Revolutionizing Payment Processing: Real-Time Settlements with Marshall Greenwald of Ionia

Marshall Greenwald is the founder of Ionia.

In this episode, Marshall shares his journey of creating Ionia, a groundbreaking payment platform designed to offer real time fund settlements and eliminate fraud risk for merchants. He unveils the genesis of this idea rooted in years of working closely with businesses and identifying their pain points. From his early start in the banking sector to launching and growing companies amid challenges like COVID 19, Marshall's story is one of resilience, innovation, and forward thinking.

Discover how Aeonia aims to revolutionize the payment processing industry with its unique approach, and hear about the collaborative efforts required to bring such a disruptive product to market. Whether you're an aspiring entrepreneur or an industry veteran, this episode is packed with valuable insights on overcoming adversity, building a dynamic team, and driving change in a highly competitive space. As always, if you found value from this content, please like and subscribe.

Now. Here's my conversation with Marshall Greenwald. Enjoy. Hello everyone, and welcome to another episode of the Beyond Fulfillment podcast. I'm your host, Dave Gulas, and this week my guest is the founder of Ionia, Marshall Greenwalt. Welcome, Marshall. Thank you. I'm glad to be here. Yeah, we appreciate you taking the time, if you could, for everyone. Can you tell us what Ionia is and how it got started? Absolutely.

Ionia is a payment platform for merchants, but it's not your typical platform. There's lots of those out there, very competitive space. What Ionia does differently and better is we settle funds to a merchant in real time. Instead of it taking days for a business to get the money from a card transaction, they get it in seconds or minutes. And we eliminate any fraud risk that merchants would normally take on accepting card payments.

And started this actually based on feedback from my, my businesses, my clients, my merchants. After selling my company in 2013, I spent a couple of years talking to hundreds of merchants and trying to understand what they needed. They all kind of described the same three problems, and I didn't have a way to solve it, so I built the solution myself.

Okay, all right, so, so let's go back in the story there too, because my, my next question would be like, how long have you been in the space and what and what, you know, made you decide to start this company? So you, you kind of gave us some of the answer there in terms of when you, you had the previous sale, then you started talking to people in the market and you, you got feedback that led you to create this.

But so have you been in payment processing for like a long, you know, the majority of your career? Almost My entire career. So I started at a bank in the credit card division, and when I was right out of high school and left there and started my first payment company in 1999. So dating myself here. But, yeah, I've been doing this for a long time. Okay. All right. And so clearly, things have changed a lot over the last 25 years, you know, since you started.

So what, like building that first company. What. What was that? What was that company? And what was that process like for you? Yeah, I started a company called Discount Payment Services. I still own the company. I've kind of sold the assets of the company multiple times. You know, we were really focused on, you know, just solving problems that merchants have for payment acceptance.

So that's kind of what my whole career has been based around, you know, working with hair salons, dentists, you know, e commerce sites, kind of your wide variety of different types of businesses. And it was really eye opening, though, when I could see the margins compressing. Right. And that's one of the things that's really changed is it's become heavily, heavily commoditized.

There used to be kind of a sense that you'd kind of set up with a processor and you'd be good to go for many, many years. And that kind of loyalty changed shape to where people were kind of loyal to a good deal. Better pricing, better fees, you know, free equipment, stuff like that. And so over time, the market kind of shifted its focus and merchants became more savvy, and there were more and more options.

And so to really compete, you had to be, you know, putting your best foot forward on pricing every time. But that didn't really leave a lot of room for value creation. Right. It was kind of like one guy bidding one penny lower per transaction than the next guy. And I really wanted to create a scenario where it was a win, win, win, where merchants are thrilled with everything we're doing for them.

We're capturing enough margin to be profitable and make sense of what we're doing, and everyone makes money in the end. So that was kind of what led me to starting from the ground up and building something totally new. Okay. And clearly, like you said, right, you want to be able to provide value for your customers. And of course, you want to have a healthy margin to have a sustain business model. So given the landscape, like you said, it's heavily commoditized price war.

