The internet in 1998 was pretty primitive. Only 41 percent of Americans went online, and when they did, what they found was pretty unimpressive, and even hard to use. It’s no wonder that nearly 60 percent of Americans, when surveyed by Pew Internet Life that year, said that they didn’t worry about missing much of anything online.
But Henry Helgeson thought differently and built a company around his belief that over time, merchants would too. That same year, Helgeson rented 700 sq. ft. in Boston and set up a web site that would allow them to capture leads for payments processing and merchant account solutions services online that they’d farm out to ISOs to close and service. Merchant Warehouse was born.
Over time, the number of ISO relationships grew to more than 1300, providing the company the opportunity to double down on expansion opportunities that would take it to another level. Those expansion plans focused on Helgeson’s vision of becoming a payments technology company first and foremost, one that also happened to enable payments processing services. That vision gave birth to mPOS hardware and capabilities that were in market, Helgeson says, 3 months before Square’s launch, and the Genius platform that enables merchants to accept all forms of payment across all channels, including mobile, from a single software platform.
And yesterday, Merchant Warehouse announced yet another expansion effort, a rebranding initiative, designed to align Merchant Warehouse’s external identify with a growing set of capabilities that has defined the company since 1998.
In an interview with MPD CEO Karen Webster, CEO Henry Helgeson explained how the company is making the brand Cayan their own, what prompted them to make these changes in rebranding and elsewhere, and what they see as fundamental in the future of mobile for merchants and their customers.
WHAT “CAYAN” MEANS
Webster’s first question was all about the name, one that she said brings to mind fast cars (The Porsche Cayenne), and spicy foods (cayenne peppers). “Is Cayan the hot, spicy and fast alternative to existing payments technology companies,” Webster asked Helgeson. After a bit of a chuckle, Helgeson replied that despite not being a valid Scrabble word yet, “Cayan” is a word that the company plans to make its own, after having debated for quite some time about what they wanted to get out of a new brand. Helgeson said that payments, as an industry, is changing drastically, and they wanted the new brand to reflect that.
“Things like security, offers, loyalty, discounts, and coupons are kept to encapsulate with a very literal interpretation of payments today, so we needed something that would capture the spirit of what we’re trying to do,” said Helgeson. “We have pivoted into a much more technology-centric company.”
Helgeson added that right now, about a third of their staff is focused on technology. They have an engineering office in Europe and have become more of a technology company than anything else.
“We didn’t want to be seen as a financial institution or a company that solely does payments,” Helgeson said. “We believe that Cayan captures that and captures the spirit of who we are and who we are becoming,” he told Webster.
But that doesn’t include hardware. Cayan is the invisible engine – the software platform – that interacts with other POS hardware. Helgeson explained that Cayan’s merchant services portfolio includes a number of capabilities – some of which can reside on other merchants’ systems and some which can reside on third-party systems. Then, there’s the backend, which is all cloud-based.
As a “technology-centric” company, Cayan solves a number of problems for merchant, explained Helgeson. Webster observed that, at the moment, there is any number of things that merchants are facing – new technologies, new security requirements, new ways to interact with customers, new payments methods such as Apple Pay. That, said Helgeson, is where Cayan steps in, helping merchants find “the right solutions that relieve and abstract them from the pain points associated with the industry.” That includes providing enhanced security, and giving merchants the ability to add and remove payment types to their countertop without impacting their POS through their platform, he said.
WHAT’S IN IT FOR THE MERCHANTS
But as Webster pointed out, merchants come in all shapes and sizes with different areas of focus – and therefore, different areas of pain and different solution requirements. “What kinds of customers will Cayan serve?,” she asked Helgeson.
“Right now, our merchants are everything from SMB to enterprise level customers,” Helgeson responded. “We have everything from merchants with a single location that do very little volume all the way up to national retailers with as many as 800 locations processing billions of dollars a year through our platform,” he explained.
Accommodating that range of merchants efficiently and cost-effectively, Helgeson said is one of Cayan’s “secret sauces.” Cayan accomplishes that today by building out the greatest level of functionality possible, yet keeping it as simple as possible, recognizing that those things can sometimes contradict one another, and threaten to pull Cayan in different directions.
