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Inside the payments sector: Interview with OpenPayd’s founder

X4 Technology’s Jemima M speaks to Dr Ozan Ozerk, serial entrepreneur and founder of OpenPayd on scaling a payments business, the impact of the pandemic, and future trends.

OpenPayd is a financial technology business that provides a range of banking and payment services, often referred to as Banking-as-a-Service or embedded finance.

What sparked the passion for the payments sector?

To be honest, ending up in the fintech space was a bit of an accident. I was running a social media company in Norway and when we slowly moved into E-commerce, we realised how difficult it is to deal with banks and payment companies.

I grew up in Norway, where your banking requirements being sufficiently met is usually the norm. However, finding a proper payment service provider for start-ups was a challenge even in Norway. Once I moved out of Norway and started doing business internationally, I realised it was almost impossible for a new company to find a payments provider that gave them what they actually needed – or to be banked at all.

Back then, some larger brands like PayPal did provide payment services to start-ups and small and medium-sized companies, but their pricing model, customer journey and terms of use were neither customer friendly nor commercially viable. Now that I know how the payments industry works, I have a better understanding of why they would charge so much and insist upon harsh terms. Managing a proper back office, being regulatory compliant, building and supporting technical requirements, and customer service support are all very costly. However, this is not to say payment services can’t be improved and providing a flexible yet affordable solution is exactly what we’re doing at OpenPayd.

What has been your biggest learning curve over the last 12 months in light of the pandemic?

Learning to expect the unexpected. I didn’t expect the pandemic to accelerate this fast based on the news that I was reading. Once the pandemic was clearly spreading rapidly, I didn’t expect the politicians to move so slowly domestically, and the international community to be so out of synch in their approach. I also didn’t expect the markets to go up, or at least not this high. I understand the principle that when central banks print money, the price of assets risk going up, but some assets have increased 5x, 10x, 100x in value during the pandemic, and I don’t believe there is any substance to support such an increase.

I also realised that even digital-first or online first companies weren’t prepared for this, because at some level there is almost always a human factor that comes into play. You still rely on a truck driver to deliver your package. You still rely on the doorman in your apartment who will receive that package, or that your building has the capacity to store the huge increase in packages that it will be receiving.

But against this backdrop of unforeseen territory and uncertainty was where I arguably had my biggest learning. I learned that, as human beings, we’re both resilient and creative. We’re able to quickly adopt new ways of doing things and come up with innovative solutions to the challenges we face. In what has obviously been a difficult year, it was hard not to be impressed.

Since the pandemic there has been an accelerated adoption of digital payments and a significant change in consumer behaviour, how has that impacted OpenPayd?

I used to travel all around the world to meet people face-to-face. I did this because it was expected of me to do so, and I expected certain people to come to my office because that was the right thing for them to do. By simply turning up you show respect, you show your personality, and you show that you’re engaged and serious.

Today, inviting anyone at any level to a Zoom meeting is considered normal, and I think that’s great. At the beginning of the pandemic, people would suggest postponing a meeting until after the lockdown. 12 months down the line you just jump on a Zoom call, and even approaching people digitally has become far more accepted.

OpenPayd has a physical presence across the world so the digitisation of the approach to work did take a little getting used to. We started moving into our new HQ office in London in January 2020, but just as we were setting in, we found ourselves locked up at home. Most of our staff are only now beginning to use our new office, and that’s just part-time.

For me, seeing 150 tables empty definitely had a psychological impact, but from a business perspective we did well over that period and we’re continuing to grow. We’ve always been a digital-first company with staff from all around the world, and working with banking and payments means that being accessible online and knowing how to communicate securely has always been a priority. Yes, we did miss the Friday beers and the casual chat during lunch, however, the digital-only format has enabled us to help our clients grow quickly and in return, our business has grown quickly with them. I’ve seen many digital-first businesses, especially FX trading companies and Crypto companies doubling their revenue quarterly.

What does it take to scale a payment business?

Great talent is a key factor. A good regulatory environment and regulatory understanding are also important, as well as having a good understanding of what opportunities there are in the market. Competition is tough out there. Many companies seem to be well funded and willing to burn cash to reach their targets. I always question this approach, simply because I have very seldom seen it succeed. That being said, access to cash is often a key factor to be able to scale any business, especially a payment business.

What do you see being the industry’s biggest future trends and will they change the types of skills needed?

If you look at the industrialised world, there’s a huge adoption of the digital-first approach by both governments and private companies taking place. Banking-as-a-Service, embedded finance, open banking, blockchain and digital currency are all terms that more of us will encounter and become familiar with.

We will definitely move further away from cash. Cash will not disappear entirely, but its circulation will be reduced. Cash is expensive to use, produce and secure. I expect central bank-issued digital currencies to become a reality. This will bring the cost of money down, but new challenges around privacy will present themselves – though that’s a discussion for another time.

I think that a lot of people will still be unbanked and underbanked, and the gap between the people having access to digital goods and services and those that are dependent on cash payments will grow. This is a serious concern, and a comparison can be drawn with the gap between people that have access to reliable internet and online services and those that don’t. This issue must be addressed properly domestically in the developed world as well as for nations that are still struggling with basic sanitation and 4G coverage.

As the overall trend becomes digital, working remotely will be a part of the norm. One of the most exciting benefits of this is that talented people from across the world could work borderless, meaning that businesses could hire the perfect fit for their company without being restricted in their search by location. On the employee side, having access to reliable internet will be a key factor, as well as good technical infrastructure (hosting, software etc.). Language skills, especially English, will be even more critical to master, as it’s often the default language used for intercompany communication, as well as with clients.

So going forward your location as an employee or business will mean less, but your access to the Internet, online infrastructure and language skills will mean more – that’s my prediction.

With the number of new competitors rapidly growing and big tech companies such as Apple Pay and Amazon Pay being created, what are the biggest challenges you face when competing for top talent?

I think we in London are a little spoiled, as there are a lot of good tech companies here and even the small ones can make enough noise to attract talent over the larger companies like Apple and Amazon. The smaller companies of today can be the unicorns of tomorrow. Company valuations are growing faster than ever before, and that is attractive to techies – that feeling of being a key part of something which becomes a household name.

The difficulties become more apparent outside of big, exciting cities like London, Berlin or NY. If you live outside the big cities or in a developing part of the world, a large company in the western world can represent much more than just an exciting job opportunity. It may be a new beginning in a more developed country. There is a certain amount of job security that smaller companies cannot realistically offer. If you’re moving from Pakistan to NY for a job opportunity, or from Kenya to London, a big, established company is probably more appealing than a startup.

At OpenPayd I can’t recall ever losing anybody during the hiring process to some of the industry giants, but I have had several of my key staff leave us during the years for bigger companies. Seeing some that we hired as a junior to grow into a senior role at a larger firm or starting up their own business is, for me, an honour. I see them as a friend of our business – valuable brand ambassadors and people I can get honest external feedback from.

The question is though, what will happen when the tide turns, and access to funding dries up and profitability takes centre stage? When the management team shift focus from a billion-dollar valuation and over to survival mode. When that happens, the culture you represent will be crucial for your survival. At OpenPayd we’ve never had the highest salaries and yet to date we’ve never had external funding. Instead, we’ve relied on our good company culture, where autonomy and the ability to influence the business have been some of the key elements. Have we always got it right?  Of course not. But we’re clearly doing something right as we’re still attracting amazingly talented people and growing as a business – and settling for anything less is not something we’ll ever be interested in.

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