Latest / The Payments Shed / Ep. 48 - Live from MPE Berlin: From Redundancy to Strategy - The Evolution of Orchestration with Solidgate

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Ep. 48 - Live from MPE Berlin: From Redundancy to Strategy - The Evolution of Orchestration with Solidgate · The Payments Shed

• 0:03
  Welcome back to The Payment Said Podcast live here at MPE.
• 0:06
  I'm with Alex Fernandez, VP of Western Europe at Solid Gate.
• 0:10
  Alex, thank you so much for joining us.
• 0:12
  Tell me a little bit more about yourself, your background, and
• 0:14
  then about Solid Gate. Thank you so much for having me,
• 0:17
  Justin. I'm really happy to be here
• 0:18
  having this conversation with you.
• 0:20
  Look, I've always worked at payments.
• 0:24
  Really my early starts, I was working at Amadeus, which
• 0:27
  everyone knows nowadays as outpace and that was really like
• 0:31
  the origin of orchestration, right?
• 0:33
  Like it was all about connectivity and connecting
• 0:37
  airlines and the systems with the ecosystem.
• 0:41
  After that I moved some years to the consumer sides and the last
• 0:45
  five years prior to Solid Gate I've been with Karna leading the
• 0:48
  go to market efforts for Iberia. Amazing.
• 0:51
  And tell me a little bit more about Solid Gate.
• 0:53
  What do you guys do? So Solid Gate is all in one
• 0:56
  orchestrator. So what we really do is that we
• 0:59
  give the infrastructure to any company to really excel at
• 1:03
  payments. So as we like to say, we
• 1:06
  actually want our customers to be building their products and
• 1:08
  we care about everything that is payment related for them.
• 1:12
  Nice. And when we talk about
• 1:14
  enterprise businesses and merchants, a lot of them still
• 1:18
  rely on one PSP. What kind of why do they still
• 1:23
  rely on one BSP when there's so many other options out there?
• 1:25
  Yeah. I think that's it's because they
• 1:29
  are too comfortable and their priorities are just elsewhere.
• 1:33
  So as I like to say, like when a merchant gets to the 20 million
• 1:37
  TPV or GMV thresholds is where they really they can really
• 1:41
  start optimizing. And optimization is not really
• 1:45
  about performance, right? There are so many different
• 1:48
  things that you can be looking at and a conversation I often
• 1:52
  have with my merchants is that depending on the business line
• 1:56
  where you are operating into, you are spending so much money
• 2:00
  to get the customer on top funnel on your positioning, on
• 2:03
  your marketing efforts, on your consumer acquisition.
• 2:07
  And you are focusing so much here that then everything that
• 2:10
  is happening here is kind of left at the status school.
• 2:14
  Sometimes the status school is fine, but you know, and for
• 2:18
  specific for payment people like when you have an acceptance rate
• 2:21
  of like 80%, that's not fine. You know, like you can actually
• 2:25
  start digging into it and working on things to actually
• 2:28
  improve it. And that's where we actually get
• 2:31
  into pace, not only in performance price, right, but
• 2:36
  also like so many things that we could be all looking after.
• 2:40
  A conversation I have with many merchants is maybe when they're
• 2:43
  using 1 gateway into multiple PSPS and they call that
• 2:46
  orchestration. When we have lots of different
• 2:49
  gateways who don't have lots of different acquiring
• 2:52
  relationships, what do they then think becomes a challenge when
• 2:56
  they're kind of they're overwhelmed with solutions?
• 2:59
  Look, I think it's also in the sense of like who is actually
• 3:04
  having control over payments rights?
• 3:06
  Like we don't rely our own lives to a single bank.
• 3:11
  Yeah. Right.
• 3:12
  So like a payment series exactly the same.
• 3:14
  Why do we have a single player having the control of everything
• 3:18
  that is happening that is so-called to your own business
• 3:22
  which is receiving the money for your products or your services,
• 3:27
  right. So here is basically the same.
• 3:28
  So of course, every merchant is unique.
• 3:31
  Every merchant is very different on the goals that they have, on
• 3:34
  the architecture that they have and the resources that they
• 3:37
  have. But what we really do is to work
• 3:39
  with them almost as consultant partners to make sure they are
• 3:43
  getting the most out of it. And that can be a single
• 3:47
  gateway, multiple acquirers actually might be orchestration
• 3:50
  where you're connecting to the full ecosystem and letting the
• 3:53
  merchant actually have different commercial relationships with
• 3:56
  different acquirers. Again, depending on what the
• 3:59
  goal is, sometimes the goal is margin, sometimes the goal is
• 4:02
  performance. And we need to adapt to that,
• 4:04
  right? One time we're hearing quite a
• 4:06
  lot in the industry at the minute is smart routing, Yeah.
