Payments On Fire

Fintech

Episode 150 – How a Fintech Speeds the Logistics Industry – Robin Gregg, RoadSync

In Episode 150, we continue our focus on fintech and its role in improving the payments process for specific verticals.

We recently spoke with Robin Gandhi at TripActions about the hard focus it has on enterprise expense management for the Travel and Hospitality industries. It’s also a great example of multiplayer fintech. (Take a listen).

In this episode, we find out how a fintech helps a very different industry, a segment we have come to rely on more and more as the pandemic has extended supply lines to our doorsteps and stretched the transportation and warehousing businesses.

Take a listen to George and RoadSync’s CEO Robin Gregg as they take a deeper look into how fintech’s solve specific problems for specific industry segments. RoadSync provides payments and commerce services to the logistics and trucking industries.

RoadSync’s market targets include warehouses, trucking firms, and the maintenance and towing operations that keep it all on track.

Logistics is an industry that still relies heavily on checks. When a driver picks up a load at the warehouse, they often pay by check. Knowing the check is good before the driver hits the accelerator is necessary. RoadSync helps with these “dock door” payments through check authorization as well as enabling the warehouse to accept credit cards.

Like so many of today’s fintechs, RoadSync has built out data handling capability around its payments services. Matching up payments to invoices is critical on both sides of the transaction.

For example, the warehouse can create a complete invoice through RoadSync and then simply text the link to the driver for review and payment.

Roadside repair plays a key role in logistics. We’ve all seen an 18 wheeler with its hood up or a blow tire. Those repairs are not inexpensive. Towing and repair services need to:

Get authorization from the freight carrier before doing the work. Work over authorization is a key step.
Get the invoice to the customer when the work is done. The repair tech can create the invoice on the spot.
And get paid, best case by the driver as soon as the last bolt is tightened. RoadSync gives the repair tech the ability to accept a card or a fleet check

To help drivers find those RoadSync-able truck and trailer repair services, the company has established its BigRig411 directory.

In Glenbrook’s payments education workshops, we will call the introduction of a new payment system like today’s Fast Payment rails an “ecosystem build.” Success requires the deep participation of as many parties as possible.

Here, RoadSync is applying that imperative in the areas it can impact. It is automating both sides of a transaction. It makes it easy to find ecosystem participants. And it is API-enabling its services so its payment services and data handling can be more deeply embedded into fleet, warehousing, and repair operations software.

Read the Transcript

George Peabody:
Welcome to Payments on Fire podcasts from Glenbrook Partners about the payments industry, how it works, and trends and its evolution. I’m George Peabody partner at Glenbrook and host at Payments on Fire. So we’re continuing our focus on FinTech and its role in improving the payments process for specific verticals, where we recently had Robin Gandhi at TripActions with us, talking about enterprise, expense management, and how payments fits into the expense side of the travel and hospitality worlds.

And today, we’re going to turn our attention to a very different vertical market. Logistics and the multiple sub-segments that make moving goods possible. So that’s warehousing, trucking firms, and the maintenance, and towing operations that keep it all on track. And to do that, it’s my pleasure to welcome Robin Gregg who’s CEO of RoadSync affirm that provides commerce services to these industries. Welcome Robin. Great to have you here.

Robin Gregg:
Yeah. Thanks for having me, I appreciate it.

George Peabody:
Yeah, so we met a couple of years ago with a few other folks from the Atlanta area down in, I guess, folly referred to as transaction alley but I was taken at the time with what you’re doing and so wanted to get you back and a couple of years on and find out more about what RoadSync’s up to. But the way I’d love to start as is how’d you find your way to the logistics industry?

Robin Gregg:
So I’ve been a long time payments and FinTech person. I started my career at Capital One and worked on a medical lending product for them in your neck of the wood, at [inaudible 00:01:38] Boston. I shared the business was based in Framingham and aft-

George Peabody:
[inaudible 00:01:42]

Robin Gregg:
Yeah, it was. And after as about a six year career there, I really want to do something entrepreneurial. So I ended up going to a startup called Revolution Money, which was an alternative payments network that was sold to Amex in early 2010.

