A Deep Dive Into Hardware Free Contactless Payment Technologies, with Brad Hyett of Phos | Soar Payments LLC

A Deep Dive Into Hardware Free Contactless Payment Technologies, with Brad Hyett of Phos

Host Jacob Hollabaugh is joined by the CEO of Phos, Brad Hyett to discuss the growing demand for contactless retail payments that don’t require additional hardware, how technologies like Phos address the security concerns inherent in such transactions for both merchant and consumer, and how the ability to turn any smart phone into a contactless mobile POS is changing the landscape of retail business in both the first and third world.

Payments & Fintech Insights In This Episode

  • What “Tap and Pay” SoftPoS orchestration is adding to smartphones and tablets
  • Early adaptor merchants and industries
  • If mobiles will fully replace traditional pos machines
  • What differs Phos from the market

Featured on the Show

Episode Transcript

Brad: What we’ve actually done is create multiple layers of security within this, where we’re using white box cryptography, we’re using trusted elements on the device, we’re using Google certifications, we’re using Geolocations, we’re using transaction history. We’re doing all these checks in a matter of microseconds on a transaction by transaction basis. Then we’re wrapping all of this in a third party security element. So even if someone within the business lost their head and decided to try and hack it, they couldn’t do that because we’ve got someone else that we don’t even know what or how they’re doing to create that minimum level of security. And then we have a sort of another wrapper around that, which is more of a sort of notification type system.

Jacob: Welcome to PayPad, the Payments Industry podcast. Each week we’ll bring you in-depth conversations with leaders who are shaping the payments and fintech world from payment processing to risk management and from new technology to entirely new payment types. If you want to know what’s happening in the world of fintech and payments, you’re in the right place. Hello, everyone. Welcome to PayPod. I am your host, Jacob Hollabaugh, and today we are going to be talking about contactless payments and the ease of use and convenience they can offer both merchants and consumers. Joining me today, we have Brad Hyett, CEO at Phos, the company who’s empowering merchants to seamlessly integrate payment acceptance by turning the merchant’s smartphone into a point of sale terminal, securely accepting payments from contactless cards or NFC enabled phones and devices anywhere in the world. Thank you so much for joining me today, Brad.

Brad: Thanks for the invite. It’s great to talk to you and a really nice intro. Thanks for that.

Jacob: Of course. Well deserved. Let’s kick things off first with just a little background on yourself before we get into the company and the industry. How and when did you find yourself entering the world of fintech and payments and what was it that attracted you to Phos back in 2019?

Brad: Sure. So I mean, I kind of cut my teeth in FinTech in a business called Global Blue. They provide value added services to terminal solutions like tax free shopping and dynamic currency conversion plus other bits and pieces. So I was working quite a lot with acquirers and merchants and I headed up a team looking after their luxury retailers globally. Really loved it. It was really interesting. But but ultimately the financial services side of things was also really interesting to me. And I started to move across to Worldpay, which was one of our primary partners for the UK, and it was at the time when Worldpay was transitioning away from RBS as a bank and, and they were looking to try and make a real sort of transformation of the team and the thinking. And I went to be a part of that, which was good fun but quite short lived. The sort of large corporate space wasn’t so exciting as I thought it might have been at the time. And instead I got headhunted to head up the new business team in a company called the Logic Group. There’s a couple of hundred people at the time, but very well established in the UK market, providing terminal estates and payments solutions to the likes of Tesco and Sainsbury’s and John Lewis and Selfridges and all those kinds of great names. And while I was there we went through an acquisition process and we were bought by Barclays, which was a nice result for the business, but not so much for a nice result for me and my, you know, wanting to be a big wheel in a sort of small machine.

Brad: So I went to head up the UK office of a separate direct debit business just as a separate direct debit was kind of being launched across Europe and bringing that solution to market and delivering on euro payments for UK financial institutions and things like that. And then prior to 2019, then I spent a few years heading up the European arm of a US headquartered Paystack. So a company called BlueSnap Cross-border mobile sort of focused. And during my time there I met with the founders of an acquirer called Paynetics in Bulgaria, and they had been the first to kind of create this concept. They brought Apple Pay to Bulgaria as the first financial institution to bring that from a making a payment solution. But they had in mind that if you could make a payment from a mobile phone, you should be able to accept a payment on a mobile phone too. So as part of their acquiring license, they were primary members of Visa and MasterCard. They leveraged that relationship and were allowed to sort of test this as a concept. And they had waivers. And then when I met with them in 2019, it was a sort of proof of concept which they had there was no PCI sort of security levels, no specifications, anything like that. But it was definitely feeling like things were moving that way. The security on mobile phones was really increasing. The use of mobile phones and everyone’s life and business was increasing.

