How the $11 Trillion Check Problem Ends – Baxter Lanius

Episode Overview

Baxter Lanius is the CEO of Alternative Payments, a fintech company dedicated to modernizing B2B payment workflows through AI and automation. With extensive experience in both fintech and investment, Baxter is passionate about solving the longstanding inefficiencies in B2B payments, particularly in industries that still rely on outdated methods like checks. His company is focused on streamlining invoicing, billing, and payment processes to help businesses get paid faster and more efficiently.

Before founding Alternative Payments, Baxter worked with Victory Park Capital, a firm that was instrumental in acquiring and growing Giordano’s Pizza out of bankruptcy. This experience, coupled with his expertise in both the tech and finance sectors, shaped his approach to solving problems in traditional industries and modernizing legacy systems. He saw firsthand how businesses in sectors like construction, logistics, and wholesale distribution were left behind in the digital payments revolution.

Baxter’s vision is clear: leverage AI to automate workflows, optimize payment processes, and help businesses transition from paper-based systems to seamless digital solutions. Under his leadership, Alternative Payments has grown rapidly, processing nearly $1 billion in payments and helping a wide variety of businesses improve their payment cycles and cash flow. Baxter believes that by addressing the unique needs of industries still stuck with outdated systems, his company can drive significant change in the B2B fintech space.

Baxter is also a proponent of the embedded finance trend, where fintech solutions are integrated directly into the workflows of businesses, providing them with more control and automation. His leadership continues to push the boundaries of what’s possible in B2B payments and helps businesses across sectors scale faster while staying compliant and efficient.

Episode Transcript

Baxter Lanius: They’re earning about 0.4%, 0.5% on that money in the system. And when you’re processing billions and billions of dollars, right. What’s 0.5% of a billion? It’s ten five, 5 million. It’s about $5 million. So you know, you’re able to bring in really, really attractive revenue streams by creating additional float. Bill is another big example. If you look at their publicly, their public financials, a big portion of their business is float.

Kevin Rosenquist: Hello and welcome to PayPod where we bring you conversations with the trailblazers shaping the future of payments in fintech. My name is Kevin Rosenquist. Thanks for being here. 33% of B2B payments in the US are still made by check in 2025. Why is that? Because the service based industries that power our economy have been left behind by Fintech Baxter Lanius is changing that. He’s the CEO of Alternative Payments, a startup using AI to drag B2B transactions into the modern era. In this episode, we break down why the system is broken. How AI is speeding up invoicing and payments, and why some players actually benefit from keeping things slow. We also talk one of my favorites, Giordano’s Pizza. So without further ado, please welcome Baxter Lanius. All right, so I have a bit of a random start here. I thought you were a board member for Giordano’s in the past. I was yeah, that cracked me up. So I grew up right outside of Chicago, and I lived in Chicago for 16 years before moving out here to Colorado. I Giordano’s in the suburb I grew up in was the place that we went. Us being my buddies, that’s where we would go and get appetizers and drink coffee and coke and stuff like that. And it’s just funny. I saw that. I’m like,  my God, that’s like a reference. Not everybody knows it’s funny.

Baxter Lanius: So I worked at a firm called Victory Park app for two years. Victory Park was the owner of Giordano’s Pizza and helped acquire the business out of bankruptcy and then grew the business tremendously under the CEO’s leadership. And as part of that firm and in my work, I got an opportunity to be on the board. But totally I mean, you know, it it shows you the power of branding and the power of markets, right? If you go meet anybody from Chicago and they look at my LinkedIn profile, they immediately see Giordano’s and they immediately bring it up.  If you meet anybody from the northeast, people like Giordano’s Pizza. Never, never heard of it. Don’t care at all. And it’s pretty amazing, right? The Chicago deep dish pizza love affair between Giordano’s and Lina and others carries on for generations and generations. I’m actually just at a conference three weeks ago, and we sponsored a dinner and took everybody to the flagship Giordano’s location, which was fun. I haven’t been back there in five years, so it’s fun, fun to be back.

