CEO of Stax, Paulette Rowe’s journey through the dynamic world of payments is an inspiring story of opportunities and passion. From her role at Facebook to leading PaySafe through a public offering and embracing the culture and vision of Stax, Paulette’s dedication to the payments industry is clear.
Stax is distinguished by its software-first ethos and comprehensive white-labeling capabilities, highlighting its intent to expand internationally. The conversation illuminates how Stax is redefining industry standards with its agile and precise strategies, challenging larger, less flexible entities. The company's unique position in the payments industry stems from disrupting traditional payment models with subscription-based services. Paulette shares insights into Stax's disruption, its focus on key verticals, and the company's evolution into integrated payments, compliance, surcharging, recurring billing, and becoming a fully-fledged acquirer-processor.
Moreover, the podcast delves into the transformative trends impacting the payments and financial services industry, including embedded finance and the impact of artificial intelligence on customer engagement.
CEO of Stax, Paulette Rowe’s journey through the dynamic world of payments is an inspiring story of opportunities and passion. From her role at Facebook to leading PaySafe through a public offering and embracing the culture and vision of Stax, Paulette’s dedication to the payments industry is clear.
Stax is distinguished by its software-first ethos and comprehensive white-labeling capabilities, highlighting its intent to expand internationally. The conversation illuminates how Stax is redefining industry standards with its agile and precise strategies, challenging larger, less flexible entities. The company's unique position in the payments industry stems from disrupting traditional payment models with subscription-based services. Paulette shares insights into Stax's disruption, its focus on key verticals, and the company's evolution into integrated payments, compliance, surcharging, recurring billing, and becoming a fully-fledged acquirer-processor.
Moreover, the podcast delves into the transformative trends impacting the payments and financial services industry, including embedded finance and the impact of artificial intelligence on customer engagement.
Welcome to the Leaders in Payments podcast, where we talk to C-level leaders from across the payments landscape. We'll be discussing the products and services that impact the payment space today, as well as trends and predictions for the future of payments. We will also hear stories from our guests about their journeys to the top.
Speaker 2:There aren't many companies out there outside of the big super tankers that actually run their own billing and settlement and are directly connected to the card scheme, so they're their own processor acquirer. I think because the legacy players have become so large, this is a moment in time where we can be out there as a disruptor again, not just because we've got great software tools, but also because we can give more flexibility. I think we can be more attentive to our clients than these larger players are able to now that they've become so big and they're in the glare of the public markets.
Speaker 3:That was Paulette Rowe, the CEO of Stacks. She is my special guest on this episode, episode 296 of the Leaders in Payments podcast, and I'm your host, greg Myers. Paulette was on the show back in July of 2020 during our Women Leaders in Payments month. I encourage you to go listen to that episode episode 25, as well as learn more about her guiding principles, how her nephew has influenced her life and career path, and much, much more. During this episode, we cover what attracted her to Stacks, what Stacks does and what makes Stacks truly unique in the marketplace today and what they are building in the future. It also shares her fascinating career journey from GE to Barclays, to Facebook, to PaySafe, to now Stacks. We've got a great episode ahead, so let's get started. Hi Paulette, thank you for being here and welcome to the Leaders in Payments podcast.
Speaker 2:Hello, it's lovely to be here, thank you.
Speaker 3:Absolutely. Let's dive right in, If you don't mind. Tell our audience a little bit about yourself, maybe where you grew up, where you went to school, where you currently live, a few things like that, and then we'll circle back to your professional career in a few minutes.
Speaker 2:Excellent. Yeah Well, first of all, paulette Rose, ceo of Stacks. As you said in your intro, I am a Londoner, although since August I've been based here in the US. I spent a lot of time actually away from London in the early years studying and working abroad, so I've worked abroad a few times in my career. In terms of my background, I read Mechanical Engineering as an undergrad and moved into financial services. After I was hired by GE General Electric when I graduated from INSEAD with an MBA and I joined their global leader development program, as they called it. Loved growing up in London real melting pot people, cultures, a lot to do, as you can imagine. I think that's spurred my interest over the years in discovering new places and, as I said, encountering different cultures and living abroad.
Speaker 3:Let's talk about Stacks. Tell our audience what Stacks does.
