Frictionless Commerce Solutions with Balaji Devarasetty of Paya | Soar Payments LLC
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Frictionless Commerce Solutions with Balaji Devarasetty of Paya

In a time where we rely on technology to make our lives as frictionless as possible, Paya is paving the way for the B2B payments space to automate and scale like never before. In this episode, we spent some time with Balaji Devarasetty, CIO of Paya to talk about the power of effective middleware.

Payments & Fintech Insights In This Episode

  • The power of automating AR and AP processes.
  • The unique benefit of utilizing an integrated payments gateway.
  • How a deep understanding of the integration process informs product development and the client experience.
  • And so much more!

Featured on the Show

Episode Transcript

Heather: Hi, everyone. Welcome to “PayPod.” I’m your host, Heather Bodie, and today we’re gonna be talking about integrated payments with a focus on B2B and frictionless commerce solutions. Joining me is Balaji Devarasetty, chief information officer at Paya, offering robust integrations in a front-end CRM and back-end accounting systems to enhance customer experience and workflow. Balaji, welcome to the show.

Balaji: Thank you, Heather. I appreciate you having me on the show.

Heather: So, tell us a little bit about you. We’re gonna dig into Paya for the majority of our conversation, but give us a little insight about how you got into FinTech and what brought you to this point.

Balaji: Absolutely. So, I came to study in the United States back in ’96 and came to a small town, Akron, Ohio where LeBron James is from.

Heather: Yes.

Balaji: So, went to school there and it just so happened right in its backyard was one of the Fortune 1000 companies called Diebold, which was serving the banking and financial services space. And that’s how I got into the whole FinTech even before it was a cool thing. And after spending a dozen years at Diebold in a variety of spaces, I went through the transformation of the banking industry that included the collapse of the financial system in 2008, which led me into banking transformation, mobile banking, and cloud strategy in the banking aspects. Followed by my stint at Vantiv, which is now called WorldPay, where I was the CTO for integrated payments and spent five years over there, and then followed that with a crypto start-up, Bakkt, where I was a founding member, joining Adam White, fifth employee of Coinbase, and spent three years and we took that company IPO. And then, after that, came to Paya. So, as you can see, I’ve spent the last 20-plus years in financial services and FinTech, and it’s an exciting space where there is never a dull moment.

Heather: That’s incredible. I feel like most folks have one or two sort of particularly special moments throughout their career where they get to see something, get to the point of IPO, or they get to watch the growth of a company. It sounds like you’ve had a couple of really fascinating moments along the way, bringing you all the way to Paya.

Balaji: Absolutely. My journey at Vantiv and Bakkt has been the best moments of my life, and now at Paya, I look at that as a capstone project for me pouring in all my experience into Paya and which is making it more exciting for me.

Heather: That’s a beautiful transition to bring us to Paya specifically. Talk to us about the company. How does it work? What makes it so special?

Balaji: Yeah. Paya is unique because of three reasons. The first reason is we have an integrated payments gateway that includes credit, debit, and ACH, all combined in one single API, which makes us unique and valuable for the businesses that we are in. The second aspect of Paya is we provide that last mile integration to the backend systems, whether it’s ERP, accounting, and CRM systems. So, that results in automatic reconciliation, time savings for the finance team and accounting teams. That’s very unique for us. We don’t stop with completing the payment, but we actually stop by automating the back office functions. The third aspect is a lot of the businesses that we work with, they’re integrating to us with their software, but we also are our own integrated payments provider. For example, in the case of PayaGov, we have our own platform that enables payments for towns, cities, and counties.

So, we know what it means to integrate to the payments ecosystem, that is we are eating our own dog food. So, when we go and work with other businesses that are doing that with us, we bring that experience to them. Unlike a typical payments provider who’s only providing the APIs, and they say, “This is how you integrate.” So, since we eat our own dog food, we are always looking out for how do we improve that experience for our clients. So, those three things, in my view, make Paya unique.

Heather: I’ve got all kinds of questions firing in my brain, I’m trying to decide which direction to take us in. But let’s talk a little bit about that. What makes those integrations really complicated for bigger players in the space, and how does Paya approach that?

Balaji: Yeah, it’s a great question. When you look at the integrations, let’s take the example of PayaGov. PayaGov is the brand that we use. You have different cities, you have different counties, you have different townships. They may all be using different kinds of platforms and stuff. Being able to reach all those different platforms and have a strong middleware technology that you can integrate, whether it is an API base, whether it’s a flat-file base. Even in the flat file, if it’s a CSV, we go meet the customer in whatever form or fashion they are in without changing their technologies, without adding overhead to them. And then, we integrate with them, we meet them where they are. That’s very important for the smaller businesses and for the mid-market businesses especially. When you’re a big player, they don’t wanna maintain all those integration. They look for only scale. They don’t look for ability to meet the customer where they are, and in our case, by providing that level of, I don’t wanna call it customization, but that level of productization where we can meet them where they are makes us unique.

