Editor’s note: This is the fifth post in the Credorax Interview Series. You can see the previous interviews with Smart Acquiring Experts here.
Rod Katzfey is the subject of this month’s Inside Credorax interview. He is Vice President of Sales & Business Development of North America. He shared his thoughts on his start and development during his 20+ years of electronic payment industry experience. Rod’s background and love of mentoring make him a special part of the Credorax team; he is a member of several industry boards and is motivated to be a part of educating up-and-coming employees.
Why did you join the Credorax team?
For nearly a decade, US retailers have been subject to a very overcrowded domestic market. Both large businesses and SMBs have been desperately searching for new revenue streams in order to survive the competition.
I joined Credorax, because I felt it provided me with an opportunity to help retailers grow financially by tapping into e-commerce markets beyond the borders of the US. I became an executive at Credorax three years ago, because the company provided me with an immediate way to achieve my goal of helping retailers grow internationally.
I immediately recognized that Credorax’s well-planned cross-border e-commerce business model would mean that domestic online retailers would have a quick and easy solution for global expansion. In addition, as a 20-year veteran in electronic payments, I also recognized that domestic payment processors could benefit from the Credorax business model as well.
Today, we are helping several US businesses expand into Europe. Through incredible partnerships with companies that share this vision, such as Vantiv, Credorax has brought a promising and groundbreaking cross-border e-commerce business model to the US market. It’s very exciting for me to have a role in managing our North American partners/customers’ international growth.
What is it about payments and acquiring that inspires you?
I actually fell into payments by accident, during my senior year in college. I had worked for Boatmen’s Bank (now Bank of America) and my mentor, the CFO, told me that they were about to form an alliance with First Data. I jumped at the chance to learn about the acquiring side.
There went my accounting degree! I went to work at First Data, jumpstarting my career in acquiring and payments. I have been deeply immersed in this industry both on the business and thought leadership sides – I’m currently Vice President and a Board Member of the Midwest Acquirers Association along with being an advisor on several other boards. I find the industry ever-evolving and always exciting.
What’s happening in US-based cross-border payments?
Three years after joining Credorax, I find we still spend a tremendous amount of time explaining the benefits and challenges of cross-border e-commerce to both retailers and payment providers. Don’t assume that retailers, even big ones, are taking advantage of what the payments industry currently has to offer. Even people who are focused on domestic want to access international markets, and they want to try to expand internationally, but they don’t necessarily understand what it really entails.
On the flip side, there are payment providers as well as retailers who are savvy enough to realize that cross-border e-commerce, especially for Europe, will mean overcoming tough and fragmented government regulations and card scheme rules, as well as linguistic and cultural obstacles. We take pride in providing consulting services to help our partners/customers make these decisions wisely.
I believe the reason we continue to secure many partners and remain a thought leader domestically is because we are a no-nonsense company that is able to honestly assess whether it makes financial sense for businesses to go cross-border.
Can you describe the strongest benefits for a merchant or ISO making the effort and entering Europe?
I think the way that I approach it is twofold. One of the benefits has disappeared with the change of Visa rules in the EU as of July 1. In Europe, you had a higher threshold for chargebacks at 1.5-2%. In the US, it has always been 1% across the board. Now that Visa has changed its rules, that’s no longer going to be an advantage. But I think there are two other very distinct advantages that outweigh that:
- Running a European card through an American merchant account increases the chance of being declined due to potential fraud. It may also be seen as higher chargeback potential in case you have to ship goods and the consumer is not getting those goods. If the exact same entity is set up in Europe, now the issuing bank will be more likely to approve that transaction, because it’s considered “domestic” versus “international.” The most important thing that we actually push into the marketplace in the US for cross-border is likelier higher approval rates by bringing international cards back into a domestic arena.
- Interchange costs are much cheaper, almost 1% less in Europe than in the US, so from a cost-savings perspective, a company with a European office should see an approximately 1% lower rate and a higher approval rate.
You work closely with large enterprises, so why do you also have a strong belief in investing heavily in merchant acquiring banking solutions for SMBs?
Some “small” companies will turn into giants some day and should therefore not be overlooked by banks and payment providers. I admire the differentiators in this market, such as Square and Stripe, because they boldly invest in small businesses and many of them are flourishing.
Statistically, most consumers keep and cherish their first credit card as it symbolizes the first time someone believed in them. Did you know you’re likely to keep your first credit card longer than any other? You may even keep it forever. You associate it with somebody (the bank) giving you an opportunity. This is similar to what small businesses do when they’re growing, they’re looking for providers and partners — not just in bank cards, it’s in other products and services as well. This first leap of faith with them will likely lead to their allegiance.
Credorax invests technology assets and business solutions into smaller businesses through its partnerships. Through these partnerships, we have the opportunity to grow these smaller businesses into bigger ones. One reason is because they’re going to remember who gave them their first merchant account, and who brought the technology to the table; I think that’s a key.
By the way, I still have and cherish my first credit card!
Can you explain how mentoring is important to you, both at work and elsewhere?
I strongly believe that each of us needs to have an outside passion separate from our professional lives. I have always loved to educate and empower young people, and I am able to do this by being an assistant coach for our local high school girls’ varsity basketball team. In addition to my own daughters, I want to empower young people to feel they can accomplish anything they set their minds to.
I try to apply that philosophy in my professional life as well. I have such a strong passion for payments, and I think it’s such a fantastic career. When I see that there is someone on my team who loves it too, I proactively take the time to nourish their growing passion for payments. As with coaching, it’s important to be patient with professional mentees and give the right amount of time and resources and, most importantly, the kindness to help them turn into superstars.
As my grandfather always taught me, ‘Your name is worth more than a dollar.’ I carry that saying with me every day.
We appreciate Rod taking the time to answer our questions!
Watch for our next interview in September!