Episode 114 - How to Orchestrate the Merchant's Payments Infrastructure - Justin Benson, Spreedly

Mar 6, 2020

Justin Benson, CEO of Spreedly, shares insights on revolutionizing merchant payment infrastructure. He explains how Spreedly serves as a vital 'glue layer,' offering a single integration point for payment providers. Justin discusses the importance of flexibility in evolving merchant business models, the nuances of tokenization, and how to utilize transaction data for revenue optimization. He also covers the integration of Google Pay and Apple Pay, highlighting security challenges and the significance of managing latency in payment processing.

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INSIGHT

Merchant-Centric Orchestration Layer

Spreedly positions itself as a merchant-centric payments layer that embeds into a merchant's stack to provide flexibility and control.
It connects merchants to gateways, acquirers, fraud tools and others so merchants can change partners without rebuilding integrations.

ANECDOTE

SeatGeek's Phased Payments Evolution

SeatGeek used Spreedly to start as an affiliate model and then evolve to merchant-of-record and white-label experiences without rearchitecting payments.
Their phases showed how a payments orchestration layer future-proofs business model changes.

INSIGHT

Control Over Tokenization

Spreedly built merchant-controlled tokenization to give merchants the power back from PSPs and networks.
They plan to act as token requester for network tokens so merchants can use tokens across providers without losing control.

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On Payments on Fire® we've talked with gateway operators, processors, tokenization specialists, fraud management firms, and others - all providers who help payment acceptors handle their payments.

The range of services and business value they deliver varies a lot. Some providers do everything. Others, like Spreedly, the subject of this Payments on Fire® podcast, focus on a narrower set of functions and business outcomes.

Payment Flow and the Payment Service Provider (PSP)

When we talk about merchant acquiring in the Glenbrook Payments Boot Camp, we highlight the following transaction flow:

The merchant or its ISV, perhaps running as an PayFac, accepts the customer's payment
They connect to a gateway or a processor
The gateway routes the transaction to an acquiring bank or its processor OR the merchant connects directly to one of these entities
The transaction is routed by the acquirer or processor into the payment network and on to the accountholders's financial institution

That picture oversimplifies the tasks at hand. Depending on what kind of merchant you are, the set of payment-based services you need can vary substantially.

If you answer yes to any of the following, there are payment service providers ready to help you with specific tools:

Are you an e-commerce merchant
Is omnichannel commerce important?
Are you strictly a bricks-and-mortar operation?
Are you a biller or a heavy user of invoicing?
Do you operate unattended devices like vending machines and kiosks?
Are you global or have global aspirations?
Are you an SMB or enterprise-class payment acceptor?

Some payment service providers (PSPs) are owned or captives of larger upstream entities. Their role is to capture an ever widening stream of transactions to flow on to their parent company. CyberSource, owned by Visa, may not care a lot about who the acquirer is but the company's transaction handling drives revenue for Visa.

Other independent PSPs like NMI and, in today's podcast, Spreedly, focus more on the needs of the merchant. NMI anchors it many other talents around its core gateway. Spreedly might be considered is a gateway to gateways. It connects to processors and has developed a broad set of connections into domestic systems around the world. Spreedly is a also payments tokenization provider.

Given that range, Spreedly refers to itself as a merchant-facing payments infrastructure provider. More casually, Spreedly is a layer of glue between the payment acceptor's operations and the payment systems that the acceptor needs to support. Payment orchestration is another in vogue term to describe what Spreedly, and others, do.

This is an evolving story and marketplace. Definitely worth a listen to Justin Benson, CEO of Spreedly, as we talk about what his company does and a range of industry topics including tokenization, risk, and more.