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April 14, 2021TSG Press

Executive Interview Series: NMI CEO, Vijay Sondhi

The Executive Interview Series provides readers with exclusive insights from movers and shakers in the payments industry. The Payments Industry is under continuous transformation, as such this series provides diverse perspectives on everything from strategy to payments technology and to the future of the industry.

In this interview, TSG’s Market Intelligence team-member Alex Ferguson sat down with NMI CEO Vijay Sondhi to learn more about his 25+ year journey through the payments industry and how NMI has found success and growth as an unseen engine of the payments industry.

Background: Vijay is the CEO of NMI and an accomplished fintech executive and investor. Vijay ran Visa’s CyberSource and Authorize.net businesses, was head of Visa corporate strategy and launched Visa’s flagship One-Market Innovation Center. He served as CFO for three private equity and venture-backed companies spanning a wide variety of fintech solutions, including ERP accounting, point-of-sale systems, hospitality reservations and billing, plus financial document management. Vijay serves on the board of Tangem.com and Altimar Acquisition Corp. II. He is passionate about entrepreneurship and enjoys skiing, cycling and being outside with his wife and two daughters.

TSG’s Alex Ferguson:
How’d you get your start in the payments industry?

A: Vijay Sondhi
I got involved in the payments industry over 25 years ago. I started out as a software engineer and worked at a small little startup (I think I was the eighth employee) we were doing software for hotel reservation and property management systems. These were the systems that allowed you to check in and check out of your hotel room, and as a part of that there was a whole billing component. Effectively these systems are kind of funny because when you check into a hotel you essentially open an “accounting folio” (it’s actually called a folio) where all of the charges that you incurred at the hotel accrue to that folio, and then when you check out, they close out the folio and you pay it. So, my first introduction was actually connecting our systems to MICROS point of sale. It was one of those funny things where you go for breakfast at the hotel and they give you a check and type it into a MICROS POS, and we have got to make sure that the charge makes it back to the front desk by the time you walk over and check out. This will date me, but I wrote an RS232 interface that captured the payload from a MICROS point of sale system and put it into a hotel billing system as a lowly software engineer in my early 20s.

TSG’s Alex Ferguson:
You’ve held several executive positions and been heavily involved across the venture capital, fintech, and payments space over the last several decades including roles as Senior Vice President and Head of Corporate Strategy at Visa. How have your past experiences helped you transition to your role as CEO of NMI?

A: Vijay Sondhi
I have had just about every job you can have at a software company and that’s really helped me to transition into that CEO position. As I mentioned I started in the payments industry programming systems that talked to point of sale. As a software engineer, I was sort of promoted (not even promoted, our company just grew) and I de facto became a product manager. Then I got into sales because we were a small company, and you do a little bit of everything. Then eventually I did an MBA and studied finance and came back as CFO of the same software company I had been at before business school and we ended up actually selling that company to MICROS. It’s now a part of Oracle Hospitality.

So, going into the role at Visa, I really wanted to join the company because I thought “wow I’ve been on the peripheral edge of the payments industry for a couple of decades, but what would it be like to work inside the mothership of the largest consumer payments network in the world.” It coincided with a time (this is 2012) where Visa had recently gone public, they had been public for just a few years, and they were looking to bring in executives that had been in the software industry and in high growth software companies because executives at Visa realized that their future would be determined very much by these disruptors. My role as Head of Corporate Strategy was fantastic because I got an inside view of how the credit card payments industry works from issuing to acquiring and then all of the innovation that goes around that.

TSG’s Alex Ferguson:
What do you feel is your biggest contribution to the payments industry thus far?

A: Vijay Sondhi
I think what we’ve done here at NMI by creating a white-labeled, behind the scenes payments stack (we call it a payments platform) for the SMB space, and particularly going after the SMB market via a channel is very unique. So, we go to market by offering up our payments platform to independent sales organizations (ISOs), independent software vendors (ISVs), and value-added resellers (VARs) that connect disparate systems such as medical, dental, office, practice management systems to payments, and increasingly now also to banks who are looking to take our technology and enter the payments industry more directly. I think being able to lead NMI going into that bold new world where the technology stack that we offer to the mid-market via a channel is very unique. We bought a company about three years ago in the U.K. called Creditcall and they had a deep expertise in EMV, and we created omnichannel solutions which in the COVID era really helped our merchants a lot as people started to shift into buy online, pickup at the curb, and scan a menu with a QR code. I’m really proud of what we’ve done here. We’ve processed over $100B of payments and we enable over 200K SMBs via a channel of about 2K partners.

