Latest / Leaders In Payments / Mitch Davis, CRO & Co-founder at PayAmigo | Episode 272

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Mitch Davis, CRO & Co-founder at PayAmigo | Episode 272 · Leaders In Payments

• 0:01
  Speaker 1: Welcome to the Leaders in Payments podcast, where we talk to C-level leaders from across the payments landscape.
• 0:06
  Speaker 1: 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.
• 0:14
  Speaker 1: We will also hear stories from our guests about their journeys to the top.
• 0:18
  Speaker 2: So you really need to take into account the impact of these local currencies on your revenue as a merchant, and so you need a partner that's able to optimize their effects for you because of the impact it has on revenue when you do the cross-border remittance.
• 0:35
  Speaker 2: Similarly, ensuring that your tax compliant in these local markets is absolutely critical, and so it's worth doing the work with a team that has that kind of deep, deep, deep expertise.
• 0:53
  Speaker 3: That was Mitch Davis, the chief revenue officer of Pay Amigo, and he is my special guest on this episode, episode 272 of the Leaders in Payments podcast, and I'm your host, greg Myers.
• 1:02
  Speaker 3: Pay Amigo is the leading enabler of e-commerce and emerging markets.
• 1:06
  Speaker 3: Mitch and I talk about Pay Amigo, what makes it unique in the marketplace and how important emerging markets are for companies looking to grow their business.
• 1:13
  Speaker 3: Mitch goes on to talk about his professional journey as well as what he's passionate about, both professionally and personally.
• 1:19
  Speaker 3: We've got a great episode ahead, so let's get started, hi Mitch.
• 1:29
  Speaker 3: Thank you for being here and welcome to the Leaders in Payments podcast, hi, greg.
• 1:32
  Speaker 2: Good to be here, thank you.
• 1:34
  Speaker 3: Absolutely.
• 1:34
  Speaker 3: So let's dive in If you don't mind.
• 1:37
  Speaker 3: 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.
• 1:42
  Speaker 2: Sure, the accent is probably a bit of a giveaway.
• 1:44
  Speaker 2: I grew up in Australia, principally in Sydney, so a few years outside of Sydney doing the farming thing moved to the US in the end of 98, 99.
• 1:55
  Speaker 2: Principally for entrepreneurial reasons.
• 1:58
  Speaker 2: I've been living here in the US doing startups ever since, between San Francisco and New York.
• 2:04
  Speaker 2: That's where I live, so I go between both cities.
• 2:08
  Speaker 3: Okay, well, let's talk about the company Pay Amigo.
• 2:11
  Speaker 3: So tell us what Pay Amigo does Pay.
• 2:13
  Speaker 2: Amigo services digital merchants, with a focus on processing payments effects and managing payment operations in emerging markets.
• 2:22
  Speaker 2: So our geographic focus is high growth areas like Latin America, brazil, argentina, colombia, chile, peru, mexico, as well as the Middle East and Africa.
• 2:33
  Speaker 2: Obviously, you've got large populations, very digital populations and a lot of growth in those markets, and so the aggregate transaction volume, if we include Asia, is about $1.8 trillion a year.
• 2:47
  Speaker 2: So it's very much a focus for growth for digital merchants over the next five to 10 years, and we focus exclusively on those markets.
• 2:57
  Speaker 3: Are there certain verticals within digital commerce that you focus on, or is it basically anyone doing e-commerce?
• 3:05
  Speaker 2: Yeah, good question.
• 3:06
  Speaker 2: So we've been very strong in video games over the years because they were at the forefront of digital payments in emerging markets.
• 3:14
  Speaker 2: But that's expanded dramatically over the last five to 10 years and so there are a lot of software companies, a lot of digital entertainment companies.
• 3:22
  Speaker 2: If you think about streaming whether that's streaming content, music, film, television, short form content and so forth travel is obviously a very big vertical market there and, to some extent, physical product as well.
• 3:36
  Speaker 3: And can you talk a little bit about how you go to market?
• 3:39
  Speaker 3: Do you have a direct sales team, do you work through partnerships or both?
