Defining The Key Players In The Digital Payments Industry

26 May 2022

Dobromira Chobanova: Thank you everyone, for joining us today. It's our series of webinars and today we'll discuss defining the key players in the digital payments industry. My name is Dobromira Chobanova, and I'm a Business Development representative here in Bridger pay. And we have here our long lasting guest.

Ran Cohen: Hi, guys. Hi, everyone. How are you?

Dobromira Chobanova: I'm good. How are you? I'm really excited, actually.

Ran Cohen: Good. It's, it's great to have these events with different people in Bridger. Each one has his own take on the things and businesses and payments. And it's very interesting to everyone and what they think about the ecosystem.

Dobromira Chobanova: Indeed, as in my position, I speak with potential customers on a daily basis. And that gives me insights about their challenges when it comes to online payments.

Ran Cohen: Yes. So let's get started. Okay.

Dobromira Chobanova: Now, I will say a few words about the digital as we live in digital era. You know, for the past two decades, the online payments have grown exponentially and why is that? Simply because it's more convenient for the consumers to pay online via debit or credit card. Now also, the few banks are encouraging the usage through point based programs and cashback rewards. For example, yesterday, I went to the petrol station, and I got a couple of euros discount. So the next time I will definitely.

Ran Cohen: And how did you pay?

Dobromira Chobanova: I paid with my debit card.

Ran Cohen: Was it connected to the application?

Dobromira Chobanova: Yes, it is.

Ran Cohen: So you're buying, you go to the gas station, you pump up your account with another 50 euro and you gas your car, right? You choose the whole process of processing. The 50 Euro that you paid was seamless.

Dobromira Chobanova: Indeed, it was. Last I got a discount. 

Ran Cohen: And plus, you got a discount to be loyal and you know coming back and doing it from the app and not just you know paying in cash or whatever.

Dobromira Chobanova: Indeed so next time I'm definitely gonna use my debit card again, especially now with the petrol prices.

Ran Cohen: Yes. So what does it tell you? Tells you that first of all their experience of payments is super important. The merchant, the gas station did quite an effort to have you as a client and to get you back, right?

Dobromira Chobanova: Yes.

Ran Cohen: So they didn't offer you just present on refill, they offered you something that you could see as a real value in your credit card or pay less in a transaction you should pay more, that's a real value that you get. And think about what they had to do processing wise to do that.

Dobromira Chobanova: Yeah, I guess it's behind the scenes, things are quite complex. But the point is that my experience was seamless. And yeah,

Ran Cohen: And what if you could add from the app, not only your debit card, but your buy now pay later account or your PayPal account or your even crypto wallet and pay for gas with your crypto wallet.

Dobromira Chobanova: Oh sounds amazing.

Ran Cohen: If you speak about, if we speak about the future, then that's the future, the future is where you would have any method you want to pay for that gas in the same seamless experience that you have today. And there are many players, many players around the ecosystem that are now involved between you pressing a button and popping your account and until the gas station gets this 50 Euro into their account. Many, many, many different places that the transaction can go through.

Dobromira Chobanova: And in between is a lot of technology involved as well.

Ran Cohen: Exactly. Okay, let's see. Guys by the way, we have the chat on the right, if you have any questions for us during this event or session, so please just ask us on the on the chat, we'll be happy to answer and speak about your use case between the different payment ecosystem players.

Dobromira Chobanova: Also, we have in the poll section couple of questions for you to have a look at.

Ran Cohen: So we'll check them up later on before we finish.

Dobromira Chobanova: Let's dive into the payment’s world.

Ran Cohen: Yes, exactly.

Dobromira Chobanova: Now main players involved in the payment’s ecosystem. And from the other hand, this is the customer as we spoke already, who wants to purchase products or services and from the other hand is the merchant or the business owner. And as I said in between is bank institutions and a lot of technology. Now for you as a business owner or merchant, it's crucial to have a basic understanding about who are the key players and how the whole system works. And this will give you valuable insights to be able to choose the right payment provider or payment partner.

Ran Cohen: Not just. Also the right payment flow and the right payment automation that you want to apply. So if you know your chain right and you know that for international transactions, you're paying more than domestic right? If you buy something now here in Cyprus, most probably the business would be connected to a JCC account and you would pay a domestic business would pay on your transaction a smaller fee then if you would now buy something from a US based websites and he would now have to ship it here. So if you're doing an international transaction, the merchant would pay more and you want to know how to route the right transaction to the right acquire the charge you less right. So the ecosystem of payment and identifying the players and the responsibilities of each one is super important not only for understanding who you can commercially work with on better terms, but also how you can optimize later on the actual results, the actual metrics that are coming out of your processing and processing costs, which are super important for businesses that are trying to save any single dollar.