Heather: So, what does that customer journey look like if I’m a mid-level client, maybe you can speak to a specific use case or a specific client journey from the time they decide to engage with Paya through the point where they’re up and running, and things are working beautifully. What does that process look like?

Balaji: Yeah, let’s take the example of a business-to-business payment, which is a big focus for us. Say you have a company that is in construction or distribution or enterprise warehousing or supply chain type of businesses that we work quite a bit in the mid-market space, and they have an accounting software, whether it’s a Sage or Acumatica or Infor, any of these ERP systems or accounting systems, and they want to accept payments because all these businesses, they want to accept payments for the services that they provide, and they also want to pay for the services that they receive because they could be receiving some goods that they need to manufacture or anything.

So, you have accounts receivables where they have to invoice somebody, and there is accounts payable where they have to pay somebody. And when these businesses want to work with Paya, we have existing integrations that we can quickly enable their accounting systems and ERP systems to work with Paya. By doing that, when they have to send an invoice for the accounts receivable aspect of it, they could receive an email, and they would click a button and pay via email. That everybody does it, right? You can pay via email or by click clicking a button. Where the customer’s journey becomes easier is when they complete the payment, we go back into their ERP systems and we reconcile and we mark that invoice as completed. The payment is completed, so their cash flow is updated automatically based on the payment that is completion process.

Heather: Nice.

Balaji: So, they only have to initiate the payment once and the rest of the backend processes will happen automatically. That’s where the journey becomes easier for the customer when they work with Paya.

Heather: And then, inevitably frees up more time on their internal team to take care of things that are either backlogged or maybe take a look forward and tackle some projects that they’ve been meaning to from a maintenance standpoint that just sort of sit on the back burner.

Balaji: Absolutely. Or if they wanna scale their business, they could do it with the same number of people, or if they wanna focus on other aspects of the business, the finance and accounting teams, they can focus on that. So, we make it very easy for the CFO office by doing these operations automatically.

Heather: You talked about Paya existing in multiple verticals, and I believe you mentioned healthcare and government. Right now we were talking about a use case with a maybe a logistics company. Do you run into different regulatory standards based on the vertical that you’re working in?

Balaji: Yeah, generally speaking, in the payment industry, we are subjected to the PCI compliance because we handle the card data. So, that’s sort of a uniform compliance aspect that we comply with no matter what the industry is. Outside of that, if you are dealing with a PayaGov type of business where we are enabling bill presentment for the consumers because we enable about 66 million consumers in a given year through our platform, so we collect a lot of the data from these consumers to be able to enable their payments. So, we are also cognizant of the PII that we are exposed to. And in the case of healthcare, we also have to be HIPAA compliant where it’s applicable based on the type of payments that we are doing. So, those are some of the compliance-related activities that we engage in because of the verticals that we are in.

Heather: I ask because I’m impressed. Whenever I hear of a payments company really focusing in doing a… And you didn’t say customized, but I believe you said, what was the word you used?

Balaji: Productization.

Heather: Productization, absolutely. When you’re working in those different verticals with all the different nuance of regulatory compliance and all of that, I imagine it’s a heavy lift for the folks at Paya, and it’s really impressive.

Balaji: Thank you. It’s very important for us. We have a security-first mindset. We have a great CISO on the team, Alex Tan. We have a great development organization and product organization that brings security to the forefront, and we always stay on top of it.

Heather: That’s great. So, let’s talk about this idea of frictionless payments. I feel like we’re absolutely in a time where we rely on tech to make essentially our entire lives frictionless, you know. We don’t wanna think about it, we don’t wanna have to push too many buttons. I’m often talking on this show about the magic for me of Apple Pay. You know, the first time I forgot my wallet and realized I could just touch my phone to some sort of portal, and everything I needed at Walgreens was purchased. Talk to me about how Paya prioritizes frictionless payments, and how that functions. And how you see it growing and expanding moving forward.

Balaji: Absolutely. For us, frictionless payments is slightly different from what you see from a consumer’s point of view because since we predominantly dominate in the B2B payment space, it’s slightly a variation for us. So, if you think about a manufacturing facility that is creating the widgets, and they’re shipping the product out. And once the product is getting shipped, they wanna initiate the payment so they can collect the money as fast as possible. And this process could be starting in a manufacturing facility or in a warehouse facility.