Brad: And I thought what they were doing was definitely the future. So my recommendation was to split this product away as its own business, its own entity, its own team, and then to sell this as a proposition to banks and acquirers, PSPs and ISOs globally, rather than being tied to a single acquirer, but to be acquirer agnostic. So we raised some funds, we hired a team, we split the technology away and in that time it was by about March 2020, COVID hit. The world went into lockdown and we were inundated by businesses looking for a solution that could remove cash from the ecosystem. Like overnight, Cash became a health and safety concern all over the world Middle East, Africa, South Africa, Latin America, North America. And we were inundated with opportunities to work on. But at the same time, while there were no actual card present payments happening in the world, so everything was conceptual and we were sort of given a breath to sit back and think, okay, how are we going to enable these businesses to go to market? And that’s where we thought about the soft orchestration platform, creating that flexible platform that could enable these businesses to take us off POS solution to market leverage their. Our existing branding and things like that. And that’s brought us through to today where now we have multiple levels of PCI certification available with PIN without PIN and a lot of market consolidation happening. So it’s an exciting time to be in this space.

Jacob: Yeah. Wow, what a journey for sure. And definitely I totally agree with and saw little theme there of the more corporate big things got the kind of lesser the impact there. Like let’s move to another space where we can maybe do something a little faster, a little more exciting. So love hearing that. And this is definitely some technology that I think already has started to really change things in the industry and definitely has the chance to continue doing that a big way. Let’s kind of dive into contactless payments broadly before we get too tech heavy or specific. Could you tell us, broadly speaking, what the key benefits for, you know, the processors, the merchants, the consumers, all parties involved are going to be and being able to turn a mobile device, any mobile device into a POS system capable of all types of contactless payments.

Brad: Sure. Quite a lot to unpack in that question. But yeah, broadly speaking, what we’re talking about here is in the past, everything has always been tied to a specific piece of hardware and it’s typically a payment terminal, something like that. It’s a device which has an EMV certified security chip in there and for various levels of PCI compliance, that device also needs to be tracked, controlled. You need to make sure that between the manufacturer of the device, the shipment and the delivery, the installation within the retail sites, that there’s nothing in there which can damage or harm the security levels. So there’s always been this reliance on the EMV chip in the payment terminal. And so there’s always been an association of some kind of device when you need to do payments. And the sort of lowest level of that is your sort of smart card reader or card reader or, you know, whatever it is, it’s usually a small box that tethers to your mobile phone. And what we’re talking about now is removing the requirement to have that the complexity with it, the sort of low level Bluetooth connectivity, which is impacted by lots of different things in the West. We’re very lucky to have mature infrastructure around a lot of things, logistics and delivery being a couple of those now trying to deliver a payment to a village in rural India or Colombia or something like that, it doesn’t really make sense, right? And in a lot of these regions, they’ve even leapfrogged the concept of requiring payment technology or payment hardware even related to banking.

Brad: So even banking is done direct through the mobile device. That’s what we’re really looking at. So Phos has replicated EMV level security in the cloud that enables any device that falls within the specifications that the card schemes want to be able to accept contactless payments. And from a consumer perspective, that means there should be an explosion of payment acceptance points, right? So wherever I want to pay, I should be able to tap and go. And the contactless experience, when it’s been introduced all over the world, pretty much can’t think of anywhere where it’s being rejected. It’s been adopted very rapidly. Consumers like it. They like the experience of a very straightforward tap. And I’m done from a sort of acquirer perspective and industry perspective. The level of fraud on these transactions is relatively low compared to e-commerce or something like that. And it means with less risk, there’s less cost in the transaction. So actually it’s one of the cheapest type of transactions that you can do. So there’s really benefits across the board. It’s a win win win scenario. And by removing the requirement to have that payment specific technology, we’re reducing costs for retail, we’re reducing costs for acquirers, we’re reducing the use of plastics in the world. There’s this global silicon shortage. We’re reducing the requirements for those EMV level chips to be in those devices while enabling this huge explosion of acceptance points without the sort of friction associated to those other elements.