• 3:43
  Speaker 2: Yeah, two core aspects to the business.
• 3:45
  Speaker 2: One is setting up your infrastructure in these markets, which is typically complex.
• 3:49
  Speaker 2: These are often harder markets to set up and operate than, say, the EU or the US.
• 3:58
  Speaker 2: So our payments team spends anywhere between 12 and 24 months reviewing the local market, reviewing taxes, regulatory issues, the financial aspects of the market, particularly, say, fx remittance tax and so forth.
• 4:13
  Speaker 2: We set up the entity, the structure.
• 4:15
  Speaker 2: We do that in a fully compliant way.
• 4:18
  Speaker 2: We set up the banking rails and the payment rails for all the local payment methods and then we go live.
• 4:25
  Speaker 2: And then, in terms of go to market, our strategy is that we work both directly with merchants digital merchants, but also we have a number of partners that are resellers of our platform and referral partners for us as well, and we find that works super well and we can service them efficiently and help their merchants grow their local businesses.
• 4:48
  Speaker 3: Are most of your clients.
• 4:50
  Speaker 3: Typically are they in the US and expanding to these markets, or yeah, yeah.
• 4:55
  Speaker 2: So the typical profile for emerging markets is that a digital merchant will Go into, say, brazil or Argentina, columbia with a cross-border solution.
• 5:05
  Speaker 2: They'll start to see traffic and volume there.
• 5:08
  Speaker 2: But what typically happens is that a lot of cross-border Cards are not accepted locally in those markets, principally because, if you take a country like brazil right, only about 15 to 20% of cards issued in brazil are enabled for cross-border Balance, are local cards, and so it's important to offer local cards but also the local payment methods so consumers have a choice.
• 5:32
  Speaker 2: So, for example, in brazil there's a payment method called PIX, which has now grown over the last 18, 24 months to a point where PIX is which is, by the way, a real-time payment system exceeding credit cards for total transaction volume.
• 5:49
  Speaker 2: So kind of key thing there is number one offer all the local payment methods so you can access all consumers and give them the opportunity to pay the way they want to pay.
• 6:00
  Speaker 2: And number two, make sure you're doing it in a way that's appropriate for the local market conditions.
• 6:06
  Speaker 3: Okay, and what would you say?
• 6:07
  Speaker 3: Differentiates pay amigo from your competitors out there.
• 6:11
  Speaker 2: Yeah, I think pay amigo has a couple of points of differentiation.
• 6:14
  Speaker 2: One is a lot of bench strength.
• 6:15
  Speaker 2: So the team, both here in the US and Europe, has decades of experience in emerging markets.
• 6:23
  Speaker 2: So real subject matter expertise.
• 6:25
  Speaker 2: Our local teams, you know, in brazil, in argentina, in the middle east, in africa also have extensive local market experience and expertise as well.
• 6:36
  Speaker 2: So we're in a position to provide advice to merchants on choice of payment methods, the most efficient rails, as well as having the full set of capabilities to do local payment operations, whether that's fraud, chargeback management, all the way through to FX.
• 6:54
  Speaker 2: And FX is kind of a key point here, right, because when you talk about emerging markets again, you're talking about what are typically volatile currencies.
• 7:02
  Speaker 2: So argentinian peso is the kind of perfect example of that.
• 7:06
  Speaker 2: It's depreciated significantly against both the US dollar and the euro over the last three to four years, but we might see intraday volatility of 10 and in some cases as high as 20% deval in local currency.
• 7:22
  Speaker 2: So you really need to take into account the impact of these local currencies on your revenue as a merchant, and so you need a partner that's able to optimize FX for you because of the impact it has on revenue when you do the cross-border remittance.
• 7:40
  Speaker 2: Similarly, ensuring that your tax compliant in these local markets is absolutely critical, and so it's worth doing the work with a team that has that kind of deep, deep, deep expertise.
• 7:54
  Speaker 3: In the payments and fintech industry.
• 7:55
  Speaker 3: Merchants and their customers have increased expectations around omni-channel commerce.