Kevin Rosenquist: It’s been even longer than for me since I’ve been to that, to that one, I mean, that, yeah, that’s really, really cool. And for the record, I think Giordano’s is better than Matt’s, but that’s just me. And I’m not just saying that because you’re sitting here, but I actually believe that. So yeah, I saw that I had to bring it up. So,  thanks for indulging me. All right. Let’s talk about fintech here. What are some of the core payment pain points facing blue collar industries, and why have they been underserved by the fintech boom?

Baxter Lanius: Yeah. So it’s been an interesting history within fintech and specifically within payments. So I worked at a fund called Victory Park Capital. Victory Park Capital was born just before the Great Recession in 2007, 2008, and they found fintech credit as a new opportunity to invest in from a credit perspective. So what is fintech credit? Fintech credit? Back in the day, was really providing the capital to online lenders to then deploy to either consumers or businesses. And this was kind of like fintech 1.0 in a way, and from or maybe even 2.0, I mean, just just for one and a half, I mean, depending on what your vantage point is. And from a lot of the lending work that people were doing over in terms of originating loans online, there was then this payments boom that kind of started. Right. You had squares, you have stripes, you have toast, you have lightspeed, you have a lot of businesses that started really in the core point of sale solution. So if you were a pizza restaurant using Giordano’s example, what happens, right? Kevin goes to the story, picks up a deep dish pizza. He’s getting excited to eat it at home. He swipes his credit card. They process the payment. Now, the challenge, right, is that as online businesses proliferate and as e-commerce businesses proliferate, the point of sale is not in person. The point of sale is online. And the premise, right, is that you need a point of sale system that’s online. So you need an embedded payments experience, right? And so stripe is obviously the leading player in that market today. And Stripe’s an API based solution. So you create a payment experience. It can look like whatever we want it to look like, right.

Baxter Lanius: You can be fully customizable and stripe helps you process the payments that the success of stripe as a platform has then proliferated a lot of different. I don’t want to say copycats, but similar businesses that can process online payments can process e-commerce payments.  But what we’ve learned is that a lot of these businesses have forgotten about invoice based payments, and invoice based payments are really. Payments that are attached to an invoice. So you create an invoice within any type of software. Could be QuickBooks online. It could be a vertical SaaS solution. It could be a piece of paper. And how do you make a payment attached to that invoice that is then reconciled with that invoice. And so when we talk about the real world economy and blue collar industries, the majority of their payments are invoice related. And that creates this complicated workflow between where, how and when and where an invoice is created and how and when and where a payment is created or applied via check visa, via ACH, credit card, etc. to that invoice. And so for a lot of these industries and a lot of these markets, if the invoice is not tied to the payment in a one for one nature. It creates a lot of manual work, right? In terms of reconciliation, in terms of payment reconciliation, bank reconciliation. Hey, Kevin, like, where’s my money? I don’t see that it’s attached to this invoice. Did you pay me? Did you not pay me? And that’s really where we’re focused as a business to come up with this automated workflow to streamline the process of invoicing, billing and payments.

Kevin Rosenquist: Okay. And if I kind of helped modernize the B2B payment workflows in these industries.

Baxter Lanius: So totally I mean, AI is extremely, extremely powerful from creating that invoice in the way in which that invoice is created, what products, what services are invoice, and how do you create that in an automated fashion and kind of and automate that workflow to then distribute that invoice. Right. And what’s called a bill presentment. Right. So how is the bill presented to Kevin? Is it presented via a mobile phone? Is it presented on a computer? Is it presented via an envelope in the mail? Right. And where we see a lot of this going. Is leveraging AI in the ability to test and iterate at a really, really rapid pace. To present bills in the fashion that Kevin or the business or the user wants to review them in, depending on if they’re in the car and they’re driving to the store or they’re at home on their computer, depending on the time of the day. You can optimize that bill presentment to ensure that your client is getting paid faster. And then you can also automate a lot of the downstream payment volume. And so these are the workflows that we are leveraging many times over to iterate, to then help our clients get paid faster. Because the North Star for our business is really, how quickly can we get you paid? And if I go to you as a business owner, Kevin and I say, hey, you own Giordano’s pizza, I can get you paid in five days after the due date. You’re currently getting paid in 30 days after the due date. Would you want to utilize my software? Well, you’ll say, well, how much cash? What’s the value of that difference of 25 days? And if the value is obviously great enough, then I can very, very easily and cleanly sell you our solution. Right? And so I completely changed the game in terms of what’s possible within these B2B payment workflows.

