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B2B Agility with Greg Kihlström™: MarTech, E-Commerce, & Customer Success
#39: Payment innovation for SMBs with Brian Goudie, Aurora Payments
00:28:20
As small and medium-sized businesses navigate economic uncertainty, here’s a question to consider: Are your payment systems an asset that drives growth, or are they just another expense? Today, we’re joined by Brian Goudie, CEO of Aurora Payments....
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Transcript47 lines
- [00:01]
Brian Gowdy
The agile brand.
- [00:08]
Greg Kilstrom
Welcome to the B2B Agility Podcast where we look at the factors that drive success in B2B marketing with a focus on the people, processes, data and platforms that make B2B brands stand out and thrive in a competitive marketplace. I'm your host, Greg Kilstrom advising Fortune 1000 brands on MarTech marketing operations and CX best selling author and speaker. Now let's get on to the show.
- [00:34]
Are your payment systems an asset that drives growth or are they just another expense? Today we're joined by Brian Gowdy, CEO of Aurora Payments. With nearly 30 years in the payments industry, Brian has guided Aurora to serve over 27,000 merchants equipping small and medium sized businesses with the tools they need to thrive in changing economic climates. Known for his community centric approach to fintech, Brian's here to share some insights into how the right payment systems can support business resilience and growth. Welcome to the show, Brian.
- [01:06]
Brian Gowdy
Thanks, Craig. Happy to be here today.
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Greg Kilstrom
Yeah, looking forward to talking about this with you. Before we dive in though, why don't we start with you telling us a little bit about yourself and your role at Aurora Payments.
- [01:17]
Brian Gowdy
Sure, yeah. Brian Gowdy grew up in Massachusetts, found my way somehow into payments down in Charlotte, North Carolina 30 or so years ago with a company called First Data in a bank called Wachovia Bank. I spent about 21 years with First Data in all kinds of different positions there and eventually in August of 2017 came on to what is Aurora Payments as the CEO of the company here. Aurora Payments is a, is a fintech company that supports primarily small to medium sized businesses. It's not that we couldn't do enterprise. We have some really large clients as well. But our typical client is doing somewhere between 50 to, you know, $100,000 in revenue a month and runs the gamut, all kinds of businesses out there. You'd see Main Street America today. So we, we support small and medium sized businesses across the United States. We're based in Las Vegas. I'm based in the Las Vegas office. We have a operation in Tempe, Arizona, not far from Arizona State. We have an office in Georgia and we have an office in Ho Chi Minh City in Vietnam that I'm sure we'll talk more about why the heck we have a business in Ho Chi Minh City. It'll come up. But yeah, been in it 30 years and the entire time in my career has been on what they call the acquiring side or the merchant side of the business as opposed to in our industry. They Talk about the issuing side, which is often banking products. So related. But my tenure has been more on the acquiring side of the business.
- [02:45]
Greg Kilstrom
Got it, got it. Great. All right, well, yeah, let's, let's dive in here. You're definitely the right person to talk about this topic here. So we're going to talk about a few things here, but I want to start with the role of payment systems in supporting those small and medium sized businesses. And you know, anyone in any size organization. But you know, when talking about small and medium businesses, there's been a lot of economic shifts over the last, I mean ever, I guess, like. But over the last few years there's certainly been a lot of ups and downs and a lot of, a lot of things going on from, from an economic standpoint, those small and medium sized businesses often feel the pinch in a different way than larger organizations during times of economic uncertainty. How can the right payment systems help them adapt and even thrive in some of these changing conditions?
- [03:37]
Brian Gowdy
Yeah, and you're not wrong. I will say, just for transparency here, while I'm the CEO at Aurora Payments, I also own two nail salons here in the Las Vegas area, which is something I never thought I would ever own. I could be honest with you, but my wife and I own a couple nail salons. I've got a large family, I have eight brothers and sisters and many own restaurants and jewelry stores. So I've been around the SMD business in many ways as well as being an owner myself. And there's no doubt, you know, the economic challenges that we see today that are ever growing in payments. I would argue depending on the size of your business. Obviously like your employee, your payroll is probably one of your biggest bills you pay as a small business owner and maybe your inventory depending on the type of business you're in. But I would put forth that your payment bill for many of these folks could be their third or fourth largest bill they pay every month. And I don't know that everybody would think that, you know, as a consumer, like, wow, it costs that much to accept payment.
