Overcoming "Schlep Blindness" for Small Businesses with Prashant Gandhi of Melio | Soar Payments LLC
Prashant Gandhi of Melio

Overcoming “Schlep Blindness” for Small Businesses with Prashant Gandhi of Melio

The daily workflow burden for small business operators is often a barrier to seeking new ways to free up valuable time that would be better spent with customers. In this episode, Prashant Gandhi, Chief Business Officer at Melio, joined us to talk about the ways a powerful software platform can transform their day-to-day operations.

Payments & Fintech Insights In This Episode

  • What ‘Schlep Blindness’ is and how it holds small businesses back.
  • How small adjustments to functionality ease the workflow burden.
  • The importance of prioritizing both simplicity and diversity in small business software solutions.
  • The opportunities that lie within embedded finance.
  • And so much more!

Episode Transcript

Prashant: Small businesses are schlepping through lots of things, and they’re blind to the fact that they have a choice on how to pay, not just how the vendor wants them to pay. They’re blind to the fact that there are easy tools that they can use to save valuable time, which is the time away from customers. They’re blind to the fact that they have easy contextual options to fund their cash flow needs. So, we wake up every day just asking ourselves, how do we make it super easy and super intuitive to small business owners to make use of all of that?

Heather: Welcome to “PayPod,” the payments industry podcast. Each week we’ll bring you in-depth conversations with leaders who are shaping the payments world, from payment processing to risk management, and from new technology to entirely new payment types. If you wanna know what’s happening in payments, you are in the right place.

Hi, everyone. Welcome to PayPod. I’m your host, Heather Bodie, and today we are going to be talking about B2B payments. Joining me is Prashant Gandhi, chief business officer at Melio, a company focused on building a service that helps small businesses keep up with business. Prashant, welcome to the show.

Prashant: Thank you, Heather.

Heather: Absolutely. So, to get started, tell us about yourself. Who are we talking to? What was your career into FinTech? How was your path to your career into FinTech?

Prashant: Yes, as it is, usually, it’s a combination of some of mine, some of hark. I was an engineer by training, and over the years, it struck me that FinTech and financial services is a very logical industry. Money in should equal money out. I spent 15 years at McKinsey, and one of the things I learned at McKinsey is the principle of quality materiality, meaning work on things that have potential for meaningful impact. And so, financial services as an industry, the gross profit in financial services is six and a half trillion. And if you compare that to say e-com or software, maybe financial services is a massive industry. E-Com gross profit is two and a half trillion. Software gross profit is $700 billion. So, there was a part of me that said, wow, this is a big space where we can have tons of impact. And then, the heart of it was simply that I got excited by this space and I was excited to work at JP Morgan after my 15-year stint at McKinsey. And JP Morgan’s a very well-run financial services firm, so I figured that was a terrific opportunity. So that I led payments. I was the head of product for consumer bank, consumer and small business bank at JP Morgan. And after that, I’m here now at Melio.

Heather: I imagine moving from an enormous company like JP Morgan over to Melio, there were some culture differences, some general just work environment differences. Can you speak a little bit to that transitioning from such a giant organization to a company that is not small by any means, but so different in its makeup?

Prashant: Yeah. I would say, Heather, there were more similarities and there was more synergy than differences, which may sound somewhat counterintuitive. At JP Morgan, we had worked on operating model where we had created autonomy for product teams to work on things without depending heavily on lots of pieces of the bank. So, I ran a product team, and I had approximately a team of 500 product design and engineering colleagues who were all working on consumer and small business payments. So, yes, I was in a very large firm, but my world was focused on really making sure that we were moving fast with this group of 500 or 600 colleagues. So, Melio was therefore a very natural transition. It was the same space. I do have to say that coming to a FinTech, the one thing which I noticed was different was I was spending obviously less time dealing with internal meetings and socializing things with internal stakeholders, which is probably true for any large company. We moved here at Melio very, very fast. So that was certainly a nice welcome change. But there was a ton that I learned at JP Morgan. There were a lot of colleagues that I work with, both at JP Morgan and with many other banking executives. So, I continue to leverage that and it’s all good.

