In this latest podcast episode, Hamed Arbabi, CEO and Founder of VoPay, provides a comprehensive look into the world of financial technology, sharing the journey of VoPay from its inception to its current role in the industry.
Listen as the podcast delves into the company’s impact on the embedded payments ecosystem and its innovative approach to integrating payment solutions into various digital platforms. Hamed sheds light on how VoPay‘s advanced API is driving change across sectors, including insurance and healthcare, and the significance of strategic partnerships in revolutionizing financial operations within ERP systems.
Hamed’s entrepreneurial spirit shines through as he recounts his journey from starting a business to navigating the complexities of the payment industry. The discussion serves as an inspiring guide for entrepreneurs and established professionals alike, illustrating the potential for personal growth and the realization of ambitious goals through perseverance and strategic thinking.
Thank you for being here, and welcome to the Leaders in Payments podcast.
VoPay CEO Hamed Arbabi Hi, Greg. Thanks for having me.
Greg Myers: Absolutely. So, let's go ahead and dive in. If you don't mind, tell our audience a little bit about yourself, maybe where you grew up, where you went to school, and where you currently live. Then, we'll jump into your professional journey in just a few minutes.
Hamed Arbabi: Of course, yeah. My journey has been quite diverse. I was born in Iran and spent most of my childhood there until I was 16 or 17. Then, I made a significant move to Dubai to pursue my education. I spent a couple of years at university there, where I was introduced to entrepreneurial journeys. This sparked a passion in me, and I decided to drop out of school and start my first venture. My journey then took me to Canada in late 2005, and Vancouver has been my home ever since.
Greg Myers: Awesome. I look forward to talking about your journey in a few minutes. But first, let's talk about VoPay. Tell the audience what VoPay does.
Hamed Arbabi: At VoPay, we are more than just an API service organization. We offer a comprehensive suite of solutions to other software applications that are looking to build embedded payments for their customers. Our aim is to simplify complex money movement operations across larger organizations. We provide the entire tech stack as a service, allowing our clients to white-label all these products. This not only streamlines their operations but also ensures a seamless payment experience for their customers.
Greg Myers: Okay, who would your typical customer be?
Hamed Arbabi: So we have customers across diverse industries. We are considered industry agnostic, but like every organization, we have certain target markets and specific audiences; VoPay is heavily focused on four sectors:
Insurance
Healthcare
Education
Real Estate
However, the way we enter these markets is by finding specialized ERPs that are servicing businesses in these industries.
For instance, in the insurance industry, all the insurance carriers, brokers, and agents use a software application called a policy admin system, which issues the policies, calculates the payments, premium payments, commissions, etc. So, we work with those software applications and implement payments within the core solution.
When an insurance carrier, agent, or broker interacts with the software solution, they can manage the entire money movement within that software, so they don't need to use another party, such as a bank or service provider, to transact outside that core service.
This simplifies the reconciliation process, including tracking and payment reconciliation, and decreases the hours of full-time employees dedicated to these to do these recurring tasks.
Greg Myers: Okay, and how long have you been in business?
Hamed Arbabi: We have been around since 2016. We had an initial journey of being a P2P (peer-to-peer) money remittance to understand the landscape and pivoted toB2B payment technology in 2018. We have been in R&D for three and a half years to be able to build the tech stack that we have today that can serve large enterprises.
Greg Myers: From a geography perspective, do you serve globally or just in certain regions?
Hamed Arbabi: We are in North America, Canada, and the US and have just started our globalization journey. We are conducting a pilot in the UK and are also in the process of launching in Latin America across 12 countries.
Greg Myers: You said “as a Service,” so I assume this is a SaaS model. Yes?
Hamed Arbabi: Everything we do is modular, so our customers can plug and play different components of our platform, whatever suits their service or underlying needs. Everything is “as a service”. So they subscribe to a certain category of services and can expand to other areas as they grow their operations.
Greg Myers: You talked about being integrated into the ERP, so do you go to market through those ERPs, or do you actually go directly to the end merchant?
