- Recently appointed Stax CEO Paulette Rowe said the payments processing company aims to push further into the realm of embedded payments.
- Through the company’s payment facilitation offering, Stax sells its services to software companies that support specific verticals. While that offering was introduced three years ago, “that’s where we’re going to be putting even more emphasis than has been in the past,” Rowe said during an interview last week.
- Stax is adding 10 or more independent software vendor customers each year, Rowe said, without providing more specific numbers, and those ISVs present a broader opportunity. “With each new partner, they’re bringing thousands and thousands of sub-merchants themselves,” Rowe said.
Rowe called the quiet January departure of co-CEOs and founders Suneera Madhani and Sal Rehmetullah a “mutual” decision between them and control investor Greater Sum Ventures. John Kristel, an operating partner at GSV, was named interim CEO before Rowe was appointed.
“The fact that [Suneera and Sal] went to the effort of welcoming me to Stax … indicates that there is no bad blood between the founders and GSV,” Rowe said.
Now, Rowe is pivoting to a new strategy. Payment facilitation services have become an increasingly attractive option for verticalized software companies looking to monetize payments by embedding that service into the software they sell to merchants.
It’s an area of payments that legacy processors have recently jumped into to remain competitive with digital payments entrants such as Stripe and Adyen. Earlier this year, processor Global Payments launched a payment facilitation service geared toward independent software vendors.
A number of payments companies have realized “that unless they make that step, there is that risk of disintermediation, particularly in the smaller end of the market,” said Rowe, who was named Orlando-based Stax’s new CEO on Aug. 1. She was previously CEO of the integrated and e-commerce solutions division at London-based Paysafe, which offers digital payments internationally.
“Larger companies are probably always going to want to source their payments support directly, but if you’re a smaller company, you don’t necessarily have the time or want to take the time to really understand the complications of the payments world,” she said.
In addition to its payment facilitator service, Stax offers payment processing for merchants, selling it directly to small and medium-sized businesses via a subscription model for processing. About 30,000 businesses globally use the company’s payment technology.
To fuel success in the embedded payments endeavor, Rowe is betting on Stax’s collective software experience and GSV’s understanding of the independent software market. Rowe seeks to strengthen the company’s expertise in ISV payments and hone ideas about how to address the embedded payments market.
“Whilst there are more and more companies looking into this space, it’s still not, in my view, being done consistently very well,” Rowe said. Stax has “a real opportunity” because “we’ve got the backing of people that really understand this part of the market.”
Stax raised $245 million in investments last year, leading to its $1 billion-plus valuation. The company is profitable and aims to continue on a path of profitable growth, Rowe said. A spokesperson for the company didn’t immediately comment on payments volume or revenue last year.
Since taking over as CEO, Rowe has appointed a chief commercial officer and a chief marketing officer, whom the company declined to name. Rowe said she’s considering making additional changes to the company’s organizational structure and plans to invest further in the company’s sales team. The company didn’t immediately comment on what that investment might look like.
“We think we could potentially add more headcount on the West Coast versus continuing to expand our sales presence on the East Coast,” she said. Stax currently has about 300 employees.