Finetics™ Studio at Money20/20: Brent Warrington

Finetics Sudio | Payments | 12/14/2015 3:39 PM

Hyperwallet CEO Brent Warrington is well aware of the regulatory and compliance challenges that his company navigates in more than 170 countries. He shares his unique perspective with PaymentEye's Sarah Gill in our Finetics™ Studio.


Sarah Gill, Reporter: I'm joined by Brent Warrington, CEO at Hyperwallet. Welcome.

I mean, because it's interesting. You know, when you think of somebody like Uber, a big part of the value proposition is that for consumers making the payment is so easy, that it feels like they haven't had much effort into making the payout to the contractors, as easy.

Brent Warrington: No doubt. Look, I think this was something that was probably-- didn't have a lot of thought put towards it. As were creating a simplistic way to acquire around the world and set up businesses in kind of the collaborative economy, you really have-- at the end of the day, you have good bones as far as a payout platform, let's call it a global ACH network, or however you piece it together.

But there really hasn't until, you know, Hyperwallet created its platform a very simple way, driven by a set of APIs, to give-- to complete the loop, right? So, we have simple API acceptance acquiring globally for businesses, and it doesn't have to be Uber.

Even the smallest businesses aspire to be global, right? Everybody has global aspirations. So, being able to accept a payment, then, more importantly, being able to close the loop of payments around the cycle, and kind of (inaudible) the completion of the cycle, and, by the way, which is fairly complex, compared to acquiring, just because we're dealing with compliance and KYC and AML and MTL.

So, being able to navigate the compliance landscape is a big part of this, as well. When you're dealing with businesses of any size. It doesn't even have to be an Uber. It could be the smallest startup marketplace.

If you want to be able to engage independent workers in another country, rarely do these business, at any scale, have the expertise to be able to manage through the compliance landscape. And that's just part of the services and the platform of what we offer. But at the end of the day, we're a complete turnkey, API-driven solution that gives people the ability to payout anywhere in the world, real-time.

Sarah Gill, Reporter: Is it fair to say that, you know, your collaborative consumption sort of companies, you know, as they're trying to pay their workers, they're sort of poorly served by existing financial services, so, they just can't handle that sort of complexity of payout.

Brent Warrington: Well, look, I mean, for collaborative companies, there's actually-- one of the challenges they have is, is that-- if they were going to bring somebody traditionally into their ecosystem, they have to have a bank account. They have to go through a sign-up process. They have to go through a KYC process, and, by the way, they lose a high percentage of their contract workers through that process, because they just flame out if they don't have a bank account, right?

Sarah Gill, Reporter: Yes.

Brent Warrington: So, we completely eliminate the need for that in what we do. So, it doesn't matter, once again, what infrastructure exists in whatever country you're engaging in, if you have a bank account, you're banked or unbanked, whatever level of sophistication you are personally, financially, in how you manage your business, we handle all that.

And more importantly, our platform-- through our platform, we give tools to the 1099, the collaborative worker. We give them, like I mentioned, it's like tax preparation.

So, there's a lot of things, when you become a small business, that you just don't understand, and where a lot of 1099s get themselves in trouble is, they overlook and don't think about tax implications, how to expense, write off expenses. So, we have tools that wrap around.

So, we're more than just paying you. We're literally enabling the 1099 and giving them the tools that they need to be successful as an independent collaborative worker.

Sarah Gill, Reporter: Okay, and I think, you know, the opportunity around this is clear, and, you know, you consumers (inaudible) from the grow of companies like Uber.

Brent Warrington: Yeah.

Sarah Gill, Reporter: Do you have kind of concerns about the industry, in terms of how it's regulated or anything that's sort of holding its back from achieving it's full potential?

Brent Warrington: No. Look, I-- look, the regulations, I sort of leave it as to it is what it is. I mean, we certainly have figured out a way to navigate our way through it successfully with our partners.

Look, you have-- part of the commitment and investment you make in a business like ours, when you're committed to being in 170-plus countries, and operate through 30-plus currencies, is you just have to understand what's happening at any part on the globe, at any one point in time, and react to it.

But, look, I will say this. There-- you know, the regulations that exist today, whether it be U.S. domestic or globally, are also there to provide protection, consumer protection, as well.