Speaker 2:Stacks is a payments technology company that partners with software businesses, independent sales organizations and smaller, medium-sized businesses. We enable flexible, multi-channel payment processing and invoicing solutions. We very much believe that by embedding our solutions into your business or into your software, we can help unlock new revenue streams and drive significant incremental growth. Stacks started out as a disruptor, as you know, in the ISO sector. Offering SMB is the opportunity to move away from the complexity of having to understand interchange plus pricing and introduce and this was the innovation a much simpler and more transparent and predictable subscription-based model. So that, along with some super cool front-end tools, beautifully designed reporting tools and other software that we offered to small businesses, stacks grew very, very rapidly and became a unicorn in 2022. If you fast forward, now we have 30,000 customers, but in addition to the traditional ISO retail business, we've expanded our footprint into integrated payments, compliance, surcharging, recurring billing in terms of our subscription software solution, and we are also becoming a fully-fledged Acquira processor in our own right.
Speaker 3:So you mentioned the types of businesses small, medium, saas companies, platforms. Are there certain verticals that you tend to process more for, or really any vertical?
Speaker 2:No, we definitely like to lean into some key verticals. We've had a lot of success in the professional services field services and in certain types of healthcare practice management, so dental, chiropractors, etc. So that's where we're seeing a lot of success. And then we've got some other verticals which are becoming, if you like, beachhead verticals for us, so starting to see some success where we think we can build, and that includes in the charity space, the donation space and education. Yeah, through our relationship with our investor, grace's Unventures, we do get a chance to work in other spaces as well, but that's really where we focus right now.
Speaker 3:And are you just US-based or international?
Speaker 2:Well, I can potentially tick the international bots because we do have an office in Ottawa, which is our stacks bill team, but right now we're pretty much focused on the US. We've got a small activity in Canada, but clearly international is on our minds. We definitely want to follow some of our ISV partners into other markets, so expanding our Canadian presence for our ISV partners is something that's very top of mind right now.
Speaker 3:And what would you say? Differentiates stacks from your competitors.
Speaker 2:Well, first of all, stacks has always been a disruptor, as I mentioned, and that was in introducing the subscription modelling and also sorry, I should say as a software first company. As I said, the stacks pay tools, which are the tools that we make available to our small and medium sized businesses. They are beautifully designed, great UX, very, very flexible and in the ISV space, we have really started to differentiate in terms of our ability to, first of all, white label the solution end to end. That's something that we believe very few, if anyone else, can claim to have right now, and we're continuing to make investments that will help our ISVs drive greater payment attachment within their book of business. So, for example, we've kicked off a referral service where the ISVs, rather than using their own sales team to cross sell payments, can use our teams, and we've got a lot of experience selling directly to small merchants' payments. So what we've seen is we can get a much higher conversion rate when the ISV works through our team than many of our ISV partners are able to achieve on their own. So that flexibility of model plus the fact that we're investing heavily in developing our own technology.
Speaker 2:So, yes, there are other providers out there that have their own front end. I would still argue that stacks is front end, is a standout in the market. But in addition to that, with the acquisition of APPS last year, we've been able to add our own payment rails, and that's something we're still developing. But it means that in the future we're going to be unlike many others. Rather than relying on the big players, the legacy players, for all of the clearing and settlements and building the settlement, we are developing that capability in-house. So we'll be, as I mentioned earlier, a fully-fledged processor acquirer, which we think will allow our partners to innovate faster, to have more proprietary solutions, more bespoke solutions and allow faster speed to market.
Speaker 3:That's a lot we could double-click on there. You guys are doing a lot of interesting things. I like the concept of helping the software companies sell because you know sort of if you want to call it pay-fac or embedded payments or whatever you often hear about companies who help these ISVs but you know it's embedded the payments and then I feel like a lot of them just leave them on their own to make the conversion happen and you know the whole portfolio isn't going to convert. So it sounds like you guys have been really innovative in coming up with ways to help them convert their portfolios over to the payments.
Speaker 2:Absolutely, and because we have that experience of we've been selling our solution as a software first business into the small and medium sized companies in the us.
Speaker 2:We've got some great sellers, so we've actually taken some of our best sellers from our retail iso business and move them into supporting our eyes with the referral business, which is really exciting and I should mention, our largest investor is the company calls a great sun benches and what I like about working with those guys is that they are, first and foremost, entrepreneurs themselves. The founders of the company came from ministry brands, which is one of the most successful eyes these that there's been out there. I think it's been rebranded to community brands more recently and they understood early on when they were running their business the importance that payments plays in driving revenues for sass companies so we can work closely with them. They understand sass. We're working with them being introduced to the other portfolio companies and, as you say, one of their experiences was it's not that simple selling payments. So if you can offer that service, it's going to help. Those is fees. Those platforms just go back much faster.