- [04:39]
Greg Kilstrom
Yeah.
- [04:39]
Brian Gowdy
You know, you could plug in 3% of all sales as a pretty good barometer of what a small, medium sized business might Pay. So that $50,000 a month SMB that I mentioned earlier, that is our typical client, they're paying $1,500 a month to accept payments.
- [04:58]
Greg Kilstrom
Yeah. Yeah, that's a lot out of that.
- [05:01]
Brian Gowdy
Yeah, out of that settlement. Right. There's approximately $1,500. And obviously the larger the client you are, you get better Economics, Josh Hawley, recently Mass Card, Visa were on Capitol Hill and their senator, Josh Hawley was ripping into MasterCard and Visa pretty hard. I don't know if you saw that.
- [05:21]
Greg Kilstrom
Yeah.
- [05:21]
Brian Gowdy
But you know, part of his thing was like, oh, you know, I'm pretty sure that Walmart's not paying what my SMB buddy over here from, I think it was Missouri or Kansas City, you know, is paying. And the reality is that of course not. Right. Like the Walmarts of the world, the enterprise clients are going to pay less. Right. Than your typical SMB. So it's not one price fits all. But 3% is a pretty good barometer. What has changed or what we think about as we go forward. I think one of the biggest things I've seen, and this is particularly post pandemic, is there was this phenomenon brewing in payments where merchants were able to basically pass the cost of the payment onto the consumer. So oftentimes, if you're out there, whether it's a restaurant or getting your hair cut or something, I'm sure most consumers have experienced a situation where the merchant said, if you'd like to pay by card, there'll be a 3% surcharge, if you will. Right. So the $100 pair of jeans you're buying becomes 103 if you're paying with card, and if it's cash, it's 100. You see a lot in gas stations. I think for most people, if you think about going to the gas station, it's called dual pricing. You'll see a credit and a cash price. Well, that's the same thing. That phenomenon, if you will, has started to permeate across all kinds of sectors that probably, I can tell you, like, my sister runs a restaurant, Charlotte. I don't think she ever dreamt she would impose a cost to the client to pay with a card. But again, post pandemic, I remember having a conversation with her and she's like, we're trying to stay in business right now. We're trying to stay in business, and this is one of our biggest costs. That's one way that you see SMBs today in a much more ubiquitous way and I can ever recall is passing on the cost of the transaction. I think your fintech or your payments provider have to do more. If I go back to as recently as, I would say 10 or 12 years ago, not talking a long time ago, decade or so ago, when somebody would go to their local bank or wherever they got payments from, generally they were getting a credit card terminal that would do payments. And that was probably about what it did for the most part. Maybe it did gift cards or something like that. Yeah, but it wasn't that dynamic. It was truly you were getting payments to do payments. That game has changed quite a bit in the last 10 years. You know I would, being a First Data guy, I mean I was there when First Data brought on a product called Clover, which was about 10 years ago. 10, 11 years ago.
- [07:44]
Greg Kilstrom
Yeah, I remember that. Yeah, yeah, that.
- [07:46]
Brian Gowdy
I mean it wasn't that long ago. Right. But Clover, the idea of Clover, when we were actually initially distributing that back then was to have sort of a Apple Phone like experience where A, it was simple to onboard and B, it would have this app store where you could buy all kinds of SMB type services that you might need. And that's an example. It's not the example. Certainly Square is another one that people are familiar with where you know, it wasn't just payments. There was a lot of things you could get working capital today you can get out, you can get a loan or an advance against residuals. Who would have thought your payments people were the ones that give you working capital for your business. So I do think like the fintechs can do a lot more today and frankly if I were an SMB, I would demand that.
- [08:30]
Greg Kilstrom
Yeah, yeah.
- [08:32]
Brian Gowdy
Doesn't do much for you.