For us, frictionless payments is about very similar to the Uber concept. You get into the car, you get out of the car, and the payment happens behind the scenes. In the same fashion, imagine you’re ordering for a product from a manufacturer. The manufacturer ships the product to another business-to-business client of theirs, they receive the product, but during the process, the invoice is automatically generated, and if the payment token is already provided by the client, the payment is also automatically released based on when they receive the shipment, and then the payment reconciliation happens behind the scenes. Imagine an Uber-like experience in the business-to-business payments, that’s what frictionless payments is about in my view when we think about Paya and in the context of B2B.

Heather: It seems to me like a no-brainer. I don’t know why any company that falls under the umbrella of the different verticals that you work in wouldn’t want to engage with this sort of process. What’s some pushback you get? What’s some feedback or ways in which Paya is looking to improve?

Balaji: Yeah, that’s a great question. The consumer side of the front is very simple, right? The Uber experience that I talked about, it’s in and out of her car. In the case of an Uber experience, it’s a very simple transaction. But when you look at a business-to-business transaction, while you want that experience, it could be complicated experience. Say you have ordered three things from a business-to-business client for a business-to-business client, and then you only get two things shipped, not the third one. So, you have to wait for the complete invoice to be initiated, or sometimes you have to send partial invoices. So, there are these people-oriented processes that are still, that are happening. People haven’t gone to a point where, how do we create rules around these things? So, as soon as the things are getting shipped, you can initiate payments for those partial things yet reconcile in the process because you are generating one invoice, but there are three different payments that are coming out. Then, how do you reconcile back into that process, right?

People are stuck in the paradigm of, “Hey, we do it this way and if you wanna automate it, how does that work?” So, there is a bit of education that needs to happen, and that movement has started with the accounts receivable automation process that’s happening in the industry in the same way in the accounts payable automation process that is happening in the industry. It is getting there. That journey has already started. People are starting to change. I think the COVID has definitely accelerated all these things, and digital transformation has picked off it. So, that’s where we see the friction is, how do you take some of these manual processes? How do you make it automated where the payments become frictionless throughout the process no matter what the variations are with what’s happening in the B2B invoicing space or the AR space. That’s where I think is the innovation happening today.

Heather: Absolutely. And my brain goes a little bit to, I’m wanting to solve that puzzle. I see that Paya is doing that work exactly… Part of my… I see my role as the person sitting in that AR office, right? In that accounts receivable role, and having that feeling of, but we’ve always done it this way and this is the way I know and this is the way it works, and how to manage that change. At the top of the engagement from that individual working in accounts receivable for example, do they need to code out each of those transactions so that the rules then apply, and the back end of what Paya is doing functions automatically? Or is that something that the Paya team works with the clients to build over time?

Balaji: Yeah, it’s a great question. So, when you’re coding these different elements of an invoice, people code it individually with… But it makes up one invoice, and remember, I talked about the uniqueness about Paya is we directly integrate into the accounting ERP system. So, we get raw information about even if it’s one invoice that has multiple pieces to it, we can get all of that raw data. And we do have ERP experts, we do have developers that focus on ERP within the Paya development team. So, we are working with clients because we can get all of the raw data, we’re working with them to say we can build rules. It’s not that I’m getting one lump of invoice and now I can’t break it out, nor am I integrated with the system for me to get any visibility into deeper level. But even to say you only paid this but not these two. So, it’s the fact that we have engineering teams that get access to the raw data through the integration process is helping us to work with the clients to build rules on top of that.

Heather: As chief Information officer, what are you most excited about that’s coming up? What’s right there on the horizon that you’re working on that maybe you can give us an inside scoop about?

Balaji: Absolutely. There’s a lot of things that are going on at Paya, and one of the things that we are looking at is, we have a great set of customers that rely on us for accounts receivable payments, and we have partnered and announced the accounts payable participation that we wanna have. The customers that we have are looking for one provider to offer both accounts payables and accounts receivable from one player. So, that’s one area we are expanding heavily to be able to offer that. We have 30,000 plus merchants that process accounts receivables with us, and we are excited about bringing the accounts payable aspect of it and provide that complete picture for cash flow for them. And that’s an exciting aspect. And there’s also disruption in my view, happening in the B2B space, whether it is the…how cryptocurrencies are gonna play in this space, and how it’s gonna disrupt them down the road. So, that’s something that I’m watching very carefully coming from the crypto space while working at Bakkt for over the last three years. So, that’s something watching and excited about how it impacts our business and how we can be at the forefront of that.