George Peabody:
Welcome to FinTech story.

Robin Gregg:
Yeah. And I learned about pretty much every component of the payment space. I mean, both issuing and payment acceptance, closed loop network. Lots of really interesting things I learned about the industry from that job. And when we sold to Amex, I really wanted to stay in the south of that business was based in Tampa and I realized I liked being warm. I do. I was serious. We were just talking about it.

George Peabody:
Hey, I can relate I’m in Boston. We’re just thawing out.

Robin Gregg:
Yeah. It occurred to me that Atlanta, Georgia was a good place to go. And so there’s another Capital One alum who is COO of Fleet Corps, which it was DAIN and summit-backed at the time. It was private equity-backed and was a $300 to $400 million revenue company. Primarily in the business of providing fuel card solutions into both logistics segments as well as anybody who uses commercial vehicles. So like landscapers construction companies. And that was my first foreign in the commercial payments. And I learned a lot about how people in the trucking industry and other sort of similar kind of blue collar verticals.

Robin Gregg:
We’re really dealing with letting their employees pay for the routine business expenses they encountered. And quite honestly how clunky some of the experience was, both on the payer and the payee side. So that was really how I got acquainted with it. I had a seven year career at Fleet Corps. I got to see the company IPO. It’s been a wild success in terms of a growth story and really learned a lot about how much money you can make in commercial payments and how to distribute these solutions. But really was excited about doing something newer again and starting something from the ground up. So I ended up taking over RoadSync in 2017 and really focusing more and more on the logistics segments and those challenges that they were facing with payments.

George Peabody:
What do you find compelling about the logistics segment?

Robin Gregg:
First of all, it’s vast, right? This is you’re talking about $800 billion industry that is very fragmented. There’s a lot of participants in the ecosystem. Everything from the truckers themselves to the people that employ them, that could be trucking companies could be brokers sound to the supporting services. So, warehouses, people who unload, there’s freight handlers, there it’s an industry of people who unload trucks at usually grocery and food distribution centers. There’s its own ecosystem of truck repair, truck washes, truck parking. It’s its own self-contained ecosystem that’s very vast.

Robin Gregg:
A lot of what they’re doing is still very antiquated in terms of how the payments are powered and then therefore, what kind of other financial solutions could be stacked on top of it. So I just really loved that. And also it’s an important industry, I mean, I think we’re all feeling that now right with COVID? Staying fed has been very important and the truckers in the United States has made sure that that’s happened and been really able to operate under these really difficult conditions. And I just thought it was compelling to do something for such an important part of the industry that really needs better solutions.

George Peabody:
Let me flip my questioning around. Are there conditions that have emerged in the last five years that Robin, in the payment space that gave you have given you confidence to really take RoadSync in an expanded direction?

Robin Gregg:
Yeah. I think there’s a couple trends that are happening. First, truckers or any of the employees, quite frankly, that are engaged in the sector are also consumers. And as consumers, everyone has a smartphone today and they’re accustomed to using it for personal and professional daily uses. And so I think that the industry and the participants have just gotten more and more comfortable with doing things on a device and that’s been really important. People bring their consumer experience into their, kind of, professional experience, sort of start to expect the same things. I think that’s been a driver. I think the other things that have been drivers are that… You can’t go to a trucking trade show of any kind without hearing them talk about Amazon and what Amazon has done with the supply chain. There’s such great expectations about supply chain efficiency because of what Amazon has been able to do in terms of setting consumer expectations on when they’re going to get their goods.

Robin Gregg:
And it’s really just kind of compelled the whole industry, just to think about how to seek out any kind of efficiency that they can. And digitization of their financial transactions or just even their documentation by the end of their financial transactions is a very important piece of that. And I think that’s another factor that’s kind of driven the industry as well as more recently COVID. Contactless, not exchanging paperwork, all of that is desirable in a world where it may not be safe to be face-to-face and transacting face-to-face. So I think those three things have all been happening and the last one, obviously more recently. But these were happening in advance of COVID.