• 4:09
  What's what's your thoughts and opinions on what smart routing
• 4:12
  is? Yeah.
• 4:13
  Look, I'm a payments guy, so for everyone that works in payments,
• 4:18
  it's very easy to be very geeky about it.
• 4:20
  And I think that smart routing is one of the coolest things
• 4:23
  that we have in payments because again, it's giving the control
• 4:26
  back to the merchants to decide what is happening with their
• 4:31
  transactions. It's not the gateway deciding,
• 4:33
  it's not the acquire, it's the merchants, right?
• 4:36
  And you can get very granular about it.
• 4:38
  Like for many people, routing is just about saying, OK, like 20%
• 4:42
  of the volume goes here, 30% goes there and elsewhere.
• 4:45
  But it's not really about it. Like you can get really like in
• 4:48
  details about like location of the merchant typology, sorry,
• 4:53
  location of the the consumer or the merchants or where the
• 4:56
  entity is. Obviously then in terms of like
• 4:59
  location of the consumer type of cards, bank and so many other
• 5:03
  things that you can actually do on a mega data perspective.
• 5:06
  So sometimes I think it's some merchants that I'm actually
• 5:09
  realizing that their needs on a routing perspective are actually
• 5:13
  much more complex because they want to route having some
• 5:17
  business criteria that we don't even have an idea, right?
• 5:20
  So some of the merchants actually send us the
• 5:22
  segmentation on the API message for us to be able to route that
• 5:26
  way, right? But the most common routing that
• 5:28
  I see is really about balancing volumes, fighting better
• 5:32
  performance and then of course pricing, right?
• 5:35
  It's. Quite interesting that one of
• 5:37
  this new on earth transactions where you want to be maybe
• 5:41
  processing your transactions for a certain card issuer through to
• 5:45
  a certain acquirer. How difficult does that become
• 5:48
  as a merchant to try and do that on your own?
• 5:51
  It's our everyday right to give an example.
• 5:55
  I mean, every time we have an issuer that is the same as the
• 6:01
  acquirer, it's very basic that the performance will be better
• 6:05
  potentially and depending on the market interchange will be lower
• 6:09
  as well. So it's kind of a no brainer to
• 6:11
  actually do it and we see it by the data that we have, right.
• 6:14
  So one of the cool things about Solid Gate has an orchestrator
• 6:17
  and the way that our account managers actually work with our
• 6:20
  merchants is that we have access to so much data in ecosystem in
• 6:24
  different regions, different acquirers, issuers that you can
• 6:27
  actually go to the merchant and say look to operate in these
• 6:30
  different markets. I actually, I don't know, let's
• 6:32
  say the US, the US like JP Morgan is the biggest issue of
• 6:35
  the US. So it's kind of a no brainer
• 6:37
  that the acquirer should be JP Morgan.
• 6:39
  Yeah, right. And we can actually make that
• 6:41
  happen with Solid Gate because we are not only a tech company
• 6:45
  in the sense that some of the orchestrators out there that
• 6:47
  just work more in the connectivity type of thing.
• 6:50
  We are actually a financial institution.
• 6:53
  We have our own license, which means that we have pay fact with
• 6:56
  some of these biggest Tier 1 acquires, right?
• 6:59
  So we can actually get into the details of things and make
• 7:02
  things work for merchants. It allows you to kind of
• 7:04
  benchmark acceptance rates, right and you can be proactive
• 7:07
  with your customers to say based on a customer a we've seen an
• 7:11
  increase here, so we can now go and rolled out across other
• 7:14
  merchants. Exactly.
• 7:15
  The coolest thing about it is just that we just don't get in
• 7:17
  saying like maybe you should try out audience.
• 7:20
  No, I go directly to audience. I open the midst for the
• 7:24
  customer and we start like testing in Seto.
• 7:27
  So some of the numbers that we see are sometimes are really
• 7:29
  impressive. Like we are talking about like
• 7:31
  recovery rates around like 8% by cascading, right?
• 7:35
  And 90% of merchants out there, they are not using cascading
• 7:41
  nowadays. It's so, so, so powerful, right?
• 7:44
  And then of course like very basic layer of acceptance rates
• 7:48
  when you are moving like from one acquire to the other, we are
• 7:50
  talking about deltas of like up to 5% and talking about Tier 1
• 7:56
  acquiring as well, right. So when you get into the
• 7:58
  numbers, you get very impressed by the type of revenue that you
• 8:02
  are actually bringing back to the CFO, to the decision makers.
