3158: Redefining Payments with AI, Cloud, and Security: Inside Unzer's Innovation

[00:00:03] How do you scale payments infrastructure in such a highly regulated environment while also ensuring security, seamless customer experience, and innovation? It quickly gets quite complicated. But my guest today is the Chief Product and Technology Officer at a company called Unser. And we're going to discuss the future of payments and how technology is redefining how we see money.

[00:00:30] And Unser have been on a remarkable journey, consolidating multiple acquired companies into a unified platform and leading a major cloud transformation that enhance their scalability, compliance, and security. And a quick Google reveals that over 85,000 merchants across Europe are currently relying on its ecosystem.

[00:00:54] So make no mistake, these guys are at the forefront of unified commerce by offering integrated solutions that somehow blend online and offline payments seamlessly. So in today's episodes, my guest will share his insights into the evolution of cashless payments in Europe, the role of AI in fraud prevention, and why businesses should treat payments as an essential part of the customer experience.

[00:01:20] And we'll also explore how cloud technology is enabling real-time innovation in fintech. Not to mention some of those challenges of navigating regulatory frameworks while staying ahead of the emerging threats out there. Quite a balancing act, I would imagine. So how will payments continue to evolve? And what does the future hold for businesses and consumers alike in an increasingly cashless society?

[00:01:47] Whether you think that's right or wrong, that's a debate for another day. But where are we now? Where are we going? Let's find out by inviting today's guest on. So a massive warm welcome to the show. Can you tell everyone listening a little about who you are and what you do? Thanks, Niv. Great to be here. My name is Niv. I'm the chief product and technology officer of Unser, who is a player in the payment space and the unified commerce space.

[00:02:16] And yeah, I'm originally from Israel. I joined Unser in September 2020 to run the technology part of the company. And yeah, I've been doing that ever since. We have 230 people in tech doing anything from card acquiring to payment processing, gateways, software solutions for our merchants and so on. Wow. It's a hugely competitive space and a space that's very traditional as well.

[00:02:46] I'm curious, what were the main challenges that you faced when you were trying to scale this payments infrastructure in a highly regulated environment as well? I should add. And how did you overcome these obstacles? Because I would imagine it's incredibly challenging that kind of space. It is. And I think there's two main challenges that you have to deal with. That is from my position. One is, of course, the technical perspective, where we are basically a group of companies that were acquired.

[00:03:15] And one of the biggest challenges was to transform it into one coherent platform, because previously each of the acquisitions operated independently. And when you operate independently, it leads to redundancies, it leads to fragmented technologies, you have multiple stacks and so on. Imagine it as kind of, you know, you're running an airport and you have a lot of airplanes in the air. And when you want to take care of all of them, you have to land them in the same place.

[00:03:40] So we pretty much decided that our airport will be a platform called Oncel One, which is a collection of the best of best elements of each platform. All right. So we basically took those platforms and said, OK, we have one platform that does payment gateway really good. One platform that has a really great billing system.

[00:04:02] One platform had a really nice back office for the merchants, and we basically set about to merge them into into our unified platform called Oncel One. And we had some basic concepts in place for that. We wanted it to be fully unified commerce natives. We wanted everything out of one gateway and have basically no redundancies. Took about two years, and we had the first merchants in December 2022 on the platform.

[00:04:30] And by doing that, I mean, that's what the power to attach compliance as well. We we also did it having compliance in mind, you know, at all times. Of course, you know, I'm the tech guy. I'm not so much deep in the details on the AML and another other aspects of compliance. So I'm more focusing on on it compliance. But when we've built it, we had it in mind since the get go.

[00:04:56] I think in fintech right now compliance is very, very, very high on everyone's list. Also on ours, it's basically on the top of our priorities together with cyber security. But because we had it in mind from the get go, we kind of do it natively. Right. So basically every change we do, everything we do is the compliance is embedded in part part of the process. It's part of the change process. So we don't see it. It doesn't burden us in any way.