George Peabody:
Right. And I got to ask you next about RoadSync and what it is specifically that you’re doing, but you did talk about the consumerization of technology and you know that everybody’s got a smartphone. It’s got to be that you’ve also been between that device and cloud computing, as well as some of the perhaps newer payment mechanisms that are out there that you’ve been able to assemble them into the RoadSync proposition.

Robin Gregg:
Yeah. To some extent, it’s though it’s more of a behavior that people are willing to engage in. I mean the conventional payment mechanisms and trucking are a little bit different than the consumer world, right? I mean, we’re not tackling on to Apple Pay or Google Pay or anything like that. We are really tackling making some of these products that the truckers already had in their wallet, more accessible or usable in the use cases that we were targeting. And so before us, a lot of our vendors that were needing to take payments from truckers and their employers were doing it in paper and they didn’t necessarily accept cards, credit cards or debit cards. And the reason for that was truckers didn’t commonly carry an Amex or a company card. And they might’ve been paying with specialty payment form called a fleet check or cash or something like that.

George Peabody:
I’m going to get you to describe that fleet check.

Robin Gregg:
Yeah. It just wasn’t worth it for all of these folks to sort of use Square or take a general purpose payment platform. And so, we really are helping them monetize, create a broader range of products that they can accept, and think that will eventually change the payment mix over time but to kind of start with what they’re doing today.

George Peabody:
Let’s start with what you’re doing then. RoadSync’s proposition and how are you trying to address that?

Robin Gregg:
So our beachhead product… And we think there’s just a never-ending stack of payment challenges to solve for the trucking industry. There’s so much throughout the supply chain that’s paper-based. There’s a lots of opportunity, but we’ve had to start somewhere. So where we started as our beachhead product, which is called checkout. And the way to think about checkout, it’s kind of like Square, but for trucking-related transactions. We basically allow the vendors that need to collect payments from truckers to easily do that in a mobile form. That could be things like warehouses, freight handlers, heavy truck tow, maintenance, merchants.

Robin Gregg:
And it’s like a little cloud-based point of sale where they can generate an invoice, text it to the driver’s phone. And then the driver can complete payment on his own device. And that’s really the main product that we have in market today and is being used in hundreds and hundreds of locations across the country and lots of different types of vendors. And the reason they use it is it connects with payments traceable, instant, makes data capture much easier, and really professionalizes the payment experience versus what they were doing previously.

George Peabody:
So walk me through a transaction with all the names of the parties. Just so I’m clear.

Robin Gregg:
You could roll into, let’s say what’s the grocery store up in Boston? So, it would just Stop & Shop, is that right?

George Peabody:
It’s still here.

Robin Gregg:
Still there. Okay. A trucker could roll into a Stop & Shop distribution center. I actually have no idea if that’s one of the ones we have, but anyway, we’ll do that as an example. Trucker rolls into a Stop & Shop distribution center, he needs to have someone unload his vehicle. It’s very common to do that because it’s perishable and they really want to make sure it’s professionally done. So, he may have to pay a freight handler 150 bucks at that Stop 7 Shop location. So the freight handler would use RoadSync, they would log in, we’d already have all their rates schedules and their data capture already in our system. They would generate an invoice, kind of ring them up like you would on Square. If you were in a coffee shop.

Robin Gregg:
So basically ring the guy up, texts the invoice to the driver’s cell phone, he would use a link to open it up, and then basically put in any payment that he would want, a credit card, debit card, fuel card, fleet check to be able to pay the transaction and checkout. And then he has his receipt already on his own phone, he’s checked out, and he’s all done versus having to hand over a check, hand over cash, make sure he had both of those things to be able to complete a payment at these facilities.

George Peabody:
And how does the trucker fund that transaction?