Hamed Arbabi: That's actually a great question. We refer to these ERPs as ISVs or independent software vendors, and we have various types of relationships with them. It all comes down to their willingness to own the new services or whether it just has to be a marketplace approach for us.
They can become what is known in the industry as a PayFac, and we offer PayFac-as-a-Service, where we do all of the back-office operations, including risk management, compliance, etc. They own the entire front-end relationship with the customers, and then it can go all the way down to being a referral software partner that they just integrate with us to make the service accessible to their customers. And we interact with their customers directly to enroll them in VoPay services.
Greg Myers: Great. So, what would you say differentiates fo pay from your competitors out there?
Hamed Arbabi: How we are differentiating ourselves in the market is by emphasizing what we should do or build to make our customer journey easier when it comes to building money movement operations within their core solution offering. It also comes down to our go-to-market strategy.
We are not well suited to sell to SMBs or even midsize businesses, so it's more of a platform-to-platform play. What we have done is heavily focused on building all the components for a software application that wants to add financial services as a value-added service and how we can make it seamless so they can replicate or mirror their platform on voting with minimal effort and resources.
Greg Myers: So you're working in some of the most complex verticals and selling to complex customers. So it sounds like you probably have a very consultative sale, and you're trying to simplify this complexity for your customers. Is that a fair way to put it?
Hamed Arbabi: Exactly. That's the best way you can describe it. It will all start with understanding their business and how money moves within their environment. Each industry has its own way of transacting with all the stakeholders within that ecosystem, so we try to understand that, prescribe the best approach in terms of solution design, and then engage with our partner to help them have a successful journey throughout the implementation and go live.
Greg Myers: You mentioned payments, and you know, part of PayFac is also the risk, compliance, and other aspects of that payments ecosystem.
But are you today doing this or are you looking to go into other, like maybe embedded lending or insurance or other sort of financial services products?
Hamed Arbabi: Yes. We are expanding both vertically and horizontally. As we grow into core financial services, we would love to bring additional embedded services such as the ones you mentioned, such as embedded lending embedded other value-added services such as bill payment components, which are, again, adding value to our customers, and other credit facility services that are all coming in the form of embedded and “as-as-service” that our partners can expand to their underlying customers.
Greg Myers: When you step back and look at the broader payments industry as a whole. Where do you see it headed, say, in the next three to five years?
Hamed Arbabi
The payment industry is moving forward at a rapid pace toward innovation. I think there are two core changes that we will see in the coming years:
Payments will be Autonomous—We are getting to the point where we are embedding payments into various industries. We say every software company is a FinTech company now, and by implementing payments, they are becoming autonomous. So you don't have to look at them as a separate piece of your business.
Things have become seamless. For example, take a property management software that offers services to landlords and tenants. When it comes to managing a portfolio and payments, the landlords still have to collect the cheque, and the tenant has to make the payment; now, the entire money movement aspect of that relationship is slowly embedded into the property management software. SSothe landlord and tenant do not need to think about how the money flows. Once they get their account set up, everything is moving seamlessly.
We started getting this experience through Uber; it was a new experience for everyone that you could walk out of the door without even needing to interact with the service provider or the driver to give them your credit card or cash, and I think this is becoming seamless across B2B.
Payment Rail Integration— The totality is another piece where you will see all the payment rails integrated into each other.
It doesn't matter if you have Visa or MasterCard, Wire, local payments, such as EFT or Interac e-Transfer in Canada, or more international rates, such as ACH, etc. All of these rails are becoming accessible under unified service providers, and networks are merging together, making access easier to all of them on a global basis.
Greg Myers: On the piece about frictionless or making it seamless, it seems what I hear a lot is that it's really being driven by the consumer's expectations. You're transferring the concept over to the B2B world. I mean, do you feel like there's sort of a lag, right? It's a little bit more complex and B2B, so it's going tobe a little harder to solve, or do you feel like that's not necessarily true?
Hamed Arbabi: Yeah, I agree. It's difficult, but I think that the core aspect of being successful in this journey is to understand each industry and how they transact, as we know, each business has various operations that require money movement.