So, we're not-- Hyperwallet isn't here to change the world, and reinvent compliance and regulation. What we've done is create a very simple, frictionless way for any business to operate within a very highly regulated environment.

Sarah Gill, Reporter: Do you feel like there are any-- any gaps that people aren't really addressing, or, you know, somewhere where you'd like to see more innovation, not necessarily in just prepaid?

Brent Warrington: Yeah, look, we're always seeking-- we're always seeking innovation around compliance. I think sort of the process of KYC compliance and boarding customers globally is something that we will continue to see innovation and investment. Again, it's very complex. If you have to do KYC on somebody on the other side of the planet, and you're a small startup marketplace in San Francisco, how do you do it, right? You're not going to do it.

That being said, until you have-- you know, you've gone through the KYC process, depending on what your product and services are, you can't build your ecosystem to sell your goods and services.

So, if it takes you 30 days to do KYC on a collaborative worker before they can actually be productive for you, that's a cycle that has to be collapsed.

So, today, in the world of Hyperwallet we use our own proprietary platform, but, more importantly, we pull from sources around the world to simplify that process. But it's tough. It's hard work.

It's the hard part of our business, but it is our social and corporate responsibility to help our customers through KYC and compliance, because that's where you get in trouble, right? I mean, we can all write code, you know, and we can all create things, but I think the part that everybody sort of underestimates whenever they start a payments business or get in this space, is the complexity of the regulatory and the compliance side of this business. It's almost overwhelming, so, you have to sort of persevere through that, and play within a set of rules.

And, by the way, there is no one rule. There's thousands of rules, and they all vary by, you know, country or continent or geography, and they're always-- they're ever-changing. So, it's complex. It is complex, which is why, you know, I think in our industry, as it continues to evolve, we will see more consolidation. We will see more hardened businesses who understand global compliance, cross-border, absorbing more, let's call it, startup technology companies, and then moving them into their distribution or ecosystem.

Sarah Gill, Reporter: Okay. And, I mean, you know, that complexity means there's a lot of opportunity for innovation, still.

Brent Warrington: Yes.

Sarah Gill, Reporter: Do you feel like there are any verticals, specifically in payments, that are sort of over-hyped, or where there are too many startups kind of stirring themselves out for there to be, you know, a viable opportunity?

Brent Warrington: Yeah, well, I mean, since I'm on the other side, I can throw all the darts I want at the clearing side. I think-- look, I think the mPOS has played out. I mean, it's table stakes at this point. I know there's a lot of new, shinier mPOS-type solutions and hardware here at the end of the day, but it's sort of played out a little bit, and it's sort of table stakes at this point. I mean, tablet-based or mobile acceptance acquiring transactions, that's table stakes.

So, yeah, look, I don't know. I think the next wave of payments will be consolidation. I don't-- I don't think we will see another wave of innovation, as it relates to the point of sale. I do think we will continue to see more people who are focused on the payout side of the business, and simplifying, you know, the overall infrastructure globally.

I don't believe there'll be more collaboration between countries as it relates to payments, because the borders are becoming more and more transparent. You know, having been in this business as long as I've been in it, it used to be, you know, back in the early days, pre-Y2K, you know, a cross-border was next to impossible. It's kind of-- somewhat table stakes today, but that being said, there is still probably a fairly kludgy, if you were to kind of elevate yourself above, you have to look down at the flow of cross-border payments, there's still some simplification that needs to be had, but it hasn't slowed us up.

You know, we, literally, today can pay out anywhere, real time, just by using the acceleration of the Hyperwallet platform.

Sarah Gill, Reporter: Okay, I mean, yeah, I think helicoptering above and maintaining that perspective is really important in this business, especially when you're dealing with people.

Brent Warrington: Yeah, look, it's one thing if you're just doing business in the U.S. That's one thing, one degree of complexity, but when you're in 170-plus countries, it's-- you know, it's always-- everything is always on our radar.

Sarah Gill, Reporter: Yeah, and I guess with tech, companies are finding it easier to (inaudible) faster.

Brent Warrington: Yeah.

Sarah Gill, Reporter: Okay, and if I can get one prediction from you for next year -- payments, breakout technology, or something to watch out for?

Brent Warrington: There will be new mPOSes of a different color, and they will be a different shape, and a lot of the startups that are here this year won't be here, but the show will be bigger.

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