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Adyen Presents: Embedded Finance, your go-to resource for understanding how SaaS platforms can unlock the full potential of embedded finance. Hosted by Hemmo Bosscher, each episode dives into real-world success stories, industry insights, and practical guidance from experts in a variety of industries, analysts, thought-leaders, and fintech specialists.
Designed for SaaS founders, CEOs, CFOs, product heads, and tech decision-makers, the show demystifies the complexities of embedded finance, covering everything from integrated payments to business banking, capital, and card issuance.
Welcome to Adyen Presents Embedded Finance, real talk for SaaS leaders on embedding payments and financial products. Software platforms today are no longer just about software. Winning platforms embed payments and financial products like business loans, accounts, and cards to become full service operating systems for customers, building loyalty and new revenue streams. Now the opportunity is clear, and we've heard much about it. But tactics are largely undefined still.
Speaker 1:And that's why we're launching this podcast to hear from the platforms and experts shaping the strategies. This episode explores how platforms can get embedded payments right. I'm joined by Amit Sagiv and Volodobir Tsukur, who lead payments at Wix, the world's go to website builder, operating in 190 countries with over 250,000,000 users. And Emily Bartels, renowned payments adviser for vertical SaaS. First up, Emily.
Speaker 1:Welcome, everyone. Today, we have joining us Emily Bartels, one of the OGs of Embedded Payments. Emily, could you take a moment to introduce yourself, please?
Speaker 2:Yeah. Thanks, Emile. Thanks for having me on today. Very excited. I'll take the title of OG of embedded payments.
Speaker 2:Not that I expected to have that in my career, but a little bit of background. I'm a, yes, OG mind body. I'm no longer there. But my career in tech and payments really started 02/2010, early days mind body. I got exposed to payments as really a software seller, selling software to yoga studios and fitness studios.
Speaker 2:And early days got exposed to the payments business there and moved over to that side of our business fairly early on in my career there and spent over a decade running to really every functional part of the business at Mindbody and helping grow that business to what it is today.
Speaker 1:It's been quite a success story, of course, Mindbody, one of the more famous success stories. Can you take us back to when you first had that moment of, hey, we should embed payments with this software?
Speaker 2:So the story actually really starts before I started at Mindbody, but I know the story fairly well. So when I started in 02/2010, we already had payments and we'd had it for a few years. The real driver, early days Mindbody, this is circa 1999, February. This was installed desktop software. And circa thousand era is really when Mindbody came online, And embedded payments or integrated payments really started with a need to serve the businesses that we serve.
Speaker 2:So for example, I was going to yoga early two thousands. And what that looked like as I would go into a yoga studio and pay cash or check for a little paper class card and the yoga teacher would keep it in a Rolodex. Mindbody really helped spur the growth of the boutique fitness industry and how they operate today. And so when sort of Mindbody came on the cloud and online, we were serving up features like membership billing and online sales. And so it was really core to the product that we had to figure out payments because that's how our customers were gonna take accept money.
Speaker 1:Yeah. And what was the uptake like initially? Was it an immediate like, yeah, this makes sense for us or was there a bit of carrot, of stick involved? How did that work?
Speaker 2:Yeah. I remember early days selling where kind of going back to that example of the yoga studio with the class card, we had to teach them how to run their business differently. And so what I mean by that, it was really less about accepting payments. Yes. There's accepting credit cards and there's a fee to that.
Speaker 2:But we were teaching customers why it was important to set up a membership billing. What's the value of recurring payments? Why you should allow customers to sell online and bring your business online? And so it was really neat to be part of just a shift in how these businesses operated and how they came online and started introducing new and more modern tools to their workflows to help them run more efficient businesses. And yeah, it was less about there was an element of convincing them to accept credit cards, but there was a lot of just teaching them how to run their business differently.
Speaker 1:And I assume that's part of the value you brought. And when you think about then, when you move from mind body, one of the more established players with a lot of early success, what lessons are you taking from there and implementing your new gig?
Speaker 2:Yeah. So I always go back to the workflow. So if we start with product first, and again, it's convincing people to accept credit cards or accepting payments. That's pretty mainstream today. I know there's different sort of payment methods locally and bank transfers and credit cards and whatnot that you need to account for.
Speaker 2:But if you're not addressing the workflows that are more upstream of the payment, you can really lose the customer and what I would consider sort of top of the funnel. And so that's what we're really focused on, and it's very different. It's not fitness studios and yoga studios. Now we're talking about trades businesses, and this is really a lot of b to b payments, quoting, invoicing, deposits, reconciliation, very different type of business. So it's been very exciting for me to dive into this and learn.
Speaker 2:But I would say similar to Mindbody, it's let's look at the workflows first. What is it upstream that's leading up to payments? So that's kind of the first priority. And secondly is we talk about embedded payments. And I think we all think about, oh, the tech stack to actually embed it into your software.
Speaker 2:And I like to say that's one part of it. The other part of it is you really need to embed it across the organization and build a center of excellence across the organization. And so that's the other thing we're focused on is on being a champion in the organization to really sort of advocate and champion for the value proposition around embedded payments.
Speaker 1:And that's a good point. I was gonna ask about that. You said you start with the product, the workflows. Is that from a team perspective also where you would invest the most in the product team or what are other areas to keep in mind as you go on this journey?