Kevin Rosenquist: Some of these industries we’re talking about. Is there any particular reason that they’re sort of behind. Is it just if it ain’t broke they haven’t needed to change anything.

Baxter Lanius: I mean, it really starts with the surprising statistic of what the B2B payments market looks like. The B2B payments market in the US is a $33 trillion industry, and around 11 to $12 trillion are processed via check today. So 33% of payment vole in B2B is check based payments and.

Kevin Rosenquist: Kind of insane.

Baxter Lanius: It’s insane. It’s insane. Right? Like all of us are running around with our iPhones, with our headphones, Bluetooth this, Bluetooth that. You know, I live in New York City and I walk around New York City and I’m amazed at, like, the concept cars that are out there, like,  my God. Like, you know, you have the Tesla Cybertruck, you have these new BMW II series cars that look so futuristic. You have ChatGPT that automates a lot of different workflows. Yet 33% of the B2B payment market is still paying via check.

Kevin Rosenquist: I don’t even know where my checkbook is right now.

Baxter Lanius: I have one, I know.

Baxter Lanius: Where your checkbook is, and I don’t know where my checkbook is, But, you know, as you leave these kind of coastal cities and I don’t know where. I don’t know where you live, Kevin. But check becomes a key form of transaction. Yeah. And the other interesting point is a lot of the biggest banks in the world and the biggest fintech companies actually utilize check as a form of payment because they can earn a float on the time it takes for them to pull money out of your account and the time it takes for me to cash that check. So banks like JP Morgan, their default payment method is for you to pay a vendor a check and check. So what happens? You say, hey, I want to pay Baxter $1,000 via check. Here’s Baxter’s address. Jp Morgan says no problem. We’ll we’ll write you that check and we’ll send it to Baxter. They take $1,000 from your bank account immediately. Once you click submit and then they wait for Baxter to cash it. And if Baxter doesn’t cash it for 30 days, maybe Baxter never cashes it. And those funds need to then get reconciled back to your account, and they earn a month of float. So, you know, when you think about a month of float right there earning around 5%, 4.5% depending on, you know, latest numbers.

Baxter Lanius: So they’re earning about 0.4%, 0.5% on that money in the system. And when you’re processing billions and billions of dollars right. What’s 0.5% of a billion? It’s what it is. It’s going to be five. 5 million. It’s about $5 million. So, you know, you’re able to bring in really, really attractive revenue streams by creating additional floats. Bill is another big example. If you look at their publicly, their public financials, a big portion of their business is float. They draw funds from your account immediately. They send the check and they earn the yield on the float revenue. So, you know, it’s kind of this perverse world that we live in where on one hand, platforms are supposed to drive innovation and drive instant payments. But on the flip side, there’s some perverse incentives that actually prohibit some companies from getting rid of checks. And so for our business, you know, what I’ve always promised is we will not have a check solution because, again, our goal is to get people paid faster. And what do checks do? They slow down the entire system. Yep.

Kevin Rosenquist: I mean, you know, I joked about that, but I, you know, my last day job that I had I had to pay people and people, you know, I did a lot of the accounts receivable and accounts payable. I still dealt with a lot of checks. I mean, and this was less you know, this was about a year and a half, two years ago. I mean, the people I worked for were a little older, so I think that had something to do with it. I tried to do my best to modernize it and pay online when I could, but I mean, yeah, it’s still still a decent amount of checks that were being sent and it always blew me away. But to hear that figure is, wow, that’s a high percentage.

Baxter Lanius: It depends on what industry you’re in, right? I mean, obviously if you’re in software, the majority of software payments are online, right? I mean, ChatGPT doesn’t allow you to pay via check for your check.

Kevin Rosenquist: You’ve never sent OpenAI a check for $20. No I haven’t.

Baxter Lanius: You’re in your experience, right? I mean, Salesforce, I don’t think. I mean, maybe they do actually have an address on their invoice that allows you to to write a check. But, you know, as you go into construction, right? As you go into logistics, as you go into wholesale distribution, as you go into IT services, as you go into field services. There’s so many industries out there that, you know, some of them don’t even exist online, right? I mean, we see a lot of businesses that are doing ten, 20, $30 million of revenue. They don’t have a website. It’s just what they do.

