Arik Shtilman: Can Fintech Save Retail?
Arik’s talk at WebSummit about how Rapyd can empower retailers and how fintech companies and other technology-driven businesses are enabling the global economy during these challenging times.
Emily Nicolle 0:03
This year everybody has been talking the purse strings a bit because of the coronavirus pandemic, we’ve seen a lot of businesses having to think harder about where they’re putting their money, especially when it comes to investing and things like that technology, which I’m sure you’re familiar with Rapyd. I mean, how do you think your business as a FinTech can help empower businesses in retail have more control over their money, and also that help consumers in that aspect as well. So,
you know, these times are very challenging for a lot of businesses. And I think that what the world learned pretty much over the last six months is that they’re FinTech companies, and companies that are somehow either, you know, in the in the online payment space, or in you know, spaces like Rafi, which are deliberately are basically the businesses that enable others to actually continue to do business in these challenging times. And I think that they both companies that are on this panel, it showed over the last six months, how they truly can help the world continue and move. We did it basically, by enabling businesses to do several things. First of all, we enable businesses to bring the stores online and start accepting payments globally, it doesn’t matter if they sell in a specific country, or they do business across the region or the entire world, we basically enabled small businesses and medium sized businesses to launch payment capabilities globally and start selling to consumers. If they pay with the card or with cash or with a bank transfer or with any way that is popular in this specific country, we’ll be operating. So we enabled quite a lot of small businesses to continue to operate and no suddenly have an online presence. We also have these businesses, we showed them working capital loans and basically enable them to actually get access to the money better. So they can continue in buy supplies. In huapi. There’s a company that stands independent space and sits in the middle of this ecosystem. We know everything about our clients, which are basically the businesses. And this helped us to help them during the pandemic. And basically, we were able to give them short term loans to basically get access to capital faster and better, and actually continue and move the system and operate and scale their business even in these challenging times.
Emily Nicolle 2:21
And I mean, we’ve been described as intact as a service people that we’ve got software as a service companies, and then you’re even more niche than that in FinTech as a service. I mean, how do you think the events of this year have had to have an effect on Rapyd’s roadmap?
So it’s a very politically correct to say that but you know, COVID-19 in the pandemic, and everything that’s happened this year actually helped the business a lot, the Rapyd business and anybody that lives in the online payment space, right. So when we look at what we do, we call ourselves FinTech as a service, because we’re not the typical payments company. And we basically focus on four capabilities that are FinTech enablers. Payment collection is only one of them. But we also do disbursements, called issuing wallets, and you know, different things. And basically, when businesses had the need to suddenly change their business models go from physical point of sale to online form selling in a specific country to sell globally, they will looking for companies that can enable it for them and can enable it for them fast. Nobody had the time, you know, to go through RFPs and projects, because basically businesses will shut down overnight. In a company like Rapyd enables other companies and other businesses to basically open up a physical presence and online presence and start accepting, you know, payments online and doing payouts online in a matter of less than 60 minutes, which was a complete game changer. So it did a lot of good for our business, our business actually quadrupled since the pandemic started. And the company is scaling like significantly. Like a lot of By the way, other companies in the payment space that really got strong tailoring. I think that our tailwind was even stronger than you know, where the other companies because we operate globally. So we’re not a regional player, we saw COVID-19 coming in hitting our Asia Pacific business, then coming to Europe, and then coming to Latin America, into the US. And I think that basically, because we’re spread so much across the globe, we were also able to figure out, you know, the potential impact of the pandemic in the very early stage. At the end of January already, we started to do modification to our business model because of the impact on our APAC business, then you saw it coming to Italy affecting our Italian business. And from there, you know, Mexico, Brazil and all these countries at the end of March. So we were able to basically on on the goal to shift and change stuff. And it actually be very good to our businesses. The company has scaled significantly
Emily Nicolle 4:46
and fun as well in in Latin America with Rapyd. You’ve got kind of a double edged sword here because a lot of people are wanting more stuff to be delivered. But then you also have to manage your own logistics network and drivers and riders and everything like that. How is COVID-19? You?
Juan Pablo Ortega 5:03
Yeah, so when everything started, as Eric say you happen really fast, and we were expecting it to hit the country so fast, from one thing to another one, most of the countries wanting to lock down that operation to make it work. So the first thing that we saw, it was a huge switch from restaurant orders into supermarket orders. And people were assigned to try new services that many of them never tried before, like ordering all the groceries online. And we have to start moving our capacity and start getting our couriers, mass hand sanitizers, and all these things are equally safe. So that was the first part of the of the challenge. And the second part of the challenge was working together with our restaurant partners to make sure that the orders were safe. And we package them in a way where, when they could do them today, the customers we weren’t kind of increasing the infection or pulling our customers for our courier service. So their biggest challenge was was adjusting for the SLM. And by also adjusting the whole operation into a new normal world, everyone had to wear a mask or everyone had to sanitize their hands and wash their hands and as much as 41. And more when you know where a transporting people’s groceries and people’s food. So we had to change the whole operation overnight and make sure we were ready for this huge increase in in demand. And also, we saw triple the growth in a matter of weeks. And then in the FinTech part. And what we saw was an increase in in account openings. When the pandemic started, all the countries wanting to lock down. And many of the bank closer branches will have limited hours. So only there were only a few accounting in Mexico, for example, you were able to open 100% deal. So being able to have this platform to open up accounts and present around online and being able to receive your debit card, in a matter of minutes through one of our careers was official vanish and how we started seeing people trust in these this new system and these these new way of the doing banking deal.