• 7:59
  Speaker 3: So, in collaboration with NMI, the fully integrated payment solution built to scale, we've launched the Be Solid campaign where, in this series, we'll explore the ability to accept payments anytime, anywhere, using any device.
• 8:11
  Speaker 3: We'll dive deep into mobile acceptance via contactless tap on phone, qr codes, wallets and more.
• 8:17
  Speaker 3: We will hear from companies like Authvia, canalote, google and more.
• 8:21
  Speaker 3: To listen to the latest episodes, visit leadersandpaymentscom or nmicom.
• 8:27
  Speaker 3: Slash resources, slash podcasts.
• 8:29
  Speaker 3: A world full of squares and stripes.
• 8:31
  Speaker 3: Be solid.
• 8:32
  Speaker 3: Where do you see the payments industry headed, say, in the next three to five years?
• 8:38
  Speaker 2: Well, again, if we talk about emerging markets, we've seen a lot of payment trends very strong in Southeast Asia, for example, like QR codes.
• 8:48
  Speaker 2: The emergence of wallets is the single point of payments for individual consumers in those markets.
• 8:54
  Speaker 2: We've seen in Latin America, as I mentioned, the explosion of picks in Brazil.
• 8:59
  Speaker 2: Now picks are moving into other countries like Colombia, so that's going to have a real impact on payment methods over the next three to five years across Latin America and other parts of the world.
• 9:11
  Speaker 2: And then I think also there's significant trends around compliance and regulatory changes in these markets as well.
• 9:20
  Speaker 2: So we've seen a lot of emphasis and a lot of work being done on cross-border payments and their impact on local taxes.
• 9:30
  Speaker 2: So I think a lot of tertiary groups in emerging markets are looking at the cross-border payments and saying, hey, we need to start to capture those taxes, whether that's a country like a Morocco or some of the African countries in Latin American countries.
• 9:44
  Speaker 2: So expect to see a lot of regulatory changes around payments, and cross-border payments in particular, over the next three to five years.
• 9:52
  Speaker 3: And you've mentioned a few times real-time payments and, as you know, here in the US the Fed now launched and there's a lot of buzz in at least the US market around the real-time payment rails.
• 10:04
  Speaker 3: I mean, how does that compare to what you see in these emerging markets?
• 10:09
  Speaker 2: A lot of them are behind the curve, to be candid, right, just based on where those individual economies are.
• 10:14
  Speaker 2: Right.
• 10:14
  Speaker 2: If we looked at some of the Central American countries, right, we've seen some pretty interesting adoption of cryptocurrencies, for example.
• 10:22
  Speaker 2: But in terms of real-time payments, again, pix is a great example because it settles in seconds.
• 10:28
  Speaker 2: It's extremely low cost both for the consumer and the merchant, and there's a lot of trust in the system as well.
• 10:36
  Speaker 2: So that's local payment processing.
• 10:38
  Speaker 2: The adoption of real-time payments for cross-border remittances is a ways off.
• 10:43
  Speaker 2: We're still seeing adherence to traditional FX rails, albeit that I think that that will start to move over the next again three to five years as well.
• 10:55
  Speaker 2: There's been a lot of work being done by both banking and financial institutions around that piece as well, so that, I think, helps solve some of the challenges that we see in emerging markets around currency volatility that I mentioned earlier.
• 11:09
  Speaker 3: And a question about the regulatory environment.
• 11:12
  Speaker 3: Do you see some of these countries coming together and doing something that's going to cover a region, or is it still going to always be specific to the country?
• 11:24
  Speaker 2: A combination in the sense that there are certain countries that are leading in particular areas, and their prominence in a region tends to influence what happens across that region.
• 11:35
  Speaker 2: So we might see, for example, some of the regulatory changes in India, as a leader in Southeast Asia, starting to roll over into other markets as well, whether that's things like PII compliance or consumer protections, tax regs, things like that.
• 11:54
  Speaker 2: So it's a combination of the two, both in terms of looking at countries that are leaders within the regions and also sort of regional trends generally, I think.
• 12:06
  Speaker 3: Let's go ahead and switch gears a little bit.