Jacob: Yeah, amazing. And I think you hinted at this there. But to follow up on that, our acquirers and payment processors offering, if they offer Phos software, are they still able to use their own banks underlying merchants as the account provider then?

Brad: Exactly. And that’s what we mean by soft orchestration. So when we created this orchestration platform and concept, the idea is that we can provide acquirer connectivity as a service. We can provide certification of the end to end flow as a service. We have a flexible user interface. So you have the app, but then the app can dynamically rebrand off to login and that’s a relatively inexpensive way to go to market. You can also, if you don’t want your merchants downloading the app, the merchants can download a white label of that app in your own branding that subsequently can also rebrand. So depending on what level and layer we’re looking at in the value chain, we can enable these different solutions. We then have API connectivity, so app to app connectivity or web to app connectivity. So in the case of a cafe or restaurant, if you’ve moved to being a web based menu system or an app based menu system that’s running on your servers devices via 1 or 2 lines of code, we can just very quickly do a connection there. And through the download of an app, you can now accept payments on that device. You’re not having to share payment terminals around between 1015 different servers. You’re not having to go and buy an additional piece of hardware and then use some clunky way of connecting it to your device to take the payment. It’s a much more elegant way of enabling the solution. So this technology layer sits on top of and enables for the legacy financial institutions that find it very hard to be fast moving in a space like this, where the regulation is changing all the time, the compliance levels changing all the time, The innovation and security associated to it is basically on a constant step up process and probably will be to the end of time, right? The smarter our security gets, the smarter the hackers get.

Brad: And we’re constantly in this sort of role. And then from that perspective, we’ve also created an SDK. So from being a software platform, sitting on top of these legacy providers, leveraging the trusted brand names all around the world in that region and enabling them to go to market. We also have an SDK, so if someone is already delivering via a digital channel, like an application, a service, and it doesn’t matter what that service is, it could be banking, it could be accounting services, it could be lending, it could be a booking engine for escape room or nail salons or whatever it is. You can embed payments acceptance into that application using the SDK and in a very elegant way you can just have a way in your app of accepting payments with a tap, which we know is to be one of the preferred payment types. But something else to consider on these EMV certified payment terminals, something which is very difficult to do is to enable additional functionality after the point of manufacture. Whereas when we’re doing it on a smartphone, what we’ve created is this secure pipe that’s related to the contactless payment, but adding in other payments like QR wallets or adding in additional value added services is incredibly straightforward and something that we can do in a matter of hours rather than months. And then we don’t have to go through an additional certification because that secure pipe that we’ve created isn’t being touched, isn’t being manipulated and isn’t creating any potential security risk.

Jacob: Yeah. Wow. A ton there. That had a plethora of follow up questions through a couple of different parts of that. That was really awesome. Starting with, you know, clearly sounds like the security aspect may have been the biggest hurdle or maybe the biggest reason why this technology hadn’t existed previously. Am I correct in reading that that that was kind of the big hurdle to overcome and maybe was what was holding back this from existing prior to you guys going about putting it together?

Brad: That’s right. Originally in 2018, if we go back to to pre my engagement with Paynetics, when they had discussed this with Visa and MasterCard, the card schemes were pretty clear and said there’s no way a mobile phone can hit the level of security that’s required to manage this. But actually then the technology on mobile phones and the security elements and things like that, that’s increased exponentially. And all the technology of mobile devices just continues to improve. So without giving away any company secrets, what we’ve actually done is create multiple layers of security within this, where we’re using white box cryptography, we’re using trusted elements on the device, we’re using Google certifications, we’re using geo locations, we’re using transaction history and quality of transaction history. We’re doing all these checks in a matter of microseconds on a transaction by transaction basis. Then we’re wrapping all of this in a third party security element, right? So even if someone within the business lost their head and decided to try and hack it, they couldn’t do that because we’ve got someone else that we don’t even know what or how they’re doing to create that minimum level of security. And then we have a sort of another wrapper around that, which is more of a sort of notification type system. So if we see that on the device, someone’s enabled the developer options. They may be screen scraping, they may have something that’s trying to take images of what’s on the screen or grab any data or touch the pipe at any point in the process. And from our end, we just close it down.