Speaker 2:Yeah, I think it's gonna vary across different organizations and who the team is that they have established already. But we do need, I would say, first and foremost, as you think about the product, if you don't already have a product manager and a product team dedicated to your payments integration or dedicated to those workflows, you definitely need to establish that. So we have some clear ownership over a roadmap, someone who's really focused on thinking about these end to end workflows, someone who's managing those payment processing integrations from a product management perspective and engineering perspective. If you don't have that team that's dedicated to it, it can sort of get lost in all the other priorities. There's a ton of other things that job management, scheduling, vertical SaaS software needs to do.
Speaker 2:And so you've got to have somebody whose purpose is to wake up every day and figure that part out. So I do think that that's really important. And similarly on sort of the go to market side of the business, I think that, again, it can kind of vary. If it's a small startup, it's a small team, there's a lot of interaction together. You can have ops people, salespeople sort of take ownership part of a job.
Speaker 2:You get into a bigger organization where this really hasn't been something that's core to the product over the years. I do believe you need to have some subject matter expertise come in, somebody again on that go to market side who wakes up every day, and this is their goal is to get adoption across the organization.
Speaker 1:Yeah. And that champion, I mean, definitely something I recognize. I see it as a lot. What were for you some of the sort of the arguments that like embedded payments bear would bring some of these maybe more mature folks in the organization saying, not sure about this new thing. What did you have to combat?
Speaker 2:Yeah. I think the biggest thing is you look at definitely a mature organization. There's a lot of features. There's a lot of things that a customer wants. They may not actually be thinking about payments or embedded payments in the way we think about it.
Speaker 2:So there may be some requests coming in for customers for some streamlining. Maybe they want something embedded, but I don't think the voice relative to requests for other features is really heard across the business. And so I think these larger organizations, the first response might be, well, why are we really doing this? Customers are already solving this another way. It seems to work for them.
Speaker 2:I've got a long list of other requests that are coming in. And so why are we really putting effort into this? And so I think part of it is just because they're not asking for it doesn't mean they don't want it. There is some coaching and some teaching, and we need to identify where these gaps are. And I think there's an opportunity to teach customers how this can be valuable to their business.
Speaker 1:Yeah. And demonstrating value internally.
Speaker 2:Yeah. Demonstrating that value.
Speaker 1:Getting the resources with is it when you talk about a software platform with a lot of established payments relation, is there a lot of friction in moving them to an embedded setup when it comes to customers that are just focused on plumbing, for example?
Speaker 2:It's definitely you know, you talk about maybe there's a third party non integrated processor. Maybe there's established relationships that are just integrated payments, but there's not really ownership or control within the software organization. We like to call these maybe migrations or processor switches or moving them. And I think that there's a technical piece inside the organization to do that. There's an operational piece.
Speaker 2:But from a customer's perspective, this is a workflow they've been doing for a long time. And we may look at that externally and think, wow, that's so inefficient, or this could be so much better. It's just second nature to them. And so that's really the hardest part is, again, you gotta demonstrate that value to bring them on board to your embedded solution because it is.
Speaker 1:Oh, that's very familiar. And when it comes to pricing, you're moving to a setup where you charge a software free to one that is also a transaction based element. And then there's a pricing method that sort of the submergers, the plumbers in this case will be used to. How do you think about that?
Speaker 2:I think that pricing, I think, in payments can be very difficult. I think it's very easy to just go online, look at the big players, see what they're pricing, and you go with that pricing. I don't really wanna think about this. I just wanna go sort of what is there in a parent out in the market and bring that inside. I would caution software platforms to do that only because when you're looking externally at where the pricing is in the market for big payment processors, something that's publicly available on websites, that pricing is not necessarily for an embedded solution.
Speaker 2:That tends to be direct pricing. And so there is more value in bringing a solution embedded in house and what the value of that can actually be. And so I think be cautious of your pricing strategy and making it very sort of vanilla against what's in the market. You can definitely be a bit more strategic. And when you think about what is the value of having that integrated payments and the time that it saves, more revenue that it could potentially bring into the business, you kinda have a baseline, but you can actually add more value there with your pricing.
Speaker 2:And so, Koshka, so think a bit more strategically about it.
Speaker 1:Yeah. And more strategically, I'm Dutch. We are known for being extraordinarily blunt. You mean you could price a bit higher?
Speaker 2:You could price higher. Yes.
Speaker 1:You could price a bit. Okay. Just wanted to get that on the record. The COVID nineteen pandemic and the disruptions it caused, I think at the time you were still at Mindbody. Is that right?
Speaker 2:I was. Yes.
Speaker 1:And not the best time to visit a yoga studio, of course. How was this for you? Like, how did you navigate this? Like a big sort of geopolitical disruption like this? Well, not even geopolitical societal.
Speaker 2:I try to block it out of my memory a little bit, but I think you sort of forced me to bring it back in. It was very difficult. And business is growing, and we're moving along our merry way. We're doing payments. And all of a sudden, 90% of our businesses have to close the next day.
Speaker 2:I don't know the number. And that was very difficult because if you think about yoga studios or the fitness business, a lot of this is in payments terms for the risk folks on the call, future delivery of services. So there's class cards, there are gift cards, there's memberships. Maybe there are monthly memberships. Maybe there are six month membership that was prepaid, a year membership that was prepaid.
Speaker 2:And so although we had a risk team and we're conscious of the risk and we're managing that every day, we never expected something like this to happen. And so we had to react very quickly to figure out one, what is the exposure? Like, we really didn't have a good grasp on what the real exposure was for the business. And so we had to figure that out real quick. And it's not like we had great tools to figure that out.
