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Leaders In Payments
Leaders In Payments
Hamed Arbabi, CEO & Founder of VoPay | Episode 310
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In our latest podcast episode, Hamed Arbabi, CEO and Founder of VoPay, provides a comprehensive look into the world of financial technology, sharing the journey of VoPay from its inception to its current role in the industry. We delve into the company's impact on the embedded payments ecosystem and its innovative approach to integrating payment solutions into various digital platforms. Hamed sheds light on how VoPay's advanced API is driving change across sectors, including insurance and healthcare, and the significance of strategic partnerships in revolutionizing financial operations within ERP systems.
Hamed’s entrepreneurial spirit shines through as he recounts his journey from starting a business to navigating the complexities of the payment industry. The discussion serves as an inspiring guide for entrepreneurs and established professionals alike, illustrating the potential for personal growth and the realization of ambitious goals through perseverance and strategic thinking.
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 2The core aspect of being successful in this journey is to understand each industry, how they transact and, as we know, each business has various operations. That requires a money movement. A business has a payroll. A business has an office lease payment, they have account receivable, account payable for goods and services they acquire to service their business and then they have their core business function.
Speaker 3That was Hamed Arbabi, the CEO and founder of Vopay, and he is my special guest on this episode of the Leaders in Payments podcast, and I'm your host, Greg Myers. Vopay's FinTech as a Service technology is a full stack of integrated payment rails, commerce tools and financial services that can be embedded into any digital platform through a single and scalable API. Hamed and I dive deep into VoPay and the role they play in the payments ecosystem. We also talk about what makes VoPay unique, as well as Hamed's passion for Formula One racing. We've got a great episode ahead, so let's get started. Hi Hamad, Thank you for being here and welcome to the Leaders in Payments podcast.
Speaker 2Hi, greg, thanks for having me.
Speaker 3Absolutely. So let's go ahead and dive 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 we'll jump into your professional journey in just a few minutes.
Speaker 2Of course, to go to school and went to university there for a couple of years and taught the entrepreneurial journeys as what I'm more towards. So I dropped out of the school and I started my first venture and moved to Canada in late 2005. And Vancouver has been home for me since then.
Speaker 3Awesome, awesome. I look forward to talking about your journey in a few minutes, but first let's talk about Vope, so tell the audience what Vope does.
Speaker 2For sure. So we are API-first organization and we offer a suite of solutions to other software applications that want to build embedded payments for their customers. So we offer them the entire tech stack as a service and they can white label all these products. And what we are really good at is to simplify complex money movement operations across large organizations.
Speaker 3Okay, who would your typical customer be?
Speaker 2Yes, so we have customers across various industries. We are considered industry agnostic but, as every organization, have certain target markets or audiences. We are heavily focused on four industries insurance, healthcare, education and real estate. But the way we go into these industries we find specialized ERPs that are servicing the businesses in that industry. For instance, in the insurance industry, all the insurance carriers, brokers, agents use a software application and that software application is called policy admin system, where they issue the policies, calculate the payments, premium payments, commissions, etc. So we work with those software applications and implement payments within their core solution. So when an insurance carrier or an agent or broker interact with those offers, they can manage the entire money movement within that software. So they don't need to use another party, such as a bank or service provider, to transact outside that core service, which simplifies reconciliation tracking. Full-time employees that are dedicated to do these recurring tasks.
Speaker 3Okay, and how long have you been in business?
Speaker 2We have been around since 2016. We had an initial journey of being a peer-to-peer money remittance to understand the landscape and pivoted to B2B in 2018. We have been in R&D for three and a half years to be able to build a tech stack that we have today that can serve large enterprises.
Speaker 3And from a geography perspective, do you serve globally or just certain regions?
Speaker 2We are North America, Canada and US. We have just started our globalization journey. We are just doing a pilot in UK and we are also in a process of launching in Latin America across 12 countries.
Speaker 3And so you said as a service. So I assume this is sort of a SaaS model.
Speaker 2Yes, so everything we do is kind of modular, so our customers have that ability to plug and play different components of our platform and whatever suits their service or underlying and everything as a service. So they subscribe to a certain category of services and they can expand to other areas as they grow their operations with us.