Brad: And by combining all of these different things and now PCI has brought out the sort of security specification, we can all follow these guidelines. You can either do it to the minimum or you can do it to a level that we as a business feel comfortable with. And then we provide monthly releases of this, right? So in payments there are secure keys, there’s different PIN. Bits and pieces which have to be agreed and encrypted and switched between us and the acquirers that were connected to. And we change all that on like a monthly basis as well. So even if someone spent five, six, seven weeks trying to hack the application, four weeks into it, the whole thing changes anyway, right? And they have to start again. And this is the sort of level of security that we’re talking about to replicate that trusted element, that silicon chip that sits on the payment terminals and create this as a service in the cloud. That’s really at the core of what we do. It’s the starting point of every discussion that we have is let’s make sure this doesn’t create any kind of security flaw or anything like that. And when it comes to these certification standards, if you look back like the latest one that came out that could actually be certified was a scheme certification of the SDK. We were the first in the world to get that scheme certification. It kind of demonstrates we didn’t have to change any of our architecture. We didn’t have to bring in anything new. There was a standard written the security lab, the third party security lab that we have to submit our technology to that comes back with a report to say, yes, this is good.

Brad: Yes, this isn’t it was our first submission came back and it was like, We are great, let’s go for it. And it was sort of six months before anyone else came up behind us with that. Now we’ve got the next iteration which is coming, which effectively allows everything that we’ve already been working on, but plus pin to be done in a way that’s not throttled. So there’s no restriction on number of users or number of devices or anything like that. That specification came out at the end of next year and we’re expecting the labs soon to be opening so that we can create our submission. But we haven’t really had to make any major changes in our architecture based on that specification. We had already had that mindset to have security as our sort of number one piece, then enabling the flexibility through the user interface, through the connectivity. And I think we’re probably one of the very few providers in the world that can do that, acquire a connectivity as a service. So if a business comes to us and we’re not using their preferred financial service, they might be a Worldpay or a Fiserv or a Vantiv or a valid. If they’re already connected with us, that’s great. We can go through that pipe. But if we’re not, it’s just another project for us. And we have a dedicated team that’s just working on those types of integration projects and not many other businesses are offering that.

Jacob: Yeah, that speed and ability to be nimble I’d think definitely would make you stand out and allow for not only advantages right now, but the idea of as all of this constantly changes, never will stop changing. The one being able to be the one that can adapt to the changes the quickest and the easiest is certainly something that’s going to make all those you’re working with want to stay with you. I can only imagine you mentioned a couple different times now kind of references the different integrations. I know you know lots and lots. Anyone in the fintech payment space are bombarded with requests to provide integrations for their service with different third party platforms. Everyone you know wants. You’re the hot thing. Everyone wants to work with you in some way. Talk to me about the integrations you’ve already created for your service and how you went about selecting those initial ones to work on those first couple of projects. And then are there any potential big integrations on the horizon that you’re looking at? Is that was what can unlock new growth opportunities for you?

Brad: Yeah. So we have sort of integrations in two directions. One is where we’re connecting our technology platform to a financial service. And in the early days we selected those based on who wanted to take a service from us. So we really didn’t do that many strategic connections or integrations. We did it with businesses that said, Hey, we’d like to take this to market ourselves. So we said, okay, we did the integration, and then the way we structured our go to market was to split it in three ways. One is to banks and acquirers, one is to MSPs and ISOs, and one is a more technical sale of the SDK to that’s the sort of embedded concept. Now every time that we achieve success with an acquirer sale and we completed the integration, it opens up the option of us then aggressively going down train and targeting the SPS and ISOs of each of those acquirers in the process of targeting the ISOs and the SPS. We also then come across, for instance, ISOs that use multiple acquirers and they say, okay, well this is great. We can get it going with these guys. But actually our preference would be to have this running through this other connection. So we say, Great, introduce us to those guys, get us the documentation, we’ll review it, and then we’ll tell you how much it’s going to cost for us to connect to it. So in the meantime, they’re kind of proving a business case and ROI on their side through the connection that we already had while we work on the background.