Speaker 3:Okay, so you mentioned one of the thing I wanted to touch on. You talked about the subscription for small businesses. So so let's set the isv aside for a minute. When you're selling directly to small businesses, you have a subscription model. Is that? Is that a huge differentiator these days? It?
Speaker 2:certainly was when it was launched. I'm not aware of any other key Provide in the market offering subscription and I think it really works, and you see it in the fact that stacks has come from, you know, being a small start up to a unicorn in a relatively short space of time. What it does is it just simplifies things for the small business owner. We all know that small businesses, they've got a lot of stuff to think about Understanding what your interchange rate is on this card versus another card, etc. And instead having the predictability of knowing that you've got a monthly subscription that's going to cover your payments up to certain volumes. I think it adds transparency, it makes it simple and it also provides predictability at a time when you just want to focus on growing your business.
Speaker 3:Yeah, I mean, I've been around this industry almost 20 years. I've always thought that there was a play for that subscription model. So it sounds like you guys have been doing it for a little while and continue. Obviously you're seeing success there, so that's really cool. So let's continue talking about payments and let's broaden the scope. Where do you see the industry headed, saying the next maybe three to five years?
Speaker 2:Yeah, well, interesting. We just touched on subscription, so maybe staying with that theme for just a little bit. I do think that the ways in which consumers want to pay is just continuing to change. When I, when I entered the payments industry in 2012, there was it was all about E-commerce and on the channel, and we went through a lot of innovation and naively, I thought perhaps innovation was slow down and there's certainly no sign of that happening. So, yeah, being able to pay through subscription is becoming the norm.
Speaker 2:I have a printer at home that the subscription just gets paid every month and the printer orders its own it's own ink when it's out of the queue. That those sorts of models, payments moving Within apps. One of my colleagues here he paid for his starbucks the other day from his brand new rivian. It was voice activated, he was driving, he could speak through the app, order his coffee, pay for his coffee. I'm just going to pick it up. So you mentioned embedded payments and embed payments in the internet of things, in apps.
Speaker 2:That's really going to be, I think, where the industry is going to go, and the reliance on a piece of plastic is certainly something that is going to diminish over time and you can't really talk about innovation without mentioning generative I I.
Speaker 2:We have a new cto who is extremely excited about all of the possibilities Of using a I within our business, and that goes from using it within customer service to help with generating leads, but also helping provide a more personalized service, helpings answer questions for customer service agents when they're trying to understand where to go for help to help a customer on the wrist side being able to verify documents more quickly.
Speaker 2:Even in coding, he sees a I helping to actually write code, giving faster time to market, as one of the opportunities there. So I think that whole space is going to really change the way in which we interact, both internally and with our customers. And then we have talks about is fees and platforms, but I think it is worth Sharing some of the stats around how important sass companies are going to be as a distributor of payments. I saw some data recently, I think, from payment source that suggested that 65% of platforms that are not currently offering payment capabilities plan to do so In the next 12 12 months. So there's just a huge interest in coming back to simplifying businesses wanting to not have to have a separate payment provider from the software provider, and so I think that this intermediation of payment companies will continue unless we're able to, as we're doing a stacks, learn how to partner well with those companies.
Speaker 3:Sticking to the embedded payments kind of theme. What are your views on embedded finance? So do you think that you know the software companies have Are getting good at and they're starting to. I don't know if the market is mature, but it's going to be soon. With embedded payments, do you think the next step is All the other financial products insurance, lending, things like that. Is that something that you guys are thinking about?
Speaker 2:I think right now we're very focused on making sure we offer an excellent service when it comes to payments, but yes, there are other value added services that we want to offer and build on. We already have a compliance charging solution which is brand into card x. That allows our partners and our merchants to reduce their costs of accepting cards. It's not insurance product, but it sort of shows what you can do. Once you have that relationship, you can start to layer on other products.
Speaker 2:I mentioned at the beginning that we have a subscription Billing, automated billing software solution which, again, we're offering to our SMB's but also our ISP partners. So, yes, I do see more companies, as they grow the relationship with these platforms, being able to offer them An extensive range of products. By the way, we have a buy now, pay later solution with with paper almost forgot to mention that one. So I think through those partnerships we can start to layer on different solutions. And for the ISP's in many ISP's talk about wanting to be a payback, but in reality they just want to have a solution that works within the software, where they don't have to worry about the regulation and the detail, and so I do see that you know that one stop shop becoming something that both consumers, merchants and platforms are going to see as a win-win.
