INTERVIEW: Traxpay, Senior VP Product Management and CMO, David Desharnais

"All about growth"

Tell us about yourself
I’m all about growth.  I have an insatiable desire and passion for creating things and the element of creative destruction that comes with invention and reinvention.  With a strong quant background in engineering, software design, and finance, plus a 20 career in semiconductor design, enterprise software development, and now financial services, I’ve always found myself drawn to work on projects where the objective is to invent the future and create the next big thing.  It is this that brought me to Traxpay nearly two years ago.  What excites me most about this area of B2B financial transactions and payments is that it has not fundamentally changed since the advent of banking in the Middle Ages.  This $300 trillion worldwide market of B2B commerce is ripe for disruption and it is exciting to be the catalyst for its creative destruction.

How was Traxpay found?
After spending nearly a decade in the corporate space of a leading global bank, Markus Rupprecht, the founder of Traxpay, experienced first-hand how B2B payments were being managed within the walls of the bank, and was frustrated by how far behind banks had fallen in attempting to address the needs of their B2B customers.  Even worse, the oligopoly nature and sheer profitability of the B2B payments domain was such that it was actually a disincentive for banks to change, resulting in a complete disregard for the voice of the customer when it came to making improvements and driving efficiencies.   In 2009, seeing the B2B challenge, and inspired by recent innovations and market movements happening with non-banks in the consumer payments area, Mr. Rupprecht decided that it was time someone brought innovation to B2B, and that now was the time.  Traxpay was born.

Could you give us a background on Traxpay?
Traxpay is redefining the B2B payments landscape and provides the world’s first and only B2B financial transactions platform capable of executing payments and final settlement in real-time, anytime, anywhere, and with complete transparency and security.  Customers using Traxpay are able to send and receive electronic payments without having to rely on banking hours – and can even settle transactions on evenings, weekends and holidays.   And settling transactions and resolving issues is simple since rich data of any size and any kind can be attached to the transaction itself, and there is always a direct line of communication between buyers and suppliers. Minimizing risk for companies large and small, Traxpay enables customers to safely and securely accelerate and optimize cash flows, liquidity, and working capital with unparalleled visibility and control across the e-Commerce network or traditional supply chain.

Traxpay customers include digital marketplaces, corporations, and settlement networks who value the security, speed, simplicity and savings the platform, and its many features, provide.

The company is privately held and is headquartered in Mountain View, California, with operations in Frankfurt and Cologne, Germany.

Who are your major competitors/ tell us about your most significant product offerings
B2B companies looking to send or receive payments electronically, in real-time, anytime, with rich data, and from within their existing corporate workflows (ERP, O2C, P2P, ePayables, etc.) do not have many options today.  Of course, even though these systems don’t exist today all in a single solution, corporates still manage to send and receive payments anyway – it is just very expensive, very slow, and the data stream is completely disconnected from the financial flow.  Whether it is ACH payments via bank channels, wire transfers, credit cards or services like PayPal, it is certainly possible for a B2B company to send and receive money, however, the complaints around lack of transparency, delays, charge-back rights, fraud, and ability to match invoices, purchase orders, and payments when mismatch rates hover around 25% are deafening, and B2B customers are looking for a more modern solution that matches with the digital age in which we live.

From the ground up, Traxpay was designed specifically for electronic B2B transactions.   As a complete and integrated method of payment for secure online commerce, Traxpay addresses the unique needs of the B2B market.  .  Combining the payment and related data together means fewer payment exceptions, faster reconciliation and rapid dispute resolution. Traxpay is a SAP certified solution and provides the ultimate in trusted trade with built-in escrow-like features, its secure bank-grade private data center, and assurance that all funds more highly safeguarded than they would be in any bank. 

As the digital revolution continues and B2B commerce migrates online, the need for a faster, safer, and smarter electronic method of payment becomes a categorical imperative.    Traxpay is thrilled to be at the forefront of transforming and enabling the way companies do business anytime, anywhere, any how and bringing trusted trade to all parties in the process.

What was 2013 like for Traxpay?
2013 was a pivotal year for Traxpay.  Not only did we add new and considerable talent to our team, file multiple technology patents, open a new office in Frankfurt, expand operations and infrastructure to support global transactions, and ink new and critical strategic partnerships with the who’s who brands in cards, banks, system integrators, and corporate, we also saw a 10X increase in customer adoption and nearly 100X increase in transaction volume across our platform.  Of course, we could not have done any of this without the support of our customers and our board, and we are excited about what lays ahead in 2014 as we continue to execute.

What would you say are currently the hottest trends in payments?
You don’t have to spend too much with Google Search before you see what’s happening in the world of B2B financial transactions and payments.  Interesting partnerships are being formed with Ariba/Discover, Basware/MasterCard, Visa/UK plc., and others, soon to be announced.  At the same time, there are e-invoicers, accounting software providers, EDI vendors, and other B2B network providers that are scrambling to add payment capability to their offerings as a means to enable end-to-end flows for their B2B customers.   Payment is the missing link, and it is large gap to fill.  There is a massive trend to accomplish this, and banks – the natural contender – are not well positioned to participate. This leaves room for non-banks to take the lead, and we are excited about the uptake we are getting for new customers in this segment.