Brad: And sometimes we can do that strategically. If our partner is building up enough monthly recurring revenue, it can make it worthwhile for us to strategically complete an integration and these things kind of cycle. And it sort of we’re starting to see it now. It becomes a bit viral because once you’re working with one and then they go to four of their PSPs and say, Hey, we’ve now got this service, isn’t this fantastic? Then all of the PSPs competitors that so then bring this to market. Then they’re saying, Well, we want this. We need to make sure we can offer these services and then that comes back to us. So that’s the sort of way that we structured it and it really worked. But on the front side, what we saw was that typically in the terminal world and we used to see this a lot, the logic group is you have these businesses that want to embed, they have the concept of embedding payments and it may be in a retailer, they have their iPads running on a screen, but that screen is fixed. You know, they don’t have the mobile concept, right? But they do want to have the mobile concept of someone walking around with the ability to take payments. So we created APIs so that from the fixed element they can connect to a mobile element.

Brad: So it may be a desktop computer that’s, you know, someone goes and says, okay, I’m looking for this top right, it’s in aisle five, whatever, take it there. But then you have a member of staff there that also has an Android device, is connected to the desktop PC and they can say, okay, great, you want to buy this? I can scan it. It’s communicating invisibly back to the desktop device, but actually I can take payments directly here and now and in the in the luxury retail space that’s really preferred. You don’t really want your customer walking to a central checkout point with everyone else. You want them feeling like they have this unique experience, right? So in enterprise retail, you have that concept of clienteling. You also have the concept of failover, you have the concept of queue busting. It’s particularly important, you know, busy times of the year. If you read anything about supermarkets, the one thing they don’t want people doing is queuing up and spending time at the checkout, right? All of those colleagues probably using devices for in-store comms or stock control or whatever it is. And on that existing estate of devices, through the use of it, through a download of an application, we can now turn them into walking checkouts. And that’s pretty cool in the enterprise retail space.

Jacob: Yeah. And as you explained, some of the kind of end use cases of it, my mind only races to I’ve worked a lot of odd jobs over over my life in a bunch of different retail settings as well. And I just immediately jumped back to different places where it would have been so amazing for both myself and my colleagues to have this and for the actual customer and consumer themselves. From, you know, I worked in a retail store where we could walk around with our iPads, our phone and check inventory and pull up orders and even create the orders. But then we have to say, and now you can go stand in that line over there, because the last, final part, I can’t do that here. And how we would actively lose sales in those moments because they’re like, Oh, well, that looks like it’s going to take 20 or 30 minutes. Didn’t you just do everything? I have my card right here, so I can only imagine how much it’s going to help and make a lot of people’s lives a lot easier from the merchant standpoint. I wonder. I know while you’re not working directly with the merchants, but what types of places were your early adopters or continue to be your early adopters, either types of businesses, possible industries as a whole, locations Who were the ones? Early that you saw and maybe did it pan out that the ones you thought would be the early adopters actually turned out to be the case?

Brad: We had a few interesting ones to start with. So actually we started off with food and beverage within immediate walking vicinity of the office, right? So we literally went to the independent …

Jacob: Let it benefit us first. I want to be able to use it myself right around the corner. Exactly.

Brad: We got 30 people that will come here for lunch tomorrow if you put this in here. Right? So we did a lot of those. We did a lot of personal contact. So actually we ended up with a pretty big network of personal trainers that were doing this. It was great for them. They have a mobile device on them and then they were able to take sessions, be it for PT or group classes or whatever it is for them. The cost of that hardware is a pretty big barrier. And then if it doesn’t work very well, the associated Bluetooth connectivity issues can be a problem. And then we started to see these other use cases in like mobility. So one of our first really good customers was a taxi technology company. They were already with their dispatch platform. They were already working on Android devices of taxi drivers. So they’re like, Hey, well actually now you can just download this application. They still get to keep control, right? Because the taxi technology company is the merchant, so they’re still bringing in the funds and distributing as they would be if they took a payment over the phone. So yeah, it’s again about exploding that number of acceptance points without the associated cost of technology. You’ve got taxi drivers, sometimes they’re only working nights or they’re only working two days a week. And a good example of this is in Brazil with a business called My Food. They have 800,000 delivery riders and obviously not all of those are working at the same time. Right. But you can imagine if you wanted to provision each one of those with a payments device, that’s just an enormous outlay. And then given that their riders as well, they’ll drop them, they’ll break. They’re not the most robust things. But actually, really people take care of their mobile phones, right? Because they’ve often paid for themselves.

Jacob: The most important thing in all of our lives at this point.