Heather: We have a segment that when I can, I’d love to close the show on five questions. Rapid fire, are you ready?

Balaji: Absolutely.

Heather: Okay, great. Make a prediction about the immediate future in payments. What’ll happen in the next 12 to 24 months?

Balaji: You’re gonna see the advent of stablecoins more into the payment space, especially in the B2B space.

Heather: What’s one cool piece of payment or finance-related technology that you come across recently that impressed you?

Balaji: I would say at this point in time, the use of Zelle has become so prevalent because, with COVID, everybody’s using so many different services right now, and being able to pay with Zelle very quickly, especially whether it’s your nanny, the daycare person, or some sort of a custom food that you’re gonna order. So, for me, I use Zelle multiple times in a given week. So, it’s pretty cool.

Heather: In the next five years, most people are gonna make a purchase with some form of cashless payment, whether it’s Bitcoin, Apple Pay, which one and why?

Balaji: I wanna say stablecoins. I think you’re gonna see the proliferation of stablecoins pretty soon [inaudible 00:19:11]

Heather: Oh, I think you’re the first person to answer it that way.

Balaji: Yeah.

Heather: Which keep…continue. I didn’t mean to cut you off. I’m sorry.

Balaji: No, I see it because there is value in the stablecoins that is pegged against the US dollar, by the way. I’m not talking about the algorithm that make stablecoins because it is a great alternative to the credit card processing that we have. So, if you look at the spectrum, you have the ACH processing to be the least expensive, and you have the credit card processing which is the most expensive. In that spectrum, there is a big gap between the two. There isn’t too many options in between. And I see stablecoins as an option that is, in some regards, cheaper than debit cards because the debit cards are applied basis points, and there is 21 cents per transaction. When you look at smaller transactions, you may be paying more because of that combination. But stablecoins, you could do it with three basis points, you can purchase them, and after that, you get instant settlement, instant payouts, and it’s lower cost of processing. So, I definitely see a place for stablecoins, but there’s a lot to happen before that to get materialized. But I’m bullish about it.

Heather: What’s one piece of advice that you have for someone who’s considering payments or FinTech as a career?

Balaji: Yeah, it’s a great question. I get this question asked all the time. Have a growth mindset, and have the mindset to learn a lot. They are fantastic books and materials that are available online, and this is one of those industries that is very transparent. There is no opaqueness to it because everything is wide open. Financial system is a transparent ecosystem. It’s not some sort of a special domain knowledge you need to have. There is definitely some nuances to it, but you can learn, in my view, 60% of payments by investing yourself, by learning, by being a student, and soaking it up. And then, the 40% will come through experience and specialization. So, I would say learn, have a growth mindset, and read a lot, and experiment.

Heather: And last but not least, what’s the best business advice you’ve ever received, and from whom if you can remember?

Balaji: Yeah, I have, over the course of my career, received a lot of advice, lot of mentoring to get here, and the best thing I have received is from a good friend of mine, Mahn Dows. It’s all about get shit done, you know?

Heather: Yes.

Balaji: You have to make sure… You can talk all you want, you can strategize all you want, but at the end of the day, you gotta execute and you gotta get things done. And that’s the best advice in my view. And I still keep it even today, every day.

Heather: That does it. Thank you so much for joining us today. If folks wanna get in touch with you or if they wanna learn more about Paya, where should they go?

Balaji: They should go to paya.com, and I’m also accessible via LinkedIn, and my email is balaji.devarasetty@paya.com. You can reach out and would love to share what we do here.

Heather: Thanks so much.

Balaji: Thank you, Heather.

Announcer: If you enjoyed this episode and wanna hear more, head on over to soarpay.com/podcast to subscribe on your podcast listening platform of choice. That’s S-O-A-R-P-A-Y.com/podcast.

Industry Spotlight

Paya

Paya is a leading provider of integrated payment and frictionless commerce solutions that help customers accept and make payments, expedite receipt of money, and increase operating efficiencies. The company processes over $40 billion of annual payment volume across credit/debit card, ACH, and check, making it a top provider of payment processing in the US. Paya serves more than 100,000 customers through over 2,000 key distribution partners focused on targeted, high-growth verticals such as healthcare, education, non-profit, government, utilities, manufacturing, and other B2B end markets.

The business has built its foundation on offering robust integrations into front-end CRM and back-end accounting systems to enhance customer experience and workflow. Paya is headquartered in Atlanta, GA, with offices in Reston, VA, Fort Walton Beach, FL, Dayton, OH, Mt. Vernon, OH, Dallas, TX, and Tempe, AZ.