Leaders In Payments
Vijay grew up in Vancouver Canada and started his career as a software engineer. He got deep into payments when he joined Visa where he was initially the head of corporate strategy and then the GM of CyberSource and Authorize.net before heading up the innovation and payments group at One Market Center.
NMI is an enablement platform for businesses to embed payments into their solutions. They serve three different markets or three different sub segments – ISOs, VARs and ISVs. NMI has three different types of solutions sets including an omnichannel payment gateway that allows customers to offer a full card-present and card not-present integrated payment platform. The second one is a payment facilitation or payfac in a box solution that allows VARs or ISVs to actually start monetizing payments. And the third one is a set of solutions for unattended devices such as in the parking sector, vending or ticketing.
Vijay’s sees payments becoming a commodity in the next 10 years. The authorization, clearing, and settlement of a transaction is something that a variety of vendors will offer you. And the prices are really going down.
Vijay has a passion for family and all things payments. He advises young people getting into payments to follow their passion and to get into the nuts and bolts of payments.
Greg: Hi, I’m your host Greg Myers, and this is episode five of the Leaders in Payments podcast featuring Vijay Sondhi, the CEO of NMI. In this episode, Vijay and I talk about his journey to becoming the CEO of NMI and his passion for all things payments, even to the point where payments becomes the topic of conversation at the dinner table with his family. Vijay also talks about some of the trends in payments and provides a great way to think about the ecosystem “before, during, and after” the transaction. Traditional payments companies focus on the “during”, but there’s a lot of room for improvement in the before and after. Vijay also gives some great advice to those just starting their career in the payments industry. So let’s get started.
Vijay, thank you for being here and welcome to the Leaders in Payments podcast.
Vijay: Good morning, Greg. It’s great to be on your podcast. Thanks for having me on.
Greg: Absolutely. So, Vijay, let’s just jump right in. Tell our audience a little bit about yourself, where you grew up, where you went to school, where you currently live, a few things like that.
Vijay: Yeah, let me start off with where I currently live. I live in San Francisco, California and I grew up in Vancouver, Canada. I started my programming career as a software engineer. I was one of those typical kids in high school that found the computer lab and became really obsessed with writing small little programs and that ended up leading to a computer science degree and software engineering jobs. And I ended up at a startup that was doing hotel reservation systems and we were connecting these to Micros point-of-sale systems in the hospitality industry, mainly hotels. And over the years I ended doing an MBA and moved into the C-suite and became CFO and COO and then CEO. And I really got very deep into payments when I made my way to Visa at their global headquarters right here in San Francisco where I had kind of three tours of duty there. I was initially head of corporate strategy and then I was general manager of CyberSource and Authorize.net, a company that was acquired by Visa. And then I headed up the innovation and payments group at One Market Center right here in San Francisco, which eventually led me to NMI.
Greg: Great. That’s a great segue. So let’s discuss NMI. What exactly does NMI do?
Vijay: So NMI, which is by the way, I know it’s sometimes about mouthful, which is why we use the acronym that stands for Network Merchants Inc. We are an enablement platform for businesses to embed payments into their solutions. And we serve three different markets or three different sub segments. We start off with the ISOs. We also serve VARs or otherwise known as value added resellers. Those would be people that are packaging payments with other software platforms. And the third segment is independent software vendors so people that are offering up a SAS solutions for things like field service or gym memberships or the charity sector for example. And what our enablement platform does is it allows for example, an ISO to take our payment gateway, which is a white labeled a white labelable payment gateway and a branded as though it would be their own technology.
And so, at the very easy end of the spectrum, somebody who has no programming or technology expertise can use our web-based consoles and the branding attributes to start boarding merchants and processing payments. And at the end of the spectrum, they can consume our services with APIs and SDKs and embedded directly into their solutions. We do have kind of three different types of solutions sets that we offer to the market. The first one I already referred to is an omnichannel payment gateway that allows our customers to offer a full card-present, card-not present integrated payment platform. The second one is what we call kind of a payment facilitation or payfac in a box solution that allows somebody who is a VAR or an ISV to actually start monetizing payments. And the third one is we have a set of solutions that allows for unattended devices such as in the parking sector or vending or ticketing to start taking payments on a variety of devices.
And just to give you a couple of numbers to orient yourself around and as a company and we processed about $70 billion of payment volume last year. That would be in 2019 we’re at a run rate of over a billion transactions a year. We have over 200,000 terminals kind of on our terminal management system that would be devices and we service about 130,000 small business merchants.
Greg: Okay, great. I did see on your website the term unified commerce or unified customer experience. Can you tell us what that means?
