As announced to our shareholders on December 16, 2020, Openpay (ASX:OPY) has officially entered the United States. I have the privilege of becoming the US CEO and Global Chief Strategy Officer. I’m thrilled to take on this important role, and at a critical time.
So, why is this move so significant? And why would a senior partner from one of the most successful consulting firms in the world, happily enjoying running the most successful global payments practice, leave it all to take on this new role. And, why do so during a global pandemic?
Along with lots of encouragement, I’ve received hundreds of similar questions in calls, emails, and messages from my clients, colleagues, connections and followers on LinkedIn and Twitter. And, now that I have officially retired from Deloitte, I am excited to answer these questions and begin a dialogue with all of you about what could very well be a material long term, needed change in the US payments system.
For many of you, the answer will be interesting. But, for the majority of you who are directly impacted by changes to the US payments landscape, such as merchants and corporates across all industries, I think you’ll find the answers to be important, maybe even exciting.
First, a quick introduction to the company where I just became US CEO, Openpay. Openpay is a payments fintech operating in four countries across Australasia, Europe, and now North America. The company offers B2B and B2C solutions distributed through merchants, payments processors, and other aggregators (e.g., co-ops such as large shared-services organizations that provide payments services to medical/dental offices like Dental Services Organizations).
I’m thrilled and energized to take on this important role, and at an important time.
Openpay’s current focus is in Auto, Home Improvement, Healthcare (including Veterinarians), Education, and larger ticket Retail (e.g., Sports Season tickets). That’s the successful focus today, and we will very thoughtfully and selectively expand as the solutions become ‘cross-industry utilized’ by Openpay’s fast-growing consumer base.
Thousands of merchants offer and use Openpay solutions today. This is because Openpay is the most merchant, corporate, and consumer-friendly payments option available in their markets, from a company that places its responsibility to fairness and transparency ahead of self-interests. This is reason number one that sold me on joining – their integrity.
While others mask their payments solutions in opaque promises that can harm consumers and often damage the relationship between the merchant and their customers, Openpay has stood steadfast, refusing to set such product ‘traps’ even though they could mirror other payment options that generate effective APRs of over 25% while claiming to be “interest-free.” Others push ‘zero down’ payment offers for anyone that “qualifies’,” when we and those providers know, that such offers often result in avoidable problems for the most vulnerable consumers. That’s neither fair nor transparent.
This is also why, as part of my senior leadership team, I brought on Gary Stein as my Chief Product and Compliance Officer. Many of you know Gary as a leading expert in payments regulation, joining us from the CFPB. Gary also brings a background in payments innovation and achieving the balance of internal product performance with trust, transparency, and fairness, which is Openpay’s core value proposition.
Openpay’s flagship product is a true interest-free, highly differentiated installment with flexible payment terms matching the unique time periods specific to industries. For example, this buy-now-pay-smarter solution can mirror the specific duration, longer-term, and larger ticket size associated with financing orthodontia. A parent or patient faced with paying for a medical procedure that needs to spread out a $5,000 cost, requiring 12 visits across 18 months, can be easily supported by Openpay, where most others offer only inflexible ‘pay in 4’ installments and/or only a 6-month maximum duration.
I’ll explain in a later post in more detail why this is so relevant and important in the US across other merchant categories and purchase types. Suffice it to say that across all of my clients who I’ve introduced to Openpay since learning about the Openpay offerings, there has not only been strong demand for their solutions, but some have already lined up to implement immediately when the platform goes live in Q2 2021. That’s reason number two I was sold – demand.
Openpay’s growth rate to-date has been an impressive 64% YoY. However, as I commented in some of the press interviews, “The US is the market.” With $5 trillion in transaction volume, the highly differentiated Openpay solutions and their success have yet to be exposed to the massive US market. The growth potential and relevance are significantly greater than even that seen in Australasia and Europe to-date.
The opportunity is not just born from the sheer size of the US market. The US system is much more in need of Openpay’s style of payment solutions. The US payments ecosystem is in many ways far behind that of other developed countries. Antiquated practices cost merchants and consumers a too high amount, far more than in other countries that enjoy modernized payments practices and solutions. The cost and experience in the US are, simply put, byzantine. It is slow, unfair, non-transparent, and expensive for all parties, especially merchants and consumers.
Will a credit check reduce my ability to make a purchase using BNPL?
And, the excuses many attribute to the US slowness to improve are increasingly falling short of credible. Thanks to the Federal Reserve, followed by bold actions from The Clearing House, we now have an operational real-time payment solution RTP™ up and running, with a second called FedNow on its way in a few years. Thanks to investments from multiple solution providers, we have the tools and methods to provide alternative risk scoring for ‘thin file’ businesses and consumers, alike.
Yet with all of that, we still haven’t introduced a platform that genuinely places the merchants, corporates and customers first. And, I believe that’s about to change with the launch of Openpay USA and the platform being Americanized from its current European and Australasia ‘cousin platforms’.
For this reason, I’m happy to announce Troy Carrothers has joined the Openpay team as Corporate Advisor. Troy brings a proven financial services and retail history of creating improved payment options for merchants and customers. Many of you may know Troy from his role building and leading the credit organization at Kohl’s, others may know him from his contributions to the merchant community while serving on the board of the Merchant Advisory Group.
An Americanized Vision for an Americanized Platform.
The US payments market has its own needs and idiosyncrasies. Not just because of the complexity of different regulatory requirements in every state, but also because of merchants and consumer preferences. An example is the strong desire for a compelling loyalty and rewards element to the use of payments methods of choice. There has yet to be a compelling BNPL or installment loyalty offering that can compete with US credit card issuers’ traditional affinity programs.
Creating a platform that dynamically meets the regulatory requirements, preferences, and needs of the diverse US demographics, with tailored flexibility across industries, is not an easy task. But, Openpay is well on its way to creating that promising platform, with a head start and an AWS SaaS platform that is flexible, scalable, and which will be ready for our first foundational US customer in Q2 2021.
This is all just in time for what I believe will be a spending resurgence as we heal our country and emerge from the pandemic to rehire, create new jobs, and see signs of increases in pent up spending for the precise categories Openpay thrives in, health, home, auto, and education. This is the third reason I was sold – Openpay provides the right platform at the right time.
Over the next four weeks, my new management team and I will be setting up virtual working sessions with merchant user groups to gather input on the Americanized Openpay platform. We invite you to actively help us design the new standard for payments that promises to be significantly better, transparent, flexible, and designed by and for merchants, corporates, and their customers. To participate, you can either reach out directly to me or contact Dean Sheaffer, who is coordinating these sessions in partnership with the largest merchant and retailer organizations.
And finally, if you’ve made it this far, I’d like to wish you, your families and organizations a very healthy, and happy new year. I am optimistic that 2021 will bring great healing and renewed prosperity to all of us, and most importantly, to those who need them most.