The Executive Interview Series provides readers with exclusive insights from movers and shakers in the payments industry. The payments industry is under continuous transformation. This series offers diverse perspectives on everything from strategy to payments technology and the industry’s future.
In this interview, TSG team member Liz Kieffe spoke with Tom Bell, a Member of TSG’s Board of Advisors, about his recent appointment, his valuable experiences as a payments executive, and key industry trends.
Tom’s career spans over forty years of consulting, technology, and payments expertise. Most recently, Tom was the CEO and co-founder of Maast, a wholly-owned subsidiary of Synovus Bank. Maast, founded in 2022, focuses on making embedded finance attainable. Additionally, Tom has served as CEO of Bank of America Merchant Services, MerchantE, and Transaction Services Group. Tom has also served as a board member of the American Transaction Processors Coalition (ATPC), FinTech Atlanta. Additionally, he has served as a member of ETA Presidents Advisory Committee, the Discover Card Acquirer Advisory Council, and a founding member of the Atlanta Chamber of Commerce Fintech Task Force and the subsequent Atlanta Federal Reserve Peach Pay Initiative.
Q: Liz K.
As a new member of TSG’s Board of Advisors, what led you to this decision, and what excites you most about this role?
A: Tom B.
The decision to join TSG as a member of the Board of Advisors was an easy one. I have known the TSG organization since its inception in 2006 and have been a client since the early days. I have looked to TSG for support in M&A activities, benchmarking, and consulting expertise. As a member of the Board of Advisors, I am excited to partner with the entire team at TSG to help continue the growth of their presence and impact in the payments industry.
Q: Liz K.
What key lessons have you learned from your extensive career that were crucial to your success in the merchant acceptance industry?
A: Tom B.
I entered the payments/merchant acceptance industry in 2007 when I joined First Data. Before joining First Data, I had a 25-year career at Accenture focused on the Communications and High-Tech industry segment. I specifically lead some of Accenture’s largest Business Process Outsourcing (BPO) client teams. When I was given the opportunity to join First Data, I quickly realized that payment acceptance and the overall payments ecosystem was a very mature, established BPO service. Businesses of all sizes partner with payments companies to deliver an end-to-end solution that is not a back-office function but a mission-critical component of their overall value proposition delivery. Payments are as critical to these businesses as electricity, and they must work all day/every day. Understanding that the service provided is a component of the world’s economy “critical infrastructure” definitely helps an organization focus on flawless delivery.
Q: Liz K.
With over forty years of experience in consulting, technology, and payments, what have been the industry’s most significant changes?
A: Tom B.
My first thought is that 42 years is a long time, and changes are too numerous to even quantify. Considering that the IBM PC was introduced less than ten months before I started my career, the geometric growth in innovation, technology-led use cases, productivity gains, etc., the world we live in today would be almost unrecognizable in 1982. I think the one constant of the past 42 years is the ongoing integration of technology into the way we work and live.
Reflecting on payments specifically, the biggest shift of the past ten years has been embedded payments. We have evolved from a credit/debit card being presented as a tender type at the point of sale, just like cash or check, to payments being embedded into the process. As a result, increased sales, a better customer experience, richer data, improved fraud protection, and the creation of business models and use cases that were unimaginable ten years ago.
Q: Liz K.
As a board member of the American Transaction Processors Coalition (ATPC) and FinTech Atlanta, you have unique perspectives on some of our industry challenges. What would you identify as those key challenges (i.e., talent/recruitment, regulatory, etc.)?
A: Tom B.
The payments/fintech industry shares many common challenges across most industries: access to capital, the war for talent, ever-increasing expectations for efficiency gains, investor/shareholder expectations, etc. However, our industry has some not-so-subtle nuances that are uniquely challenging.
Fintechs straddle multiple arenas and are subject to an ever-changing regulatory environment. Banks, although experiencing their own shifting regulatory sands, have the experience and infrastructure to meet their regulatory requirements. Fintechs are running into the buzzsaw as they expand beyond the traditional payments regulatory frameworks. Regulators increasingly consider Fintechs as Financial Institutions and want to expand oversight to include entities traditionally outside their jurisdiction. The impact of these changes is still being assessed. One potential scenario is the creation of tighter partnerships between Fintechs and FIs to leverage the FIs’ expertise in regulatory compliance. While also fostering innovation outside of the FI. A potential, not-so-positive impact could be the pullback of innovation and investment in certain areas due to the high cost of regulatory compliance. Let’s hope not.
Q: Liz K.
You have served in various advisory roles, including with the ETA Presidents Advisory Committee and Discover Card Acquirer Advisory Council. How have these experiences influenced your perspective on the payments industry?
A: Tom B.
Having the honor to serve as a member/advisor with these and other industry groups, I have gained a key perspective that payments are a very small, large industry. The industry is certainly huge. At the same time, it has managed to maintain a partnered and collaborative spirit, unlike many industries in which I have worked. I think it stems from the interdependency of the ecosystem. From sponsor banks, card networks, processors, gateways, ISVs, etc., everyone has a role to play, and no one can independently fulfill the customer’s needs. Today’s competitor is tomorrow’s partner.
Q: Liz K.
What is the current investor appetite for payment-focused companies? What would you consider attractive areas within the payment space that investors focus on?
A: Tom B.
The investor appetite for payments-focused companies is as high as ever. The deal flow may have slowed due to expensive capital and valuation expectations. However, firms looking to maximize investment returns realize that companies with opportunities to monetize payments are still very attractive. With most of the payments M&A opportunities I have been involved with, the potential payments revenue per customer can be 2x the revenue contribution per customer of the acquisition target’s core business. With embedded finance (other services beyond payments) being pursued, the opportunity is even greater.
Q: Liz K.
On a related note, what “types” of deals do you think will be completed in the latter half of 2024 and into 2025?
A: Tom B.
Without the benefit of a crystal ball, I believe that we will see more of the same. As the free/cheap money era has ended, investors/buyers are certainly less exuberant in their willingness to pay top valuations. The possibility of a mega transaction is certainly low, unless addressing a structural issue (such as FIS/WorldPay). Therefore, deals will be technology and capability tuck-in’s for strategics and above average payments monetization opportunities for financial sponsors.