Speaker 2:This is definitely a data science exercise to figure out this exposure. And then once we know that and almost down to the merchant level, now we've got to figure out how to deal with that exposure. And so tons of credit to our risk team that we had during that time, but they were very busy talking to customers daily, doing a lot of manual reviews constantly on Google websites to try to figure out, okay, what exactly is our businesses doing to kind of stay afloat? How are they handling these payments for services and memberships? And it was a very manual process, but kudos to our risk team for dealing with that and kudos to our partners who really leaned in as we were all trying to figure this out together.
Speaker 2:But ultimately, we wanted to come to a solution where it's hard because you wanna balance the risk of your business, you but also don't wanna cut the lifeline off for your merchants as well. And so it's definitely a fine balance of trying to move very quickly to control the risk for the business, but also help our customers at the same time.
Speaker 1:Do you think there's been any lasting impact? Any changed behavior that hasn't sort of changed back from before the pandemic?
Speaker 2:I would hope that for those of us in the payments business, it opened our eyes to, you know, there's a risk out there and you deal with risk and you manage risk every day. I think it's slightly changed our behavior in that, okay, what we thought could never happen can happen. Right?
Speaker 1:It's now like maybe.
Speaker 2:Yeah. Like, maybe the risk of that is pretty low, but I think most of us don't wanna go through that again sort of without being a bit more prepared for it. So I would say that we're all just a bit more conscious of what could potentially happen and the impact that that could have to our respective businesses.
Speaker 1:Yeah. One thing I remember, I'm hoping to get your take on this, it was not caused by COVID, but it was definitely during the same time with a very low rate environment. I remember a lot of money flooding into the space, and suddenly embedded payments and embedded finance was sort of like the hot ticket. Like if you're at money twenty twenty, that's already one talked about. Have you seen that alter the space at all or like maybe accelerate?
Speaker 1:What's your view?
Speaker 2:I see nothing but acceleration in the space. It does feel like it was there. And though we've have big companies like Mindbody and Toast and Shopify really be the example of what can be done with embedded payments. And I think we all were kind of in a bit of a COVID lull, and now we're sort of emerging out of that. And to me, it feels like we are just at another turning point here where we are sort of verticalizing everything, and there's still tons of opportunity for embedded payments.
Speaker 2:And to me, it feels like we're on, like, the next wave or embedded payments two point o. Not sure if somebody's already grabbed onto that title. But
Speaker 1:I'm sure they have. Yeah. Everything's got a two point zero nowadays. Now you see all these folks in their verticals thinking, I want to do what Mindbody and Toast have done. It's definitely an acceleration.
Speaker 1:Right now, software platforms have been very successful at penetrating so that the long tail of the market, but there's definitely a ceiling to the size of business. I mean, I've definitely seen it move a bit more upmarket in the last few years where they're successful at also boarding enterprises. Do you think in the long term that there's a real ceiling where at some point businesses will be so big, they're like, no, we want all the flexibility and control that comes with a direct relationship with a payment provider? Or do you think ostensibly a software platform could one day serve any size business?
Speaker 2:I'm bullish in that. I do think a software platform can serve any size of business. I think you get more enterprise, you definitely get more complicated payment flows. There's lots of pricing compression that happens upstream as well. And so knows, I think, software platforms, when you think about sort of the investment in doing that, the pricing compression, what's the return.
Speaker 2:But I am optimistic that there still is an opportunity there. I mean, definitely comparatively to the long tail of smaller businesses, probably not quite as much. But what I do think is gonna have to happen is that what I would say it has in the past and still exists today is that so much of sort of the embedded payment solutions are very horizontal. And what I mean by that is you can tailor it specifically to your business within the vertical software, but you get to enterprise level and there's just a lot of nuanced needs. And so you really got to find a partner or partners that can really address these, what I would say have long been kind of the edge cases of payments that you're gonna need to address as you get upstream.
Speaker 2:And so I don't know what that looks like yet, but I think we're gonna see more and more of that as vertical SaaS companies and embedded payments providers wanna move more upstream to those markets.
Speaker 1:So you think one day we can live in a world where every business is run on the platform?
Speaker 2:I do.
Speaker 1:Okay. And for the folks that are now in a bit more of a vertical that's in its infancy when it comes to embedded payments, and they look at the successful companies and think, I want this too. What advice would you have for those people building an embedded payment strategy and embedded payments team? Anything that comes to mind?
Speaker 2:It's harder than you think. So be ready for that.
Speaker 1:Good advice.
Speaker 2:Good advice. Yeah. With that, I would say, and this is kind of just a life philosophy of mine is be relentlessly curious. And so I mean by that is don't expect to just plug it in and expect customers to use it. You've really gotta find out what they need and why they need it and how you can really build for them.
Speaker 2:This kinda adds to the complexity of it is that you have to be relentlessly curious about it. And I would say third, if it's not you as the kind of founder, CEO, CPO of the organization, If you don't have somebody within your organization who is really has found a way to be passionate about this or is passionate about this, you need to figure out how to get that inserted into your organization so that you do have somebody who's helping to drive this forward.
Speaker 1:You need an evangelist.
Speaker 2:You need an evangelist. Yeah.
Speaker 1:That's the takeaway.
Speaker 2:Yeah. That's the takeaway.
Speaker 1:Thank you very much, Emily.