The business has a payroll, an office lease payment, an account receivable account payable for goods and services they acquired to service their business, and then their core business function. What we see, which is very interesting, is that we are building that network effect where these businesses across various activities in their everyday operation, so we have integration with payroll management software, and as a result of that integration, the controller or account once they approve the payroll, they don't need to go cut the cheque and handover to the employees. The software automatically debits the bank account and distributes the funds.
We have touched the same business when they are using an account payable software that once the payments are approved, the money gets moved automatically and distributed. Same thing on the lease payments. So we are working with property management software, and we are touching that business across various activities they have and each activity has its own behaviours. And it's important for anyone who wants to enter this aspect of the FinTech industry to really invest time and understanding those how’s before offering a solution.
Greg Myers : Yeah, I think that's great advice. There's so much intricacies of these verticals. So the fact that you've specialized in these verticals is is pretty interesting. Well, let's switch gears a little bit and talk about you. So tell us about your journey to your role there as the CEO and founder maybe start with your entrepreneurial days early on, and then bring us up to date to where we are now.
Hamed Arbabi: That's great. I think I've done a little bit of everything since I was little. I always wanted to start a business that was at the beginning how I can create something that that can translate to dollars. So I started building a home computer units and selling that to family and friends and from there, the journey found its own path and I ended up being in a telco space.
So started my first venture around what it called RF planning, which is Radio Free stands for radio frequency planning and started working with regional telcos in Middle East and getting involved in network more of engineering play. And from there I realize young telcos have a challenge accessing networks, and there was this transition from traditional switches into cloud based solutions. So we built this software and started signing up telcos. And that was where I moved to Canada and managed to grow that venture in five years to over two billions of sales and we got acquired in 2012.
What I learned through that venture was how money movement is complex, either domestically or internationally and how we had to grow our financing to constantly track 1000s of invoices, account payable account receivable, and that's where I really got excited about payments and and how I can fix the next problem. So you know, in an entrepreneurial journey, we always focus on telling the good side of the story but but you know, that there has been so many dark days and days that you don't want to go to work and say this is it, but but I have made it and it's been an interesting journey so far.
Greg Myers: When you were in your prior company, and you solve this problem on the payment side, you said, hey, that's, that's a problem that probably other companies have as well, and I think I can solve it and then you went out and found the right people to put the solution together to solve that problem. Is that a good summary?
Hamed Arbabi: I actually took the two years of college self education journey that from the time I existed before I started up, I really got myself involved in networking and trying to hire advisors that come from different areas of payments. You know, from x MasterCard, Visa, treasury and cash management at the bank, cross border payments, such as Western Union, even virtual wallets or even businesses that are active in the money movement outside North America to really meet myself and see how these executives or or people who are engaged deeply in industries are looking at the future of the industry or the current state and the challenges and, and the gaps that could help me have a better understanding of the entire industry before we even started writing the first line of the code.
Greg Myers: Okay, and did you say that it started on more of a peer to peer money movement business?
Hamed Arbabi: Yes, it seems to be wanting to build a proof of concept on the core platform VoPay became the first customer of our platform to see how smoothly we can operate and implement and once we built that we entirely moved toward the B2B and basically use that component that we built for cross border services as a product now which if someone want to launch a cross border service, they use that “as-a-service” and go live with that application in a short period of time, rather than building everything from scratch. So that became a service of VoPay that we are offering.
Greg Myers: Okay, gotcha. That makes sense. So what are some things you're passionate about? So maybe one work related passion and one personal passion?
Hamed Arbabi: I always think as as founder, your vision you have should align with what you're building in your everyday, you know, activities in your company. So I really have a passion for digital transformation to see how much of the things we do today can can move toward automation and eliminate inefficiencies. And that's the vision for VoPay. And as I mentioned, when we work with the software applications, we literally enable digital transformation taking industries that are heavily relying on cheques, paperworks and manual processing and bringing that unified experience to the forefront of their business and help them scale faster and help them focus on what they're good at, rather than doing these repetitive tasks. That's really my passion.