Speaker 3:Yeah, yeah, I like the way you described that. Well, let's switch gears a little bit and talk about you. So earlier in the conversation, mechanical engineering degree went to g e. Maybe fill us in between g e and today.
Speaker 2:Wow, yes, so. So I work for g e, mostly overseas, went back to the UK to join a retail bank, so this is still in my, if you like, my my years before payments, which are probably not that interesting. What's in the retail banking? For a while, if you like, my big break, or my realisation that payments was the future, came when I joined the park please. What please was, and I think still is, the second largest much processor by volume in Europe and I was very lucky that they offered me the opportunity to come in and run that business, and it was a great time to do it because it was around the time that will pay have been spun off from our bs and a lot of banks, particularly in the UK, where finding it hard to compete in payments was lots of private equity money coming into into the space. Innovation was changing very, very quickly, so it was a great job. It was an exciting time because it was all about trying to defend. Position is a process of wanting three card payments in the UK whilst transforming the business and turning it into a modern day processing company capable of doing e-commerce as much as Pause, which barf is was particularly good at, and that involves, for example, decommissioning the thirty year old platform that we processed on and replacing that, which was four years of my life. I like to say that I'll never get back, but it was a huge project and one that I know the other large processes have really struggles with. So it's a great deal of pride that I can tell you that the team and I managed to get it done within within four years.
Speaker 2:After after park please, I joined facebook. That was a great experience, you know. I got the opportunity to wear both the merchant as well as the payment provider hat and at the time this is before facebook became matter and more focused on that opportunity payments was seen as one of the key ways in helping to encourage commerce on the facebook apps. So I had lots of engagement with the whatsapp team, instagram team, facebook marketplace team and also every payments in company in the world wants to talk to facebook slash matter. So it was an incredible opportunity to meet and learn about financial services and payments companies across the world.
Speaker 2:I left facebook to go to pay save not an easy decision, but it was an opportunity to work with a leader and a team of people that I had I knew from my my buck these days and I really enjoyed working with and it was also pre I p? O and that was a little bit on my bucket list to be involved with the company and take it public. That opportunity took me to being the c? O of the integrated and the commerce division, so that's where I was. I had teams in a number of different markets, but in particular in north america, in the us and canada, and in europe, and so I got really excited about the embedded opportunity there. We also had a digital wallet and cash, so just a really unique experience in terms of the combination of solutions that we could bring to the market.
Speaker 2:And then moving to where I am now at stacks, the opportunity stacks has really been perfect, as I hope you heard, the business is in a great space. It also has a fantastic culture. Stacks was started, as I think you know, by c? O, a female c? O and her brother, children of pakistani immigrants. So and then with this unique take on on the market, so I feel that stacks has its own dna and it's been a real pleasure to take on the rain's. Here is a c? O and and move stacks into its next phase of growth.
Speaker 3:Sure were there other things beyond the culture that that was attractive about stacks.
Speaker 2:Definitely the opportunity to, first of all, the ISO business has been the cornerstone of Stats success and will continue to serve that small business market through our Stats pay product. But the opportunity to really go after and become a leader in this embedded payment space, in the ISV space. I think we've got all of the tools through our StatsConnect product, through our relationship with GSV and our other board members, to be very successful in that space and it is growing very, very strongly. And then, of course, there's this vision of not just being the cool front-ends but also owning our own payment rails, which is what we're building right now and will be available fully next year, or sorry, this year, we're in 2024. So that vision and just given my experience of having already transformed the Barclays back end I also did a transformation at PaySafe of some of their acquiring product that just felt like a unique opportunity.
Speaker 2:There aren't many companies out there outside of the big super tankers that actually run their own billing and settlement and are directly connected to the card scheme. So they're their own processor acquirer and I think, because the legacy players have become so large, this is a moment in time where we can be out there as a disruptor again, not just, as I said, because we've got great software tools, but also because we can give more flexibility. I think we can be more attentive to our clients than these larger players are able to now that they've become so big and they're in the glare of the public markets.
Speaker 3:And you're controlling your own destiny.
Speaker 2:So funny. You should say that because I say that all the time. So thank you for reminding me Controlling our own destiny, but also helping our partners control their destiny too, because we have the flexibility, because we won't be saying, hey, we're off to talk to XYZ player like everybody else is. We will have that technology in house and that's going to be a pretty differentiating proposition.
