After spending twenty years working in payment solutions, most recently with PayPal, Gr4vy founder John Lunn was well aware of a growing roadblock to efficiency: The payments team for every retailer he worked with was building essentially the same product from scratch and entirely independent of one another.
Why the redundancy? It’s usually simple enough for small online retailers to begin with a platform like Stripe or Braintree for cards. But as businesses scale up, a single solution is no longer enough. They need to add other payment gateway options, like PayPal, Square, Google Pay, and Apple Pay. And international customers may have a completely different set of expectations and needs. “Different parts of the world use very different methods of payment,” Lunn says. In Germany, for example, shopping online with a credit card is surprisingly uncommon—consumers are far more likely to use real-time banking. When he was at PayPal, Lunn worked with a merchant trying to move into South America who was quoted $8 million for each new country because of the payment options they’d need to add. “That's just crazy,” he says. “That's a ridiculous amount of money. And it's not that hard to do this. It takes time, but not that level of time.”
The problem, Lunn explains, is that the bigger their solutions networks grow, the more difficulties—and expenses—retailers encounter. “You're adding more and more pipes into the plumbing that you're building internally, and it gets bigger and fatter and becomes a problem. I think this has slowed down payment innovation over the last few years.” Potentially adaptive new platforms, Lunn says, “never get traction because merchants have to work out the true cost in technical debt and engineering.”
The problem, Lunn explains, is that the bigger their solutions networks grow, the more difficulties—and expenses—retailers encounter. “You're adding more and more pipes into the plumbing that you're building internally, and it gets bigger and fatter and becomes a problem. I think this has slowed down payment innovation over the last few years.” Potentially adaptive new platforms, Lunn says, “never get traction because merchants have to work out the true cost in technical debt and engineering.”
This complexity was a significant issue before Covid-19, but in the wake of the virus, it may be the single biggest minefield retailers must navigate. “I saw this at Paypal all the time,” Lunn says. “Giving customers the choice of how they pay for things is really going to increase your conversion at checkout. And this has been massively accelerated by Covid.” Before the virus, Lunn points out, “having some payment types missing, having some holes, that was okay. But suddenly Covid means 100% of your orders are online. So those small holes became massive gaps. A missing payment option could be the difference between whether you're going to survive or not compared to your competitor who is offering that payment type.” There’s been a huge shift, Lunn says, in options available to consumers, like installment payments and one-click checkout. “As a retailer, you can't ignore that anymore. You've got to do it all to be competitive.”
42% of American consumers won’t complete a purchase if they can’t use their preferred payment method, and 50% of them stop a purchase if they find the checkout method too complicated.
The numbers confirm everything Lunn says. Nine out of the top ten global online retailers experienced double-digit revenue growth in 2020, and that trend is only increasing for large and small retailers alike. And consumers balk at any hitches in online checkout. A 2020 PPRO survey found that 42% of American consumers won’t complete a purchase if they can’t use their preferred payment method, and 50% of them stop a purchase if they find the checkout method too complicated. Although 41% of retailers have adopted Buy Now Pay Later options, such as Klarna, retailers are falling behind in offering the one-click payment system Amazon has conditioned many consumers to expect.
Obviously, online retailers need to offer as many options as possible. Lunn built Gr4vy to address the snowballing gap between customer expectations and retailer capacity. Gr4vy is a cloud-native platform that merges what Lunn collectively describes as “payment orchestration” with payment infrastructure.
Payment orchestration is a relatively new approach that allows retailers to process payments from multiple providers through a single API integration. The payment orchestration layer handles all payment logistics, including fraud detection, reconciliation, and validation.
Right now, Lunn says, “Merchants are not aware enough that orchestration is an option. A lot of what we’re doing, and why we’re doing things this way, is that the market needs to learn about the orchestration options.”
Right now, Lunn says, “Merchants are not aware enough that orchestration is an option. A lot of what we’re doing, and why we’re doing things this way, is that the market needs to learn about the orchestration options.”
Lunn draws a parallel between payment orchestration and fulfillment. “Companies used to have to have a connection to DHL and UPS and FedEx and so on. And then along came shipping aggregators that made it really easy for you to pick the best way to ship your bottles. And that's what's going on here. Instead of exploring a custom solution for each new expansion, retailers should get a payment orchestration solution.”
Like many other fintech innovators, Lunn sees client education as a large component of what he does. The type of client he encounters most often, he says, is a product manager “who has been given a goal to do something either internationally or with a specific payment type and who is very frustrated by the timelines that they're getting back. People who reach out to us directly are literally like, ‘Make my life better. I've been told we need to launch in Japan and it's going to take 12 months. Can you make my life easier?’”
But Lunn encourages retailers to think bigger. “At first, a retailer might not want the entire Gr4vy platform to solve an initial problem. But once we've shown we can fix this problem, they realize the power of everything we can do. We’re selling a powerful solution that is essentially an alternative to growing an entire payments engineering team.”
Gr4vy’s approach isn’t limited to its home in the cloud. It also offers data residency and sovereignty to its clients. Each merchant has their own instance of Gr4vy in the cloud; they don’t share infrastructure or server loads with other Gr4vy clients. Customers only pay for what they use, so they can scale up or down without penalty.
Covid-19 has changed the way we shop forever. And payment orchestration pioneers are ensuring mid-size companies are able to nimbly respond to the rapidly evolving demands of the digital marketplace frontier.