I mean, bidding over, you know, pennies based per transaction, of course, which adds up. But so how did you go about creating this solution that would not only provide Value, but have, have a good enough margin to, to last.

You know, I think why I built it and how I built it are very tightly related. The, the first thing was just to really listen to the client and understand what they're telling me, because when they complain about price, it's not always price that they're really meaning to complain about, but that's how, that's how they've been trained to tell you that they're having some, some problem around that.

And so by listening intently to what their, their problems are, I could really understand that something new was needed. So I first started looking for a solution in market, trying to find a partner, a software company, you know, some innovative payment processor that I could partner with and resell for and provide more value to my merchants and thereby create a higher margin. And it just didn't exist. Right.

The problems of merchants taking all the risk on every transaction and having to wait two to three business days to get their funding on every purchase, those are kind of just baked into the ecosystem. Those can't be solved within the ecosystem itself. And so the way that I did this is I partnered with some of the companies that you have to be working with to make any sense of doing payments. So Visa, MasterCard, you know, partnering with them so we can accept as many cards as possible.

But then also, you know, working to build a layer of technology that would change the outcomes on every payment really required bringing in a fantastic team. So I brought in payment experts, technologists, you know, people who could really figure out how to take this idea and this concept and make it actually function in the real world. Okay, so you're on the path, you have the idea, you know, what you want to create.

You know, it's not existing in the market via a partnership, so you have to build it yourself. So you bring the team in. So then what was the process like actually getting this built to a finished product? Much more challenging than, and I knew it would be challenging because this isn't my first rodeo, but much more challenging than we anticipated. There's all sorts of pressures and factors that are against you doing something new in a market as big as this.

I mean, this is literally a $40 trillion a year industry, $10 trillion in the U.S. and you know, it's highly, highly competitive. But there's also embedded players that own the market. Right. So you've got kind of the need to partner with them, but also do it in a way that they don't feel that you're a threat. Right. Make sure they know you are helping them grow, not potentially taking business away from them. So that was challenge number one. And then you get all the regulatory challenges.

Right? How do you work with a sponsored bank in a way that all the money movement and everything is done safely, securely, without introducing any risk, in a way that's totally compliant? So partnering with the right companies there and making sure they understand how your systems will work together, all of that was a challenge.

And then I think the actual doing something that's never been done before in a, in an environment where you have so much regulation and so much pressure to do it the same way. I'll give you a quick example, David. So when you go to a website, you're expecting as a customer, your checkout to flow a certain way, there's some changes from one to the next. But if somebody did something wildly different, you'd be very shaken. You may not ever come back to that website again.

You certainly might not check out. We can't introduce these breaking changes into our flow. So to be able to do something that's more secure and moves money faster without changing anything for the customer experience is very, very challenging. So trying to incorporate all of what consumers expect, plus what merchants expect, plus what regulators and bank partners need, is a very complicated solutioning.

Yeah, yeah, absolutely. Okay. And I mean, let's touch on the fraud piece too, because as we all know, there's more fraud than ever these days. And you're trying to create a product that removes the risk from the merchant and do it faster where they get their, their money like almost instantly. Right. So that sounds, that sounds like a tall order. So I mean, what was like, what was that aspect of, of building this, this system?

Like, you know, it's interesting because fraud and instant payments are really necessarily go together, fraud elimination, because if you're moving money faster, you have no opportunity to hold the money. You have no opportunity to scrub it for fraud. You have to do everything in real time, including the fraud and the fraud elimination piece. So what we've done that I think is very unique is we kind of triangulate three data sources.

We have the information the consumer gives us at checkout, who they say they are, then we have that, the information we pull passively from the device to see who they actually are, or who the phone registrar says they are, etc. And then we have the information we get back from the card networks. And this is not typical, but we can actually see this card was issued to that same person. So what we're doing is saying, hey, this person says, They're Marshall Greenwald.

Their phone is registered to Marshall Greenwald. And there's a bunch of other stuff we do in there too. And then this card is issued to Marshall Greenwald. And by marrying those data points together, we can say with a lot of confidence that this is actually a legitimate transaction. If any of that's a mismatch, our algorithm decides whether we should accept the payment and indemnify the merchant against fraud, or whether we should say, let's not take this payment. Right.