Vijay: Yeah. What we mean by unified commerce enablement, there’s few important pieces of that statement. First of all, we’re always leading with the word enablement. NMI is a kind of a behind the scenes company. You know around here we used to joke that we may be one of the most important payments companies you’ve never heard of and that’s sort of by design.
We want to be known by the people that need to know us, that we are, as I mentioned, a white label solution kind of behind the scenes, so that’s where the word enablement comes from. We enable our partners to offer those payment solutions. Unified commerce refers to the fact that we believe we’re really the only solution in our sector of the market space that allows you to meet your customer at what we call every point of engagement. That means whether a consumer is making a payment on a website via an in-app purchase, a card on file, they may be dipping a card into a credit card reader or using an Apple Pay, Android Pay type of solution. We allow you to integrate all of those different points of engagement into a single token repository, which is a kind of technical term for just saying that regardless of how consumers are paying, all of that data gets into one single database. So you don’t have to reconcile or synchronize multiple databases, which is what many of our competitors do. And we coined the phrase unified commerce enablement to describe that.
Greg: Okay. You said something earlier that I wanted to go back to. You talked about the unintended payments space and it’s very interesting sort of where that’s headed. Can you maybe talk a minute or two about sort of what you do in that space?
Vijay: Yeah, that’s actually a great question. And you know, having worked at Visa, I’m very familiar with the different categories and origination methods and unattended happens to be one of the technical categories of a type of transaction. So, it’s been around forever. And you know, generally we think of the parking device when you go in the parking lot and you take your ticket and you stick your card in, that’s an example of an unattended device. A vending machine would be another one. What’s happening today is the confluence of the kind of explosion of contactless, and what I’m referring to is cards that are enabled with a contactless and FC antenna on them -finally in the U.S. after this being very normal in the UK, Canada, Australia, where we’re getting critical mass here in the United States, but also through Apple Pay, Android Pay, an Apple watch, et cetera.
The coming together of those contactless payment methods with new modern, unattended experiences for things that we didn’t have in the past, such as parking apps that help you find a parking space and make the payment very seamless. So, we are active in the following sectors, ticketing, which would be, for example, in transiting that would be public transport. But as well as venues, whether you go to a county fair or a concert or sporting event. We’re active in the parking space. Parking is going through quite a revolution there and making it a lot easier and a vending machine as well as kiosks. So that’s how we think of the unattended market. And we’re excited about it because it’s something that’s been around forever, but it’s going through quite a bit of an innovation explosion.
Greg: Yeah, I use an unattended vending machine and it’s a long way from when you used to have to put the quarters in to get your little snacks out. Let’s talk a little bit about your company and what differentiates it. I mean, we know the payment space is incredibly competitive, so what would you say makes you guys different or better than your competition?
Vijay: Yeah, I think what really makes NMI stand out, and I’ve alluded to some of these points earlier. One of them is we are a behind the scenes white label solution, so we’re, many of our competitors actually lead with their brand name or they would be leading with their solution, having to be a named as part of your solution if you are one of these ISOs or VARs or ISVs. That’s kind of a unique positioning in combination with the complexity around this unified commerce platform. So, the ability through one point of integration that would be a single API call or embedding our SDKs into your software stack or even just using our self-service web console, you get access to over 160 processor connections. You get access to over 50 different devices in terms of point of sale, credit card readers, desktop, handheld, mobile phone, unintended devices that we mentioned earlier, and kind of putting that all together into a platform where you can purchase the service from us as a SAS platform, so it’s delivered through web services.
You get a buy rate from us, you can mark it up and make your profit and sell it on to your end customer. We don’t know anyone who offers that kind of almost enterprise scale, complexity, breadth and depth of a solution, but we’re clearly focused much more on that kind of SMB space for the reseller community.
Greg: Great. Let’s talk about the industry as a whole. Where do you see it heading? Let’s make it a two- part question in the next two to three years and then let’s go way out to 10 years. Where do you see things headed?
Vijay: Yeah, that’s a great question. I think a lot about that. You know, people that have been in the payments industry for many years tend to be, and I include myself in that group, we tend to be fascinated by the concept of actually processing a payment.
We actually think that’s really cool and frankly it is very cool because the ability to, swipe or dip a card and have it go through the internet and countless connections and processors and make its way to a Visa or Mastercard to an issuing bank and come back and tell you there’s enough funds or the card hasn’t been compromised through fraud. It is amazing. But if I think about the next 10 years, the processing of the payment is something that’s becoming really commoditized. Authorization, clearing and settlement of a transaction is something that increasingly is something that a variety of vendors will offer you. And the prices is really going down for that. So where it’s moving towards and where we play is enabling the consumer experience. And so the way I like to think about it is, you know, before you make a payment, there was a before, during and then an after. The during is what the payments industry has traditionally been focused on.