Speaker 3And you talked about being integrated into the ERPs. So do you go to market through those ERPs or do you actually go directly to the end merchant?
Speaker 2That's actually a great question. So we refer to these ERPs as ISPs or independent software vendors and we have various types of relationships with these software vendors. Or is it just going to be kind of a marketplace approach for us, so they can go as far as becoming what is known in the industry as a payfac and we offer payfac as a service, which we do all of the back office operation, from risk management, compliance, et cetera. They own the entire front end relationship with the customers and then it can go all the way down to being a referral software partner that they just integrate with us, make the service accessible to their customers and we interact with their customers directly to enroll them into VoPay services.
Speaker 3Great. So what would you say? Differentiates VoPay from your competitors out there.
Speaker 2I think how we are trying to differentiate in the market is by emphasizing on what is that we should do or build that makes our customer journey easier when it comes to building money movement operation within their core solution offering. And also it comes down to our go-to-market strategy. We are not well-suited to sell to SM, to our go-to-market strategy. We are not well suited to sell to SMBs or even mid-sized businesses. So it's more of a platform to platform play and what we have done is heavily focused on building all the components for a software application that wants to add financial services as a value-added service and how we can make it seamless so they can replicate or mirror their platform on Wope with minimum amount of effort and resources.
Speaker 3So You're working in some of the most complex verticals and you're selling to complex customers, so it sounds to me like you probably have a very consultative sale, but you're really trying to simplify this complexity for your customers. Is that a fair way to put it Exactly?
Speaker 2That's the best way you can describe it. It all starts with understanding their business and how the money moves within their environment. Each industry has its own way of transacting with all the stakeholders within that ecosystem, so we try to understand that and we prescribe the best approach in terms of solution design, and then we engage with our partner to help them have a successful journey throughout the implementation and go live.
Speaker 3And you mentioned payments and part of PayFact also the risk and compliance and those other aspects of sort of that payments ecosystem. But are you today doing this or are you looking to go into other, so like maybe embedded lending or insurance or other sort of financial services products?
Speaker 2Yes, we are expanding both vertically and horizontally and as we grow into core financial services, we would like to bring additional embedded services such as the ones you mentioned, such as embedded lending and embedded otherded services such as bill payment components, which are again adding value to our customers, and other credit facility services that are all coming in a form of embedded and as a service that our partners can expand those to their underlying customers.
Speaker 3Well, when you step back and look at the broader payments industry as a whole, where do you see it headed, say, in the next three to five years?
Speaker 2Definitely the payment industry is moving forward at a rapid pace toward innovation. But I think there are two core changes that we will see in the coming years from my point of view, and it's that we are getting to the time that, as we are getting the embedded payments into various industries, which we say every software company is a fintech company now, by implementing payments. So payments are becoming kind of autonomous, so it's not that you have to look at it as a separate piece of your business. So things are getting seamless in a way that for a property management software that offers, as an example, offer service to landlords and tenants that how they have to manage their portfolio and when it comes to payments still, landlords have to collect a check or a tenant have to make the payment Entire money movement aspect of that relationship is becoming fully embedded into the property management software.
Speaker 2So the landlord and tenant do not need to even think about how the money flows Once they get their account set up. Everything is moving seamlessly and we have started getting this experience through Uber that it was kind of new for experience for everyone that you walk out of the door without even need to interacting with the service provider or the driver to give them your credit card or cash, and I think this is becoming seamless across B2B. And the totality is another piece where you will see all the payment rails are integrated to each other. It doesn't matter if you have Visa, mastercard, wired, local payments in Canada, such as EFD, or international rails, such as ACH, etc. It's all becoming accessible under unified service providers and networks are merging together, so it's making access easier to all of these rails on a global basis.
Speaker 3On the piece about the frictionless or making it seamless. It seems what I hear a lot is that it's really being driven from the consumer's expectations. You're transferring the concept over to more the B2B world. I mean, do you feel like there's sort of a lag right? It's a little bit more complex in B2B so it's going to be a little harder to solve or do you feel like that's not necessarily true?
Speaker 2Yeah, I agree it's difficult, but I think that the core aspect of being successful in this journey is to understand each industry, how they transact and, as we know, each business has various operations.