And that, that building that piece was a big part of the lift. You know, getting all the right vendors, all the right technology in place, and then making that a really smooth experience for the consumer. In my world, a personal brand is invaluable. A year ago, Easy DC was brand new with just a couple of customers and no online presence. Then I found Hicks Marketing.

They helped me amplify my personal brand, build a solid content strategy, publish my podcast, and 10x the number of customers we serve, all in less than one year. Do you need a marketing partner who gets you and cares about your success? Reach out to aliciaxmarketing.com for more info and tell her Dave Gula sent you. Okay, so you have like an algorithm almost to where, of course, if everything lines up, it's a pretty. Pretty easy confirm. But then what if. Right.

What if someone's using their wife's phone or. Right. Something else or, you know, someone else's credit card. But it's a legit transaction. Right, all those things. Then the algorithm kind of decides based on the available information. This, that, and then you're still processing the payment instantly. Almost. But then I guess if you may have to move to an indemnification. Yes. Model to still get the merchant their money right away. That's exactly right.

So you think about this as, like, it sounds pretty simple, like a pass fail thing, but it's not. Same thing with payment processing. It sounds like you're approving or not approving the transaction. There's actually more than a million different scenarios that can happen at checkout, and you have to test against every one of those. And you hit on a great one, which is you've got a family member who's transacting with somebody else's card, but they have authorization to do it. Right.

And you don't want to flag that as what we call false positive. You don't want to say, hey, this looks like fraud, and block that person or block that transaction if it is indeed something that's authorized. So being having the system Understand whether this is truly a fraudulent attempt to use a card or whether they, they have permission and they should be able to use it is very complicated.

There's, there's literally hundreds of thousands of scenarios that you have to run through in your testing. But that, that one is handled very, very well by our system. But it took, you know, months of work to get that right. Okay. And so when, when you started building, building this right, you had, you know, lofty ambitions like you said, it was a lot harder than you expected.

So how long did it take you to get from, you know, when you set out to do this to having a finished product that you could go to market with? It took about three years and one month actually. So we started building in June of 2021 and finished the build and launched it into beta in July of this year. So took a long time to actually build the platform and get it functional, get live with a bank partner and start processing transactions.

And one of the biggest challenges, we're working with really, really big companies like Visa and MasterCard. Anything that you change along the way, you have to go get their approval again. You can't just take your approval from three years ago, change your product and assume that they're going to be happy with going into production. You have to go through those steps. And it's, it's, it's necessarily a time consuming process.

But that when you're a fintech and you're trying to move quickly and trying to take on opportunities that are coming to you, you gotta balance like how do we move fast and also work with that kind of environment with highly regulated entities where it's going to take longer. And I think one of the things we've learned along the way is we need to have lots of partners for each category. Right.

If we've got a, let's say a vendor that tells us what we call kyc, tells us who the person is, we need to have multiple of those. In case something goes wrong with one of them, we can hit another one. And then same with bank partners, same with card networks. We have to have multiple options for everything that we're doing, which just grows the scope of the development work, grows the complexity of the platform.

But I've been very fortunate to have incredible people managing this who really understand it and can really take ownership of their piece and run with it. Okay. And that's another interesting point too. You bring it because you talked about putting the right team together that could actually build this. So given that like this is something very new and Radically different than the status quo. Right.

I mean, how bought in and how, you know, because it makes me think of like a startup where you have a bunch of people really passionate about really building something and even though it's hard, it's challenging, you're going to get knocked down a lot because everyone's so committed to this vision. I mean, how important was that in, during the process? That's 100% like the focus for us. We look for people who not only have the skill set but have the mentality and the passion.

I really look at things like attitude, you know, more than I look at things like, you know, specific skills. Obviously we want to check that box, right. This person can do the, they have the skill set to do the job. But there's a lot of people with this skillset. Right. But finding people who are fully aligned, culturally fully aligned for the challenges ahead, who can stick with it and pivot and change dynamically is challenging.