• 8:06
  So it's something that's on my perspective is really a no
• 8:09
  brainer when we are talking about enterprises.
• 8:12
  Companies and it comes back to that whole kind of situation you
• 8:14
  mentioned around merchants spend so much money on getting
• 8:17
  customers to the checkout. You want to make sure that the
• 8:20
  minute they press submit or pay now that that the rest of the
• 8:24
  journey is as smooth as possible.
• 8:25
  Yeah, that works. Things that they need to work,
• 8:27
  needs to work, yeah. And talk to me a little bit kind
• 8:29
  of about when we look at acceptance rates, it's always
• 8:32
  the positive. What about decline rates?
• 8:34
  What do you see as a false decline?
• 8:36
  Yeah. Look so many things and then
• 8:39
  there of course like it's very different per different PSP in
• 8:44
  the sense that you know like the decline codes that they use and
• 8:47
  so on. So what we really try to do is
• 8:49
  to bring it every everything to the same layer.
• 8:52
  So not only the merchant knows how to act, but we also know how
• 8:57
  it can actually influence the better performance of that given
• 9:00
  merchant, right. And one thing that we see like
• 9:03
  we know that who has actually the power on a setting a
• 9:06
  transaction is actually the issuer bank.
• 9:10
  And sometimes, you know, like so many things can happen actually
• 9:14
  in terms of the API, the messaging, the time of the day,
• 9:17
  whatever, that can actually make the issuer bank feel not so
• 9:22
  comfortable about accepting a given transaction.
• 9:25
  So just by the ability of being able actually to cascades, we
• 9:28
  can actually recover a lot. Now sometimes I have merchants
• 9:31
  that come to me with an acceptance rate of like 90 plus
• 9:34
  percent. And you'll say, yeah, this is a
• 9:37
  very solid acceptance rate. Like maybe there is not much I
• 9:39
  can do that. But the reality is that by
• 9:42
  having a single point of failure, just by trying out
• 9:45
  different cascades, you always recover some money.
• 9:48
  Sometimes it's 2%, sometimes it's 3%, but 3% at the scale of
• 9:52
  a multi $1,000,000 business that's a lot of money.
• 9:55
  Then you have the different side of the coin which is some
• 9:59
  merchants come to us with a very good pricing with our local
• 10:02
  acquiring partner, let's say in specific niche markets, you know
• 10:07
  not one of these big guys and they have a very decent pricing,
• 10:10
  but they have acceptance rates around like 70 plus percent.
• 10:14
  And there when we get into the game of, OK, I will respect your
• 10:18
  commercial interests here, we will put this local acquire in
• 10:23
  the first layer, but I'll start cascading to Tier 1.
• 10:25
  Acquires are often solid gates because you can actually process
• 10:28
  and you can actually acquire as part of the plan.
• 10:31
  There's a game changer. I think it all makes sense.
• 10:34
  So quick question, do we think PSP's have got a little bit of
• 10:38
  hate for orchestration platforms?
• 10:41
  I don't think they will admit it, but they have.
• 10:44
  Yeah, because it's nonsense when you get to a certain level of
• 10:48
  volume to be putting all your money in a single provider,
• 10:52
  right? And can be one of the biggest
• 10:54
  providers, but that just does not make sense because not
• 10:57
  everyone can give you a level of service that you might need
• 11:01
  given the complexity of your business.
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  And then it comes as well pricing discussion and so on.
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  And the fact that I see around, like many PSPS actually focusing
• 11:13
  on orchestration and saying that they do orchestration
• 11:15
  themselves, it's actually something quite cool because
• 11:17
  everyone is kind of educating the merchant on what
• 11:20
  orchestration is. But also, we cannot fool
• 11:22
  ourselves. Like APSP can do very limited
• 11:25
  orchestration. We can do some routing, we can
• 11:28
  play around, we can do some connectivity on Apms, whatever.
• 11:32
  But the real orchestrator needs to sit a level behind, because
• 11:36
  there's where we actually find the real the real games, right?
• 11:40
  Yeah and you mentioned around and work with solid gate you do
• 11:44
  a lot of the heavy lifting for your merchants.
• 11:46
  Get an account set up. We all know how painful it is to
• 11:48
  get missed from most aquariums. How weird is that kind of 1
• 11:53
  integration to many to to solid gate?