“You have to be very disciplined about how you implement some of this technology and features, and how you can make it very usable and easy for these merchants to use,” Helgeson explained. “Our big customers want features, but they don’t want complexity. They want flexibility, but they don’t want it to be difficult to operate and that’s very easy.”
He added that as long as the process is simple, it’s scalable and therefore, possible to bring to smaller merchants. The product needs to be stable, simple, easy to use and real functional — and that, said Helgeson, is the product they build.
To get merchants enabled, Cayan goes directly to them as well as thru channel partners that work with merchants to provide full technology solutions – including Retail Pro, Tomax and Teamwork Retail – to name just a few, said Helgeson. Most of what Cayan does today is work with these channel partners so that they can better support their end users, which are the businesses and merchants.
Who, then, does Cayan regards as competition, Webster asked. The answer is, it depends.
“The short answer I used to say was nobody. We are unique and we do things that nobody else is really doing out there,” Helgeson admitted. “But when people say, ‘Surely, you have to compete with somebody,” I say that we do compete in non-traditional ways with traditional players. We do compete with some of the ISOs and acquirers that are out there today,” he said.
At the end of the day, he added, they do credit card processing “very well,” and they have got their own twist on it that not too many people have.
“We have married some of the technology with the acquiring and that we haven’t really seen done out there yet.”
THE FUTURE OF MOBILE FOR MERCHANTS
Webster observed that way back in 1998, Cayan embraced the online and digital opportunity before most of the world really did. She wondered then what came first – did Cayan see the future of mobile and digital before the merchants saw an opportunity with mobile, or were the merchants the first to come forth and request help in developing a mobile strategy?
“Fortunately for us, we saw this before the merchants did and I think we are still a few years ahead than the industry on this,” said Helgeson. Helgeson noted that in 2011, during a dinner with Webster and a few others, he recalled the discussion about mobile that happened around that dinner table. It was clearly so new, Helgeson observed, that not a lot of people understood what was about to happen. But Helgeson also took away from that discussion the possibility of what mobile payments could bring, which matched up perfectly with what he called then Merchant Warehouse’s “geek understanding” of what the merchant countertop looks like today and what the pain points were.
“We could see a path that moved us from the payments of today or yesterday into the payments of the future, and we had to draw a line between those two points and figure out how to connect them as quickly as possible.”
Webster was then prompted to ask Helgeson what he thought the biggest issues were with respect to getting merchants enabled to accept mobile – not knowing what they want or just not being sure that the timing is right for them to take that path now.
“It really depends on the individual customer,” said Helgeson. “When I say customer, I mean merchant. We have some that are very cutting-edge when it comes to technology and want to be seen as cutting edge as part of their persona to their customers, so for them, it’s a very easy conversation. There is also a lot of merchants who are confused.”
Helgeson mentioned that there seems like an infinite amount of choices for companies that want to start looking into mobile payments today, for his company, that’s an opportunity. Cayan provides solutions where they can integrate directly to those mobile payment companies as easily as possible.
“That confusion, then, is something that we work with merchants on, helping them get some clarification and provide the technology to solve that. Where we see a lot of friction in mobile payments taking off, however, is getting to that merchant’s countertop and integrating with their existing POS.”
These POS systems are the very systems that run entire businesses – from inventory to payroll to communication between front-end systems. Mobile payments, said Helgeson, must work with all of that.
“We provide a very simple solution for all of those systems to start to connect for the mobile payment players,” he said.
SOLVING FOR MOBILE, EMV AND APPLE PAY
Not surprisingly, their conversation then turned to the two topics that are top of mind for everyone in payments today: Apple Pay and EMV and Cayan’s role in helping merchants with both.
“A lot of this is about education for these merchants,” Helgeson remarked.” A lot of them have heard EMV, but don’t quite know what it is. Some of them call up saying their customers have cards issued to them with chips on them and they won’t work at their store – and they ask how it works,” said Helgeson.
When it comes to Apple Pay, the beauty there is the simplicity of it, he said. Helgeson said that these conversation are much easier to have in one sense. But given the degree to which there’s so much change going on in the industry right now, and it’s difficult to absorb it all at once for these customers.