[00:05:24] It's just the native part of what we do. And I think that's the right way to do it. And just to take a step back from everything that you've done and achieved here with. And so one of the things I try and do on this podcast is have a look under the hood at the technology that makes businesses successful. When I was doing a little research on you guys, one of the things that stood out to me is you had a cloud transformation journey that you've been on since 2021.

[00:05:49] And I'm curious how that journey has enabled you to achieve things like greater scalability, innovation and compliance in this equally rapidly evolving fintech regulatory environment. So I'm curious, could you share any aspects of that journey and how it's actually been a business enabler to help you grow, to help you succeed?

[00:06:10] And this also goes back to being composed of several platforms, right? So we had a plethora of platforms hosted on different hosting providers, somewhere cloud somewhere on-prem, different stacks, etc. And you cannot scale when you have that. So basically, our operations team is just touching and touching different platforms all day and not enjoying anything that can be centralized and streamlined.

[00:06:34] So here too, the concept was to consolidate first a single stack. And from there, we can iterate and improve the operations. So basically going cloud native has helped us scale everything. We are quite done with that. By now, all of our platforms, I think the last one will go on cloud. We are now in a cloud this year. And we are now in a state where our platforms, they process millions of transactions per year. They provide payments 24 seven.

[00:07:02] Uptime is basically 100%. Of course, you have sometimes patching to do the quiet shutting down parts of the platform, but time is just perfect. And the cloud environment basically helps us also scale up and down for demand. So Black Friday or Cyber Monday is a great example of that.

[00:07:22] Not to mention that it's much easier when you're in payments, you need to be PCI compliant and being on AWS or GCP gives you native and very easy compliance with PCI standards. I'm curious in your view for everyone listening here. How are you seeing technology redefining the concept of money?

[00:07:43] Are there any implications of this shift towards cashless payments for the future of commerce, whether it be across Europe or US and beyond? What are you observing here? So, I mean, as you very rightfully mentioned, the way we shop and pay for goods and services is changing massively. And I think the change started, of course, where cards were really the preferred way to pay by a lot of people who are used to paying cash.

[00:08:12] But beyond that, I think shopping habits are also changing, right? So people like to shop from the comfort of their homes, but in some cases they would want to see the goods. So they would go to the shop first and would like to order what they saw on the shop online. And that's basically the concept of unified commerce. But also changing shopping habits, they go hand in hand with payment methods, right? So you can see the rise of digital wallets like Apple Pay, like Google Pay and so on.

[00:08:40] And you can see the credit card companies also going towards having checkout solutions of their own, like Click2Pay, Office and MasterCard. And it's driven by both convenience and security of payments. It's also something that you see across the market. So with traditionally Germany and Austria are quite cash heavy, and this is changing as well.

[00:09:04] And you can see also that in retail, the trend is towards selling experiences rather than just selling goods, right? So you have cafes and restaurants in shopping malls. You have workshops in Apple stores, DIY workshops in hardware stores. Another trend that you see is self-checkout in shops more and more, supermarkets and airports. And I think that's also changing convenience. And we are here to support our merchants in that.

[00:09:31] So basically to enable them to have this smooth checkout and shopping experience for their shoppers. And there is so much going on in this space, so many emerging technologies converging as well. So I'm curious, as all these begin to collide, what measures such as AI, authentication, biometrics, and so many others can companies like UNSER implement to ensure secure payments and ultimately mitigate the risk of cyber attacks?

[00:09:58] Because we're seeing more and more of these cyber attacks. I'm curious for being inside the industry, how you see these technologies, how you see these measures and how they can better protect what you're offering here. I think, first of all, cybersecurity and prevention of cyber attacks is one of our two top priorities just next to compliance. Because we handle financial data, we handle personal data.

[00:10:25] And that's why cybersecurity is also embedded in everything that we do. And I will separate this between, you know, how do you secure the payments of customers and prevent fraud versus how do you prevent cyber attacks to the best that you can. So UNSER one is built with cybersecurity in mind. Again, this goes back to the question around cloud transformation.