Speaker 2That requires a money movement.
Speaker 2A business has a payroll, a business has an office lease payment, they have account receivable, account payable for goods and services they acquire to service their business and then they have their core business function. What we see, which is very interesting, that we are building that network effect where touching these businesses across various activities in their everyday operation. So we have integration with payroll management software and, as a result of that integration, the controller or accountant, once they approve the payroll, they don't need to go cut a check and hand over to the employees. The software automatically debits the bank account, distributes the fund. We have touched the same business when they are using an account payable software that once the payments are approved, the money gets moved automatically and distributed. Same thing on their lease payments. So we are working with a property management software and we are touching that business across various activities they have and each activity has its own behaviors and it's important for anyone who want to enter this aspect of a fintech industry to really invest time and understanding those hows before offering a solution.
Speaker 3Yeah, I think that's great advice. There's so much intricacies of these verticals, so the fact that you've specialized in these verticals is pretty interesting. Well, let's switch gears a little bit and talk about you. So tell us about your journey to your role there as the CEO and founder. Maybe start with your entrepreneurial days early on and then bring us up to date to where we are now.
Speaker 2That's great. I think I've done a little bit of everything since I was little. I always wanted to start a business. It was at the beginning. You know how I can create something that can translate to dollars. So I started building home computer units and selling that to family and friends, and from there the journey found its own path and I ended up being in a telco space.
Speaker 2So I started my first venture around what is called RF planning, which stands for radio frequency planning, and started working with regional telcos in the Middle East and getting contracts setting up their network more of an engineering play.
Speaker 2And from there I realized young telcos have a challenge accessing networks and there was this transition from traditional switches into cloud-based solutions. So we built the software and started signing up telcos and that was where I moved to Canada and managed to grow that venture in five years to over three billions of sales and we got acquired in 2012. But what I learned through that venture was how money movement is complex, either domestically or internationally, and how we had to grow our finance team to constantly track thousands of invoices. I can't pay it, but I can't receive it, and that's where I really got excited about payments and how I can fix the next problem. So you know, in an entrepreneurial journey, we always focus on telling the good side of the story. In an entrepreneurial journey, we always focus on telling the good side of the story, but you know that there has been so many dark days and days that you don't want to go to work and say this is it, but I have made it.
Speaker 3It's been an interesting journey so far, when you were in your prior company and you saw this problem on the payment side, you said, hey, that's a problem that probably other companies have as well and I think I can solve it. And then you went out and found the right people to put the solution together to solve that problem. Is that a good summary?
Speaker 2Exactly. I actually took two years of I call it self-education journey that from the time I exited before I started Vope, I really got myself involved in networking and trying to hire advisors that come from different areas of payments you know, from ex-master cards, visa, treasury and cash managements at the bank, cross-border payments such as Western Union and even virtual wallets, or even the businesses that are active in the money movement outside North America, to really educate myself and see how these executives or people who are engaged deeply in the industries are looking at the future of the industry or the current state and the challenges and the gaps. That could help me have a better understanding of the entire industry before we even start writing the first line of the code.
Speaker 3Okay, and did you say that it started on more of a peer-to-peer money movement business?
Speaker 2Yes, since we wanted to build a proof of concept on the core platform. Volpay became the first customer of our platform to see how smoothly we can operate and implement, and once we built that, we entirely moved toward the B2B and basically used that component that we built for cross-border services as a product now, which, if someone want to launch a cross-border service, they use that as a service and rely with that application in a short period of time rather than building everything in scratch. So that became a service of Wope that we are offering.
Passions and Advice in Business
Speaker 3Okay, gotcha, that makes sense. So what are some things you're passionate about? So, maybe one work-related passion and one personal passion.
Speaker 2I always think, as a founder, the vision you have should align with what you're building in your everyday activities in your company. Have a passion for digital transformation, to see how much of the things we do today can move toward automation and eliminate inefficiencies. And that's the vision for Vope. And, as I mentioned, when we work with these software applications, we literally enable digital transformation, taking industries that are heavily relying on checks paperwork, taking industries that are heavily relying on checks paperwork and manual processing, and bringing that unified experience to the forefront of their business and help them scale faster and help them focus on what they are good at rather than doing these repetitive tasks. And that's really my passion. On a personal side, I'm a car fan, so it's not really related to what I do, but I'm a big fan of Formula One and it's all about. I think at some point it's faster payments and driving fast can come together as a mutual interest in personal and business.