TSG’s Alex Ferguson:
NMI operates quite differently compared to most payment technology providers in that NMI is not merchant facing and instead works directly with ISOs, VARs, and Payment Facilitators. How has NMI been so successful in utilizing this business model?

A: Vijay Sondhi
It goes into what we’ve just talked about. I think there are three key components to our success by not being merchant facing. The first piece is we by definition are a behind the scenes company. From day one NMI had built its solutions to be sort of generic. Our name doesn’t appear anywhere. Our URLS will be things like status.transactiongateway.com. So, having that ability to wrap our tech stack with your logo, your colors, and consume our APIs and embed it into your software solution was the first piece. The second piece was we really went out of our way to stay at the forefront of innovation and future proof our solutions for that said channel. If you were an ISO, a VAR, or a PayFac, and you didn’t want to worry about some new Field 52 for example that Visa and Mastercard came out in the EMV spec, we would take care of that. If you wanted to have acquirer neutrality and you didn’t want to be dependent on one particular acquirer, we give you access to over 200 processors or acquirers. So just future proofing and giving you that choice and flexibility was the second piece. The last one is, we built our system to be a series of modules. So, you don’t have to take all of it. If you want to take card present, card not present, a unified token vault, one database that makes your life really easy if you consume all of it, then that’s great. But, if for example you happen to want to use someone else’s token store or you want to use your card present gateway or a gateway from someone else but combine it with our in-store card present solutions, you can choose the modules that you want to use in your way. So, I think a combination of those three things, being really white-labeled behind the scenes, the ability to future proof your innovation needs where all we do is make sure that our system is up to date, and then that last one of choice and flexibility. You can use only the modules you need and want to use from us.

TSG’s Alex Ferguson:
Because NMI isn’t merchant facing, many may be unfamiliar with the services NMI provides. Tell us about NMI and what gives the company an edge over the competition.

A: Vijay Sondhi
I mentioned in the last question the 3 key components. I would go a little further and just say our ability to respond to customer requests given that we are a small agile company. Today we are about 300 people, and I would call that a pretty small company in terms of employee headcount, but as I mentioned earlier, we’re processing over $100B in volume. We’re processing over a billion transactions a year. I think we have over 200K terminals and vending machines on our terminal management system. So, we have the ability to punch above our weight class. We have the agility and the speed of a small company and at the same time provide the reliability, security, and stability of a larger player as is borne out by the statistics I’ve mentioned. I think that’s given us a great edge. There are companies that are a lot bigger than us in terms of headcount, but they tend to be slower moving. Then there are smaller companies, maybe our size or even smaller, they just don’t have the reliability, the security, and the history where you can trust your payments processing to them. So, having that sort of middle spot has been really unique for us and has put us where we are, which is we’re winning more business than we ever have.

TSG’s Alex Ferguson:
NMI has been in the news recently for its acquisition of USAePay in February. How does this acquisition enhance NMI’s product set, and what are you most excited about with this move going forward?

A: Vijay Sondhi
USAePay has been a really great company in the payment enablement space. We like to use the word enablement a lot because we enable partners to go to market. USAePay was a very strong competitor in the marketplace, and they’ve been around for about 20 years, about the same amount of time as NMI. The first thing that makes me really excited about this is just the ability for us to pool our resources. We were about 200 people, they were roughly about 100 people, and we put it together. Well now we have more software engineers, more product people, more support, and more sales folks to service that mid-market in the ISO, ISV, PayFac, and the VAR space. So just scale and resources are the first one. At the same time, it’s not too much scale. If we were to suddenly become a ten-thousand-person company I would be worried that we would possibly lose some of our nimbleness, agility, and flexibility. So, scale but at the right size is the first piece. The second part where USAePay was really good is they had more of a mixture of physical payments and more of a card present flavor to their base. We were much more eCommerce focused. As we see the vaccinations being rolled out in the U.S. and around the world and we start to see people returning into physical payment settings, just having that more balanced portfolio of a combination of eCommerce and in store payment acceptance is something that makes us super excited. It’s one of these situations where we just feel it is a 1+1=3. We’re both better off together and we feel we can provide better service to our customers and their customers and to the channel in general.

TSG’s Alex Ferguson:
Where do you see NMI five years down the line? Do you feel NMI will begin to transition towards more merchant facing solutions?

A: Vijay Sondhi
We will always want to stick to our DNA and USAePay has the same DNA, which is to enable others to go after merchants. We’ve never gone direct to merchant because we see ourselves as that channel enabler, so I don’t see us heading into that direction.