Heather: Which brings us to Melio. What makes Melio different? You know, there are other competitors in the space, so why would I choose your software platform over another that has a similar set of services?

Prashant: Yeah. I would say, Heather, four things. First, Melio is designed for small business operators, not finance professionals, not CFOs. Every single piece in our experience from product features to service and support is written in very simple-to-understand language. One of our founders was the GM of the B2B business at PayPal, and we’ve really carried that ethos in our company of simplicity in everything we build. So that’s the first thing. The second is, we are a platform-first company now. Melio is extremely easy to integrate into other third-party platforms that gives us the opportunity to distribute our offering via multiple channels. Number three, we offer a very rich portfolio of choices by which our users can fulfill their payment obligations, whether that be pay-by-card, even where cards are not accepted, whether that be use same-day ACH, whether that we send fast checks. If they wanna send a virtual card, we even do that. So that’s number three.

And number four is just we have worked very hard to build functionality which eases the workflow burden and it overcomes the schlep blindness that we talked about. For example, Heather, our customers get a dedicated email address where they can actually receive invoices very easily in one central place. They don’t have to chase paper, they don’t have to chase multiple inboxes. For example, they can approve invoices and batches. They can sync and reconcile with accounting software. And so we’ve really spent the time to ask ourselves, where is the pain in the workflow for small business operators? And we’ve tried to fix that. So, again, number one, we are designed for operators, not finance professionals. Two, we are a platform-first company. Three, we built an incredible array of payment options. And four, we worked hard to build purpose-build workflow features.

Heather: Melio has host of competitors in the landscape. What is that customer journey like as far as integrations are concerned? Why Melio versus another company that can fill those same gaps?

Prashant: Yeah. Well, first, our biggest competitor is inertia and paper checks. I will tell you that if you look at the five or six or seven players in our space that are focused on what we do, the total customer penetration of the solution is 4%. Ninety six percent of the customers for small businesses in the country today do not have what we are building.

Heather: Wow.

Prashant: In some ways, Heather, what we are building today is akin to where you could say the small business accounting software industry was 20 years ago.

Heather: Mm-hmm.

Prashant: We believe that in the next five to eight years, there’ll be a giant S-curve of adoption of what we are building because of the innovations we are doing, because of the innovations our peers are doing. But we wake up every day just making sure that we are really overcoming what I will just say, schlep blindness. Small businesses are schlepping through lots of things, and they’re blind to the fact that they have a choice on how to pay, not just how the vendor wants them to pay. They’re blind to the fact that there are easy tools that they can use to save valuable time, which is the time away from customers. They’re blind to the fact that they have easy contextual options to fund their cash flow needs. So, we wake up every day just asking ourselves, how do we make it super easy and super intuitive to small business owners to make use of all of that?

Now, we are a platform company, so you asked about integration. From day one, Melio integrates whatever possible to enhance both our product and our experience. So from the payment rail side, we have tons of integrations that we’ve done with infrastructure providers, as well as we are integrating with distribution partners so that we can make our service be available to whatever is the platform of choice for small business. In other words, we are a bit like Stripe. We do offer our service through melio.com, but increasingly, a large portion of our growth and we expect a large portion of our growth going forward to come through platform integrations. And our services are built on a very modern architecture, which supports the embedding of the accounts payable and the accounts receivable service through very limited integration points.

And it requires very little implementation effort from our partners. Three or four integration points. There is an integration point on some sort of a navigation bar. There is an integration point where on-users consent, there is an exchange of author information to maintain the user session. There is an integration point to ensure that the right funding source API is consumed to display the payment method. And then, there is an integration point to make the funds move from the partner to our FBO account. And so, that’s the principle we followed. We are live today with Capital One small business card. If you are a small business card holder of Capital One, you can now do accounts payable using your card via the Capital One platform. We are live today with Intuit QuickBooks. If you use Intuit QuickBooks, you can do accounts payable using the Melio service.