And I think where it’s moving now and moving into the next 10 years is making that before purchase experience be something that is really compelling propensity models. What was the way that we got the consumer to make this purchase in the first place? And then what happened after they made the purchase? What kind of loyalty model did you have a good experience, a bad experience and then stitching together the data to really serve the consumer with a better pre and post purchase experience. Payments being the enabler of the data that allows that – what I would call driving consumer delight. That’s kind of where the industry is headed. And if I can just borrow an example, many of us would not have thought if somebody asked a group of payments executive seven or eight years ago that the innovation and payments would be driven by the taxi industry.
We would have said what are you talking about? And the reality is a lot of this thinking comes from the folks like Uber. And what Uber did was they taught us that the best payment experience is the one that never happened. You know, I called my Uber from my phone and I get into the car and I say, are you Greg? And you say yes. And I say, I’m Vijay and I drive off and I check my email or check my social media and I get off and I say goodbye. I never touched my card, no username, password, no biometric authentication. I get an e-receipt after the fact. And so that notion of making payments disappear is I think what the industry is going to be focused on over the next X number of years.
Greg: Yeah. That’s something that I hear a lot and I’m sure you do too, is removing the friction in payments. And certainly Uber has done that. In some ways you could think of Uber as sort of a disruptor. What do you think that means to the industry when these disruptors come in – do you see that as a positive, a negative, a little bit of both. How do you view these disruptors coming into payments?
Vijay: Yeah, that’s a great question. You know, with any disruption, we tend to think of winners and losers, those that are disrupted and don’t take advantage of the change, whether it’s a Blackberry or the, Kodak film or the fax machine or whatever analogy you want to use. And those that do benefit either the new entrance or the incumbents that are able to morph and kind of roll with the innovation. And so, we see this as a tremendous opportunity. Our payments enablement platform is very much focused around this notion of making payments disappear. And I talked earlier about if you’re a merchant or somebody who is offering solutions to merchants, you want to make sure you meet your customer at every point of engagement. That could be at the point of engagement where the best payment is the one that never happened.
That means you better tokenize the card on file for your app based experience or web-based experience so that once you’ve identified the consumer, in the case of the example I gave earlier, you just identify yourself as being who you are that ordered the car and you’re the driver. That authentication is done. It can be done in different ways. The payment just gets handled in the background and the reconciliation happens after the fact. So, meeting your consumer at every point of engagement, whether they are paying with a card, with a phone, with a watch, maybe with an NFC chip in their jacket or their ski gloves or whatever the case may be is going to be critical. And the other thing that I think is important is we’re getting into this mode where payment credentials and form factors start to proliferate. We used to have one Visa card in our pocket or one Mastercard. That one Visa card may now live in 40 or 50 different places. I’m sure Greg, you have your card on file like I do at Amazon and Netflix and a host of other merchants. We have to make sure that we keep that stuff protected. This new world where the form factors in the car gets replicated, need to be protected from hackers. So, security is a big topic and consumer experience is really what it’s about.
Greg: Let’s pivot right now and let’s start talking about you a little bit. You mentioned a little bit in the opening about your journey through Visa into becoming the CEO there, but tell us a little more specifics about how you got to be in that role of CEO.
Vijay: Yeah. As I mentioned, I was really fortunate to have worked at Visa and had sort of three different roles there and got to see the payments industry from really many angles, including the acquiring and merchant acceptance side of the business as well as the issuing side of issuing the cards. I decided to kind of go back to my roots, which was really working in a smaller high-growth environment. And I ended up becoming an advisor to a private equity firm and they were looking to invest into payments companies and they were looking for seasoned executives that could help them do due diligence, identification of companies and then go off and either be a strategic advisor or an operating executive. And so, I ended up becoming an advisor to one of these private equity firms.
And I assisted as an external advisor on two acquisitions. One was NMI and the other one was Verifone. And then ended up becoming a board member of both companies, Verifone and NMI. And that was great for me because one of my passions is just anything to do with financial technology disruption and payments. And so at that same time, that was about a two and a half, three years ago after I left Visa, I invested in a few startups, one in the cryptocurrency space, one in the IOT payment space and another one in the open banking arena. And I sort of took some time off. And so I got everything from the startup stuff to the larger companies. And then the private equity firm asked me about two years, just about two years ago, if I was ready to go back into an operational role and I was, and they asked me to become the CEO of NMI.
So, it was a great way to have got to know the company from when the due diligence and pre-acquisition work was being done, sat on the board for awhile and then step in into the CEO role.