Dobromira Chobanova: Exactly. Imagine that there are a lot of cars are stuck in traffic and each and every one must reach from point A to point B. So they need a specific route. And they need to follow certain regulations to reach the final destination now in the digital payments world who is acting as a regulator?

Ran Cohen: In the digital payment world where it's break down to the player itself. So each player in the ecosystem would have a regulator that regulates his type of business. If we start from the acquirer or the payment providers. So payment provider needs to have their own institutional financial institution license and the license to transfer money between accounts, exchange them if they want to exchange. So there are different licenses all over the line. Obviously, if you're an acquirer, if you're a PSP, it's a different type of licensing. And so everyone in the chain has its own type of license that it needs to follow. When you look at gateways like the aggregator gateways that merely aggregating the account and giving you the option to connect to them, then those clients needs to have some kind of a money service organization license something that is related to the fact that they can exchange money and send it to different companies. So different licenses according to the chain, if you look at companies like Bridger that are acting as the technology layer between the business and all the different other players that are out there if it's a payment providers or gateways or requires or payment methods or anyone that is processing the actual money, the ones that are also actually settling the money to you. And we are the layer between the business to them. And on those type of layers. The regulation is PCI, and different types of PCI DSS. In Bridger we have level one, which is the highest and we keep our protocols were pretty much secure. So

Dobromira Chobanova: Security is important.

Ran Cohen: Let's see if there's any questions. Michall I hope you can hear us better now. Okay. So guys, if you have any questions, please don't be shy and use the question part on the right wall. You can ask us anything that is related to payments and we'll be happy to answer. We have a lot of new people here with us and we are happy for them to be here. We have Shmuel and Conrado and Bruno and Luciana and Noah and Marco and great, it's great to see everyone here and Dahlia. So guys, please be free to ask us anything on the chat. I hope I shall that the sound problem would be would work for you. Cool. So yeah, guys, if there is, I would really want to hear from you. Also if you had or what do you think, what's your thought about those different players? And the relationships between those different players? It could be quite confusing.

Dobromira Chobanova: Exactly the system is complex and in your wide experience, who do you think is the most challenging player?

Ran Cohen: The most challenging player? Well, the most challenging player are the players that you want to have. And they are the most challenging to achieve. For example, I'm a merchant and I have huge amount of volume from Japan or a demand from Japan. To open a Japanese local acquire merchant account is not easy. And you would have to work how to get there so you could use different other service providers and payment providers and aggregators, etc that would give you a service but you would obviously if you want to make it to the next level, you will always want to go directly and local to get the acceptance rates to the best you can. So, and that won't be easy and different challenges around the world, I think acquires and to reach the merchant account in the acquire is basically what merchants wants to get to and to have this widespread, have different merchants accounts in different local banks.

Dobromira Chobanova: Now when it comes to the card network, that's the major card brands Visa, MasterCard, and they issue basically, the issuing banks are issuing the cards that customers are using to pay online on behalf of the credit card network. So the credit card network works and also as a regulator.....

Ran Cohen: Is to be an issuer of credit card, so you need to have a license to issue credit card from the schemes and then once you've issued this credit card right, now not every processor in the world would like to accept this credit card or would like to take the risk on this transaction. And that's where a lot of transaction are being failed and both been declined because there is still a lot of miscommunication between the acquirers and not every acquire want to go and process any issuer account or any beam. And we see that on the declines. And that's why you are building fallbacks and that's why you cannot rely on a single payment provider. And usually you are taking more to use. If we look at the payment providers that are allowing you with one account to access multiple payment methods or multiple acquires, they can do a great job for you when you need to have the processing account first, when you don't have the enough infrastructure to start building this relationship or connecting all those providers. And then it's a good choice to start with them and work with them. And we can see, it attracts a lot of small medium businesses.

Dobromira Chobanova: So what would you say, my opinion then the future for merchants will be to use a unified payment system that they can manage their payments.

Ran Cohen: Well, I don't see how a business can continue or will continue to scale, if he wants to scale without thinking thoroughly about payments and payment infrastructure. It's a key element in growth and in obviously, in scaling in multi regions, you want to adapt your checkout to multi regions, you want to adapt to personalize it and make sure it's giving the right payment method to each one. And there are many payment methods, right? Many countries, many payment methods, it really depends where your countries are coming from. And that's where you need to focus and also measure, measure the impact. So it's not just saying okay, let's add, let's add, let's add. Add and measure. If you add now, by now pay later, you want to know how much it increased your cart size, if clients are actually paying more. Once you see that the cart size is growing, you have more transactions in the end of the month, you will get this confidence of adding more and more providers. And sometimes business owners wants to fill it before they actually do it. Okay, we.....

