Thought Leaders in Financial Technology: Infinicept CEO Todd Ablowitz (Part 2)

Todd Ablowitz: Then in 2009, Jack Dorsey started Square. He scratched that itch that I always had – more like 15 questions in 45 seconds to sign up a merchant. I loved what he was doing except I knew enough to know that what they were doing was breaking the rules at that time. Ten years earlier, PayPal was in a similar situation and the rules changed. I knew that was a possibility, and I was hopeful.

Soon after that, Square was forced to make some big changes in compliance. If I understand it correctly, they even had a hiatus where they either turned off the existing merchants or stopped selling new ones. I’m not sure which but I think they turned off all their merchants while they retooled and fixed their risks in compliance.

I saw Jack speak the next summer. He said, “We get it. JP Morgan has already agreed to turn us back on. We know what we’re going to do to revolutionize accepting payments. We do care about risk and compliance.”

Nine months later, I was in an ETA meeting. Visa and MasterCard came in on the same day and both them said they’re changing the rules. This was a business idea for me. Square is a payments facilitator. It’s a very specific term that Visa and MasterCard use to describe a certain type of payment acceptance company.

I said, “If you want to be a consultant in that space, you need to understand risk, fraud compliance, and underwriting. I called the only person I knew who knew those things, Dina Rich. I asked her if she knew anything about these payment facilitators. She said, “I do. I’ve been working in the early predecessors of this space for a decade.” I said, “Would you be interested in doing a project?”

We did our first project. That was for a company that later became Stripe. We did a number of other projects that summer. In the fall, Shopify called Dina and said, “Can you help us create Shopify payment?” She said yes and called me.

By this point, we’d done a number of gigs together. We said, “We’re really compatible. We complement one another.” We agreed to start a 50/50 partnership focused on consulting for payments facilitator. By April, we announced that partnership and we sat down to see what this has become.

One of the things that was obvious was that Square, Stripe, and Shopify had to build all of these systems to sit on top of the credit card processing infrastructure. They couldn’t buy that from their banks or the processors.

We set out to build a toolkit or a middleware for the rest of the payment facilitator world. The big guys like Square and Stripe built this stuff themselves and the rest of the world wished they had tools rather than spending a year building it in-house. We set out to build it.

Meanwhile, we worked with a lot of software companies. Square and Stripe picked up on the trend that Visa and MasterCard saw that banks and processors could not grow their acceptance in the world fast enough without software companies.

In developing markets, software companies are leading the population of merchant acceptance. In developed markets, there is verticalization happening where vertical software is exploding. Any vertical software that touches payments is a profitable business.

We’ve helped 200 software companies become payment facilitators. As we did that, we rolled out a software platform starting in 2015 that makes it possible to become a payment facilitator in weeks.

This segment is part 2 in the series : Thought Leaders in Financial Technology: Infinicept CEO Todd Ablowitz
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