Brad: Exactly. That brings in the kind of concept of BYOD, which we haven’t really talked about. But that long tail of small solopreneurs, electricians, plumbers, that type of thing, like everyone’s everyone’s running their business through their mobile device. They’re maybe running an invoicing application or something like that. They may be running a booking service and definitely doing phone calls through their mobile. So in the very early stages when we went to a pilot, we went for that very small independent business. But then actually when we expanded to be more of the orchestration platform and we said, okay, let’s provide this to financial institutions, we had a great partner that took up the solution in Cyprus was just about the time that the government mandated that if you were opening a business bank account, you had to be able to accept card payments and this was a great tick in the box for them where they could make a download available to all these businesses that were opening. All of a sudden we saw all these different use cases. So we had bookshops, we had cafes, we had art galleries doing like thousands of euros per transaction. We’ve seen cash and carry, we’ve seen delivery drivers, all sorts of different things. Charity is an amazing one. Typically, charities, if they’re running an event, they need to get a whole bunch of devices delivered to a place. Someone needs to distribute them, someone needs to collect them at the end. Then what are they doing? Are they renting them or do they own them and they send them back to us? The whole logistics of it is a nightmare.

Brad: We have a great charity partner who have an application and they embedded our payments acceptance in there and they had I think it was it was about 70 people turned up at Twickenham Stadium. They all had the mobile phone. They’d pre downloaded the application onto the mobile phone and then just said, Right. This is how you can take contactless donations right on your device. Now, in 2019, when we were first having discussions pre the pandemic, the feedback we’d most often get was there’s no way people will be happy tapping against someone’s mobile phone. It just sounds a bit dodgy. But then post-pandemic, that whole concern seems to have gone away. But also all the existing terminal providers, they’ve all brought out Android devices. Right. So now if you go to relatively new businesses, even though they have a piece of payment specific hardware, it just looks like a mobile phone, it’s just a screen. It maybe has a printer on it or something associated to it, which is slightly different. But generally speaking, it just looks like a mobile phone. So all of those concerns have just faded away as a result of the pandemic. Firstly, the rise of contactless payments, the huge increase in the use of wallets like Apple Pay and Google Pay, because that’s accepted through the solution to now, I think we’re kind of moving into this mass adoption stage of this type of technology in all different types of use cases.

Jacob: Yeah. And where all are you operating at this point? I think I saw recently you partnered with was it Thrive to come over into North America in the States and as myself over here in the US, selfishly, I’m like, when am I going to have this ease from my selfish consumer standpoint of what am I going to start running into this in my everyday life? Where are you currently working? And then what’s the expansion plan more so to speak?

Brad: We currently have projects live. We’re relatively small business, right? And we have projects live in all five inhabited continents. So we have stuff going on in Australia which is about to launch. We have stuff in the Middle East, we have things going on in Africa, South Africa, Latin America, North America is the most recent one. So it’s become an area of particular interest because Apple have announced that they or they announced a while ago that they were bringing a solution to market and that has kind of saved us millions of dollars in market education. Right? Because if Apple brings it out, people just assume, okay, this is great and it is great, but people don’t have that question mark around our world. Is this safe for me to use? If it’s an Apple product, people are happy with it. So it’s really interesting what we’ve seen in the US because during the pandemic there was also a shift in attitude of the banks there where again in 2019, I don’t know the exact numbers, but it was something like 19% of cards in people’s wallets were contactless. And now in a relatively short space of time, that’s up to more like 50, 60%. And the use of wallets like Apple Pay and Google Pay is just increased exponentially. And all the banks, I believe, have committed to, as your card goes out of date, your replacement will be contactless enabled.

Brad: So we’re looking at a huge ramp up in contactless enablement in the US market. And when we were thinking about it in 2020, we were kind of thinking, well, we’ll probably be dealing with the US market in 2025. But this Apple News sort of created this catalyst where we’re actually like, Oh, actually we can bring this to market much sooner. And so we’re connected to Fiserv and Elavon, which are two of the big acquiring banks there. And with Elavon, we’re a part of their works with program. So any ISO or ISV that’s using and merchant, I think that’s using Elavon today can just select us as a solution through the 11 works with platform in the US and with Fiserv, we’re connected to their solution where they actually have like a sponsor for acquirers in the US. So someone like Thrive will partner with an acquirer. I think it’s Wells Fargo and they will be able to take a solution to market with Wells Fargo as the acquirer fiserv doing the processing underneath and we’ve certified that start to finish. So they have terminal solutions and things like that which they’re putting out into market, but they will also have an opportunity to deliver a terminal plus soft POS or running through the same bank, the same technology, the same reporting they will have.