Speaker 2:Thanks, Ima.
Speaker 1:With the big picture in mind, let's shift to the platform perspective. Welcome back to Adyen Presents Embedded Finance. We are here today with two leaders from the software company Wix. Welcome, Vova and Amit. Thank you very much for being on the show.
Speaker 1:I'll give you both a minute now to introduce yourselves and maybe tell the audience a bit about what Wix is trying to change in the world and what you're doing for your customers.
Speaker 3:So I'll probably go first. Let's start with an introduction. But first of all, I wanted to say that I'm personally very excited to be here with you today and together with my co partner, Amit. We are basically excited for two reasons. Okay?
Speaker 3:So the first reason why we're excited because we are really invested in what we do in the embedded payment space, and this is driving our day to day. And the second thing, we're actually very proud of what we have achieved here at Wix with embedded payments, and we would like to share that. So about myself a little bit, my name is Wawat Sukur. I'm based in Kyiv, Ukraine. I'm co heading payments by Wix, which is the FinTech division of Wix, a bigger company.
Speaker 3:And I'm co heading this endeavor together with my brother-in-law, Amit Zagir from Israel. Basically, I was busy building systems for the last twenty five years, built systems and platforms as a software engineer. And actually in the last seven years, decided to immerse myself into payments and into FinTech by giving customers the best way to accept payments for like as a part of the business operating system that we'll describe later today. And this has been a fun ride, has been very successful, very hectic, very challenging, but also very fruitful with the best team around. So that's a little bit about myself.
Speaker 3:Amit?
Speaker 4:Hi. Thank you for having us. Very happy to be here. My name is Amit Sagheev. I'm based in Tel Aviv, Israel, and I'm co heading payments or the fintech as Vova pointed it out.
Speaker 4:I've been fascinated with the way money moves the world for a very long time, And I was very privileged to take a part in this seven year ride that we've been building the embedded payment experience at Wix. Prior to this, I was a part of a founding team of a neobank in Israel. Before that, I was building some fintech solutions for online trading and brokerages.
Speaker 1:You've both been at this game for a long time.
Speaker 4:Yes, at various positions with various perspectives. And actually right now in the best, I think, setup for really big tectonic changes that we're able to deliver to our users.
Speaker 1:Got it. And can you tell us please a bit about what Wix does? And then this seven year journey you've both sort of alluded to, tell us a bit about what changed on that journey versus what Wix originally set out to do.
Speaker 3:Let me start the story here. So first of all, let's look at what Wix is. Like, we're quite known in the industry, but it still makes sense to reiterate what we do and what we focus on. Basically, Wix is a website building platform or how we like to call it the platform for creating online presence. So it's not only websites, it's also full fledged web applications.
Speaker 3:We are present in over 190 countries all over the world. We have more than 250,000,000 users. And what people don't know and what we actually want to focus on today is that as a part of this online presence creation, Wix is also giving a platform, which is a business operating system. Okay? So think about it.
Speaker 3:Many users and many merchants are coming to our platform to create online presence. But in essence, what they want to do, they're actually running a small business and they want to reach more customers online. Maybe they're doing event business, maybe they're doing ecom, maybe they have restaurant. Maybe they provide some kind of services. So at the end of the day, the website is a UI and UX for their customers.
Speaker 3:But those who on the day to day, they have their business needs that they have to close. And we give those capabilities to those merchants. So for example, the merchants who are running ecom can upload products, can manage inventory, can track shipping, can also do marketing promotion. And by the way, it's not only typical ecom, it's also services. And as I mentioned before, events and stuff like that.
Speaker 3:So basically it's a one stop shop for SMBs to run their day to day and also reach their customers. And was that
Speaker 1:the mission from the outset or did it start with a website building toolkit and become like more of a command center sort of operating system for a small business?
Speaker 3:Look, we are always following the intent of the users. So at first they came to create something simple, then they started creating web applications. Then they also demanded, like, they wanted to have a more complex experience where they can also inject their code into the site and do something more complicated. But also along those lines, saw that they're coming there with an intent. And usually this intent that they have, it's around running the business.
Speaker 3:So it kind of evolved naturally. And then we as a company understood, we actually want to cover more than just creation side of things. We want to stick We want to keep users in our platform. We also believe, and this is really the case, it's better when you solve the problems of the customer holistically in one place. But we started adding more and more capabilities to the platform.
Speaker 3:Also, I wanna say the company was structured in the way that it's kind of split into several companies. One of the companies managing ecom and other companies managing editor. And we, for example, and we'll speak a lot about it further in the podcast, which is about embedded payments.
Speaker 1:Thank you for that. And perhaps for you, Amit, what specifically does embedded payments add to sort of the experience and the journey of your users?
Speaker 4:I think to understand how we approach this, you need to understand the general approach of Wix. We have something that is called the Wix way. We approach things in a certain way, following the user, delivering excellent products that don't compromise. And the way we are built is that each company under the Wix manages a component of that operating system. So when we look at payments as a component inside the business life, it's such a vital point.
Speaker 4:It's the most crucial point in the sales cycle. It's at the end of the rainbow. And if you create problems at that funnel, at that crucial point, it basically stops all of those great efforts that were done before you from succeeding. So that merchant went and built a website and he marketed it and he found the right product and he targeted the right audience. And they're getting to his shop and they've decided to check out and then it breaks.