- [08:33]
Greg Kilstrom
Well, so also, you know, so we've been talking about from the business side, but let's talk a little bit about from the customer side as well because you know, the POS technology definitely, you know, there's been a lot of advancements and things on the, on the business side, but they're almost becoming hubs of customer engagement and getting insights about customers. How do you look at, how should an SMB look at a POS technology to enhance operations, grow their business, reach their customers better? How should they be thinking about that?
- [09:10]
Brian Gowdy
It's a great question. And you know, you started that with the consumer and frankly for the consumer, depending on where you shop, things may have become more irritable. I mentioned, you know, that dual pricing where the cost of the transactions being passed on the consumer. An SMB has a decision to make whether they're going to do that or not. I mentioned restaurants. Right. Restaurants is a restaurant on every corner. So if you're a restaurant, I think you really got to think about am I going to impose 3% whereas I don't know, maybe if I'm a chiropractor. There might be a chiropractor every half mile or something. It's not maybe as that's probably a terrible example, but you know what I mean.
- [09:51]
Greg Kilstrom
Yeah.
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Brian Gowdy
Nail salons, hair salons, restaurants there, they have them every corner. So to do dual pricing or charge that consumer, you have a real decision to make. Whereas a business where it's less competitive. I know when I go to pay my kids college tuitions, if I pay with card, they surcharge me for that. So I don't, I pay with ach. Yeah, but you know, you're in a bit of a contained environment there. You gotta pay the tuition. Right. Um, I think the other things for consumers that post pandemic is tips. I've never seen where so many businesses are asking you for a tip and often like handing you a device and saying do you want a tip? There's a bit of a guilt factor there.
- [10:27]
Greg Kilstrom
Right, right. It's no pressure there, right? Yeah, yeah.
- [10:31]
Brian Gowdy
I literally had one, I've had a couple interesting ones there. One I got my smog test done and a smog test guy, I was there for like 90 seconds, you know, and he wanted a tip and I had one recently where they literally, the guy handed me the device, it was in a restaurant and was waiting for me to decide whether I was going to tip, you know, so that I bet most consumers don't love and we'll see where that, that trend goes. But the other one, you know, you kind of were touching on is marketing. Everybody wants your phone number, everybody wants your email and sometimes that's for good reasons. And I think this is a personal thing. You know again, if you're in a hair salon, let's say you have a hairstylist that you really like. I think most women, men, hair and nails and things like that, it's extremely personal to them and that's an experience for them. So listen, if you get a discount from your favorite hair salon, you're going to probably sign up, right? If you get buy one, get one free because you go to Jersey Mike's and that's your sub place or whatever. Like you're not, you're not opposed to maybe having these, you know, what seem incessant marketing efforts. But the information at the point of the transaction definitely is companies are looking to monetize that in all kinds of ways. I mentioned offers. Right. But there's other ways they're looking to market to you based on buying habits and such. Aurora recently we built our own payment platform which just means that that front end transaction is actually going to Aurora, it's not going to a third party and Due to that, we now have transactional data. So we might know like spending habits of people and things like that. All of that is really, really important. The consumer has a choice to make. Just like everything today, how exposed do you want to be? Are you going to embrace that or not? There isn't any merchant that should mandate that. You shouldn't be mandated to put in a phone number. But yeah, that, that is definitely a big change that I've seen in the last 10 years is the marketing aspect to merchants that are asking for all kinds of information.
- [12:30]
Greg Kilstrom
Yeah, well, and so you know, also again we're talking about, we're talking about small and medium businesses and a lot of those are local. You've mentioned a lot of what would be considered the local businesses. You know, whether it's, you know, it's in the, the corner, the strip mall, the what, whatever it is, these businesses are often the, the backbone of, of communities and really driving, I mean, I think, I don't know the exact statistic but it's like 9, 9, 9% of businesses are small businesses. Right. So it's like, it's, it's a, it's a very large number. How does a company like Aurora tailor your solutions to, you know, address those, those unique needs and you know, what do you think the role of, of fintech companies is in strengthening that, that local aspect?