We are live today with a software company in construction called Built Technologies, where we have integrated Melio inside a construction finance platform. And we have a host of things that are lined up for announcement in Q1 of next year, very much in the e-com platform and in the banking space, which we’ll be doing, which will be coming out with in Q1. So, we are very excited about that. Our belief is that our service needs to be super simple to solve the cash flow and workflow issues, but we are also very focused on ensuring that the distribution of our service happens through multiple points. Whatever is the platform of choice for the small business, we wanna make sure that Melio is available in that platform.

Heather: It’s incredibly impressive, and I feel like as someone with entrepreneurial experience myself and previously a small business owner, this sort of approach to tackling, and when you said spent 30 days a year on this, that’s, I think, for folks who are proficient in that arena or that workflow. But for some small business owners, we’re wearing the hats of many different roles if we have a smaller staff. And I’ve found that, you said 30 days, I thought, my gosh, I bet in the past I was closer to 60 or 75 days a year sort of slogging through these tasks that didn’t come naturally to me. So, it feels like a no-brainer, and I’m actually shocked to hear that only 4% of those businesses are using this kind of platform. I think I agree with you wholeheartedly that we’re gonna see an enormous spike in utilization of these sorts of advancements in technology to ease that workflow because it’s just shocking how much time payment processing, accounts receivable, accounts payable, all of that, can really eat up, and then you’re working in your business and not on your business. That sort of perpetual schlepping you mentioned.

Prashant: Exactly. And, Heather, this whole embedded finance, this whole innovation cycle around embedding contextually relevant services in that experience is, we are very excited about that opportunity. We are just [inaudible 00:12:06] now, AP financing service where a small business owner who’s got, if you have a major bill payment to a vendor, and if you’d like to break that into installments, we are just testing now in the market a service where we’d be able to actually do that for you. And this too, we think, comes at a time where small businesses are in great need of this solution. You may know this, but for the listeners who don’t, SBA issued $390 billion in COVID disaster loans to nearly 4 million small businesses. And unlike the forgivable loans that were issued through the PPP program, the disaster loans were designed to be repaid, and those bills are coming due just next month, 1.2 million COVID disaster loan payments are due for small businesses, and then another 1 million loan payments are entering the repayment cycle in January. So back to my point about small businesses have less of a revenue problem, growth problem right now, profit problem, we are also gearing up to make sure that our service comes in handy for small businesses to work through the cash burden that comes with whatever is happening more macro in the economy.

Heather: I mentioned the many hat wearing of many smaller business owners, and as you just mentioned, with that debt that’s coming due, there’s just so many points of vulnerability. Can you speak to Melio’s philosophy or approach around security and privacy, especially when we’re talking about really private information, anytime we’re talking about the payments field from both the business owner standpoint and their clients or their vendors?

Prashant: Yes. Our challenge is twofold in terms of security. We protect our data with industry standard encryption and protocols, and improve upon it where it’s possible. But because we serve a lot of small businesses, we also value the privacy of our customers. So, to this end, employees cannot simply access customer data if there is not a business need for it. And the actual data that is being accessed is monitored and analyzed. So we analyze and monitor whatever data access is happening with our customers. So, in other words, you could say that our philosophy here is to limit the access as much as possible, trust and also verify. So, the data is encrypted at rest and in transit, access is granted in a secure manner only to dedicated employees. And authorization is based on what we call the least privileged principle. And by doing all of these things, we just wanna make sure that it addresses the core data security need.

Heather: Prashant, can you talk to me about how you provide high-quality customer support? I mean, especially with small businesses, they need all the help they can get. So talk to me about Melio’s approach to customer service.