Speaker 4:It's the most sensitive point where things needs to be frictionless. This is where we come in. We take away the complexity from those merchants in a space that they really have very little knowledge about. They know how to be a wonderful restaurant, or they know how to be a fantastic lawyer, but payments is not their space. So what we do is we take that hard work, that complicated work, and we do it the Wix way.
Speaker 4:We make it accessible and we make it so simple and intuitive that the user just interacts in a much better way that leads them to a much higher success and eventually touches their lives.
Speaker 1:And if I may ask, what was their reality before Wix or payments by Wix?
Speaker 4:So I think the reality had a few steps in the journey, I would say. It started off with random integrations that they could interact with, with random providers.
Speaker 1:And you just had a referral model before or something like that?
Speaker 4:Referral model in a very semi governed way, where you don't know the quality of the service. You don't know if that merchant is getting lost or not. And when we started offering embedded payments, we basically dug deeper and deeper into where the problems of those users are, and we solved them one by one. We streamlined the KYC, which was a huge undertaking for us And for the user, it's like the most crucial point. They wanna get approved, they wanna start processing and they want it streamlined.
Speaker 4:And then you're looking at checkout experiences and how do you constantly optimize and how you constantly add the right payment methods, the right risk tools, and basically providing for those merchants, those users, a clean flow. They want to have transactions, but they don't have the resources, the knowledge, or the time to handle everything that comes with it. So we do that for them. And then comes the management part. You need to manage what's running in your pipes.
Speaker 4:You need to dispute chargeback, you need to refund, you need to create taxation for the end of the year. There are so many different things that when you apply what we like to think is our magic, you streamline those big hurdles. So they were lost between multiple systems for multiple payment methods given by multiple providers, going through different KYC's with different errors. They had their cash flow very distributed across different channels. They didn't know what's coming into their bank account, very hard to plan ahead.
Speaker 4:We saw it go crazy in COVID times where people were struggling and trying to manage one week at a time. And at that point where you saw users using our consolidated embedded solution, they just had a much easier life. Everything in one place, in a coherent way, where you see your sales and then you see your transactions, and you can follow that money flow in a much easier way.
Speaker 1:Exactly. Hey, Vova, for you then. Obviously, the product is better than having payments separate. I think Amit described it perfectly just now. To get those initial sort of people converted, was that difficult getting folks from a referral model over to the embedded product?
Speaker 1:Or what lessons did you learn in that process?
Speaker 3:It was easy and very hard at the same time. And I will explain. I actually want to double down on what Amit said before and answer also in parallel your question, because I think it's a very good question. By embedding payments into Wix, there is something simple but very substantial that is going on. Merchants are doing their day to day.
Speaker 3:I wanna repeat it. They're doing their day to day on our platform. So we know a lot about them and we have a lot of data. And we also know what kind of marketing campaigns they do, what kind of inventory they have, and many other things, whether they're running the business or whether they're doing it solo or not. This simple knowledge streamlines the process of onboarding, so which is not possible to get if you're a standalone payment provider.
Speaker 3:So by leveraging the fact that we know merchants better, we're actually reducing friction. I actually wanted to explain how that is done. We collect the right data points in the right time when there is no friction is introduced, and that actually enables these merchants to run faster and to see results faster. And it's not just our belief because we have measured it in numbers. We try to do it this way, also the other way.
Speaker 3:And we saw a huge difference between the two approaches. And that's where it stroke that it stroke us that, wow, we're actually enabling something like air that you don't think about it, but it's already available and allows you to run. And it's still super compliant with all the possible regulations, but also very easy for the customer to go through. So from that perspective, now answering your question, that was easy. That was easy to get users converted.
Speaker 3:By the way, today Wix Payments, which is our embedded payment solution is the de facto standard on our platform and majority of users choose that. That's interesting.
Speaker 1:You say choose that. So there is optionality still where you present it because Of course. Well, you say of course, but many software platforms mandate it. They say you join us, you
Speaker 3:get our payments. We say, of course, because for us, it's natural to always give the option to the customer and actually win by giving the better service and the better product, which helps Win like on value. Yes. And by the way, I also wanna say we're not charging extra fees if you're not using our embedded solution. We're not doing that.
Speaker 3:So we're not doing that. We're winning by actually providing the best service, which is very competitive from product and service from all sides, but it was not easy to get there. I spoke about onboarding and I wanted to say that even though onboarding was simple, I have to say it wasn't very clear in the beginning. And when you have a payment system, which is simple, but not necessarily clear, it might lead to issues. And we have experienced a few issues in the past and we had to work hard to resolve them.
Speaker 3:And it was again, mainly around the user experience. And now we can say we have both simple, but also the clear process, but it might sound simple on the high level, but actually in reality to get to the point took us months and then years, and we're still improving the overall UX part. And also I wanted to add just one comment about how it all started. The embedded solution actually started in a completely different market, which is Brazil. It's one of the big markets for us, but it's not like the major market.
Speaker 3:And there we had two specific issues that we wanted to solve for our customers. One, we saw that with what you call the referral partnership, we saw that not many customers are actually getting onboarded by the provider, which was a miss and wanted to enable more merchants to process on the platform. And second, their customers, customers of their customers, basically the buyers on the site didn't have a clean card purchase experience, which is embedded on the site. It was basically redirect based.
Speaker 1:So it made your product worse in the end.