Kevin Rosenquist: It’s really minimalistic with not much information on it.

Baxter Lanius: Exactly. Exactly.

Kevin Rosenquist: And another note, I saw that alternative payments just raised,  22 mil. Congrats on that.

Baxter Lanius: Thank you, thank you.

Kevin Rosenquist: What are you gonna do with all that cheddar?

Baxter Lanius: We’re gonna eat it. We’re gonna eat.

Kevin Rosenquist: It.

Baxter Lanius: And we’re gonna put it on our diet.

Kevin Rosenquist: On us. Here you go. Put it on your pizza.

Baxter Lanius: We’re gonna.

Kevin Rosenquist: Eat it. So, what are you guys building that’s getting investors excited?

Baxter Lanius: Yeah. So it really comes back to your point, right, of thinking about a lot of these markets in which there are still a lot of check payers. And how do you get them online. How do you bring them to the 21st century and help modernize and automate some of their workflows? And so what we’ve done is we’ve gone after a handful of these kind of more traditional real world markets and economies that have a lot of check payments. And the pain point is automation, efficiency, scalability for some of these businesses. And we’ve streamlined the way in which a lot of these businesses accept payments. And obviously payments is a really, really massive market. They’re massive opportunities. There’s not a ton of competition relative to the software markets. And so we launched our first product about two years ago, and we have a B2B payments motion. And we’ve been scaling and growing very, very quickly. You know, we’re now a team of about 50. We do a little less than $1 billion of payment processing vole. And we’re growing quickly and excited for what’s to come.

Kevin Rosenquist: Very cool. Congrats on that. That’s definitely really exciting. How are merchant service providers evolving in this landscape? What does it mean for the businesses that rely on them?

Baxter Lanius: Yeah, so there are a lot of trends to unpack. I think one of the biggest trends is this embedded finance trend. Yeah. And you know, we talked to a lot of different merchant services providers that, you know, they may process credit card payments for hundreds of thousands or millions of businesses. Right.  if you think about lightspeed, if you think about global payments, if you think about Worldpay, like a lot of these companies are processing payments for thousands and thousands of businesses, and all they’re doing is just processing it’s merchant acquiring, right? All they’re doing is processing the credit card payments. And so a big trend, right, is, how do these companies increase their wallet share of their client base? Historically, it’s just been, you know, they earn 2.4, 2.5% based off of any of their credit card vole. But what do they want to do? They want to be able to offer lending. They want to be more sophisticated. Are emotion. They want to be able to offer accounts payable. And so they’re trying to use a lot of the existing rails and existing merchant relationships to embed financial services into the channel, which is a big theme. Another big theme is obviously vertical SaaS solutions. A lot of companies and a lot of businesses are building vertical SaaS solutions that are kind of the source of record for your business. You know, I’m sure there are vertical SaaS solutions for podcasters to manage their business, their vertical SaaS solutions for landscapers to manage their businesses. Hvac pool services is a big market, right? And so people are building these vertical SaaS solutions to automate and optimize some of the workflow and day to day management of the business.

Baxter Lanius: And then again, embed payments, embed fintech into those products. The thing that’s amazing to me is if you look at the software landscape, the software landscape is only about a 700 $800 billion market in the US. So people are spending, you know, $800 billion a year, let’s say, on on software products and on all those vertical SaaS solutions. But if you look at a lot of these other markets, like logistics, distribution, transportation, wholesale distribution, a lot of these markets are actually a lot, much, much larger than the software markets. And there are other angles to take to help these businesses automate a lot of their workflows. And so where we fit into the market is not from an embedded payments perspective, but in terms of just mastering that workflow for a lot of these kind of more nuts and bolts manufacturers, blue collar industries. But there’s a lot of exciting, you know, trends to unpack. You know, another statistic that I always love is, you know, we’re all fascinated, obviously with e-commerce. You know, if you look at e-commerce, spend as a as a percentage of total spend, it’s only like 17% of the market. So, you know, everybody and I live in New York City, I think I shared that previously. Everybody’s living in New York City. And you see Amazon trucks going left, right and center. You’re like,  my God. Amazon must own 100% of the e-commerce market in New York City. You know, but on a national basis, less than 20% of the market. Yeah, there’s just so much other opportunity out there to to really build big businesses that, you know, may be complementary to the e-commerce market.