Brad: They will be spending money on acquiring customers that don’t meet a minimum set of requirements. Okay. Because they can’t ship technology and they won’t see a return on it within a suitable amount of time, but they can make available a software solution to them because there’s not the associated costs of the hardware and the shipping and the logistics and the support. So that’s what we’re doing with Thrive and others. We have a very big charity there. It’s a religious charity that we’re looking to go live with and another us ISO as well that’s well known, but we haven’t publicly announced and lots of others in the pipe. So yeah, the US is an exciting market for us because compared to Europe it’s relatively straightforward. In Europe every country has its own kind of regulator and they each have their own rules. They’re sort of similar but with some differences. All the different languages, all the different currencies. There’s a lot of complexity when it comes to Europe that we don’t necessarily face. In the US. There were different challenges in the US, but I feel like it’s much more straightforward and it’s a very big market that we can get into. We’re just about to hire two people there from a sales perspective and that will be the sort of kick off of our big drive into North America.

Jacob: Fantastic. Do you think in the long term that mobile and SoftPaws will fully replace traditional old school hardware and POS machines?

Brad: It depends how long term your long term is. I think in ten years, potentially, yes, we’d be looking at that because, I mean, in ten years time, who knows, Right. There are so many different moving parts. Maybe people won’t even be using cards. So we’ll be using some everyone will be using rings or chips on the skin or something like that, but not in the short term. So I still definitely see that there’s a requirement for hardware and there is a place for that, definitely. And contactless isn’t a solve all everywhere. And there’s complexities in Europe around secure customer authentication. And often we’ll see these things in Europe and a few years later they’ll go to the US as well. So they’ll be the same complexities around KVM limits and PIN and that type of thing, which we which can be difficult to deal with. Like for example, the UK today is an offline PIN market and contactless payments currently require online pin. So that creates its own challenge for us in the UK that we have overcome. And in the meantime the UK visa specifically, or MasterCard, one of the schemes has said that there needs to be a change to supporting online pin in the UK. But yeah, I think they’ll still definitely be a demand for a payment specific piece of hardware that is robust and doesn’t move from site and that you sits and has its own task to do probably for the next 4 or 5 years.

Jacob: Yeah. And I mean, as you said before, it is hard to talk what’s long term? What’s short term actually really think about it because like you said, you thought maybe us in 2025 and then something like a pandemic happens and then something like the big one of the biggest companies in the world and makes one announcement and suddenly timetables moved up, timetables moved back. So I think that was a fair, fair way to go about that. We’ll get you out of here on this. Then we just we’re touching kind of on the trend of the industry. But looking at the industry as a whole, you’re on the cutting edge of payments. Are there any other big trends that stand out to you right now in the industry or that you’re looking at as trends to be kind of at the front of over the next couple of years to come?

Brad: Yeah, I mean, there’s definitely, there’s business interest in trends and there’s Brad’s Interests in trends. So I’ll talk about kind of what I think is interesting. There’s certainly the element of crypto acceptance where historically I think there’s a very high demand for the concept of, of, of cryptocurrencies, the idea of a decentralized, deregulated currency that the world is using and isn’t so heavily influenced by banks, I think as a concept that people really buy into and think that it’s such a huge market, it can’t really be ignored. But the enablement of acceptance for these things at a low value, the technology has never really been there and it required someone, I think, to take a bit of a risk on how they manage those sort of micro transactions going and buying a candy bar or a sweets or whatever, and still being able to use Bitcoin or Ethereum to pay for that. The transaction value is so small, getting the authorization on an exchange, it’s kind of prioritized by value. So, so almost they could never hit that. So you need someone to kind of group those up and do them every few hours or days or whatever. It works out as. I think now we are starting to see some businesses out there that are bringing this concept live. Jenico announced a partnership with Binance for accepting Bitcoin on their payment terminals. I think that’s things like that are really cool to see where you see massive influence in the market, make an indicator and make something available. And they’ve obviously spent time and resources in getting that enabled.