Emily Nicolle 7:15
And as a business as well. I mean, before the pandemic Rafi had said that, obviously, maybe the pandemic has probably change that how did it affect your fortunately?
Juan Pablo Ortega 7:28
Yeah, so the layoffs that happen at the beginning of the year, they were mostly they were an effect of us being more efficient in the way we think. As we grew the company really rapidly, we had to do some other processes internally and with humans. And as we have grown, we have hire more engineers, and we have been able to do automatic process that before we’re doing when we’re done by humans. So layers were more on that sense that that like Robbie was struggling or we needed to do stuff.
Emily Nicolle 8:01
And it’s a great example, as well about the trickle down impact that tech can have not just in FinTech, but on retail businesses as well. I mean, how do you think businesses and fintechs can protect workers and drivers and suppliers, and especially those who are in the supply chain that aren’t really visible, visible to the consumer side effects?
Juan Pablo Ortega 8:20
Yeah, so we came the only source of revenue for for 1000s of restaurants across the region. And before we were kind of like a nice to have for restaurants and users. And in countries like Colombia, we’re in a complete load that were it was really hard for people to get out and buy the groceries, we became a library or became the only way for them to, to get something to eat. So it showed the impact that technology can have because we’re making things more efficient, and we’re helping people stay in their home and stay protected and stop the spread. And all using technology. And the same thing in the FinTech space, people that for example, needed to some of their banking transactions in in the legacy events, they had to go to branches, even though we’re in a pandemic, and we our FinTech solution, and they were able to bank transfers, they were able to pay online and many things 100% you know, from their phones without going to a branch.
Emily Nicolle 9:21
But as technology becomes more a part of our lives as well, there are other problems that come up, right. So this year, with everybody moving towards cashless, we’ve also seen rises in things like credit card fraud, and the need to really make sure that data and personal data is protected properly. So all right, have you been tackling that at breakfast?
So that is a massive challenge that you just raised right for me No way forward on payments or payouts or whatever it is for any data privacy, which basically, these two things if you have to protect data privacy, then your capability to do for prevention is you know is reduced and it’s a type of a chicken and egg Access situation. And what happened at Rapyd is that we actually build our own homegrown full platform, which is called Rapyd protect. And that was basically designed to handle all of the things that are related to foreign compliance inside our platform, we actually started to design it way before the pandemic and work on it. But the pandemic accelerated like dramatically the growth of the platform because of the massive growth in the transactions and also in the for the dense in the heart of this product up infotech is basically a, it’s an engine that not only does the typical credit card for, like most of the other providers, but it’s actually designed to handle more things that are think ticularly for like the account opening the one talked about and things that are related to moving money in and out for platforms in variety of payment methods, doesn’t matter if it is a big transfer, over cash payment over wallet platform in Asia Pacific and somebody is trying to pay with all of these elements have fought. On the other hand, you have to protect the data, you know, different countries in different regions have their own data privacy GDPR in Europe, in several other countries have their own things. And basically, this engine is designed to work based on what we call a tokenize identity. And this identity basically allows us to take things from the physical device that the consumer is using during the process, things that are legal, of course, the use, and this together with these transaction patterns creates a type of tokenized identity without these personal and private data, like you know, identity documents and stuff like that. This is something that don’t stop. But the tokenized identity allows us to basically store the information in a way that is secure and compliant, and then actually leverage it in order to prevent fraud in different areas of the system. Because this token floats around our platform. And we really can see you know, for the tense form, you know, somebody is trying to buy groceries or somebody is trying to open an account or somebody is trying to take your ride hailing Right, right, all these things are combined into a single identity on our platform.
Emily Nicolle 11:54
And so as you move into new geographies, as well as the business itself scales, because you don’t want to put a hold on anything, just because there’s a pandemic. And then what are the some of the obstacles that you’ve had to overcome when you do that fun.
Juan Pablo Ortega 12:07
And, you know, I want to I want to add something about the security and fraud. I think using technology to be able to reuse credit card fraud is crucial. And we’re the first visa issuer to remove the pan or the 16 digits out of the car, because it doesn’t make any sense that these digits are kind of the key to your morning are busy well. So we have the the number securing your phone and you can only use them and using face ID or any authentication method. And I think what we have saw is that we have really low chargeback rate compared to two issuers. And he’s basically enabling technology to be able to face these kind of issues that legacy banks have. What was the question? Sorry.