Speaker 3:Yeah, yeah. Well, I would love to have you back on the show when that happens to learn about kind of that experience and talk about what it means to the business. So I think we should just tentatively put something on the calendar for later. I would. Yeah, that would be awesome. What are some things you're passionate about? So maybe one work related passion and one personal passion.
Speaker 2:Yeah, I mean I'm probably going to sound boring, in a sense that I just love this space. So, in terms of work, this is I don't know 12th year roughly in payment processing and I'm just as excited as my very first day at Barclay's payment processing and just kind of seeing how we connect buyers and sellers. Yes, we're all competing, but as companies in the payment space, I think we're so important to the economy, to driving commerce, so I'm just excited to see where consumers take us next and where the new technologies take us next as well. For me, it's all about driving more convenient ways to pay. I remember very briefly rolling out contactless in London across the London transport, across the, the tube, trains and the buses, and people then friends then even say to me why would I want to use my bank card or even my phone to take a journey on the bus or the train? And now it's so well adopted, it's huge and contactless is something we don't even think about. So being part of that, being part of finding new ways to remove friction, is incredibly exciting.
Speaker 2:A bit of work and there is definitely time spent outside of work. I do enjoy traveling and in fact, back in 2010, I think it was. I actually took 18 months out to go travel the world. I haven't indulged myself with anything like that more recently, but now that I'm here in the US I'm really looking forward to hopefully discovering a lot more of America. I've already been to a number of places since moving here and I've kind of set myself a goal of visiting all 50 states in the next few years, and I think I'm at 20, 20 ish right now, so I actually have my work out for him. Almost halfway, almost, yeah.
Speaker 3:So one final question and I like to ask this to all the guests, because I think you always get it kind of unique, your own perspective. If someone's coming to you and they want to get into this industry maybe they want to job with stacks and they come to you and they say, paula, what do I need to do to be successful in payments? What would you tell them to do?
Speaker 2:I would definitely get out there and some of these shows are not inexpensive. But if you can get to some of the shows the Money 2020s, the NRFs, et cetera, the ETA show so that you can see what's happening and start networking, just go and talk to people and ask about their products and ask about their markets, I think that's a brilliant place to start. And many of these associations they have networks that you can join so, again, you can meet other people. You can meet other people who are new to the industry as well. I think, clearly, this podcast you've had some fabulous guests, so you're learning from different leaders in payments through these sorts of podcasts, including the various trade publications that are out there I think is incredibly useful.
Speaker 2:And, if you can, because you mentioned, is there someone coming to join stacks? So, as we talked about, stacks is more focused as a domestic player today, but I still think that Taking the time to learn about payments in the different markets is incredibly helpful. I feel that I have an edge versus other people in the market because I've been exposed to payments in Europe, north America, apat, mira and LATAM and the incredible thing about payments as much as we all think it should be global and we talked about innovation and, clearly, blockchain, maybe one of those things that helps make payments boundaryless in a way that it isn't today. It does continue to be surprisingly local, and so understanding what's driving innovation in different parts of the world, what's driving different consumer behavior in different parts of the world, I think, only helps to give you a unique perspective on the market, which, wherever you end up, is going to be helpful.
Speaker 3:That's great advice. Well, Paula, we've covered a lot of ground, obviously, about you and your background, about stacks, about the industry. Is there anything else you'd like to cover before we wrap up the show?
Speaker 2:No, I think it's been lovely having this conversation. Thank you so much for the time. I guess just to touch again on my enthusiasm for all things payments I do think that this is one of the most fascinating industries that anyone can choose to be part of. And just sort of going back to your question about innovation, I could have gone on and on, because there's so much to do in the fraud and security space. I just touched on blockchain. This is an industry that's going to have to continue to reinvent itself, and so I would just encourage anyone who is listening to this and thinking about jumping into this industry that coming jumping the water is lovely.
Speaker 3:I think that's a great way to close out the show. So, paula, thank you so much for being on the show. I know your time is very valuable, so I really appreciate you being here.
Speaker 2:Thank you so much, greg, it's been a pleasure.
Speaker 3:And to all you listeners out there. I thank you for your time as well, and until the next story.
Speaker 1:Thank you for joining us this week on the Leaders in Payments podcast. Make sure you visit our website at leadersinpaymentscom, where you can subscribe to the show and where you'll find our show notes. Thanks for watching.