And you know, I could probably shout out to, you know, the whole team individually on the contributions, but what, what's really been great is how we all pull together when we have those things because we did get knocked down multiple times. And I'm sure it'll continue to happen as a startup with being very disruptive and very different from what's in market and there's a lot of value creation there. There's also a lot of people who have interest in protecting the status quo.

And so we'll continue to fight those fights, but we'll do it together.

And I think that's, that's the key. And how big of a team do you have building this? We have 25 roughly FTEs and then we've got a team, a development team in India and then we have a couple of full time contractors. I think we're about 60, 65 people today if you count everybody. Okay. And is this like the, the full time people is this remote? It's a mix. We are based in Gilbert, Arizona.

I'm here at our office there and then we have people who are located and work out of their homes all over the US One in Canada. You know, it's, it's pretty diverse and we really, I think would love to have a fully in office team. I like that kind of camaraderie you build doing that. I love the kind of walking around management style where you get to talk to people and see what they're working on firsthand. But we've been able to adapt to a fully remote environment.

You know, during COVID we had A really big office that we shared with one of our partners, our clients. And when, when that happened, we made the decision not to renew the lease or go into a new one. So we worked fully remote for a year, and we've got some office space now, but I'd say, you know, probably 75% of the team works remotely.

Okay. And just another question to go back, because again, you bring up a great point and clearly you've been in business previously for a long time, but what was it like launching and growing this company right in, in the, in the middle of COVID when at that time nobody knew what was going on or what was ultimately going to happen? Yeah, I'd say the biggest hit was, you know, trying to go out and raise capital. Right. Because we are venture backed. We've raised about $25 million to date.

Doing that during COVID was very, very challenging. People had no idea if the stock market was going to recover. People didn't want to pull money. A lot of times investors will pull money out of other sources like the stock market. They don't want to do that when it's at a loss. Right. When it's upside down. And just overall, people were kind of holding onto their money. And so what we decided to do was to just buckle down, be really, really frugal with our resources.

I sold my other company assets to fund us in 20, trying to remember what year that was. 2020. And then we were able to get to a point where we had investor confidence and we're really fortunate to be able to raise capital in 2021. Okay.

And so come into present day. So you've, you've got the finished product built. And are you, are you still in beta mode? Are you fully on the market? That's great. We've been in beta since July. We're really going to take our time. We've learned a lot in the last couple months. One of the things that we've learned is everybody wants our platform, whether that's a small business or an enterprise client.

We've got multiple clients that we're working to solidify that are a billion plus in payment volume. And we had not anticipated engaging with those clients so deeply so quickly in our beta. And so what it's shown us is that the demand is there. And to properly support the demand, we're going to take our time, we're going to make sure we have all the staff we need, all the systems are fully shored up.

We got, like I said, redundancy between bank partnerships and processing Partners and all the different things that, that are necessary to run our platform. We're going to make sure that we have redundancy among them. Because somebody who's doing a couple billion a year, they can't, you know, stomach having downtime. Right. You've got to have that redundancy for them. So we're building those systems. We've got a system called Delphius that is basically the brains of the system.

It extends to all different parties. Consumers, merchants, partners, us internally. That's about 50% done during beta. We're going to finish that before we go live fully. So we're kind of, you know, tooling up to be ready for the demand that we see for the product. So Q1 is our plan for the full launch and to be ready to, to kind of tackle all the opportunities together. Okay, yeah. And Q1's right around the corner. I mean, we're recording this in November, so that's coming up.

Are there certain industries or certain markets that this is geared towards more? So. I'd say on the one hand, yes. On the other hand, maybe not. There's a different focus for different segments. Right. If you're an E commerce business, fraud is probably top of mind for you. If you can eliminate fraud, it's very beneficial and you can't without us like there doesn't exist our knowledge any other way to do that. You can help kind of monitor and reduce it the best you can.

But interestingly, fraud has other costs besides the actual dollars of fraud. The average in the industry is about $3.75 to $4 in cost for every dollar of fraud. So if you have a 1% fraud rate, for simple math, it's costing you almost 4% of your bottom line to cover those losses between, you know, operational expenses, legal expenses, chargeback fees, et cetera, not to mention other things that happen. So E commerce businesses, that's.