- [13:18]
Brian Gowdy
Yeah, boy, there's a lot of directions I can go here. And I would say the first thing we do at Aurora is try to be, it's been called a horizontal platform. Odd term. I think investment bankers often talk about this or private equity firms like oh, we're looking for a horizontal payment platform. It just means to me you have a lot of outs. Like you're not all in on one bank sponsor or one processing company. So for us we have back end integrated into fiserv into Global Thesis. There's another big change in this country in terms of payments and processing is 10 years ago there was maybe six to 10 big processing companies. First Data, I think was the biggest at the time. You had companies like worldpay and FIS and Vantiv and Global and Thesis and fiserv. Right. There's been a ton of consolidation at the top. I mean today there's like three huge processing entities in worldpay, Global Thesis, fiserv, First Data. There's not as many big processing companies. So for us building out a horizontal platform, number one, I don't want to be single threaded into any one vendor partner. Number two, it's what's best for our SMBs. Because anything now, you know, if you think about technology, they're going to integrate into a fiserv or a worldpay or a thesis. Like if not you've really cut your ability to distribute off. And so if they are, if you think about technology integrating into those big processes for us we can basically resell anything that we're a global thesis by sip shop. As I said, it gives us a lot of optionality. In addition to that we also I mentioned we built our own payment platform, we have our own hardware. In some cases we own the vertical software as well. So we are. I will give you the example of the nail industry. Actually it's probably the best one. We own a software called mailsoft and we bought that from an entrepreneur who was doing business with us a few years ago. I love what he was doing. He was trying to make the best nail salon scheduling software for the industry. He was a former nail salon owner. There's a lot of scheduler based softwares out there for SMBs but not they don't necessarily speak to nail salons. They may be more ubiquitous where anybody schedule you can use it. He really was trying to solve for the nail industry. And 80% of the nail industry in this country is Vietnamese culture. That's their thing. Just like you hear dry cleaner is Korean driven or you have other ethnicities that have really focused around a particular industry. With nail salons, the Vietnamese culture, when they came to the United States they really focused on the nail industry. So there's a cultural aspect. I said I would get back to why we have 70.
- [16:08]
Greg Kilstrom
Right, right.
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Brian Gowdy
90 employees in ho Chi Minh City. It's supporting the mail software that we eventually acquired. So in that case, one of the things we're trying to do is vertically really become the best ecosystem for payments and really everything that keeps it in this case a nail salon owner up at night. Because we control the CRM, we control the payment platform, we control the hardware. So if we're going to go iterate any one of those things, maybe there's something unique about payments that a nail salon or hair lash, they're almost a one for one for nail. If something a hair salon or a nail salon or a lash store wants, we decide if we're going to develop that. Most people do an acquiring. If you don't own the payment platform, the hardware and the payments ecosystem you can't just go solve for everything that ails that payment owner. So we do a lot of voice of customer listen to what keeps nail salons or hair salons up at night and figuring out, can we solve that. A great example in the nail industry is if you're getting a pedicure, you're sitting in a chair for 30 to 45 minutes, your hands are free. Why not be able to tap out and pay or get a text link to pay while you're sitting there? Why wait? Right. That's an example where the technology can make both the owner's life better and also the consumer's life better.
- [17:32]
Greg Kilstrom
Yeah, so, yeah, and I guess along those lines, I mean, definitely, you know, you've mentioned quite a few things as far as how payment systems are, you know, as features get added to things, the payment systems themselves become increasingly sophisticated, similar to the thing that you just mentioned. Okay, let's simplify the process of, you know, you're sitting there, your hands are free, why not pay? I'm sure that that increases kind of, you know, the, the ability to turn customers over and stuff like that in a good way as well. How do you, in a, in a more general way, I guess, how do you ensure that the technology remains accessible and user friendly for those SMBs while you keep kind of adding, adding features because they also want more features. You know, how, how do you look at that balance?