Robin Gregg:
So he’s using the stuff he would have had anyway. So, instead of actually having to produce the physical fleet check, he can… The fleet checks are almost like a precursor to virtual card. So there’s a code that you’re actually supposed to put on the physical check. We’re integrated with the fleet check providers. So we’re actually able just to take the code, we don’t need the check. And so if his company has a fleet check, a fleet card company that they’re using, they can use the payments they already have. They don’t have to have anything to do. If he’s an individual trucker and he wants to use his credit card, debit card, he can use that too. It’s really about sort of making sure that the things that they were commonly using are very easy to use.

George Peabody:
Got it. How… if I’m curious about the trucking industry, how many are individuals and versus sort of corporate drivers these days?

Robin Gregg:
Oh gosh, I think it’s pretty high. I’ve heard stats as high as like 30% to 40%. There’s two types of kind of contract drivers. Some are, they call them owner operators, so it’s a guy and a truck and they own their own truck. But then, there’s also just contract drivers. So I think across both of those are fairly significant. And even if it’s not, even if they’re part of a larger trucking company, the majority of trucking companies in the U.S., I think it’s something 90% have six or fewer or 20 or fewer drivers. So this is an SMB world very [crosstalk 00:13:03].

George Peabody:
Yeah, it sure is. How do you reach them?

Robin Gregg:
We don’t have to. We’re reaching them by… because you don’t have to do anything special as a tracker, other than just check out at our facilities. Really, we’re reaching the people that they’re paying, which tends to be a little bit more consolidated, right? There’s heavy truck repair networks, there’s heavy truck repair chains, there’s warehouse groups that have large groups of warehouses to take payments. And so that’s really where we’ve focused. And then we’re engaging the truckers to set up accounts on our system so they have their transaction history, they can store the payment mechanism, and eventually they could use us for their own payments if they wanted to. But that we’re not out finding them, we’re just finding them as a by-product of the transactions we’re already processing through Checkout.

George Peabody:
Got it. So I suspect then that, that’s the reason that you formed this BigRig411, a service which is a directory of truck and repair and towing maintenance shops that they sign up, they put themselves into the directory. Is it because they’re using the RoadSync, is that right?

Robin Gregg:
That’s correct. Yeah. One of the interesting things about the industry is that if you… It’s very transactional, right? I mean, the driver doesn’t know where he’s going to be. He could be anywhere all over the country, his truck could break down, and he needs to find someone to repair it if he breaks down. And so there are quite a few repair directories that heavy truck repair and towing merchants will use to promote their business and try to find customers cause they need to find them somehow.

Robin Gregg:
So we wanted to… This was just sort of a way to help our customers. One, we help them provide some visibility that they’re part of the RoadSync network and we encourage the truckers that are transacting in our system to use because they’ll have digital receipt, they’ll have better documentation, they can use their existing accounts. But we’re also using it as a value add to our vendors like, “Hey, we’re going to promote that you have modernized and you are able to take more payment types.” Sort of like how PayPal did from… You could see all the places that have accepted PayPal is payment online. That was sort of its own little mini network. And either raising the online merchants side of it, that way, that more ways to pay the easier it is to check out. It’s kind of the same thing, but sort of in the physical world with these trucking specific transaction.

George Peabody:
Got it. So you’ve used the Square analogy a couple of times and Square, as we all know, is in the transaction flow, they are operating as the payment facilitator. What’s your role in payments? Do you function as a payment facilitator?Are you seeing the money? Are you making connections between the parties?

Robin Gregg:
We do see the money. We’re not a full PayFac, but we are in the payment flow and that makes it easier for us to sort of capture data, help manage float. It’s just one thing that could think about a large percentage of the line share of our percentage of our transactions are not credit or debit. They are proprietary network stuff. So it’s not like a PayFac and it’s closely fleet cards, fleet checks, some of the proprietary stuff. It’s a little bit different. So, we had to build a lot of our own stuff and be in the funds flow because of that.

George Peabody:
So the role of data in the transactions you’re handling, you’ve mentioned it multiple times, that how critical it is in terms of value add. Can you say a little bit more about the data types that you’re capturing and the integrations you’ve had to do in order to make that really useful or put it onto the digital rails?