Emily Nicolle 12:48
So as you’re kind of expanding into new geographies, and you’re thinking about growing your business in that sense, what are some of the specific obstacles you’ve had to overcome so far?
Juan Pablo Ortega 12:57
Well, there were many obstacles. We operate in a region where in nine countries in Latin America and and the biggest challenges is that the regulatory side and the operation side in the payment space is completely different. Each country operates their own payment network, with their own way of doing things. So we have to customize the operation. And we have to customize how we do the payments in each country to make sure we have the best experiences. So in Colombia, for example, the payment networks there allow us to the third capture of an authorization. So if you are supermarket order, and let’s say you are buying $100 in groceries, and one item is missing, and we have to remove it. Now your new total is $99. In Mexico, and in other countries, we use captured $99. And you see that change in your critical statements are the very first time and right away. In Colombia, we have a full refund, and then charge $99 because the payment networks don’t allow to these more complex operations. So adjusting and making sure we learn how to operate in in these different ways of working has been challenging.
Emily Nicolle 14:07
And Eric as well, what are some of the specific obstacles you faced and take me as well as you’re looking at more and helping more physical stores move into working online? What do you think is going to be the problems for them in 2020?
So the end of the day, really similar to what Juan Pablo said, regulation and differences between every single one of the countries in Planet Earth is unbelievable. You know, sometimes people think that paying you know, in the US or Colombia or Mexico, Indonesia or with the UK looks the same because everybody thinks that everybody has a Visa and MasterCard and it works the same but the realities. No, it’s not even the people that have it, it’s not working the same and most people on planet earth actually don’t use these payment methods. And they use a lot of other payment methods. And during the pandemic really the you know, the scale and trying to operate in. We operate today more than 100 countries and the difference says that we had from a regulatory burden to basically monitor transactions enable payments, in a very large scale with a lot of further attempts with a lot of cross border based transactions that happened, that are much more open up for fraud and to the regulatory scrutiny. I think that, you know, the challenges that we had, that we had to teach our own technology, what is the difference between doing a payment in Colombia versus Mexico versus Indonesia versus Bangladesh. And there are a lot of differences in a very short timeframe, we had to do all these adjustments in the platform, just to make sure that the regulators in these countries or the regional players will not shut us down just because we did something that is not compliant for a specific country.
Emily Nicolle 15:42
So with them, bricks and mortar retail in this year, I mean, a lot of those businesses have really been struggling, how do you think they’re going to survive? And what is FinTech doing to help with that?
I think that the first of all, everybody to understand that the world is going to come back to normal at certain stage, right? People still think that we’re living in an apocalyptic movie, that everybody will be locked in the zoom screens for the rest of their lives. But the reality is, that life is stronger and bigger than everything, right? People survived world wars and stuff like that. So a pandemic, with all due respect, and there’s a lot of respect is not what’s going to kill the world. And I think that, you know, the reality is that most of the small businesses that work here will have a very hard time, you know, to come back just because they were shut down for six or 12 months in some of these countries. But it’s going to basically create a situation at every single small business, that we still have a store, the physical store will have to have an online presence and will have to have relationships with company like copy for delivery, because we doubt that at the end of the day, they will understand it when the next pandemic will come. And even if it will never come right. But when the next pandemic will come, they will have to be safe. And by the way, it is an identical situation that what happened in 2001, after the 911 situation, everybody suddenly understood that they needed a disaster recovery plan. They need multiple data centers, the backups, by the way, 911 never happened since then. But everybody always says disaster recovery plans. So it’s the same thing with the pandemic, everybody will have to have online courses, everybody. With online payments, everybody will have to have somebody like copy to deliver. And that’s the way to be ready for the next time it will happen. It will happen. Yeah,
Juan Pablo Ortega 17:22
I want to add to that, I think we saw a need and we’re working right now in in official committee ENDA, which is like my store. And we want to make extremely easy for any business owner to take pictures of the product to be able to go online and getting our platform and be able to accept payments and to all of these things that before used to be like a nice to have but as Eric said, is becoming a necessity and he’s going to be is becoming the only way for for many merchants to receive orders and to make money. So I think we as as as you know, delivery people and technology companies need to be able to create technology and makes it easier to any small, medium or large merchant to have presence online and to sell in these in these new normal. So that’s, that’s basically the answer then is FinTech is going to save the day by bringing all the physical retailers online.
Emily Nicolle 18:10
And also I think that’s all we have time for. But thanks for joining us for this session. I can find it’s been lovely speaking to you.
Thank you very much.
Emily Nicolle 18:18
You might be able to enjoy it at home.