Dobromira Chobanova: I think we covered the first part two. Let's see now when we know now who are the key players, how exactly the payments are getting processed from the moment the customer taps their card and enter their card details in the webpage up to the moment the funds are transferred into the bank account?

Ran Cohen: So then the transaction flow would go as you see in the slide that we're showing here. We have the customer that will submit the order that would be in business website in a checkout, which is PCI DSS certified that can make this transaction and tokenize the credit card and securely send it to the payment gateway. The payment gateway will basically run it through the credit card network with his acquiring bank to the issuer to get to an approval from your bank, you have money, I can take it now and then come back, tell the payment provider tell the gateway and it comes back and it all happens really in milliseconds. There are some acquires that are faster than others, some are slower than others. When you have multiple transactions, more than let's say, once a second, or once in five seconds, if you have more transaction than that, then you need to start worry about the time that it takes you and then you start choosing your requires not only because of the fees or because of the approval ratios, per say, but because of how fast they make this transaction. So you can have your clients waiting, and it depends. So think about Amazon or the merchants, they want your purchase to be seamless, like in the gas station, right? They want this to be seamless, they want it to be fast, they don't want you to feel that you have just now made a transaction so that's why the speed is super important here. Marco is asking us the issuer almost the most challenging part among the key players because more banks driven rather by acceptance, this can lead to conflict of interest based on lack of reporting transparency and risk appetite. Also, because considering interchange fees as revenue stream rather than cost compensation and to the inconvenience to the merchant and acquire. So Marco is very right issuers are creating the problems that in the end, we see the decline is coming from. And there is a lot of like Marco said a lot of inconvenience that is being done to the merchants and the acquirer themselves that are coming trying to get responses and they still get nothing and they're also super slow, very late, low tech, not the most advanced layer in the ecosystem and that's a big part of it.

Dobromira Chobanova: So I would say that we can break down the whole cycle into three stages, the authorization, the clearing, and then the settlement.

Ran Cohen: So settlements are you know, once you've processed and money is being processed with the acquirer or the payment provider or aggregator whatever you're using. Now he has your money and he needs to settle it to you into your bank accounts. So obviously, that's where a lot of, where you see a lot of change between one to another, each payment provider, each gateway, each acquire are bound by his regulation to settle you in a few specific countries in specific places. So there are a lot of boundaries and restrictions are around. So you want to know, when you open your processing account and the process of itself want to know who you are as a business and if he can obviously, if you're fitting his requirements and then once everything is signed, he can process you and also settle you the money back to your bank accounts. Marco is saying the more intermediates in the process change the more it will impact the performance superlight the performance and not only the performance in terms of time, so in terms of time approval ratio, cost the whole thing and that is definitely something that we want to see if we can avoid.

Dobromira Chobanova: Yes, talking about technologies as we all know, no matter how fast and secure the transactions nowadays are happening online, still payment failure is inevitable, right? So let's see who are the most common payment pitfalls in the payment processing. In general, online payment failures can occur from the merchant site, also from the customer site. For example, if you enter your credit card details incorrectly. If you enter your one time password wrong, if you have insufficient funds, this can lead to a failed transaction. If, for example, from the merchant side, if you don't have the correct PSP, your potential customers can pay you in the right payment method or their preferred payment method. This also is a big hassle to find the right payment provider. All these can lead to loss of revenue, acquiring banks, penalties, processors fees sorry, processors fines. And in order to avoid all these, you require an advanced technology with functionality to help you rescue the decline transactions.

Ran Cohen: Declines is a world of big world with a lot of reasons behind it. If we look at it from the perspective of key players, then there are many different players that will that connect, create or trigger this decline, like you said. From the business side, I think it's important that the business side will do whatever he can before the transaction was even sent to a payment provider. So to check the credit card authenticity, to make a few basic checks on the checkout level, which are important, before you even send it to the payment provider because in the end you send it transaction, like you said, with 4444444 I'm not doing any validations, I'm sending it to the payment provider and what happens, I'm just paying another I don't know a few dozen cents to the payment provider on the transaction fee. It's a waste of mine, you want to make sure that you don't send payment provider transactions that don't need you don't want to make the user think that he can run this transaction through you, and that you are securing yourself. So you should do a few checks on the checkout level. And that's super important. Then we send a transaction. Now, who do you send it to? Do you send it to a local provider to a worldwide provider? Do you send it to someone with 3d or a non 3d processing need? If it's on 3d, or 3ds too even, more advanced challenging then you know that there are some transactions here that are going to fall through the authentication process. And that's a power that you need to also be aware of.