On a personal side, of course, and so it's not really related to what I do, but I'm a big fan of Formula One. And it's all about I think at some point is Faster Payments and driving fast can come together as a as a mutual interest in personal and business.
Greg Myers: Did you go to the Formula One races in Las Vegas?
Hamed Arbabi: Yeah, that was fascinating. Actually, it was it was the first time that they did it after many years. Definitely a lot of mistakes that we made, but but I think the next year gonna be even better.
Greg Myers: Yeah, it was fascinating because I was there like, maybe two weeks before and they had, you know, the streets almost completely shut down at that point. And it was a little bit of a nightmare to get around town. But I know the city was very excited. So I'm not surprised you were there.
Hamed Arbabi: Yes. Definitely very difficult to move around. But they managed to turn that city into, you know, the f1 of hosts. It was it was incredible how they could pull it off.
Greg Myers: Yeah, it was it was quite a transformation. So I'd like to ask this question to to all my guests because I think everyone brings kind of their own unique perspective and certainly you as not a payments person from the very beginning, but definitely a founder and entrepreneur curious to how you would answer this. But the question is, if someone comes to you and says, Hey, you're maybe they just graduated from college and they're looking for a job and they're looking to start a career and they look at payments or FinTech and they say, Hey, that's, that's an exciting space to be in. I mean, you've mentioned how fast paced it is, and you know, all the technology that you use, maybe they come to you and say, hey, I want to start a career in this space and maybe even want to go to work for your company. What would you tell them they need to do to be successful in the payments or FinTech space?
Hamed Arbabi: My initial advice would be don't. If you can do anything that would be easier than then running a payment company. 😂
Well, I think I say that as a joke, but in reality, I always tell people, just try to educate yourself around what you're trying to get into even if it's not payment, any industry that you want to enter and, and you need to, you are going to grab a market share.
It's important to understand who are the players what has been the industry like 10 years ago and how it's got to be potentially in 10 years and and where you can differentiate.I always say it's all about bringing value to your audience. If you want to come to payments or any industry other than being emotional that I want to run a tech company and do payments, you have to understand where I can add value to a specific group that can use my services and how I can validate it. And that's going to be the formula of success from my point of view, is not that I have I'm gonna build this imaginary great product and everybody gonna buy it.
You have to understand where you can differentiate and bring something to your customers that they buy it because they see the value that you're bringing to their business, and how you can help them grow their business. And I think that's the simple rule of business, how we can be successful.
Greg Myers: Okay, great. So in a similar kind of way, I want to double click on something that you said, you talked about taking a couple of years off to really, you know, study the industry and you had mentors and advisors in the space. Maybe tell the audience like how did you do that? Like, what were the mechanics of it? Was it easy? Was it hard? What did you learn? Maybe talk through that a little bit because I think people would find that interesting.
Hamed Arbabi: One thing that has always had a positive impact in my life through my entire career is that I've been good at networking. So that's where I think everyone should start just trying to get yourself involved in those industry related events. Try to find or meet as many as people and see who is willing to be your mentor or who is willing to give you their time and how you can learn from their experiences.
And that has always have the highest return of investment because that's where you can get the right people who have done it before or have tried and couldn't do it. So this is how I would start usually by networking and getting myself exposed in the industry. And one other thing that I have personally always done is really read their books, articles. Listen to the podcasts, such as yours that can help you understand the bigger picture and try to digest where it's the weakness in industry or where are the strengths in the industry that you can get involved.
Greg Myers: Okay, well, Hamed, we've covered a lot of ground obviously about you and your background and the company and the industry as a whole. Is there anything else you'd like to add before we wrap up the show?
Hamed Arbabi: No, I think this was an amazing conversation.
Greg Myers: Great. I think it was a great conversation. So thank you so much for being on the show today. I know your time is very valuable. So I really appreciate you being here.
Hamed Arbabi: I appreciate that. Thank you so much for having me.