Brad: So it’ll be really interesting to see that sort of crypto trend. I think there’s a massive drive towards the concept of reducing carbon footprint and payments is in there in almost everything and it is a definite touch point between the business and the consumer and it creates an opportunity for the consumer to make a choice or the business to make a choice. And do I want to offset the environmental impact of this transaction? And when you think about flights or taxis or banking transactions or things like this, I think there is a very high demand for solutions like that. And there are businesses out there that focus specifically on delivering this type of thing, and we’re looking at it as well. So I think that’s really interesting. There’s a younger generation of people coming in that really care about these things and where you see that, I think you’ve got to enable them to act on that choice. Historically, people have always talked about you’ve got to make the payment options available. The people they want to pay with this wallet or they want to use this bank transfer system or they want to use this card. That’s all great. But actually there’s other things that people would like to be able to do. And if you don’t enable it for them, you’re never going to see that, right? So there’s a good opportunity for good. Pennies is a good example where you can round up your amount and donate those pennies to a charity.

Brad: I think things like that are really cool and in the green space, I think that’s one to watch. I think VR is an interesting one, right, where pre-pandemic there was a high level of interest in VR for all sorts of industries, good and bad, then I feel like it sort of during the pandemic there was a lot of interest, but not a lot happening on it because it was a pandemic and people couldn’t be interacting to actually work on the tech. Then coming out of the pandemic, people started to think, Actually, we’ve really missed those human interactions, right? And I don’t necessarily want to then put a headset on and just enter a slightly different world of Instagram or Facebook or something like that. But ultimately, we’re in a recession. I think Zoom is great as a tool, but for business communication, it definitely works better in a more socialized environment, and I think VR could potentially happen with that. The world is getting smaller and the concept of VR and being able to buy from brands with a much higher level of experience through using VR is really cool. I think that is a concept for me to be able to interact without having to someone regionally, without having to travel into central London to have an experience with whatever brand you want to name Louis Vuitton or Burberry or whoever you want to have that experience with. I think VR is going to be an awesome way of doing that. And then I don’t think you can talk about trends without talking about AI and the impact of AI and what’s happening in the world.

Brad: And if you think about the data that’s being drawn on to create something like ChatGPT this data is all there for payments. It’s all running through these payment terminals and connection points and digital endpoints already. And I feel like it’s not going to take very long for someone to connect an AI engine to it and pretty much be able to predict with a fair degree of accuracy what someone’s going to buy before they’ve even thought about buying it, whether it’s coffee pods or I think you kind of see it in Amazon already, right? Where they try and prompt you with, are you running out of this or do you need more of that? But I think actually you’ll be able to get a much more what feels like an emotional prompt. Where is it coming up, not just for you, but maybe for your family or friends or whatever it is, and they know what those people like. And instead of going through and buying your card and then being given an option of chocolates or flowers to add to it, I think you’ve been given a really personalized purchase option. And I think all those types of things will be really interesting to see where retailers want to be able to sell more. They want to be able to market in a more laser focused way. And I think the ability for AI to interpret data will be a huge enabler of that.

Jacob: Yeah, all those fantastic answers and that last example you gave to just kind of chuckled to myself of thinking I have in the past been very frustrated when Amazon has offered like, Hey, you’re probably out of this. I’m like, Hey, don’t tell me when I’ve had all my stuff. And then they make one recommendation like, that’s actually very accurate. I’ve been meaning to get that for a couple of days now. Thank you. And please send it. So very amazing stuff. Brad This has all been super fun, incredibly informative. Can’t thank you enough for your time. The final thing before we go here, if listeners wanted to follow you or the company, learn more about yourself or Phos, where would they go to do so?

Brad: We are most active on LinkedIn and we also have big news coming, so it’s definitely worth a follow for the next few months.

Jacob: Certainly. Well, we’ll definitely put links to your LinkedIn, the company website, everything like that in the show notes. So anyone looking and eager to await that big announcement, definitely go give that a follow. So thank you so much for your time, Brad. Thanks for joining us on PayPod and hope to talk again soon. Thanks for having me. If you enjoyed this episode and want to 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


Phos is the leading SoftPoS orchestrator which helps legacy technology providers and financial institutions quickly bring ‘Tap to Pay’ solutions to market. This can help businesses avoid the high costs of having to pay for additional hardware – i.e. chip and pin machines – while creating a frictionless experience for customers.