The whole point of startups is to do things differently than mainstream players, and that is exactly what these companies are doing with automation, interoperability and digital currency initiatives. Why should organizations say “yes” to purchase order matching and “no” to cryptocurrencies? Why bother making new and old systems play nice together? Why are one startup’s customers calm in the face of Visa’s upcoming new chargeback rules? Read on: It’s all in this month’s Startup Roundup.
Adopting a purchase order (PO) matching process is a significant marker of maturity, according to Rob Israch, chief marketing officer for accounts payable (AP) automation startup Tipalti. A PO matching process ensures a PO has already been established and approved for the vendor before an invoice is even received. That way, when the invoice arrives, the organization can guarantee it’s paying out the correct amount and not overspending.
Israch said automating this process using technology like that which Tipalti just added to its AP suite, which can both reduce risk and slash the time spent manually completing these tasks by approximately 80 percent.
Being a program manager means handling everything other than card issuing, authorization and transaction processing. That includes anti-money laundering (AML) compliance, know your customer (KYC), fraud mitigation, marketing, privacy, document review, Office of Foreign Assets Control (OFAC) compliance, reporting and more. Program managers often find themselves at the mercy of the processor, which can leave their hands tied and result in frustration for the companies beneath as they try to get programs up and running.
That was Cascade’s experience, and the main reason the company decided to become its own program manager. Spencer Schmerling, Cascade founder and CEO, explained how the startup leverages partnerships, RESTful application program interfaces (APIs) and in-house customer service to build a better experience for other startups.
Merchants are stressing about April 15, the day that Visa’s new chargeback rules go into effect. For Chargehound, though, it’ll be just another day. The startup automates chargeback responses for retailers, and its system is already doing everything the new rules will require. Dispute windows are shrinking from 45 days to 30 but, since Chargehound submits responses instantly, the earlier cutoff will not impact its customers. While other merchants may need to change workflows to meet new evidence requirements, its customers can simply modify their response templates to present the right evidence.
Pallavi Kuppa-Apte, head of sales and marketing at Chargehound, said the shift creates more ways for the startup to deliver value to customers and should encourage merchants to automate the chargeback process from end to end.
Growth can be a mixed blessing for eCommerce marketplaces. More sellers and products can mean less visibility into what is being listed, thus leading to issues like counterfeit products — or the sale of controlled substances such as health supplements that may not be approved in certain regions.
Jewel Paymentech extended one of its existing products, One Sentry Marketplace, in 2016 to help address these issues. By connecting to marketplaces via API, the startup is able to scan all listed products for anything that infringes on intellectual property rights or that could violate regional health regulations. Wooi Siang Lee, president and COO, said cracking down on counterfeits creates consumer confidence and can improve the marketplace’s reputation. Failing to do so could drive business away, and adding this layer of diligence can also reduce time and funds spent on chargebacks, Lee explained.
The tension between legacy systems and new innovations often creates friction, but organizations may not want to get rid of older systems if they still function as designed. After all, they represent substantial capital investments over the years. Modo Payments says a balance must be struck, enabling new and old tech to play nicely together, and that that interoperability can be achieved without integration.
The startup examines the states and actions of payments in motion and creates a common ledger through which systems can find common ground. As payments change states, both systems can follow along, each in its own language. CPO Matthew Leavenworth says this approach can unleash innovation by enabling the creation of new functionality at the edges of existing systems — and then, by lowering the barrier of entry to get those functions up and running in the real world.
Cryptocurrencies have a throughput problem, as the slow speed and high cost of transactions make it impractical as a mainstream currency in its existing form, according to nanopay CEO Laurence Cooke. Even if cryptos evolve and change, though, blockchain for payments has a bigger issue: It allows people to transact with parties they don’t know and don’t need to trust. There is no other use case in which this is legal, Cooke said, and the very concept of blockchain undermines the all-important KYC process, opening merchants up to risks such as AML violations.
If people are looking for a new method of transacting and/or storing value, Cooke recommends a digital version of fiat currencies such as nanopay that could be far more practical. A digital U.S. dollar would have the same liquidity the currency has today, and would enable banks to continue providing the lending functions their customers need — something which blockchain as a primary currency would not allow.