Ran Cohen: So there are many places a transaction can fail, obviously acquire that like we said that don't want to even send this transaction anywhere because all the payment gateways that have a relationship with their acquirer and they don't want to send the transaction even to the acquirer before they issue that don't want to send it to them because they feel that they are in a risk. So it could be stopped in the gateway, it could be stopped in the acquirer. It can be stopped between the acquirer and the issuer in the connections there which happens a lot, a lot, a lot a lot. And then also from the responses of the issue of back. Yes, we have money, okay, yes. So, all of those can create you those declines, you really want to know that you have a flow which is working, which is getting you to the best optimal approval ratio you can get to obviously each business and its profile and its category and approval ratios are changing between countries and credit cards and business types of course so, but you definitely want to be the best in your game. And but for that you will have to work hard and like you said you will have to also have some kind of technology to back you up, to allow you to have multiple connections or think about integrations, scale fast, fallback your provider between one another, rescue those declines seamlessly. It's hard to scale without I think the world today understand it and use it and get a lot of value out of it. I think that there are many businesses that are still staying back because they think the change to those type of platform could be longer, costly, but in the end, we see that we do it in in a few clicks or sometimes a few hours. So complicated it's not and I think that businesses needs to do this step up.

Ran Cohen: Guys, you have any more questions for us? Happy to answer. Okay, well I think we are on the questions.

Dobromira Chobanova: Yes.

Ran Cohen: Cool, cool and (Name) I'm sorry that you couldn't hear us. We will send you the recording of the event. So you could have all that. Eshell for you as well.

Dobromira Chobanova: Talking about events?

Ran Cohen: Yes.

Dobromira Chobanova: We have a very exciting one upcoming.

Ran Cohen: Yes, we have.

Dobromira Chobanova: You want to share it?

Ran Cohen: Yes, we are having a live event on the 25th of May 7pm. Your time. Well, we are going to present live on stage and also broadcasted to the world. A lot of Bridger features, Bridger capabilities, we're going to speak about the future of payments and how we see it and what we are building here in Bridger in these rooms that we created here and I think that many businesses wants to see how far we can take what we do with payments. And we are taking it to really the next level and we are going to start to show very cool and advanced stuff that that are going to be very interesting for any merchant that wants to use and to monetize the power of the data we have here in Bridger, in his processing world making his processing ecosystems super optimized according to the best practices that we see in Bridger. So a lot of cool stuff is coming. We invite everyone to join us on the 25th of May and yeah. Marco is also.

Dobromira Chobanova: He already knows.

Ran Cohen: Marco is asking us about the raise. So yes. We've completed the raise of a seed fund of a seed round not long ago and we have built with basically brought into Bridger investors from VC from Israel and the few private investors strategic that came into this seed round. With that we've basically built our no touch flow, making Bridger a full SAAS company, something we've been visioning for a long, long time. After almost three years of getting Bridger onboarded the client after the client and business after business, we've opened the doors to the product and really enabled it for any business around the world to come into our website and allow us to allow himself to start and build these own payment operations system. Connect this payment provider create and enjoy basically all the features we have in Bridger you know.

Dobromira Chobanova: We already have clients that are benefiting from.

Ran Cohen: It's been launched two months ago and the reaction are great. And we see a lot of clients coming in from all around the world. opening accounts, connecting payment providers, making transaction, plugging the plug of Bridger and that's really we're very happy with that. And, and yeah that's how also that's our scaling strategy. That's how Bridger will get to many, many 1000s of businesses. So, the seed round was the first chapter, we have round a soon that will be that will be done soon. And we'll prepare Bridger for the future and all our plans. So yeah, thank you Marco for sharing our news as well and we are happy, we're happy to have you with us on the on this journey. So let's see if we have more questions from the team or the audience.

Ran Cohen: Okay, guys, we are on the question phase, we'll be happy to answer anything that you have in mind in terms of payments and obviously super happy to see you on the 25th. If you are in Cyprus, you are invited to come to our event. And if not register online and we will see you there. Great. I think we are good guys. If there are no more questions from your side. Thank you very much for joining us.

Dobromira Chobanova: Thank you, Ran.

Ran Cohen: Thank you.

Dobromira Chobanova: It was pleasure.

Ran Cohen: Right.

Dobromira Chobanova: Yes.

Ran Cohen: So let's see Marco is asking us. Alex, thanks for a nice presentation. It was nice to learn. Thank you Alex. Yeah, we will be in the next expo here in Cyprus Marco, so happy to meet you in person and if you're in Cyprus, you're always welcome to our office. Have a coffee. We have a happy hour even so. So you're always welcome to come, which are doors are always open.

Dobromira Chobanova: Indeed.

Ran Cohen: Cool, guys. Thank you very much.

Dobromira Chobanova: Thank you, everyone. Bye bye.

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