[00:10:50] It's much easier to secure yourself when you're on a single hosting technology with a single robust cloud provider than when you are hosted on 10 different hosting providers with 10 different security standards. Being PCI DSS level one certified with all the massive requirements that come with it also helps ensure that. So, you know, you can always do better. You can always do more with cybersecurity. We are always trying to keep with the best in class standards in market.

[00:11:17] Well, it comes to securing people's payment methods against the cyber attacks and making sure that fraud is prevented. A very, very significant movement in the industry now towards AI based fraud detection systems. We use huge data sets. They combine data for multiple sources to try and find patterns and characteristics of transactions that are suspicious.

[00:11:42] Of course, you always have to balance between the sensitivity of what you do and try not to have too many false positives while keeping the fraudsters out. We do a lot of user behavior monitoring over time to understand what's typical behavior on checkout or what's a typical basket of fraudulent user versus a normal shopper. So, stuff like unusual purchase times, unusual locations to purchase from.

[00:12:07] So, if you see the user is shopping from the other side of the continent for very expensive stuff and so on. There's also a strong trend of identity theft where we also depend on our partners to do some prevention, right? So, if somebody steals your PayPal account or steals your phone and changes the password, they can pay with your Apple wallet. But that's something that we can try and identify on our own because then the shopping patterns will probably also be a bit different. But we also depend on how secure all the payments themselves.

[00:12:35] And before you came on the podcast, I was reading that you believe it's important for businesses to actually view payments, not just as a transaction process, but also as an essential part of software that enhances the overall customer journey. Can you expand on that for anyone that is unaware of your take on this? I mean, I think a lot of people take the payments part of the trivial part of the journey, but it is the end of the customer journey, at least the first part of the journey, right?

[00:13:05] So, if you went through checking what you want to buy, you did comparison, you found the best product that you want to buy, you put it in the shopping basket, whether it's a physical or an online shopping basket. In the end, if you don't manage to pay, you haven't finished your journey. Or if it took you a long time to pay and you go through a frictious checkout process where you have to provide your birth date or get an SMS and click that link and so on,

[00:13:31] that makes your shopping journey not so satisfying, right? So, imagine how we used to pay with cards. I'm old enough to remember where we had this kind of iron thing that you would put the credit card in a paper and you would like do... Yeah, if you remember that, that changed into swiping the card, which then changed to tapping the card. And now you just double click on your phone and you pay, no pins, nothing. You just put your face and pay.

[00:13:56] So, how nice is that journey versus the cashier taking the paper and ironing your card, right? That makes you happy as a consumer. Or if you shop online with Apple Pay, if you order Vault or you order on whatever website and you can check out with Apple Pay, you just double click your phone. You don't have to put delivery information. You don't have to type 16 digits of the card. You don't have to flip it and put the CVC. That's a much nicer customer journey than having to go through the full checkout flow.

[00:14:24] So, I think payments is really, really important for the customer journey. I completely agree with you. And from a business point of view, I'm all about the ROI of any new technology and what value does that new tech solution offer? So, for anybody listening, particularly in e-commerce or business, interested in finding out more about what you do here. Can you tell me a bit more about this all-in-one approach to ultimately providing

[00:14:51] that integrated payment and software solution that simplifies operations for merchants and hopefully improves that shopping experience for customers? What's your ROI and value added, what you offer here? I think our strongest USP is that we offer the full vertical solution on one contract and one invoice. So, in the past, if you had a website or a physical shop and you wanted to process payments, you would have to sign with a company that would provide you the terminals.

[00:15:20] You would have to sign with a company that provides you with credit card processing. You would have to sign up with an online payment provider. If you wanted to offer BNP at Buy Now Pay Later, you would have had to sign with the Buy Now Pay Later provider. Nowadays, you still have to sign a separate agreement with PayPal. That's something we cannot fix. And we simplify all that. So, you sign up with us, you get credit card processing both online and offline. You get a terminal from us. You get a set of API keys to connect your website to.