Now this question is the one I find the most exciting because as a CEO, this is what I love to think about and make sure we have the right strategy and plans to execute across a five-year plan. We have seen that the industry that we were born out of, this sort of payment gateway industry, was really about providing an abstraction layer that gave you connectivity and neutrality to multiple acquirers and processors; I mentioned we have over 200 connections that are always being kept up to date. Well, that’s great for authorizing a transaction, but what we’d like to do is focus on providing more enablement solutions for our partners over the coming years. We have some really exciting projects underway and are looking forward to finding new ways to empower our partners through them.

TSG’s Alex Ferguson:
How has NMI dealt with the COVID-19 pandemic? What has the impact looked like from NMI’s perspective given your focus on eCommerce?

A: Vijay Sondhi
That’s a really interesting question because when the pandemic first hit, and I think I was reminded by my wife on the weekend of March 13th, that it was actually the one-year anniversary of the lockdown. So, there’s a couple of things that we thought about here. First of all, how do we deal with our employees, our business, and the ability to service our clients. Like most companies, we were able to work remote from home. In fact, we’ve increased our headcount even without the USAePay acquisition by about 25% during the pandemic because our business has grown so quickly. So, the impact on our eCommerce business has resulted in faster growth than we would have had prior to the lockdowns and the impact on our card present business, which is a much smaller part of the whole, has been hit pretty hard, but it has started to come back. I think the biggest impact has been how we think about payment processing and payment enablement solutions.

We used to think of eCommerce as being an adjunct or add on to retail spend or card present which is the vast majority of spend, and during the lockdown it sort of flipped around. We like to use this analogy of the solar system, eCommerce used to revolve around the sun which was in store payments and retail spend and it flipped. The center of the universe or the center of the solar system became eCommerce and we started to add-on the card present type solutions I mentioned earlier: QR codes giving the ability to scan a code and go to a hosted order page and type in your credit card. Things like the ability to buy online and pick up at the curb or the other way around, where you buy in store and return it from your home in a UPS box as many of us have been doing. So, the impact has been quite monumental. The net effect in terms of the business change has been that we have accelerated our solutions to the market and our business has grown.

TSG’s Alex Ferguson:
How do you feel the COVID-19 pandemic has impacted the payments industry? What trends that have come from the pandemic do you think will continue long term?

A: Vijay Sondhi
So, I think that the comfort level with having this sort of omnichannel imperative (and that omnichannel word is so overused in our industry that it’s almost got a bad rap). Let’s just say if there was ever a debate that you needed to be able to process payments in a variety of manners, that debate is over. I think for the payments industry going forward for merchants (and we provide solutions for partners that enable merchants) you have to be thinking of all of the use cases and you have to offer them all through a single unified database, a single integration, a single token vault, and accompanying database for reconciliation and the movement of money. So, we think of it this way, you need to be able to take payments online on a website, in app on a phone, certainly with newer forms as I mentioned: QR codes, more alternative payments, Apple Pay, Android Pay, contactless, and one of the areas where we are a pioneer in, unattended payments. So, things like kiosks. Or in Sweden we enabled a store that is sort of like an Amazon Go where there are no human beings, it’s basically like a vending machine on steroids. You basically scan a code to get into the store and you pick stuff off the shelf and you are automatically charged as you walk out. So, that idea of the form factors and the way of taking payments but it all reconciling back to one customer perspective, or one customer ID, one form of bank account, that’s been a huge change. I think that anyone who hasn’t jumped on that and is still trying to offer solutions that don’t stitch together will have a problem. For the long term, I think that eCommerce is the center of the solar system and lets just continue to think of things that way and retail will be more of an add-on to that versus the other way around.

TSG’s Alex Ferguson:
That concludes all the questions I had for you Vijay. Do you have any closing thoughts, or additional thoughts you’d like to add?

A: Vijay Sondhi
Yes, I do. I think that we should just be cognizant of the fact that the pandemic has wreaked a lot of havoc on a lot of people that are not in the payments industry or the technology sector. Small businesses have been hit really badly. All of us here in the United States, and probably in other countries, we see all of the for-lease signs on the Mom-and-Pop shops, and what’s happened is there’s been a bit of a movement towards the behemoths and the large brands. We want to, first of all, make sure that we have gratitude for the fact that we live and work in an industry that is thriving, but we have a responsibility in the payments industry to help out those SMBs, to help out the Mom-and-Pop shops and give them the latest technology. If restaurants are going to morph into ghost kitchens, or whatever these phrases are, then let’s make sure that those people that have to change their business model, these small businesses owners, have the ability to take payments in a variety of ways that allow them to compete with the big chains. I would just love all of us here in the industry to take that on as a personal responsibility and we do that here at NMI and I do it also as CEO of the company. Let’s try to revive that small business and the main street entrepreneurs with the best payments solutions, easiest to deploy, lowest cost with the same amount of innovation that the big folks have.

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