• 11:55
  Yeah, extremely easy because again like we are not just a
• 11:58
  tech integrator, we are actually financial institution, which
• 12:01
  means that often, again depending on what the goal is
• 12:05
  for the merchants, if they're actually providing payment
• 12:07
  services to the merchants, we'll do the onboarding with that,
• 12:10
  even merchants. And that onboarding very often
• 12:13
  is just enough for us to be able to open different needs with
• 12:16
  different requires, but also to get access for this given
• 12:19
  merchants to specific Apms, right.
• 12:23
  So often we are talking about an e-mail to a given account
• 12:26
  manager, give us a couple of business days to get that set
• 12:29
  for you and you are actually able to do that, right?
• 12:34
  Alternatively, and for the merchants that want to have
• 12:37
  again that power or debt control, all of these can
• 12:39
  actually be self serviced in our hub.
• 12:42
  Not only getting these accounts live, but also everything's in
• 12:46
  terms of the routing, the cascading logics and so on.
• 12:49
  So it's everything that we do is about giving the merchants the
• 12:53
  control on their payments stack. What could PSPS do to up their
• 12:58
  game then? Yeah, look, PSPS are in the
• 13:03
  tough position at the moment, right, Because orchestration is
• 13:07
  becoming more and more common. So I just think as an industry
• 13:11
  will have to adapt to be living in ecosystems where a given
• 13:15
  merchant can actually have more than one PSP, more than one
• 13:18
  acquire, right? And that's what makes sense.
• 13:20
  So I think like upping its game or how one can open open want to
• 13:26
  repeat. Yeah, that's fine.
• 13:28
  So what could PSPS do to up their game?
• 13:31
  Look, I think PSPS at the moment are pure player.
• 13:35
  PSPS are in the corner situation at the moment because you know,
• 13:40
  like more and more it's becoming very common that the given
• 13:43
  merchants actually needs to work with more than one acquire.
• 13:48
  So for all of us to open our games, I think what we can do
• 13:51
  better is actually to work Better Together.
• 13:54
  You know, to also to make sure that things are easy for the
• 13:58
  merchants, but also for our partners and the ecosystem.
• 14:01
  Because more and more cascading is going to become a bread and
• 14:05
  butter of the industry and everyone is going to be doing
• 14:07
  cascading and everyone is going to be migrating tokens from one
• 14:10
  to another. So I think it's all about making
• 14:13
  it easy for everyone because I think eventually there is space
• 14:17
  for everyone and whoever is good in this industry will always
• 14:22
  have merchants and will always have more volume.
• 14:25
  Nice. And we're here at MPE.
• 14:27
  What do you love about the event?
• 14:29
  So it's a very high quality event.
• 14:32
  I think in European perspective all the big people from the
• 14:36
  industry are here, not only the provider side but also on the
• 14:38
  merchant side. And what I really like the most
• 14:41
  of it is that people that are here are very knowledgeable
• 14:44
  about payments. So the type of conversation that
• 14:47
  we have is very interesting and you know, like no one like we
• 14:51
  are not selling here. We are act really acting as
• 14:54
  consultant partners to our merchants because often I hear
• 14:58
  about some needs and sometimes you know, like you just say like
• 15:02
  what is actually the best for the merchants And everyone has
• 15:05
  his spirit here and that's what I really love about the events.
• 15:08
  And lastly, we have something on the Payments podcast with the
• 15:11
  Shelf of Shame. What is the biggest frustration
• 15:14
  for you in the industry that we work in?
• 15:16
  Look, I think it goes by waves in the sense that it changes
• 15:20
  constantly. Right now for me is really the
• 15:23
  way that's more some local providers do KYC.
• 15:28
  You know, I think nowadays we have so many cool companies, so
• 15:31
  many like offering really smooth KYC tools.
• 15:37
  And sometimes you see some stuff that's, you know, like sending a
• 15:42
  UBO to a specific branch to sign some papers.
• 15:45
  That's what gets me crazy. So there is a lot to be done
• 15:47
  still in that's. I have to agree onboarding still
• 15:51
  painful in 2026 as it was 20 years ago, right went with paper
• 15:56
  applications. There's still frustration even
• 15:58
  though some of it's more digital.
• 16:00
  It still takes just as long it has to go to a risk review team
• 16:03
  and merchants just want to get trade in it and then frustrating
• 16:06
  for them. Yeah, absolutely agree.
• 16:08
  Alex, thank you so much for joining us today.
• 16:09
  Enjoy the rest of the show. It's.
• 16:11
  A pleasure. Thank you.
• 16:11
  Thank you.