[00:15:49] We offer plugins to the most common online shop systems like Shopify or WooCommerce or Oxid and so on. And we basically signed the contract. You can do it online as well, and you're just ready to go. You don't need to start handling multiple suppliers, which simplifies your operation, especially if you're a small merchant. That helps a lot. Beyond that, because you are onboarded into Unser One, you could have the experience of a shopper buying a pair of shoes online.

[00:16:17] They show up at your store with a pair of shoes wanting to exchange them or return them. You can easily find the transaction. And then if they need to pay a bit more or they need to get a refund, you can process that on the POS terminal that you have in the shop. And you would see it all in the same place under the same shopper. So you would have the full overview of what happened online, what happened offline. And that's for us unified commerce.

[00:16:39] Other than that, we are specializing in three core markets in Austria, Denmark, and Germany, not in any particular order. And we provide hyper-local support. So support in local language. We have people on the ground. If you need help, we are there for you, which you would not get with larger, more international players.

[00:17:00] And I'm glad you mentioned local language there, because a stat I read before you came on the podcast was that more than 85,000 different merchants right across Europe are currently using Unser's ecosystem. And of course, when we're talking about across Europe, there is a lot of different languages there. So what role does local expertise, local language play in creating those tailored solutions for businesses in so many different regions?

[00:17:27] And Europe, despite being a union, still has quite significant local variance between markets, right? So it's from payment days. So cash is more dominant in Germany. Whereas if you look at the Nordics or Netherlands, cash is almost gone. You have local payment methods in each country. So Dutch people, they like to pay with an online banking method called Ideal. Twint is a payment method that's becoming very popular in Switzerland.

[00:17:55] In Germany, pay by invoice, which is now referred to as BNPL, is very popular. Mobile pays a very local Danish payment method. So you always have this local twist. If you come and you say, I want to play in Europe and I just offer credit cards and PayPal, you're not going to be very successful. Yeah. So I think in Netherlands, 80% of transactions are not done by credit cards. Yeah. Credit cards are actually not that popular in any European country. They are not the majority of transactions.

[00:18:25] Yeah. They enable the rails behind it in a lot of cases. So if you want to fund your PayPal wallet, you use credit cards. But direct paying with credit cards is not the number one payment method in most European countries. From our end, we are quite agnostic. So we support all the European payment methods. So if you are a German merchant who wants to sell to Dutch customers, we offer a deal as well. Right? So if you are a Dutch customer shopping from the German website, they will be able to pay with their favorite local payment method.

[00:18:56] Beyond that, each country has their own fiscal systems or fiscal supporting systems to support your financial operations like Dativ in Germany and so on, which we offer local integrations to. which again, simplifies operations so you don't have to export CSVs from your Shopify system and import them to Dativ and do as a merchant some data mapping. We just handed it for you, whether you're German, Austrian or Danish.

[00:19:26] I think it's also a lot about matching the customer preference. And if we dare to look ahead, where do you go from here? Is there anything you could share about how you're planning to continue driving innovation and staying ahead of these regulatory and technological trends that are moving so fast right now, it can be difficult to keep up. But anything you could share around the road ahead? Yeah, we look at, I think, we look at it from four different angles.

[00:19:53] The first angle is, of course, our overarching theme, which is unified commerce. So we want to bring our full product suite to our core markets and expand as well into additional markets. And we see a unique opportunity also in Germany because Germany still has a lot of digitization potential, right? And we see ourselves as a big part of that. To enable that, we continue to invest in tech and products.

[00:20:20] So we just announced our cooperation with Mastercard in open banking. We are introducing soft POS, which is basically if you until now you had the quite sizable black terminals, we have to type in the amount and you get the paper note. The market is now moving into soft POS, which is basically an app on a phone, on any phone, which can enable a lot of smart cashier features such as seeing your reservations.

[00:20:44] If you're in the beauty segment, for example, you can see the reservations on your phone as a merchant and then charge the consumer from the phone by tapping the card. So no need anymore to have two devices, the terminal and the management. We will launch the European Digital Wallet Initiative this year as one of the first movers. So that's what about tech and product.