Greg: Great. What would you say is your favorite part of being the CEO there?
Vijay: Yeah, I would say that boy, the first thing that comes to mind of course is I like to geek out on payments. I love the technology and I love seeing the disruption and the innovation, but really it’s about the people. For me, it’s just, I work with a really talented set of folks across the entire company as well as our customers and our partners. And so my perspective of being a CEO is your job is really to provide a vision, be the person who sort of sets the North Star, and then it makes sure that people are motivated emotionally and connected to the mission of the company.
In our case, as we said, unified commerce enablement, enabling our partners to come up with great ways of merchants to take payments and drive delightful consumer experiences. And that all starts and ends with the people.
Greg: Great. So, you mentioned earlier a little bit about what you’re passionate about in the Fintech and disruption space, but what else are you passionate about? It could be work related or it could be personal.
Vijay: Yeah, I guess I’ve got kind of two other passions besides everything to do with payments, although I spent a lot of time thinking about that even on the weekends. One is my family. I’ve got two daughters and just spending time with them. It really gives me a lot of joy and satisfaction. And of course, I kind of forced my kids to learn about payments. They can probably tell you a little bit about authorization clearing and settlement. They don’t have a choice, that’s been the dinner conversation since they were six or seven years old. And I think that’s the definition of a payment geek, right? As they talk to their family and friends about payments outside of work. And the other one is just being in the outdoors. I feel really lucky to live in the San Francisco Bay area. I like mountain biking and love heading up to Lake Tahoe to go skiing in the winter.
Greg: Okay, great. You know, there’s a lot of investment in this space. I think it’s grown tremendously over, I would say the last 10 years. A lot of people wanting to work in this space. So, what advice would you give a younger person who’s just starting their career in payments?
Vijay: Yeah, I get that question a lot, Greg. I really feel so indebted to people that had mentored me earlier in my career and I think everyone who has been through the journey, I can always remember one or two key mentors. And nowadays it’s interesting, when I got into payments and financial technology over 20 years ago, it certainly was not a sexy thing. It was not the kind of thing that you would talk about at a cocktail party. I find that in the last few years, if you say you work in financial technology, it actually is cocktail party talk, so it’s something that has fascinated and captured the imagination of a lot of young people and career changers. My number one piece of advice is to get into the nuts and bolts and sort of the bits and bites of it. I talked earlier about how I think the goal of the payments industry is to make payments disappear and the during that is not as important as the before and after, but you really want to understand how the money flows work.
There’s a book called Payment Systems in the United States written by a friend of mine, Scott Loftesness and I tell people to go and read that book and it tells you how checks are cleared and it tells you about the history of the payment system in the United States, why we have a Visa and a Mastercard. So, I think the first thing is to kind of get your hands dirty and kind of under the hood stuff. And then the next piece of it is, is just, in today’s world, listen to podcasts like this one and you know, try to ask as many people as you can where they think there’s an interesting part of the payment’s sector that you can play in. And then finally what are your skills? Like what are you good at? Are you technical person, are you more salesy? Are you on the marketing side or are you a leadership type person? And then try to find a company or a sector that is aligned with your strengths.
Greg: Great. So, we’re about to wrap up. Any final thoughts? Anything else you’d like to share with the audience?
Vijay: Yeah. We talked about a lot of things here about the payments industry and about people wanting to get into the industry. You know, I think the final thought I have is – all of these things are really about following your passion. And I feel like I was fortunate enough to become the CEO of NMI, which is a company that’s pioneering a very unique type of payment platform for a unique part of the industry. And the reason why we’re successful is we’re passionate about what we do. And I joked earlier that being FinTech makes for good cocktail party conversation these days. You know, what, in three or four years it probably won’t, it’ll be flying cars or something else. And so, you definitely want to follow your passions and stick with something that is going to happen. Longevity beyond fads and trends.
And so that’s always my credo – look for something that you’re good at it. Look for something that you enjoy and look for something that is meaningful for you. And that’s what I’ve always tried to do.
Greg: Yeah, I think all that’s very good advice. Well, Vijay, I really appreciate your time. I know it’s very valuable, so thank you for being here today.
Vijay: Greg, thanks so much for having me on your podcast and I look forward to maybe being invited back in the future and certainly look forward to following your progress here.
Greg: Great. I really appreciate that and to all you listeners out there, thank you for your time as well and until the next story…
1:13 Vijay's Personal & Professional Background
2:30 Background on NMI
8:11 NMI's Differentiators
9:45 Trends in Payments
14:39 Vijay's Professional Career
17:18 Vijay's Passions
18:11 Vijay's Advice for Those Starting in Payments