That seems to be a common thread of conversation when it comes to kind of your more brick and mortar retail hospitality, food and beverage. The focus seems to be more on getting our funds very quickly. Those businesses really have kind of a cash flow crunch every weekend because that's when all their sales happen. If Monday happens to be payroll has to be submitted, they're not, they don't have the funds yet from Friday.

And so getting it to them instantly allows them to have better cash flow and manage that and free up that cash. And then sometimes we were able to make a significant impact in the cost structure for a merchant. And so everyone's always interested in that piece of art, of course. Okay. And so being that like you said, you're, you're so close to launch, you spend so much time, you really got a phenomenal product. What do you see? And like you said, there's demand and clearly. Right.

Merchants getting money quickly and eliminating fraud risk. I mean, that sounds like a no brainer. So what do you see once it's launched too? Because like you mentioned, this is such a huge industry and your company is so disruptive. Are you anticipating, you know, more resistance from the big players once they see the type of market share you're going to take or copycat type people coming along? I mean, what do you see as far as once you launch this?

I'll probably answer that last part of it first, which is on the copycats. I think there will be people who attempt to do it. There are people trying to solve these problems all the time, but it's incredibly, incredibly difficult. There's some secret sauce, we have some IP that we've got some, we've got a patent pending right now. So there's, there's definitely lots and lots of hurdles somebody would have to go through to copycat.

And I think our approach to the market has been such that it should discourage that. So the way we go to market is we don't sell direct. We don't go looking for opportunities direct. We sell through other payment companies. They come to us, we partner together, they bring the merchant and then we share in the profits with them.

So what this should do and what it's done for my other business is it discourages anyone from trying to compete with you and see you more as a partner rather than a competitor. It allows us to go to market together and make a difference for everybody. It's better for their merchants, it's better for their bottom line and it generates new revenue income for us. Okay, yeah.

And that makes a lot of sense, right, because again, if you're going to offer this service and someone essentially, it sounds like other big payment processors can essentially white label this, so to speak, and then offer that value, but yet their names on it and hey, you're sharing in the profits.

So it's really a win win. That's right. In fact, kind of interesting story about our name, Ionia. We took inspiration from a region in ancient Greece where they were right at the heart of the Silk Road. And because of that they had to innovate how to do trade. It was done previously with commodities and they were credited as the first region that ever printed a physical coin.

They made an actual currency that had a set value that you could exchange and you could set an exchange value for items, for commodities. But nobody really knows that story. Very few people know that story. And yet we've all used coins to make purchases in our lives. And so what we looked at is, hey, they, they improved how humans transact for thousands of years to come. And yet nobody needed to know who they were to take advantage of their solution, their innovation.

And that's how we see ourselves. We don't need to be the consumer brand that somebody like a PayPal or, you know, whatever. Like all these companies, the buy now, pay later solutions, they have a consumer presence. We don't need that. We really just need to be behind the scenes improving the outcomes for merchants and we'll be successful. So we allow partners of certain size to be able to white label the platform. Others can resell it under like a co branding environment.

And so we make it really easy for those who are in the industry to work with us and benefit from what we built. Okay, excellent. All right. And so Marshall, if people want to get in touch with you, whether they're a potential partner or anyone else that you know that's going to want to talk to you regarding this business, what's the best way that people can reach out to you? We have a fantastic website that kind of explains what the product does, how it works@ionia pay.com.

but as far as social media, I'm usually on LinkedIn. You know, I think that we have a great presence there and that's kind of a great place for us to have conversation. So LinkedIn is great and our website as well. Okay. All right. And we'll link all that in the show. Notes for everybody. All right, well, Marshall, thank you so much for taking the time to be here. Tell us about Ionia. Sounds like some very exciting stuff coming, coming in Q1.

So we'll all stay tuned for that and really appreciate you taking the time to share this, this journey with our viewers. Thank you, David. I enjoyed it. Okay, and that is all the time we have for now. We will see you next time.