Speaker 3:Yes. So those two issues actually led us to the decision to start playing around with embedded payment solution. That was in Brazil. We solved that problem very successfully in Brazil. And then we said to ourselves, basically, we want to do the same in other geographies, in US, in UK, in Europe.
Speaker 3:And by the way, we started doing that with IDN. It was very successful, but the challenges there were also now very different because locations were very different. Also onboarding experience was very different. So creating those challenges along the way was super interesting. And also, I wanna say very beneficial for our customers at the end of the day.
Speaker 1:And that's incredibly unique. Think that the origination of your embedded payment strategy is around UX UI, rather than adding another net revenue line or changing the business model the margin mix or anything like that. It was really like, oh, this is a problem for the user and their end customer, so we fix it for them.
Speaker 3:It's only part of the story, I have to say.
Speaker 1:Oh, but it was so elegant. You should have just left it at that.
Speaker 3:Yeah, it's not enough to provide a best experience. It's
Speaker 1:not enough. But what else is needed?
Speaker 4:When we are discussing user experience, I think what's important to understand when we're looking at experience that it's multidimensional. The experience that the user experiences or its buyer is experiencing has a lot of depth behind it. For us to enable something very streamlined, very frictionless, there are multiple processes that are happening behind the scene that are preventing problems from even happening. From data science models that route you to the right payment method or from classification that happens as we process you and risk that is being assessed. So when you're saying that we've structured a business model around user experience, we've structured a business model around the most optimized funnel that we can generate.
Speaker 4:So for us to take a user and give them a seamless experience from A to Z means that at the end of the day, their value is higher, their success is higher, and we can control the operational efforts that are done into that. So if you think about the way we are building what we're doing, we have a very tight and technologically oriented operational staff. So we're not creating this situation like many other payment solutions in the world where there's a lot of people manually doing work. We're constantly evolving technologically behind the scene in making sure that from an ROI perspective, it's very profitable. Understood.
Speaker 1:Thank you for adding that color. I wanted to ask another question. You've talked a lot about how the business of Wix very much follows your customers' needs and making it as an ideal as possible experience for them. What's the Wix way of collecting that feedback and making sure that your product prioritization is done correctly? Do you do anything special there?
Speaker 4:So I think that at Wix, the belief in the customer is almost like a religion, where we are so fanatic about it, that if you'd ask our CEO who he works for, he works for the user. It's to the point where some people text him or directly send him messages over, and he will refer back to us on why is there a $5,000 reserve on this user? And you would ask yourself, why would a CEO of a company of this magnitude would care about $5,000 So it starts by those values that you pursue all the time. To that, we have many layers and tools that are basically enforcing that approach from user conversation, advisory boards, immense amount of data that is collected on every event in the work, strict SLAs, and so many more things that are coming now in the age of AI where there is an ongoing dialogue with the creators that are building businesses on top of Wix on what's working, what's not working, what's missing. How was this experience, and have we answered your solution?
Speaker 4:And I can give you clear examples. I have a Slack channel that gets every chat that every one of my users is doing about their payouts. So they would have the ability to ask a question about their payouts, which is their most sensitive part.
Speaker 1:Wait, so how many users does Wix have?
Speaker 4:Wix has many, many, many millions.
Speaker 1:And anyone that enters a question on payouts goes straight to you? Yes.
Speaker 4:On my Slack channel directly with a direct transcript of what they asked, what were they given answers to.
Speaker 1:It's like real time NPS feedback. Constant.
Speaker 4:And I would start my day by looking at what are those longer threads. I'm looking for the longer threads, those who actually converse and you would get some insights out of unless those two, three messages that get stuck. So you start digging into these, and you constantly direct your team to go further and deepen those relationships. So it could be with our relationship managers who have direct access to users of all sizes. It could be by our customer care that is getting all kinds of requests or these automatic tools that are scattered around our products that are collecting this real time feedback.
Speaker 4:I would say that in our design processes, everything needs to be validated either in a quantitative or qualitative way, sometimes both. So even if you would have an idea that hasn't been tested, you would go and get some feedback on. It's a part of the working procedures.
Speaker 1:Yeah. Otherwise, you get distracted by the anecdotes. You just go, oh, this is feedback. Let's build that.
Speaker 4:Exactly. So things get deep learned.
Speaker 1:Thank you. Pivoting to you, Vova. I'm wondering, you've been on this journey, you've both said for seven years of embedding payments. You also talked about the fact that Wix FinTech is essentially a separate company. I'll let you expand on that in a bit.
Speaker 1:My question's twofold. What's embedded payments changed about the business from a revenue mix perspective and perhaps a growth trajectory perspective? Has it drastically changed Wix a lot? And then secondly, has it changed Wix at all culturally? Because I would assume if you get a lot of payments and tech talent in that might change the mix of the people.
Speaker 1:Is there something you
Speaker 3:can comment on? So all are very important questions, think. Payments, just wanted to clarify, payments is not a separate company. It's how we call basically internally business units, and there are many business units within Wix, and payments is one of the other business units that is doing fintech. So that's number one.
Speaker 3:Number two, payments have had a significant impact on the company financials in the last seven years. Now we are at the point when, for example, if we take 2024, for instance, if we've generated around 1,760,000,000.00 in revenue, more than 11%, which is over 200,000,000 was coming from our activity. We should be fair to say this is not only us, okay? Because basically we're working for weeks, we're working for the general funnel and we're working together with other business units, which are actually fulfilling needs of the customer, which are not payment or fintech related. But this monetization approach has been introduced by our team.
