Thought Leaders in Financial Technology: Erich Litch, Chief Revenue Officer, 2Checkout (Part 2)

Sramana Mitra: Can we talk a bit about the competitive map around this ecosystem? The direct competitors are Chargify and Zuora, right?

Erich Litch: Since we operate in so many parts of the ecosystem, we compete with a number of different companies. In the subscription billing space, we compete against Zuora or Chargify. If you do choose one of those providers, then you also have to choose a payment processor. You may have to choose somebody that handles other elements of your e-commerce system.

We compete with those just for subscription billing whereas we provide much, much more. They don’t really handle any of the regulatory or tax complexities. Then we compete with companies that do a lot of what we do in terms of the all-in-one monetization platform like Digital River and cleverbridge.

We differentiate ourselves by having better subscription management capabilities, better payment methods and capabilities, and just greater flexibility in our platform. One of the unique things that we just recently came out with is, we have flexible payment models on the backend such that you can be a listed merchant in a particular country where you have a significant presence. It simplifies your ability to do business in far off countries even if you have no presence.

Sramana Mitra: What about companies like Adyen?

Erich Litch: They compete on the backend payment processing only. They’re focused on providing a really robust payment gateway and last mile payment processing. Generally, they’re used by companies that set up entities in the locale where they’re selling. Adyen tends to go after really large merchants like Uber or Facebook.

They go after large merchants where merchants need a lot of flexibility as to how it flows and works in their system. A lot of times, they have entities in these countries where they’re doing business. They don’t need the processor to bring any sort of simplification to them in terms of doing business in those countries.

As a subscription company, we compete against a combination of Zuora and Stripe. The merchant will look and say, “I have to integrate with these two systems and deal with two different systems whereas yours is packaged up in one.” That’s on the backend payment processing.

Sramana Mitra: Let’s talk about customers. I want you to switch roles for a moment and put the customer’s hat on. All these different kinds of solutions are out there. What kinds of customers are looking for what kinds of solutions specifically? Do you see segmentation happening in the customer base?

Erich Litch: There’s segmentation in terms of size and segmentation in terms of verticals. For really large companies dealing with $5 million in sales, you have a lot of different needs and issues. You might be saying, “We’re doing business all over the world. We have entities and bank accounts everywhere. We have a lot of custom things we need to do in order to manage our backend ERP systems.”

On the larger enterprise side, they might be looking for point solutions that satisfy specific needs and that can be tied into their systems very easily. They might even require a lot of customization and integration. They’re used to doing very large professional service engagements. On the enterprise segment, they’re looking for something potentially just to satisfy specific needs. That’s especially true because a lot of times, they’re organized in a highly complex manner. To buy something that handles multiple needs across the organization is just not practical in terms of the way they handle procurement and the way their business is constructed.

We have to deal with each of the general managers and each of the regions that they’re in charge. They’re the ones that make the purchase decisions. They might choose to do completely different things. In the large enterprise space, a lot more point solutions with a great deal of flexibility are needed.

This segment is part 2 in the series : Thought Leaders in Financial Technology: Erich Litch, Chief Revenue Officer, 2Checkout
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