across the different platforms, provide security across, provide if it’s in a high risk segment, you know, all of the proprietary negative databases and scrubbing features and all of those types of things. Or if it’s in a mobile environment, be able to serve the different types of mobile devices in contact with sale devices that are out there.
Greg:
Sure. So, you mentioned trends, so let’s talk about that a little bit. Where do you see the payments industry headed over the next say two to three years?
Charles:
Yeah, I would say probably continue to see acceleration in contactless payments, channel conversions, integration. I think we’re going to see more and more technology companies and innovators solving problems in verticals and continuing to create and deliver real incremental value, wary of the payments as an integrated part of that. So, we really want to be at the kind of hub, the convergence point of that. We may or may not develop our own solutions and feature sets in various verticals, but we definitely want to be in a position to enable those innovators to easily and securely integrate payments into their innovation and feature sets and technologies that they’re delivering into the market.
Greg:
Great. And you mentioned it already, the Covid-19, maybe tell the audience a little bit, Charles, about what Signature Card is doing maybe to support your employees and your customers during this time?
Charles:
Yeah, that’s a great question. So, I think I alluded to it before, Signature has been around for the better part of 20 years and it has a great group of owners. So, it’s owned by three partners. The company is well positioned and stable, the portfolio as well hedged. And so, we’ve been fortunate to be able to take care of our employees through this process. In fact, we’ve not only retained all of the employees that we had prior to the start of Covid, but we’ve actually been hiring through this time. And so, all of our employees have been fortunate enough to be able to and capable enough to be able to work from home and continue to operate as normal on a full-time basis. So, we have been a technology company where our infrastructure is already set up to be able to support that, our phone systems and our technology.
So, we had to make some quick transitions in the lead up to. But once we did that, we were able to get everybody home and safe. And so, we’ve been doing that. We keep a couple of people on rotation in the office as necessary, but by and large all of our employees have been able to work from home. And then we’ve continued to try to service and be of support to our agent networks. We have very large and loyal group of agents. And so ISOs and technology partners that are our distribution channel. And so, where agents have needed support and help because they may not have as well of a diversified portfolio, we’ve been available to be able to help them as well. And then with respect to the merchants, you know, it’s been all over the place in terms of their needs. Some unfortunately haven’t been able to sustain, although I would say that is the minority group. Many have needed to be put on what we’re now calling kind of a Covid hold. So, giving them some temporary relief in terms of their fees and pricing and support. Of course, we have the ability to do that and help them. And then like I said, the majority of our merchants have fortunately been in verticals that haven’t been too challenged and even some have, we’ve seen an increase in processing volume and some of the verticals that have offset some of the declines in some of the segments. So, it’s been really interesting to watch the portfolio over the last few months and see how the volume has shifted around and moved.
Greg:
Yeah, it’s interesting having talked to CEOs over the last two months, how depending on the market they’re in, so many of the larger ones obviously serve everything from retail to online, but they seem to be balancing out with the lack of retail. But the mobile or online commerce is really spiking and some of them in the security side, fraud and things like that are really seemingly doing really, really well. So overall it’s been a big hit on the economy. But I think people like you guys and others that I’ve talked to are really, really trying their best to take care of their employees and really reaching out to their customers. And I think that’s just a success story for the whole industry. When companies like you guys are reducing people’s fees and things like that. I mean I think that just says a lot about the companies and the industry that we’re in.
Charles:
Yeah, I agree with that. Absolutely.
Greg:
All right, well let’s switch gears a little bit and talk about you. So, we covered sort of your background and sort of the different opportunities that you went through leading up to where you are now. So, let’s talk about your role today, what you’re doing there and what you’re overseeing and some things like that.
Charles:
Yeah, absolutely. So, like I said, coming in, it was kind of a transitionary phase but quickly turned into kind of an evolutionary process. So transitioning Signature from kind of boutique, we’re all called lifestyle owner run business over the course of the last 20 years into more of a management run technology oriented platform company that’s headed in the right direction in terms of the next five, 10 15 years in payments. And so, a lot of early work was spent in infrastructure and operations and personnel and systems, policies, procedures, kind of putting in place the building blocks for growth. And then over the course of the last year or so, the company has been focused on kind of really three pillars. One has been the continued organic growth and proliferation of its distribution channels. So, continuing to go kind of deep and wide. The other has been in its technology, so both internal and externally facing technology.
So, our systems, our CRM systems, which are all homegrown and home built that are integrated front to back. And then also our gateway technology, which is a complete and robust gateway and the branding across all of that. So, Signature Card is going through a rebranding process to become Signature Payments and the gateway that we acquired and our building on. So, the acquisition of the gateway was called i-Deposit and we concluded that about a year ago or so. And we’ve been in the process of updating and rebranding that to what we now call tunnel T U N L. And so that’s an end to end gateway with all of the features you would expect in market from a mature gateway. So, all of the mobile integration and the virtual terminal and that kind of stuff. And then we’ve been working to develop our own proprietary feature sets.