Speaker 3:So it is substantial and it's growing year over year in two digit percent number. So from that perspective, it was substantial. And also the team, like what you're asking by the way, it's kind of a general story with embedded payments in a way, because when you're doing embedded payments, you're embedding payments into something. And there is something bigger, like in our case, it's online recreation of online presence and websites and web applications. And when you embed it, you have to remember and have to stay and have to serve the overarching vision of the company, which makes total sense because then you will get maximum out of the payment journey and will amplify the key vision of the company and for the customers.
Speaker 3:But still you're holding something unique, like in our case for payments by Wix business unit, what is unique is the fact that we're managing financial risk, which is not present in other business units, or we are doing content monitoring. So those kind of things which are more related to payment operations is very unique to the company.
Speaker 1:That you get expertise in, but there's not necessarily a culture shift or something like that.
Speaker 3:Yeah. It's not a culture shift, but I wanna say I wanna go back to your question before, whether there was a cultural shift in the company. I think when we draw this line that success of the customer is actually tied to the success of the company and payments is one of the drivers on this transition.
Speaker 1:Then it becomes more intuitive.
Speaker 3:The company started looking differently at, I think, at SMBs and micro merchants and bigger merchants and trying to find a better match. We all try to find a better match between the creation of the content and how it combines with execution of the business with the business operating system that you mentioned before. So these kind of things started clicking more and more. And of course, it's all for the sake of our customer success.
Speaker 1:Amit, anything you'd like to add?
Speaker 4:I did see a culture shift, and I did see people speaking in terminologies that they were not aware of, and thought patterns that didn't exist started rising. When people understand that their action has monetary results that are measurable, they start asking themselves, how can I impact that even more? And we do see product majors, engineers seeking this kind of deeper integration between products, between infrastructures, it generated new aspects of thinking about how a transaction can be handled. Can it move into a pay link or an invoice? Can we move from rigid card forms into more intuitive payments?
Speaker 4:And I saw how throughout the years, as we've gained more and more trust by the users, we started seeing a much higher demand for payment related features. Things that usually were out of Wix end because they were done by third party solutions now are in our hands. So there is a deeper collaboration, I believe, around these spaces.
Speaker 1:It's helped the company grow up, so to become more GAO oriented essentially. Yes. Thank you for that. That's really insightful. Vova, back to you.
Speaker 1:Let's say you're talking to a very ambitious entrepreneur, and they're running a software platform and they're having some success, and you talked beautifully just now about the fact that you are embedding payments, not just in your product, but also in your company. When you think about those first few hires that you would make for an embedded payment strategy to execute on that, Are there any characteristics or profiles that you'd suggest to this founder that they go after? What does it take to be successful here?
Speaker 3:I would like to address this question in, like, in multiple dimensions. First of all, I wanna say in order to start doing embedded payments, you have to understand you are stepping in a different kind of world. If you were doing, for example, mainly product focused development, which was not operationally heavy, now the ballgame will change. Okay. This is gonna be very unique.
Speaker 3:So I think the first hires should understand what they do, should ideally have this kind of embedding payments experience, and they should have this outlook on how the operational piece will work. So I think this is very important. The other aspect I would say, which might be controversial, I would say FinTech experience of the people that are coming abroad is very important. In our case, for example, was great because prior to, I mean, in the case of payments by weeks, I didn't have prior payments experience before communicating with this company. And I mean, did.
Speaker 3:And we kind of combined in a really natural way when I was more like the engineering kind of guy and he was more like the product and Fintech kind of guy, which combined together in a great segue and in this beautiful result that we have today. So basically the way to address it, you always need to compliment your team with the things that you are lacking today so that in combination it will work well and will be the perfect superposition on running the business on the best way. And here, I think operational payment and fintech experience is very important to get started.
Speaker 1:Thank you. Amit, anything to add on that?
Speaker 4:I wanna say very short, you have to have some wild cards because it seems that everything's been done. Payments to many people feels like an almost, well, we know the solution. There's a checkout. There's an onboarding. This is how it's done.
Speaker 4:And that is the old world. And if you wanna build something for the new world, which is evolving and changing and getting all these AI momentums and personalization of one momentums, you have to have some wildcard thinking. You can't repeat the same patterns that you had in payments throughout the last ten years. You need to take from it something substantial, fundamental and great, but you have to mix on top of it influences coming from very different worlds, very different experiences, because the end user will interact with that and would experience TikTok. It won't expect a payment form.
Speaker 4:They would want something that's inside their existing people. So we have to have some wild cards.
Speaker 1:Some wild cards that solve for the payments needing to become invisible, or to think outside the box that haven't done the same thing for thirty years.
Speaker 4:Yes. And that happens on product, on design, on architecture, on engineering. It happens on business solutions. It happens on every one of those perspectives that you establish as you go to build the fintech. And it's almost crucial.
Speaker 4:We see people coming with a team that is only staffed by old thinking, and they have a very hard time moving forward.
Speaker 1:Yeah, I mean, I gotta say, I obviously have spent significant time in this space myself, and I find meeting these executive teams, the creativity and thinking is often a leading indicator to the success we later see. So people who just repeat the same phrases, you can already see there's gonna be some stagnant years ahead. And on the flip side, sometimes I get surprised by a left field idea, and then later these turn out to be extremely successful. So I definitely agree with you.