Kevin Rosenquist: I live in Colorado, just outside of Boulder, and believe me, there are plenty of Amazon trucks around here too. So yeah, I’ve actually read recently that even some younger people, the Gen Zs of the world and stuff, are finding it to somewhat, I don’t know, appealing to go shopping, go out and buy stuff instead of getting it online. And maybe it’s a flip in just the script of people just, you know, maybe the pandemic broke some barriers on that because people were stuck at home and weren’t able to go anywhere. I don’t know, but I have read some articles about how the newer the younger people are going out and spending money, you know, in stores rather than have stuff delivered to them, which I think is interesting.

Baxter Lanius: But in industries like thrift shops having a new boom time in the market. And, you know, we I just got back from Toronto. About 60% of our team is based in Toronto. And I was talking to a lot of our younger salespeople, and they go to thrift shops. That’s like, you know, part fun, part shopping experience. And, you know, if you look at the thrift market,  it’s expanded significantly over the last five years. And yeah, if you ask, you know, our,  you know, the baby boomer generation there, probably their perception of thrift shops is probably a very different perception than what the 20 year old Gen Zer thinks about it today.

Kevin Rosenquist: I grew up in the grunge era, and when I used to go to to thrift stores to get my ripped up jeans, you know, to look like Kurt Cobain, and my parents were shocked that I would go to a thrift store because that was that was for people who couldn’t afford new clothes. You know what I mean? That was the perception of my parents. So you’re 100% right on that. Yeah, that’s an interesting example of something that is probably speaking to what I just said about younger people wanting to go out and shop. Yeah.

Baxter Lanius: Well, and at the end of the day, obviously everybody wants to shop where they want to shop. But bringing it back to payments, people want to transact also when they want to transact. And it’s really interesting. You can go into, you know, all sorts of different stores and, and even I do this and I go into a store and if the payment experience is not really, really tight, like sometimes even like walk out, right, like we’re all accustomed to this Starbucks, like, you know, incredible mobile checkout experience where you order online, you pay online. Everything is super streamlined. You go to the store, you pick it up, you leave on to the next thing. And that type of experience in the conser market is really the leading indicator for what’s to come in the B2B market. The big difference is that the B2B market just needs a lot of controls around it, because it’s not a $4 cup of coffee that you’re purchasing or a $6 latte. You know, it’s a $50,000 truck, right, for your business. And so, you know, if you have issues or challenges or you don’t confirm payment, you know, there’s, you know, a lot of fraud to that potential and a lot of risks within those transactions.

Kevin Rosenquist: That’s a perfect segue, because I was going to ask you, sort of beyond your current clients, what long term changes do you kind of think I will bring to B2B financial infrastructure as a whole.

Baxter Lanius: You mean at the end of the day? B2b financial infrastructure is just it’s behind, behind the eight ball. You know, you go to markets like Brazil, for instance.  and they have a payment rail called the pick picks, which is basically instant pay 24 over seven.

Kevin Rosenquist: Yeah, we’re way behind on that on the instant pay, that’s for sure.

Baxter Lanius: I mean, it’s insane. You know, a lot of markets, a lot of, you know, quite unquote third world countries have much more sophisticated payment rails than we do in the US. Now the US is catching up, right? There’s real time payments. There’s fed now that provide, you know, different faster payment timelines. You know, I don’t know if 24% of the market will ever exist necessarily in payments. A lot of that is driven from a handful of friction within regional and community banks and credit unions. But ultimately, B2B payments in AI will transform the market and that we will have controls on how money moves. And we will also have workflows and approval capabilities. And a lot of that will then migrate from an internet based right platform, which you got to log in. And two factor authentication, you know, to our phones. And so we’ll be able to transact with much higher dollar values in a safe setting based off of a lot of that infrastructure that’s been built. You know, the key unlock, I think, in the near term is really this bill presentment component of how do you provide a B2B invoice or a B2B bill at a time, or in a situation in which that are clerk is or that AP clerk, depending on how you look at it, is ready to pay and transact on that bill. Right? They’re not setting a reminder for tomorrow or the weekend or whatever. You know that based on this person’s email inbox, that based on where they are, you’re able to deliver that invoice and deliver that experience right where you want it, which then can accelerate the payment. And then simultaneously, you can adjust how that bill presentment is paid to then optimize that transaction. You know, stripe has been doing this for years within the B2C market, and the B2B market just lags the B2C market, especially within fintech and payments.