Speaker 3Okay. Did you go to the Formula One races in Las Vegas last year?
Speaker 2Yeah, that was fascinating. Actually, it was the first time that they did it after many years. Definitely a lot of mistakes that have been made, but I think the next year is going to be even better.
Speaker 3Yeah, it was fascinating because I was there like maybe two weeks before and they had, you know, the streets almost completely shut down at that point and it was a little bit of a nightmare to get around town. But I know the city was very excited, so I'm not surprised you were there.
Speaker 2Yeah, that was amazing. Definitely very difficult to move around, but they managed to turn that city into the F1 host. It was incredible how they could pull it off.
Speaker 3Yeah, it was. It was quite a transformation. So I'd like to ask this question to all of my guests, because I think everyone brings their own unique perspective and certainly you, as not a payments person from the very beginning, but definitely a founder and entrepreneur curious to how you would answer this. But the question is, if someone comes to you and says, hey, maybe they just graduated from college and they're looking for a job and they're looking to start a career, and they look at payments or fintech and they say, hey, that's an exciting space to be in I mean, you've mentioned how fast-paced it is and all the technology that's used Maybe they come to you and say, hey, I want to start a career in this space and maybe they even want to go to work for your company. What would you tell them they need to do to be successful in the payments or fintech space?
Speaker 2Yeah, I think my initial advice would be don't. You can do anything else. That would be easier than running a payment company. I say that as a joke but in reality I always tell people just try to educate yourself around what you are trying to get into, even if it's not payment.
Speaker 2Any industry that you want to enter and you are going to grab a market share, it's important to understand who are need to.
Speaker 2You are going to grab a market share. It's important to understand who are the players, what has been the industry like 10 years ago and how it's going to be potentially in 10 years and where you can differentiate. I always say it's all about bringing value to your audience. If you want to come to payments or any industry other than being emotional, that I want to run a tech company and do payments, you have to understand where I can add value to a specific group that can use my services and how I can validate it, and that's going to be the formula of success from my point of view. It's not that I'm going to build this imaginary great product and everybody's going to buy it. You have to understand where you can differentiate and bring something to your customers that they buy it because they see the value that you're bringing to their business and how you can help them grow their business. And I think that's the simple rule of business, how we can be successful.
Speaker 3Okay, great. So in a similar kind of way, I want to double click on something that you said. You talked about taking a couple of years off to really study the industry and you had mentors and advisors in the space. Maybe tell the audience how did you do that, what were the mechanics of it? Was it easy, was it hard? What did you learn? Maybe talk through that a little bit, because I think people would find that interesting.
Speaker 2Yeah, definitely. One thing that has always had a positive impact in my life, through my entire journey, is that I've been good at networking. So that's where I think everyone should start Just trying to get yourself involved in those industry related events. Try to find or meet as many as people and see who is willing to be your mentor or who is willing to give you their time and how you can learn from their experiences, and that has always had the, I think, highest return of investment, because that's where you can get the right people who have done it before or who have tried and couldn't do it. So this is how I would start, usually by networking and getting myself exposed in the industry. And one other thing that I have personally always done is reading Read their books, articles, listen to the podcasts, such as yours. That can help you understand the bigger picture and try to digest where it's the weakness in the industry or where are the strengths in the industry that you can get involved.
Speaker 3Okay, well, hamed, we've covered a lot of ground, obviously, about you and your background and the company and the industry as a whole. Is there anything else you'd like to add before we wrap up the show?
Speaker 2No, I think it was a pretty good conversation.
Speaker 3Great, great. I think it was a great conversation, so thank you so much for being on the show today. I know your time is very valuable, so I really appreciate you being here.
Speaker 2I appreciate that. Thank you so much for having me, Greg.
Speaker 3Thank you, and to all you listeners out there, I thank you for your time as well, and until the next story.
Speaker 1Thank 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. If you enjoyed listening, please share on your social channels as well.