So, we’ve been sitting on 20 years-worth of unique data that we’re using to leverage to develop some security and fraud features for some of the verticals that we’re in. And then really focused on ISVs and channel convergence there. So, kind of what I’ll call doing more of what we’ve done for years really well, which is that distribution channel. The other is the technology component, which you know, has been my background for the better part of the last seven, eight years or so. And so leveraging data throughout that ecosystem and developing that platform for innovators. And then the third piece is M&A. So, we’ve really started to get serious about growth by way of acquisition and looking for interesting technology pieces and complimentary distribution channels and verticals that compliment kind of where we’re going. So, for us it’s really been about leveraging this great platform company that we have into some breakout growth and kind of going to the next level.
And so, watched a 30% year over year growth take place over the course of the last year, which interestingly enough, we kind of expected to get curtailed pretty heavily with the advent of the recent coronavirus. But interestingly enough, we’ve got enough momentum and winning our sales and some of the verticals that we’re in that we’re actually continuing to see growth in our business despite all of the challenges that the industry is facing today. A real testament to the company that exists today, both as a platform and a portfolio, but it’s infrastructure, its personnel, and kind of our strategic direction and our tactical plans.
Greg:
Sure, absolutely. Let’s talk about you personally. What are some things you’re passionate about? So whether that’s maybe one work-related thing and one non-work-related thing.
Charles:
So if I haven’t said innovation and technical in terms of payments enough, you probably sick of hearing that word, but yeah, I mean that’s really, I’m most passionate about what I’ll call creating real value in payments, right? Real innovation. And so real value and solving problems and creating innovation that shows up in key metrics, not just talking about it, not just kind of reselling somebody else’s products, but how do we really differentiate ourselves and deliver incremental value that solves problems for merchants. So that’s what I’m kind of most passionate about with respect to payments outside of payments. I have spent the last handful of years, so I’ve been married for almost 20 years now and I’ve got two great boys ages 16 and 18 so they’re around third heading for home. And so, life has been outside of work, really spent focused on them and their academics and athletics. So, one is a tremendous soccer player, the other is a track athlete. And so, spend quite a bit of time engaged in kind of all of those activities.
Greg:
Those kids will keep you busy, won’t they?
Charles:
Yes sir.
Greg:
So you know, you also mentioned something that kind of leads to our next question about when you got into the industry, even back 15 years ago when I started in the industry, it certainly wasn’t a choice that I made. I sort of fell into it and just haven’t figured out how to get out of it. But I think that’s changed in the last few years. I think really the amount of money that’s been invested in this industry, the word FinTech being wrapped around it, I think there’s a lot of kids coming out of school or in other industries that look at payments and they see it as an exciting opportunity. So, what would your advice be to someone just starting in the industry? You know, what would you tell them that they need to do?
Charles:
Find the white space. So, solve problems, figure out how to deliver real incremental value that merchants want. Specialize. The days of being a generic payments guy, selling terminals are over. Certainly, there is still a need for distribution and for service. And so, I’m not, a sky is falling guy that says, you know, sales channel is going to be disintermediated completely. I don’t believe that. But I do believe that there’s an evolution that has taken place and is continuing to take place. So, if you’re going to get into payments, figure out how you can carve out a niche for yourself, find a white space, solve problems, and think about it from an integrated perspective, not just a means to tax merchants for a commoditized service that doesn’t work anymore.
Greg:
I think that’s some great advice. Finding the white space. I really liked that. We’re about to wrap up. Is there anything else you want to tell the audience before we go?
Charles:
Truth be told, this has been great. I think what you’re doing here is a fantastic service to the payments community. I’m happy to be involved in it. I don’t know if you’ve kind of seen my background, but I think being of service and giving back to this industry that’s been so great and gracious to me over the years is really important. And so I look for opportunities to do that and to be of service and so if there’s anybody that’s listening that sees as an opportunity to do some business together and pursue some synergy or some business development, great. If it’s otherwise a young person or a new entrance into payments that’s just looking for advice, questions, comments, happy to be a service. I’ve kind of been in payments for a long time and have been on all sides of raise money, bought companies, sold companies, portfolios, technology. So, I only say that in the sense that I consider myself to be probably a broad generalist and can probably share some insight and I’m happy to do that if that’s necessary. Otherwise Signature is strong and open for business and we’re growing so we’re looking to grow and partner and whether that be through M&A or organic growth or otherwise, if you are listening to this and you hear an opportunity, would love to pursue a dialogue there.
Greg:
Yeah, that’s great Charles, I appreciate it. I know your time’s very valuable, so I really do appreciate you being here, so thanks again for being on the show.
Charles:
Yeah, thank you. I appreciate your time and again, be well and be safe.
Greg:
All right, you too. And to all you other listeners out there, thank you for listening as well. And until the next story…
