April 17, 2017

With new CEO, Payveris building on its digital-pay perch

HBJ PHOTO | Gregory Seay
HBJ PHOTO | Gregory Seay
Payveris LLC CEO Ron Bergamesca.

Online-mobile payments vendor Payveris LLC recently received the last chunk of a $10 million investment that, while opening doors to new customers, could finally land the five-year-old Connecticut startup in the black this year, its new CEO says.

Banks and credit unions (CUs) are the primary customers for Payveris, based in Rocky Hill, said Ron Bergamesca, a veteran marketer recruited back to Connecticut to head Payveris as of Feb. 24.

Payveris essentially is a cloud-based, software-as-services provider whose digital business-to-business — B2B, for short — payment technology allows financial-institutions' depositors to pay their bills or move money around using personal computers and smartphones, almost instantaneously.

"We are a [business] to [business] to [consumer] play,'' Bergamesca said. "We're the only independent digital-payments and money-management platform serving financial institutions."

Using the final $3 million slug of its series C investment from a San Francisco group, together with Connecticut taxpayers' $2.3 million investment stake, and a $1.25 million low-interest state loan, Payveris wants to double its roster of bank-CU clients to 400 by 2018, Bergamesca said. Doing so, could finally make Payveris profitable by then, if not sooner.

Payveris and its larger American rivals compete in a global electronic-payments market — one the U.S. dominates — that accounted for more than 144 billion transactions with a value of almost $178 trillion in 2015, allowing consumers to pay bills or make other payments in person or online, according to Atlanta digital-payments consultant Randy Pilkenton, citing the 2016 Federal Reserve Payments Study.

In exchange, Payveris and other B2B and person-to-person (P2P) e-pay vendors drew some $300 billion in swipe fees at retail points of sale and fees from customers sending payments or moneyfund transfers, Pilkenton said.

Another Connecticut digital-payments vendor, Higher One Inc., also competes in the sector, providing its money-transfer services primarily on college campuses.

"That's why it's so big," Pilkenton said, "because so much of our commerce payments are being facilitated electronically.''

Pilkenton said "disrupters'' like Payveris, eBay spinoff PayPal, and P2P digital-pay providers such as Facebook Pay, Google Wallet and Snapcash, are shaking up the digital-payments space.

"In some ways, they're just delivering on a service that's already available," he said. "But they're taking advantage of the opportunity to rethink that service and ways to make it better for customers.''

Customer growth

Payveris competes in a financial-transaction marketplace against a handful of larger players: Fiserv, FIS and Jack Henry & Associates. All rely on the Automated Clearing House to move money and information between banks and payment end points.

Bergamesca, who previously worked for other Connecticut companies in the '80s before leaving the state in the '90s, said that's precisely Payveris' strategy.

"There's definitely a market for what we have,'' he said. "The 'big three' are leaving a big part of the market unsatisfied. … What our focus is on is how fast can we get out to the market and do we have enough resources to take advantage of the opportunities.''

Co-founded in 2011 by serial Connecticut/New England technology entrepreneur Louis Hernandez Jr. and other Connecticut and U.S. investors, Payveris officials are tight-lipped about the closely held enterprise's financials and its customers, or "partners.''

Last October, Payveris inked a deal with Southington financial-technology provider COCC to offer its PayItNow services to COCC's 130 bank-credit union customers in the Northeast. The service allows community lenders to offer their customers P2P money transfers.

Earlier this month, Payveris announced the signing of Utah's Members First Credit Union, a $113 million-asset credit co-op whose 14,815 members include workers at NUCOR Steel and Utah State University.

In a statement, First Credit finance chief Darryn Hodgson said Payveris' digital-payments platform "provides our members a much better online and mobile user experience and it allows us to easily add additional digital payment services in the future at a much lower cost than our previous solution."

According to Bergamesca, Payveris will help its 200 U.S. financial-institution customers facilitate moving about $2 billion for their depositors this year, double 2016's volume.

"The last three years, we've doubled our transaction volume each year,'' he said.

More volume means more revenue for Payveris, which collects an unspecified fee for each fund transfer.

In 2016, Payveris added 85 new financial clients, and is expected to add fewer but larger clients this year, Bergamesca said. Recently, Payveris landed as a client one of "the top five banks in Connecticut,'' he said, declining to name it.

State assistance

Beyond banks and CUs that distribute its services, the Payveris name is a virtual unknown to depositors and billpayers. More familiar to them likely are Payveris' product stable, including ePay, PayItNow Network, and Transfers.

Payveris' pitch to prospective financial-technology customers is simple, Bergamesca said.

"We're going to keep you relevant with innovative products that keep [customers] from going elsewhere,'' he said.

Payveris' business model, plus that it is "the only independent bill-pay solution left'' is what drew Connecticut Innovations, the state's quasi-public venture arm, to invest in the company, said Peter Longo, managing director of investments at CI and a member of Payveris' board.

"There is a large group of other banking core software providers out there looking for an independent solution,'' Longo said, "and Payveris provides them with an option that is not owned by a competitor.''

In addition to the state's technology stake in Payveris, in Sept. 2013, Payveris got a 10-year, $1.25 million loan at 2 percent interest from the state Department of Economic and Community Development, to pay for new computer hardware and software and to cover overhead. In exchange, Payveris pledged to retain its eight staffers at the time, plus add 42 full-time positions by 2018.

According to a DECD spokesman, Payveris is current on the loan. It can earn a $625,000 "forgiveness credit" if it meets the loan's job-retention and hiring covenants by Sept. 9, 2018. If they don't, the penalty is $25,000 — $1.05 million total — for every job short of their obligation, said DECD spokesman David Treadwell.

As it stands, the hiring target is unlikely, Bergamesca said. Payveris has scrapped plans to add a customer call center and about a dozen jobs at its Rocky Hill base.

"We found that there was not much of a market need for that service," he said. "We don't intend on hiring right now. We may if we continue the momentum that we have.''

In mid-March, Payveris hired Nathan Dudek as chief technology officer, responsible for orchestrating the company's technology strategy and business-process optimization.

Online bill-pay is one of the biggest uses of Payveris' payment network, supported by its proprietary "PaySafe'' guaranteed funding model, Bergamesca said. Funds move from the payer's account to a Payveris account before being transmitted to the payee.

"We know that when we send a payment on behalf of you, we know you have the money. It's not going to bounce,'' he said.

Down the road, Bergamesca said Payveris covets being able to provide real-time electronic fund transfers.

"We want to be the central payment hub for financial institutions,'' the Payveris CEO said. "What that means is having all of the money-movement activities be on one platform.''

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