[00:21:06] We invest heavily in AI, both to reduce fraud, like we said, but we also use it internally for our own internal efficiency operation. And it's really, really powerful and it's really exciting to see how people use it. And above all that, especially in Europe, you have to keep looking at regulations.

[00:21:24] So we have teams that just keep looking at the bulletins coming from the regulators, looking at the key initiatives and developments in the area and feeding us with input because we do see compliance being at the forefront of compliance as a competitive advantage and not as something that is actually hindering us. Right. So it actually helps us to be in the forefront of that. We've talked about the story behind Unser today and that cloud transformation journey you've been on since 2021.

[00:21:53] And also, I'd like to find out a little bit more about your personal story, because none of us are able to achieve any degree of success without a little help along the way. And very often there's somebody that will take time to invest in us or see something in us and help us on this journey that we all find ourselves. So is there a particular person or people that you're grateful towards who helped you get you where you are? Well, that we can give a little shout out back to today and a thank you.

[00:22:18] I think we, you know, we all need, you know, the song said we all need a little help from our friends. This was a tough one, I have to say. So I have a lot of people to thank. I picked one of the many that helped me along the way. That person is called Christian Bertelmann. He's the founder and CEO of AutoOne, if you heard about it. Christian is the person who hired me for my first job in Germany to his product team. And I worked with him for a couple of years there. And then he went on to found AutoOne.

[00:22:47] And I was very, very complimented that he picked me to come and lead the product function at AutoOne. It was a transformative journey. So I was the first product guy in AutoOne. And it became a really, really big company. And also I peered later. And basically I owe Christian a huge part of my success. So that's definitely a person that I'm thankful towards. Oh, Simon, I really hope that Christian gets to hear that.

[00:23:15] Because I think very often, everybody, we all help each other along the way. And we're very often blissfully unaware on the impact that that help and that time can have on someone. So big shout out to Christian there. And for anybody listening wanting to find out more about UNSER and anything we talked about today, maybe even contact you or your team, where would you like to point everyone listening to that? I mean, the first and most immediate source of information is, of course, our website, UNSER.com.

[00:23:44] But all of us, me, my team, and everyone at UNSER are very happy to hear from you also over LinkedIn, of course. I think that's the go-to place these days if you want to get to talk to people on a professional level. It really is. I'll make sure there's links to everything there. To make it easy for people to contact you and just find out more information.

[00:24:06] We covered a lot today from how technology is redefining money and how Europe is adapting to cashless payments and the implications for the future of commerce, not to mention the challenges and how you overcame them in scaling payment infrastructure, that cloud journey that you've been on. And the big takeaway, as we said in the interview, is why it's so important to view payments as an essential part of the software that enhances the customer journey.

[00:24:33] I'd love to hear what people listening have thought about today's conversation and their insights, too. I invite them to share them, too. But more than anything, thank you for starting this conversation today. Thank you so much, Neil, for having me. It was a pleasure. I think it's clear, having listened to today's guests, that the world of payments is undergoing a profound transformation. From cloud-powered scalability to AI-driven fraud prevention,

[00:25:00] Unser is not just keeping pace with change, it's also helping shape the future of fintech. And I think his insights into the importance of unified commerce, secure transactions, and localized payment solutions and knowledge, I think collectively they highlight the evolving expectations of both businesses and consumers. In this digital world where we all find ourselves. The big question, though, is how prepared is your business in adapting to these shifts?

[00:25:28] What role will technology play in ensuring that your payments remain not just secure, but also seamless and an integral part of that customer experience? Love to hear your thoughts on the future of payments and commerce, what you're seeing, what you like, what you're a little bit nervous about, and anything in between. Email me, techblogwriteroutlook.com, X, Instagram, LinkedIn, just at me or CQs. But don't just hit that follow button, send me a message, let me know you listen, and I'll get straight back to you.

[00:25:59] But that's it for today. So please keep your thoughts and insights coming in on how technology is reshaping the way that you or your business interact with money. And I'll be back again tomorrow with another topic that we'll discuss together. So I will speak with you all then. Bye for now.