“You have to walk them through the process, telling them that they have a system that works with EMV and Apple Pay, and solves their security needs. That’s a big conversation,” he said.
So, then, Webster asked, how do those conversations go. Do any – or some – merchants feel that they can skip EMV and go right to mobile?” she asked. Helgeson responded by saying that they’ve had to have those discussions, too. Going on 19 years in the space, Helgeson noted that there’ve been a lot of predictions made that have not come true. It’s dangerous to look into the crystal ball and make hard predictions and investments around them.
“So for us, what we are saying to our merchants, our customers, is, ‘Let’s make sure that we get everything in there at once. Let’s get EMV in there. Let’s get NFC. We will give you ways to check in with QR codes, anything else.’ In that way, we don’t have to worry, but the expense of putting all this in now – the incremental expense of adding something – is very minimal.”
If they do not add NFC or EMV, and end up making a mistake with that choice, they would have to go back and put a whole new system in place. That, said Helgeson, is a pretty costly mistake.
THE NEXT FRONTIER FOR CAYAN: 2015 AND BEYOND
So, what’s next, Webster asked. Rebranding is about a swap of one word for two words, in this case but what story does this rebranding really tell?
“When people look back at Cayan five years from now, comparing it to Merchant Warehouse, they will think of this as the changing point,” he said.
As far as changing the culture and building out their product and technology teams, this has been something that’s been ongoing, he added. But they wanted everything to be aligned internally so that they could live up to the progress of this new brand.
The rebranding brand, then, Webster noted, seems to be the “punctuation mark” at the end of a process that allows Cayan to fulfill the brand promise that’s been at the core of the company since 1998.
“That’s very well said,” said Helgeson. “We do want everybody to see us as exactly what Cayan is and not what Merchant Warehouse is – and we have the ability to do that now.”
Looking ahead, Webster pointed that the next three years will really define what happens over the next decade of payments. She asked Helgeson, then, if that’s the case, what is Cayan doing to drive the future of payments and Cayan?
“That’s a very big question,” he noted. “I think, at this point, the big change that we are going to see in payments right now is that the value to the consumer has to be there. We have talked about payments just being payments for quite a while. Now, we are moving into a place where payments are going to be offering discounts, coupons and loyalty, and that for us is really the next frontier,” said Helgeson.
“This is not just about revolutionizing payments. This is about revolutionizing how brick and mortar businesses and online businesses connect with consumers in new ways and give them incentives to come their store, come back to their store and purchase more.”
Helgeson said that the next generation of payments is where “we will see one-on-one communication between the merchant and consumer, and a very tailored experience both on the offer side and the in-store side. “
“All of this relates back to payments and all of this is tied to payments as we see it in the future.”
And, for Cayan being a legitimate Scrabble word meaning the future of payments as defined by a payments technology company by the same name.
Henry Helgeson
CEO, Merchant Warehouse
Henry Helgeson is the CEO of Merchant Warehouse. He is responsible for driving the future vision of the company and leading day-to-day operational activity.
After attending Marist College, Henry worked as an independent contractor for United Processing Corporation selling terminals and printers door-to-door to merchants. Intrigued by the industry and interested in finding a lower cost solution for merchants, Henry co-founded Merchant Warehouse. In 1998, Merchant Warehouse launched as the industry’s first website offering low-cost merchant credit card processing equipment and software.
Since launching Merchant Warehouse, Henry has remained at the forefront of innovation in the payment solutions industry. Today, the company processes over $8 billion a year in sales and more than 12 million transactions a month. A visionary, Henry has been the driving force behind the company’s recently launched, Genius™ Customer Engagement Platform™. Genius is the first payments industry solution in the marketplace to have the capability of aggregating and integrating every conceivable transaction technology, payment type and customer program – both present and future – in a single platform.
Henry is actively involved in numerous industry associations. He currently serves as chair of the ISO Practices committee for the Electronic Transactions Association (ETA) and a member of their Mobile Payments Committee. He is also a board member of the Northeast Aquirers Association (NEAA). In 2012, he received the ETA Member of the Year Award, recognizing his contributions to the future success of the industry and the ETA organization and he has been named to the Boston Business Journal’s (BBJ’s) “40 under 40” list.
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