As a general rule, merchants aren’t really excited about payments.
Getting paid, on the other hand, they are very excited about — but what happens once the swipe or the dip or the click happens, happens inside of a black box that they don’t spent a lot of time thinking about.
“‘Gosh, I hope I get to think a lot about payments processing today. Maybe this will be the day that I really set aside the time to read and try to understand my contract with my ISO in detail’ is a statement that has been made exactly zero times, by zero merchants over the course of human commerce.”
So says Fattmerchant founder Suneera Madhani. Madhani’s journey into payments started when she graduated from the University of Florida in 2009 to find that financial firms weren’t hiring thanks to that economic nuisance otherwise known as the Great Recession.
So Madhani found herself, instead, working at “big tobacco” — a job she hated because she was selling a product that she really, really didn’t like.
But then the financial services gods smiled upon her — sort of. She jumped ship to selling payments through a variety of ISOs big and small.
“About six months into selling payments, I learned I hated selling payments more than I hated selling tobacco.”
On the upside, payments does not create known health risks or require packaging with warning labels. On the downside – six to seven years ago, there wasn’t a lot going on in payments, according to Madhani, who described the situation to Karen Webster as “traditional banks and ISOs and not a whole lot of changing going on.”
And while loads of technology came along to spice things up a lot, the reality was that the fundamental business of connecting payments with merchants remained very static — and horrifically opaque, Madhani told Webster. She said that she would negotiate contracts with clients that may, or may not, actually resemble the fees they later ended up paying later, depending on the vicissitudes of the backend.
“Payments was exciting to me, but every organization I worked for wasn’t. There was a big lack of transparency, and I never met a business owner who said ‘I love my merchant services provider’.”
Which is when Madhani had her “Ah-ha” moment.
“There had to be something the entire industry was missing.”
So Madhani decided to figure out what that was — and quickly came to interchange, because it is the single piece of common ground among all payments providers.
“It was a race to zero to see who could undercut that last guy and still make a little bit of money.”
But what if instead of a race — and a lot of complicated calculations on interchange fees — it was a subscription, Madhani told Webster. Merchants pay a flat fee each month — the same one, month in and month out — regardless of the number of transactions they process.
“I went to my bosses and I said I think we can make this work. And, surprise, surprise, they told me no — this has been tried before and it won’t work. I heard no multiple times at multiple companies. So I decided to do it myself.”
Fattmerchant was born. Wondering about the name? So were we. Fatt is an acrostic — standing for Fast Affordable Transaction Technology.
“I wrote it on the whiteboard, and I was laughing with my brother and co-founder — what if we named the company Fattmerchant because it would give everyone a fat wallet. And we decided it would be fun, and people would remember it.”
But how does it really work — and what is it, Webster asked — a pricing model or a business model?
At base, Fattmerchant is a pricing model for payments — clients pay $69 and with a slight per-transaction fee of 25 cents.
That, Madhani noted, is just the firm’s starting point.
“Quickly after we launched, we saw really fast growth, but we knew couldn’t just build on price itself. So we listened to customers.”
And that listening, she noted, was key, because she says one of the bigger problems in payments is that features get built, tech gets introduced and people occasionally forget to ask whether or not either are actually useful to most merchants. Some things, she noted, work brilliantly in some verticals or at some sizes that just don’t make sense for smaller players. Or merchants can find the solution set they need — but then find themselves mostly stringing it together with moxy and duck tape to get it to function.
“We built a subscription-based pricing model — and then built our own proprietary virtual terminal technology that has evolved to do web payments, mobile payments — we do a full line of solutions.”
She also noted that Fattmerchant is gearing up to roll out its “One” platform — which will actually help merchants tie all their individual payments efforts into a single experience that can be easily managed.
And managed by a variety of users — Fattmerchant’ s biggest vertical these days in retail, but professional services are catching up rapidly, and they are now working to really beef up those systems.
“We have a lot of niches that need credit card processing — especially those that are looking to save money. We do everything from mobile to invoice, recurring billing.”
But, she said, apart from the payments, what Fattmerchant offers is service — really personal customer service.
“We want merchants to have the best experience — and the best service. You call us, you get a real experience with our entire team,” she noted. “We are really really great about making a fun merchant services experience.”
But, the question is — can they make fun while they are also making money, especially when they are only charging $69 for unlimited payments processing? As Karen Webster pointed out, that seems like a system that someone will likely abuse. Plus, Webster noted, how do they deal with chargebacks — and merchants that perhaps aren’t quite playing above board.
Madhani noted that it isn’t easy and is always something of a struggle. Part of it, she noted, is knowing their customers and being selective in the sign-up process — Fattmerchant doesn’t want to make just anyone fat, after all. Part of it is leveraging their backend providers — and making sure that merchants are living up to those codified standards.
And part of it, she said, is just running in a very efficient manner.
“We are a membership subscription model — that is our focus and where our funds come from.”
As for the future — well, Fattmerchants is building out a host of other proprietary services — and those, she noted, could be further revenue streams going forward.
Fattmerchant is new — and very different from anything else out there. And with $1 billion processed in a relatively short period of time, a lot of interest on the part of merchants who value their value proposition of simplicity and service.
The question now is whether Fattmerchant can make merchants’ wallets — as well as their own — fatter. Stay tuned.