- [18:20]
Brian Gowdy
That is another phenomenal question. I know it feels like we rehearsed this, Greg, but the first time we met was 19 minutes ago. That's a great question. And by the way, it's like something that keeps us up at night is the user interface. You know, some of these companies, I think Apple's, they happen to be an Apple phone user. I like Samsung too, but I happen to be an Apple guy. Right. And I think Apple's done a phenomenal job where you can go into an Apple store, buy a phone, and for most part you can figure out 85% or 90% of what it is they have to offer. You might have to do a little bit of work and research on 10 to 20%, but they've solved for that. Right. And what you said is 100% spot on. We, we have this issue with the nail salon software. So, and some of this is like you have engineers who are building it, right? And an engineering mindset versus say a salesperson or an owner of a business can often be two different things. Things they probably are two different things, right? Engineers, extremely technical, probably the more complex with a great outcome, they love that kind of stuff. Right. But you can't build something that's so complex that the consumer can't use it. You're done. Or the user interface itself. Everything from the colors to how you onboard it, it has to be a seamless experience. I can tell you that right now with NailSoft, we're talking about our 2025 engineering prioritization. And one of the things we are talking about is how do we make the onboarding. If we're going to lose a client, we generally will lose them in the first 30 days. They can't figure it out. They can't embrace the new technology. It's too complicated. And I'm very empathetic to that. Again, having we run it obviously in our two stores. One of our stores has 18 nail tech. So it's not only the owners using it, the nail techs are using it, the consumers using the app. So there's the consumer app and nail tech uses it for their appointments and their payroll and then the owners using it. There's a lot of points of failure there. So we are hyper focused on. And I'm sure that Clover was like this when we. When we first released Clover in 2014. I'm not sure Clover was the right solution for everybody. And over time, Clover's done a good job of augmenting their family of products. We have to do that in the nail and hair industry. Our our beta or not our beta, but our Bellwether product, Nail Soft, it could handle everything from two hair stylists to a shop with 100 nail. Our hair stylist or nail stylist. Right. Either way, the reality is the one that has two to four hairstylists, they may not want our Bellwether product because it is too much for them. So in that case, we have a handheld device that's really built for the 1099 who might rent a hair salon station or a nail salon station. They don't need the whole device. And again, Clover's done the same thing. And it's really just you have to constantly be doing voice of customer constantly. And knowing what it is that experience is all about for them from the time you sold that to the time they probably more importantly, if you lose a client, what was it that you know, didn't work well? Yeah, don't. It's a. It's a. It's really the right question you asked and it's true of everything. You know, how do you. It's funny because, you know, even with remote controls today, I know I'm the old guy, right? Remote controls are always like you had 10 remote controls and today sometimes I think the remote control things with smart TVs isn't that simple either.
- [21:52]
Greg Kilstrom
Right, right.
- [21:53]
Brian Gowdy
You know, or I fly a lot and to get WI fi on a plane, it's like a 50, 50 proposition today.
- [21:59]
Greg Kilstrom
Totally.
- [21:59]
Brian Gowdy
That's a terrible experience by the way. If you're on a long flight and they tell you, you know, their, their wi fi is down, these things are horrible experiences. But you, yeah, you got to get it right for some.
- [22:10]
Greg Kilstrom
Yeah, yeah, definitely.
- [22:11]
Brian Gowdy
Software is, you're, you're also in a referral game. Right. If you make great software, you, you really won't have to ever sell again as your brand becomes popular and people just go out and they're actually self selecting and then you're consulting about the various services that, that it offers, but you only have to sell them. But the cop, the, the inverse of that is true too. If you just have bad experiences in this world of social media, they'll get on a Facebook group and in a heartbeat blow you up out of the water or an Instagram group and say whatever it is, you know, this is my experience. Reputation, experience is huge today.
- [22:47]
Greg Kilstrom
Yeah, absolutely. So as we, as we wrap up here, I guess where do you see, you know, those small and medium businesses listening out there, you know, what do you see as some of the biggest opportunities for them to leverage fintech to grow their businesses?