Prashant: Yeah. We know that small business owners have enough to take care of on a day-to-day basis already. So, we try to reduce the noise and clutter around payment as much as possible. One of our core principles is providing a very seamless experience where this not only applies to the product features, Heather, themselves, but also to the overall experience for our customers. So the users can self-register, the initial setup is a breeze, but if there’s any kind of a payment issue, any kind of a not-happy path issue, or if users have any questions related to their payment, we make it super easy for them to contact us directly or to get those things answered via self-services. In other words, our product teams pay as much attention to the service journey and the support journey of our customers as much as we do for building new features.

Heather: Beautifully said. So, what’s next for Melio? I mean, you mentioned it a little bit there. You sort of hinted at this idea of, and I don’t know the exact term, but you’re doing like invoice financing, technically, or is it more of like a sale of an asset?

Prashant: No, it’s contextual installment loan. It’s like BMPL. BMPL embedded within an accounts payable’s loan.

Heather: Which there’s still some… I mean, regulation is still a little light around the BMPL landscape. So that’ll be interesting. I’m curious to see how that develops for Melio. Is there anything outside of that that’s sort of exciting around the horizon that you wanna speak to?

Prashant: Well, I guess there is a few things. The first is, back to what we discussed around the S-curve with adoption. So, I think the most interesting thing is that we believe that in the next, call it six to eight years, roughly half of small businesses in the country will be using Melio or a system like Melio, which is incredibly exciting. Why? Fast, simple and ubiquitous is kind of like the three things we are most excited by. So fast, we think that as payments become more real-time in America, their RTP is going to get used a lot more. RTP has a massive need in B2B payments, so we’re excited about that. Simple, our philosophy’s that we wanna keep making accounts payable, account receivable as simple as a B2B payment transaction for a small business. And ubiquity, we are extremely excited about our platform play. We are already integrated into the systems I mentioned. But just next year, we are very much looking forward to integrating with multiple systems, systems that are used to run e-com stores, systems that are used by merchant acquirers, credit card payment systems and a few others. I mean, you know, I think that’s what we are most excited by.

Heather: To round us out today and sort of close out our conversation, if somebody is looking to get into FinTech or payments, the industry as a career, what’s a piece of advice you would leave them with?

Prashant: I would say, the best thing to do if you are interested in payments is to try to get as much cross-functional knowledge as you can. Get your hands dirty and build cross-functional knowledge on customer experience, product risk, ops compliance. Payments is the vein that flows through all of these functions. And I think a complete career in payments, a really rewarding career in payments happens as people deepen their understanding cross-functionally.

Heather: I think that’s really important advice. And oftentimes, I’m talking to founders of Fintechs who, you know, sort of dance around this idea of like, I know payments isn’t that exciting, but I can’t help but feel like it’s incredibly exciting. And you mentioned earlier in our call, it’s the heartbeat, it’s the lifeblood of all of industry, right? So, we transact every single day. It’s an incredible path into a technology career, and I think we’re gonna see so many advancements in the really, really, really near future.

Prashant: I agree.

Heather: Prashant, thank you so much for joining us today. If folks who are listening wanna get in touch with you or wanna find out more about Melio, where should they go?

Prashant: LinkedIn, you can find me on LinkedIn.

Heather: Okay.

Prashant: Very easy. And thank you very much, Heather, I enjoyed the discussion.

Heather: Yeah, absolutely. Thank you for joining us. I appreciate it.

If you enjoyed this episode and wanna hear more, head on over to soarpay.com/podcast to subscribe on your podcast listening platform of choice. That’s S-O-A-R-P-A-Y.com/podcast.

Industry Spotlight


Our mission is to keep small business in business. When we started Melio, we wanted to build more than an efficient Accounts Payable tool. We wanted to build a service that helps small businesses keep up with business. A B2B payments experience that not only saves time but also significantly improves cash flow. A payment workflow so simple it helps businesses focus on their customers, not their back office.