Kevin Rosenquist: That is definitely an ongoing theme of this show, is how the B2B market is behind the B2C market. For sure, in a lot of different ways.

Baxter Lanius: Yeah, there’s also a ton of of analytics opportunities, right. So, you know, a lot of people are working on this. And, you know, I think the theme is called CFO in a box type suite whereby, you know, you can integrate into an accounting software or an ERP software and analyze your data in a much more sophisticated fashion than what software players can do, and I will really unlock that within a lot of different products. Right? So the capability to integrate into all different systems to query that data, you know, automatically create some sort of data lake structured data scenarios and then help you run your business from a financial lens. And so we’re building a lot within this AI integration data analytics space that allows us to provide AI driven tooling to CFOs, VP of finance, finance leaders to then make better business decisions based off of the data, both payment data as well as invoice data. And so that gives them just a better line of sight for decision making in the future, as opposed to having to run On reports, drive analyzes. And then weeks later, you know, figure out what to do with it. You know, you can have access to that reporting that comparable data in a much more streamlined, simple, faster pace than ever before.

Kevin Rosenquist: Yeah, it’s definitely, definitely an interesting time for sure. So as a fintech entrepreneur yourself, what kind of advice would you give to someone thinking about getting into the payments space? Or maybe they’ve got a small startup? What do people not think about that? You now having done this would like to, you know, share.

Baxter Lanius: Yeah, I think from my perspective, one of the biggest learnings is really get outside the box. A lot of people, a lot of entrepreneurs spend time with other entrepreneurs, other software builders, other VC backed companies. And there’s a tremendous amount to learn in all of life, right. By understanding these different markets, these different workflows, I think you’re going to uncover a lot of different opportunities, as opposed to the more traditional lens of building software products for software companies, right? A lot of the majority of VC backed companies are software selling into software. Software selling into VC backed companies. Right. Great market. A lot of unicorns have been built, a lot of successful outcomes. That’s fantastic. But you know, when you look at the B2B market as a whole or you look at US GDP, you know, there’s so many other industries out there that are in need of technology, that are in need of automation, that are in need of fintech payments. And and what I’d really, you know, advise young people to do or anybody who’s looking to start a business, you know, spend time in some of these more off the beaten track industries. I think what you’ll find is these industries are very, very large. Many of them are highly fragmented. Many of them are still growing at a, you know, pretty solid pace. Single digit high single digits, low double digits.  and these are big, big markets in which you can create a lot of innovation around. But if you speak to the entrepreneurs in those markets, you know, I think they’ll shed a lot of light on what the potential is within those markets and what else is there to build outside of the traditional VC backed industries.

Kevin Rosenquist: That’s a really good tip. I think you can get really not stuck, but really laser focused on your niche or your or that area and that really kind of branches out a little bit more for sure.

Baxter Lanius: And, you know, just the nature of it. Right? Vc’s are very good at creating social environments. You know, these incubators that exist and we all attend them and we hang out with the same people and the same bubble, and San Francisco and LA and New York and Miami and all these different pockets. And sure, again, I’m not, I’m not downplaying it. Right. There’s a lot to build in those markets, you know, but but, you know, go to a rural town in Wisconsin or North Dakota or South Dakota and really understand how those folks live on a consumer angle or how those businesses do business on a B2B perspective. And I’m sure there’s just a tremendous amount of technology and automation and workflows that they would love to be utilizing that they’re just not familiar with,  that have just not come to those markets yet.

Kevin Rosenquist: Yeah, definitely. I like that. All right. Well, the company has Alternative payments. Baxter, thanks so much for your time. I really enjoyed the chat.

Baxter Lanius: Yeah. Of course. Kevin, thanks so much for having me. Really. Pleasure.