• 12:08
  Speaker 3: Let's talk about you, walk us through your professional journey, so maybe how you got into the payments world and your roles and responsibilities, and then kind of lead us up to your current role as the Chief Revenue Officer there at Payamigo.
• 12:24
  Speaker 2: Yeah, sure.
• 12:24
  Speaker 2: So I came to payments through the video game industry.
• 12:27
  Speaker 2: I've been an entrepreneur pretty much my entire career, since graduating college.
• 12:31
  Speaker 2: In fact, I put myself through college by setting up a business to import toys in Australia, so got into it early.
• 12:39
  Speaker 2: I got into the video game early industry in 2001 where I saw an opportunity to deliver advertising real time in the games.
• 12:48
  Speaker 2: That was a company called Massive, which I set up in New York and built an amazing team and sold that company to Microsoft.
• 12:55
  Speaker 2: After that I started with a group of guys, a company called Laugh Gamer, which was an e-commerce platform for video games.
• 13:02
  Speaker 2: Why was that interesting?
• 13:04
  Speaker 2: Because there was a new model emerging out of South Korea and secondly China, where games were being given away for free but players could buy items within the game.
• 13:16
  Speaker 2: So you could buy a car and a racing car racing game and then for $2 get a set of wheels and $3 a paint job and so forth.
• 13:25
  Speaker 2: Anyway, that model exploded microtransactions and so we saw an opportunity to build the Yee-Kon platform, drive that virtual economy, and as we deployed that with clients like Xbox and Sony and Electronic Arts and others, those games had users in all parts of the world and so learning that local payments were important in countries again like Brazil and Argentina and Malaysia and Thailand and Vietnam, for example, really opened our eyes to the importance of local payments for e-commerce companies, particularly in emerging markets, and so we built out a payments platform for that.
• 14:06
  Speaker 2: We ended up selling that company to Wododesk, but we became very passionate about the opportunity for emerging market payments.
• 14:13
  Speaker 2: Not only is it high growth right these markets typically growing between 20 and 40% right.
• 14:20
  Speaker 2: India is in the 35 to 40% range.
• 14:22
  Speaker 2: Most of Latin America is in the 20% range.
• 14:24
  Speaker 2: So these are large populations, high growth, real revenue opportunities for merchants, but a lot of local complexity.
• 14:32
  Speaker 2: And so we launched Pay Amigo with a focus on that.
• 14:36
  Speaker 2: Three other partners in the group and the company is very, very focused on executing against the opportunity in EEM.
• 14:43
  Speaker 2: And when did Pay Amigo launch?
• 14:46
  Speaker 2: We started at the beginning of this year.
• 14:48
  Speaker 2: Again, the core founders are all payments veterans really, really strong team and the rest of the team folks that we work with that have deep local market knowledge, really strong on product, really strong on technology, and we're very excited about the opportunity for the company and what we can do for merchants in these markets over the next five to 10 years.
• 15:13
  Speaker 3: What are some things you're passionate about?
• 15:15
  Speaker 3: So maybe one work-related passion, one personal passion.
• 15:19
  Speaker 2: I mean obviously passionate about emerging markets, right?
• 15:21
  Speaker 2: They're really fascinating countries.
• 15:23
  Speaker 2: We love travelling into these countries and really getting a sense of it the local cultures, the way people make payments.
• 15:31
  Speaker 2: Typically, when I travel with my colleagues in these countries, we're running around trying the local payment methods to pay for food, to pay for local transport, all that kind of stuff Really understand how people think, operate, interact with e-commerce merchants and also pay.
• 15:51
  Speaker 2: I think we're passionate about learning how to set up companies in country the right way.
• 15:56
  Speaker 2: We've learned that being regulatory compliant is really, really important, and so engaging the right types of advisors and local resources to really understand how to set it up the right way is critically important.
• 16:11
  Speaker 2: So you've got to be passionate about that in terms of doing it the right way.
• 16:14
  Speaker 2: From a personal standpoint apart from my kids and family, obviously, and really seeing my kids interact and have fun with different types of opportunities in life for me it's probably the 2Gs, it's guitar and golf, being a musician ever since I was a kid, so I still love playing and my kids play as well, so that's really a great source of fun for me.