Additionally, really large players like Amazon and Google have made significant announcements and deployments in the area of B2B marketplaces – namely Amazon Supply and Google Shopping for Suppliers respectively.  Also, innovative companies like Grainger, a world leader in industrial supply, have managed now run nearly 40% of their $10B in revenue through their B2B e-Commerce portal, and this is causing a mad dash of other corporates trying to catch up.  In fact over 80% B2B companies are investing heavily to develop omni-channel and e-Commerce channels to enable new revenue streams, faster conversions, and lower cost of sales.  Why is this a trend that we think is significant for Traxpay?  Simply put – electronic payments.  These companies will offer a shopping cart, and it will require an electronic method of payment that meets the complex requirements of a B2B payment.  We see massive traction in the B2B e-Commerce segment.

A third hot trend that has captured our interest is the concept of real-time, credit push, good-funds-only payments.  This is important for domestic payments, but it is especially compelling for cross-border payments – particularly for transactions between developing countries and buyers located in more stable economies.   Strangely enough, it is simpler, cheaper, and faster to put 100 Euro into an envelope and send it via traditional mail or special delivery than it is to send it any other way.  Of course, you wouldn’t do that, but you could, and it would work.  However, given the fact that by the time the 100 Euro reaches its destination by regular payment means, the receiver won’t get 100 Euro.  More accurately, after every entity in the multi-corner financial transactions models takes their piece, the time-value of money, and soft-costs (overhead, data management, etc.), that 100 Euro is more like 72 Euro, and even then, the supplier is not sure if they will actually ever receive the money due to fraud.  This is a serious drag to global commerce, and corporates are screaming for a better path forward.  Case in point, in October and November of 2013, the US Federal Reserve issued two separate requests worldwide seeking inputs on how to best address push-credit-only international payments as well as same-day domestic payments.  The US sees the lacking ability to handle this today as a dramatic impact to global competitiveness.  With our real-time, 24/7 electronic payments (good funds only), with rich data attachments, and workflow integration, we find ourselves in a unique opportunity to bring value to individuals, corporates, and governments on a global scale.

Of course, mobile payments is getting all the buzz right now, but in the area of B2B, it would appear to be more early hype-cycle stage than practical on a global scale.  The Traxpay system supports mobile payments today, and we will continue to monitor this space closely with our partners and customers, but there are major gaps in B2B payments that must first be addressed.  Putting an emphasis on mobile right now would be simply window-dressing – like arranging deck chairs on the Titanic.  We need to offer critical fixes for the gaping holes in the B2B payments boat first, and once the crisis has been averted, then we can even add more deck chairs and arrange them in various new and exciting ways.

What are you predictions for the B2B payments space going forward?
As mentioned above, we see the B2B payments area moving to electronic payments very aggressively.  Not only for cost and efficiency reasons, but for simplicity and ease of use as well.  As B2B e-Commerce continues to grow at its breakneck pace, customers are demanding a more “consumer-like” experience…which includes electronic payment.   A recent study by Ariba in 2013 highlighted that >80% of corporates expect to use electronic payments for the majority of payments within 3 years.  This represent a tremendous shift in the market and how money is moved on a global basis, and is causing great stress for banks and traditional payments providers as they are at risk of disintermediation.  The combination of real-time, 24/7, rich data, and workflow integration requirements for B2B transactions is not something that existing payments methods are equipped to handle.  We expect to see big moves in this space in the next 1-3 years.

Another prediction is that we expect to see a continuous stream of news from banks and traditional payment providers in how they are now supporting B2B payments, and we will likely see some interesting partnerships between banks and other payment companies as they try to crack the code for B2B payments.  Of course, we have to keep in mind that the movement of money is actually quite commoditized today.  There are many ways to do it.  The real value and interesting area to watch is how the business model works, and what is included with the payment – e.g. the data, protection against loss, risk mitigation, and workflow integration.  Interestingly, the movement of money is actually the easy part.

Which areas of the business is Traxpay seeing most traction in?
We see application and traction across 3 distinct target segments.  1) B2B corporates and ePayables  2) B2B e-Commerce and marketplaces, and  3) Banks looking to offer next generation B2B payments and cost-effective trade-finance applications to existing clients.

What is the company’s strategic plan going forward (regional expansion, product offerings) ?
This is always held very closely by our management team, but I will say that while we see many different approaches and attempts to address the challenges in B2B payments by traditional electronic payment providers, there are serious limitations – be it delays, charge-backs, high costs of transactions, lack of data stream, not real-time, and not 24/7 accessible/available, etc.   

Recent moves by e-invoicing or e-procurement providers to offer payments as part of their solution is always specific to a platform, a region, or a banking relationship.  We see this as only a partial solution, and the lack of adoption by users validates this.

The magic bullet is if you can build an electronic payment system that is multi-platform capable, multi-region enabled, multi-bank supported, and multi-currency…and that can operate in real-time, 24/7, with rich data attachments, and easy integration to existing corporate workflows.  From there, you can layer on all kinds of big data aspects, mobile readiness, and many other applications. 

I’ve probably already said too much, but you can see that the future is going to favour the bold, and we are definitely emboldened by our customers, partners, and investors that we are on the right track and moving forward with the right priorities.  We are excited about 2014 and beyond.

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