- [23:05]
Brian Gowdy
Yeah, I mean there's a few things I would say is don't limit your constituencies opportunity to pay you, whether that's mobile pay, you know, tap to pay American Express. If you go to places like New York City, there's still places where they don't want to take America Express. I think it's too expensive. Right. I think that stuff's a little bit short sighted. You know, you should really try to embrace a payments company where you can accept all kinds of payments. I do think, you know, I've mentioned a lot of things where I see the payments and fintech ecosystem changing the most in the last 10 years. Another one is software leading the dance. You know, 15 years ago I used to run the bank channel at First Data and we had 100 bank partners. So if you were say a Citibank client, that's probably where somebody who was starting a business that had a banking relationship with Citi, the first place they would think to go is to their bank. That pendulum has shifted a little bit to the software company. So now if I go open a restaurant and I get restaurant software, there's a decent chance that restaurant software is talking about integrated payment capability inside the software. And so what that's done is created vertical really payments ecosystems that are tied to whatever vertical software you're in. And that that can be a good thing, it can also be a bad thing. You know, over time there's a lot of leverage that these companies are going to have on you. There's a pretty popular one. I won't, I won't say who because the reality is it doesn't matter that it's this particular one, but there's a big one that just recently had a pretty significant price increase, right? Well, price increases with software companies and payment companies aren't unusual. But I will tell you like when you get really embedded in an integrated software, be prepared because it's going to be painful for you to leave that ecosystem while it prevents so many benefits for you. As a SMB, I'd really look at the contract strongly look at what the contract is, what it says, what the capabilities are for the pricing components that change. Continue to look. There's always advanced advancements. You know, I think I, you know, the Uber experience. But there's. We all live in different verticals that we might shop in today. Amazon would be like this too, right? Like you're basically putting your credentials in one time and that's it. You don't ever have to go back in there. When you check out, it's frictionless. That's pretty cool stuff. Things where similar to that would be. I've been in stadiums recently where you just go in, grab stuff and walk out. Now that's freaky. The first time you do it you expect security is going to.
- [25:43]
Greg Kilstrom
Right.
- [25:45]
Brian Gowdy
But these kinds of things that are emerging are really interesting. Self checkout, this is another one that anybody who travels will know. These gift shops in these airports, it was always, you know, you would go to a point of sale with checkout. Now they're driving you to do the self checkout grocery stores as well. I'm not even sure where I stand on that right now. I know in a grocery store I don't love it when I've got a basket full of things in the airport. I do kind of like it because often it's time sensitive. But there will continue to be these unique technologies out there that SMBs. There is no one size fits all. You know, depending on how you operate you really got to do the research. But I think there's. There's a payments companies do a heck of a lot more. I mentioned working capital that's been pretty prevalent the last 10 to 15 years. For businesses that can't go to a bank, you can often leverage your sales in your business to get a working cash advance. There's just a lot out there today that you know previously didn't exist. But do your research again. There's a lot of great vertical opportunities for you without defaulting to a credit card device or a platform because you don't know it like a square. And all admiration is square. But a lot of people will just default to square. They don't. They don't know what their options are. If they run a pet grooming store, let's say.
- [27:06]
Greg Kilstrom
Right, right.
- [27:07]
Brian Gowdy
But there are pet grooming softwares right? There are you name your vertical. Right. So there's just a lot more optionality out there and I think it'll continue. There's been massive investment in payments and fintech in the last 10 years and I don't see that slowing down anytime soon.
- [27:22]
Greg Kilstrom
Yeah, great. Well, thanks for all your insights, Brian. Again, I'd like to thank Brian Gowdy, CEO of Aurora Payments, for joining the show. You can learn more about Brian and Aurora Payments by following the links in the show notes.
- [27:35]
Brian Gowdy
Thanks, Greg.
- [27:36]
Greg Kilstrom
Thank you.
- [27:39]
Thanks again for listening to the B2B Agility podcast. If you enjoyed the show, please take a minute to subscribe and leave us a rating so that others can find the show more easily. You can access more episodes of the show at www.b2b agility.com. that's b2b agility.com while you're there, check out my series of bestselling agile brand guides covering a wide variety of marketing technology topics. Or you can search for Greg Kilstrom on Amazon. Until next time, stay focused and stay agile.
- [28:14]
Brian Gowdy
The Agile brand.