Speaker 3:You need to create some kind of magic in your company when there is no kind of templated and repeated solutions all over again. And you don't have the box. You are reinventing the box all the time. And you're also building the team in a way, either by hiring the right people, of course, but also creating this culture when you can innovate constantly and push the boundaries. Without it, it's gonna be the same game all over again.
Speaker 3:So I fully agree with Amit said before. It's something that we're working hard to preserve. And sometimes we need to make the hard calls to break the walls when the wall is all over the place and for a long time. And we say, no, it can't be like that. We need to change it.
Speaker 1:Yeah. Heard. Amit, starting with you and then Vova, you can add on. You've talked a lot about creating a very seamless experience for your user and that your CEO works for the user. Is there anything you're looking to solve next?
Speaker 1:Can you talk a bit about what the rest of this decade looks like for Wix? What are you working on?
Speaker 4:Great question. I think that this is '25 is a year of big change. We've been saying this for every year in the last seven years, but again, '25 is a big year of change. We are already seeing progress happening in our space. We've had sorry for the buzzword, but it's the reality in our cycle.
Speaker 4:AI has been around for a very long time at Wix. We've had our first website creator with AI over seven years ago. And this has only evolved and evolved and evolved. Maybe four years ago, if not more, we built our own data science and AI group within payments. And what people are now starting to talk about hygienic architecture, we've had for a while, and now it's on steroids due to the latest and greatest things that are coming from the LLMs.
Speaker 4:So we are harnessing every piece of tech that we can to make that experience move forward. There are multiple touch points that we're seeing right now that are being affected from how do you engage with a user? Is it those, I would say, cookie cutter sentences that we used to have, or is it personalized and meeting that specific user with its specific business and the specific intent in a much more, I would say, dedicated way that sees the user needs and its user needs and how we give clarity around things that are very cumbersome in a simple language, all the way to the way the interaction at the end happens with the checkout. So AI and data driven thinking has been shifting what we've been doing for a very long time.
Speaker 1:Is the goal to give Wix's millions and millions of users each a uniquely personal experience then through AI?
Speaker 4:I would say that to the extent that the user needs it. I mean, creating that personalized experience sometimes is confusing also because you do want your financial solution to be very correct. You want it to be very clear and very correct and not slangy or not too, I would say, common. It needs to be something that builds trust. So within that experience, let's take the old world.
Speaker 4:If you would step into the bank, that banker knew you most likely, or knew your credit and knew your needs and was handling your account for years. And it gave you semi personal or as personal as that person can be. When we went to the digital tools, we lost a lot of that differentiation and we've been chasing it since. Now there's an ability to kind of go back to that more personal, more individual experience that builds trust. So as long as that personalization serves the user and the way that they build trust and they handle their needs in a better way, then it's effective.
Speaker 4:It shouldn't be there just for the sake of a buzzword integration. It needs to serve proper ROI for the user. And it's continuing forward with their financial needs. So financials don't just stop at payments, but they go through full cash flow management and full perspective over how does one manage the budget, their spending, their earnings, Do they need further capital? So there's a whole world that is attached to that personalized point of view.
Speaker 1:That's interesting. And that's what you're exploring now.
Speaker 4:Yes. That's what we've been exploring for a long time now. And we have some wonderful stuff coming in 2025.
Speaker 1:Great to hear. Pove, any last words from you?
Speaker 3:Absolutely. I wanted to add that definitely on the AI space, what we are trying to do, even though it's the end of the podcast, I actually wanna voice out what is the vision of what we do at Payments by Wix. And our vision is all about empowering users on the Wix platform to maximize their financial potential. So we'll do whatever is necessary to get to this state. And this will enable and Amit rightfully and actually in a wide way emphasize two points.
Speaker 3:One, which was about AI, which is completely changing the way the experience looks like. And the second one is basic capabilities of this maximization of financial potential. And we actually are doing both right now, both at the same time. And from the AI perspective, when we talk about it internally, we're actually saying we're creating a CFO for the merchant. And CFO can act in two modes.
Speaker 3:The CFO can act as a reactive body or can be a proactive body. So we wanna make sure and also wrap it around the thinking that it should be the experience that the user is actually wants. So if they don't want something proactive, they can live it out. But actually, if they don't know or unsure, we'll be there for them to help out. So I think what we're building here is absolutely amazing in 2025.
Speaker 3:A lot of things that we're talking about right now is gonna come out live. So payments is just the beginning of the story. And even though, as we mentioned before in the beginning, we have a really like a leap in terms of onboarding experience and general experience with processing and getting payments, we see a few more leaps that we can do to keep the product really the best.
Speaker 1:Thank you. I actually have a bonus question because of what you just said. The payments is just the beginning, which is a wonderful tagline. But would you say that it's also impossible to build on all of these embedded finance aspirations if you didn't have the payments? Is it like a necessary foundation?
Speaker 3:100%. This is the foundational layer and this is the beginning, but we're not stopping here. We're moving forward. But you're absolutely correct. You cannot build layers on top if you don't have the basic one, which is panels.
Speaker 1:Great. That's a fantastic conclusion to end on. Thank you both so much for coming on.
Speaker 4:Thank you for having us.
Speaker 3:Thank you for having us.
Speaker 1:Absolutely. Thank you to our guests for sharing their insights. There's lots to digest from today's conversations, but if you take away one thing, let it be this: In order to drive value for your SMB customers, switch to fully embedded payments and unlock automation, increased visibility, and industry specific flows. Thank you for listening.