In an interview with PaymentsJournal at the 2021 Money20/20 event, Justin Benson, CEO at Spreedly and Luis Fernando Martinez, Global Head of Payments Partnerships at Rappi, spoke about how payments orchestration is a tool for growth and testing for payments in Latin America.
Tell us about Spreedly and its role within the payments ecosystem.
Benson: I’m Justin Benson, CEO and founder at Spreedly. We started about 10 years ago. My background is I’m from Australia and I’ve lived in the States for about 25 years. Spreedly is a payment orchestration layer. We’re really focused on Card Not Present payments in particular. The opportunity we saw on the marketplace 10 years or so ago was that merchants and platforms would want an independent technology layer that sat between them and their payment providers to give them some kind of maximum flexibility [and] the ability to grow really quickly. And those were PCI security development headaches.
We figured if we built that for them, it might be valuable, and it’s played out that way. As time has evolved, merchants and platforms have gotten much more sophisticated in how they do payments, so looking for us to help [at a much higher level] in the payments stack: fraud, smart routing, network tokenization, anything they can do to optimize payments.
Tell us about Rappi and its importance within the Latin America market.
Martinez: Rappi is basically an instant delivery in minutes of anything you want. By anything, I mean anything. We even have a portal, which [we call] the magic portal, where you can ask anything you want. We use it to understand the clients and to understand new verticals. Basically, Rappi is the only Super App in this part of the world. We have travel, we have restaurants, we have groceries, we have anything delivered in minutes… I am the Global Head of Payments Partnerships and what I do is try to manage and improve the relationship with all the payments industry, including franchises, PSPs, and orchestrators.
What are some of the unique payments opportunities that present themselves when comparing a direct merchant payments model to platforms like Rappi?
Benson: Our definition of a platform and a direct merchant really owns and controls the money. It’s their money, it flows through them. In that way, we actually see Rappi as more of a direct merchant. The reason that matters is it really influences behavior and what our customer is looking for. In the case of merchants… where it’s their dollars, if you’re very focused on success rates [and] optimization, the smallest tuning, the smallest perfection, can really help them improve their margins [and revenue] overall.
When we think about platforms, they have two competing interests. They’re often selling their own software features, and they are really focused on what they can do there. They want to hand off the payment piece to somebody else to manage for them on their behalf. A lot of these platforms are seeing what’s happening with PayFacs and are getting more interested in being strategic around how payments flow. The difference is that they want us to enable a flow on behalf of their merchants–just make it work. For a customer like Rappi here, the lifeblood is their revenue [and] we’re much more focused on optimizing, not just enabling.
Can you give us some more insight into Rappi’s rapid growth in LATAM and the payments opportunities your organization has been able to leverage?
Martinez: Rappi is a startup; it is the only unicorn in Colombia. We operate in nine countries, and we are still growing. We have a double digit rate of growth. We need to enable payments in every country that we arrive at in a very quick and easy way [with] the opportunity to route through one provider or through another provider. That is enabled by the orchestrator that we have chosen as our ally during these years.
We have incredible end goals of acceptance rates. We even talk about having 99% acceptance with insufficient funds, and that’s something that requires online control, online routing, and online response and we can have that by having the orchestration layer. That’s basically how we look at it. It enables us to perform better, and it helps us in getting to the market, getting to the country, quickly.
At Rappi, we are constantly experimenting and we have alternative payment methods. We are enabling banks. For example, in Brazil we are enabling a debit directly from accounts. In Colombia, we are experimenting with different providers, as I said before. We love to experiment. That’s part of our DNA. We make mistakes–a lot of them. But we try to make it quick and we try to react and learn about it. That’s the good thing about having an orchestrator. We can experiment without having to put all our tokens in one of these providers. Instead, we have this orchestrator to try all these routes, all these providers, all of [a given] country’s necessities, [without] risking the tokens, cards, or UX with our clients.
We heard Rappi previously speak about experimentation in payments. What do you mean by this and how has this helped you grow?
Benson: When I think about all of the changes that have occurred, I think the primary thing is that the internet is allowing companies to go global more quickly than ever. That’s because of this universal layer. Universal experiences are the reach of mobile devices. But at the same time payments… can still be very local. So, there’s this sort of mismatch between building an English looking mobile, an English only mobile app, and it can be used worldwide very quickly. But the payments themselves still might be very entrenched in local customers and usage, even things like the usage of cash versus credit versus debit vs APM.
When I talk to people [who are] building payments and the ability to go quickly, we always say keep an orchestration layer in there because you’re going to find user acceptance, mobile devices, apps, are all going global really quickly but the payments are going to be a drag on that. It doesn’t move as quickly and can really be an impediment to growth. So that’s one of the core things we talked about.