• 16:37
  Speaker 3: I always ask this question because I think everyone brings sort of a unique experience to the answer and certainly as someone who has been in payments but maybe a little different angle I'm curious what your thoughts would be.
• 16:51
  Speaker 3: So the whole payments and fintech sector over the years has become a great place to work and a lot of job opportunities.
• 16:59
  Speaker 3: So let's have the scenario Someone comes to you that's right out of college or university and says, hey, mitch, I'm looking to get into payments or fintech, I'm looking to build a career there.
• 17:09
  Speaker 3: What would you tell them that they need to do to be successful in payments?
• 17:14
  Speaker 2: You know it's to your point right.
• 17:16
  Speaker 2: It's a large and growing industry, and there's a lot of opportunities for kids coming out of college to really establish careers there.
• 17:23
  Speaker 2: It's a close-knit industry, and so I think one of the key points of advice I would give would be to attend as many of the payments events as possible to really start to build your network and gain some experience around that.
• 17:35
  Speaker 2: The industry tends to look after other folks, and so networking is absolutely critical.
• 17:40
  Speaker 2: The other thing and you touched on this a couple of times over our conversation there's so much change happening in payments and it's accelerating every year, and so staying on top of what's happening from a technology standpoint is absolutely critically important.
• 17:56
  Speaker 2: Looking at the innovations that we're seeing, whether that's here in the US or Europe or in other parts of the world, is also really important as well, and that innovation isn't necessarily just US centric, right?
• 18:08
  Speaker 2: We've seen a lot of innovation in Asia.
• 18:11
  Speaker 2: We've seen a lot of innovation in Latin America and now in Africa as well, and so staying on tops of those trends, those opportunities, the startups that are doing cool things, that's also, I think, a great source of opportunity for kids coming out of college.
• 18:28
  Speaker 3: Well, we've covered a lot of ground so far, obviously about you and your professional journey and pay amigo and obviously the future there.
• 18:37
  Speaker 3: So is there anything else you'd like to cover before we wrap up the show?
• 18:41
  Speaker 2: No, I think that's been super interesting.
• 18:43
  Speaker 2: I think the last thing I would mention again, when merchants are thinking about growth opportunities over the next 5-10 years, emerging markets are really critically important.
• 18:56
  Speaker 2: One because they represent probably 60% to 70% of the global population maybe even a little bit higher actually but two, these are 20% plus growth markets on an annualized basis, and so typically what merchants are experiencing when they go from cross-border to local solutions in these countries is revenue lift that can be between 20 and even as high as greater than 100%, because they're accessing consumers that otherwise they can't accept.
• 19:29
  Speaker 2: With cross-border payments, they're delivering a better consumer experience and it's driving revenue for them in these markets.
• 19:37
  Speaker 2: So I think that's going to the last point.
• 19:39
  Speaker 2: I'd make Emerging markets huge opportunity in the payment space for merchants, particularly as they really start to look out for growth opportunities over the next 5-10 years.
• 19:50
  Speaker 3: Okay, Mitch, so before we go, what's the best and easiest way for people to learn more about the company and to reach you?
• 19:56
  Speaker 2: Yeah, greg, we've got a lot of resources available on the pay amigocom website country guides, data on markets, local payment methods and so forth.
• 20:05
  Speaker 2: So tremendous amount of resources that folks can download from there.
• 20:09
  Speaker 2: And if they want to reach out to me, my email is mdavisatpayamigocom.
• 20:16
  Speaker 3: Well, Mitch, thank you so much for being on the show today.
• 20:18
  Speaker 3: I know your time is very valuable, so I really appreciate you being here.
• 20:21
  Speaker 2: Thanks, greg, awesome Thank you.
• 20:24
  Speaker 3: And to all you listeners out there.
• 20:25
  Speaker 3: I thank you for your time as well, and until the next story.
• 20:29
  Speaker 1: Thank you for joining us this week on the Leaders in Payments podcast.
• 20:32
  Speaker 1: Make sure you visit our website at leadersinpaymentscom, where you can subscribe to the show and where you'll find our show notes.
• 20:39
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