Robin Gregg:
Yeah. It’s more about having consistent data capture and making sure it’s accessible. Because if you think about it in this world, every truck, every load that a drivers is participating in is basically like a business trip. Right? And so all the stuff that we’re doing is really like business expenses, trip expenses that are just kind of unique to the industry. So it’s almost like business spend management at the employee level unique to the transportation industry. So he needs all that stuff bundled up to show to his employer so that it can be either reimbursed or added to a bill for the ultimate customer to pay. It’s all part of the cost of doing business. And so having the documentation, having the things like destination who paid for it, how much was it, itemization of what the expenses were? All of that is really important to make sure that it’s reimbursable. Because that’s really a lot of the value add that we’re providing.

George Peabody:
Really interesting. Got to be a lot of work with particularly if you’re integrating to traditional proprietary networks, never heard anyone said that was an easy to ask.

Robin Gregg:
The nice thing about it is that it is a value add to the proprietary networks customers, right? To be able to have more utility for their products. And so generally, we’re doing it. There’s high penetration if you look at sort of the proprietary products in the fuel card market. The majority of participants will have one of the major fuel card companies’ products in wallet. And so it’s definitely mutually beneficial. They’re always the newest systems. I mean, most proprietary networks aren’t they have a footprint and if there’s value to it and it does special things. That’s really important for the industry.

George Peabody:
How do you charge, are you… because you’re part of the payment flow, are you charging on an ad valorem or a per transaction basis?

Robin Gregg:
Yeah. We do a transaction processing fees. I mean it’s economic model is an awful lot like Square. We also charge kind of software fees because our platform does a little bit more than just transaction processing, but the majority is from the transaction.

George Peabody:
So it’s a subscription on the one hand and then transactions on top. Great model. What are you seeing as the barriers to adoption? I mean what’s…

Robin Gregg:
Yeah. Industry fragmentation is a challenge, right? It’s just a long tail. I mean, I think I’ve read that there’s like a million trucking companies in the United States, right? So this is just a long tail, even with the… have you tried… We stay focused on larger vendors, but even that has a long tail. So I think the fragmentation of the industry is certainly one of the challenges and just reaching everybody and making sure you’re reaching people that it’s economic for you to reach, because they’re big enough. I think the other thing that’s a challenge is they are emerging in terms of their technology adoption and are willing to upgrade and think about how to do things differently. But to some extent, a lot of the things they’ve been doing has worked for them for a really long time. And so getting them to do something a little bit different can be a challenge. So just change management, I think is a big barrier.

George Peabody:
Yeah. Well, the fact that you are leveraging these ubiquitous systems looks smart to me in terms of an adoption for you, right?

Robin Gregg:
Yeah. And the other thing we’ve had to do is design with ease of use in mind. So it’s very simple for a driver to check out. It looks like checking out on an e-commerce cart. Everything has to be very intuitive because people might be interacting with you for the first time and they’re not going to go download an app, do a tutorial, and just to check out at a facility. It has to kind of be something they can figure it out.

George Peabody:
Well, that gets right back to your consumerization of technology remarks when we started. So I’ve been asking everybody I’ve been speaking to over the last, well, 10 months, 12 months, maybe not sure. I started asking about COVID right away in March of 2020, but besides the touchless, how has that impacted RoadSync?

Robin Gregg:
Running and scaling a company itself, I mean, it’s impacted how we run our company. So internally it’s been interesting and really reshaped how I’ve thought about running the company, about how we work, how we communicate with the team, how we communicate with each other, our adoption of platforms and tools, to communicate, collaborate. And it’s just really been fascinating to me about how rapidly we’ve changed, how we thought of working, and how we worked together online. How often we zoom, I mean, it’s good and bad, but there’s a lot of stuff that you can now totally socially acceptable to do on zoom, which it probably wouldn’t have been 12 months ago. So, that’s been amazing. I think the we talked a little bit about the people realize that getting rid of paper and transactions and having it digitized was always a virtuous thing.

Robin Gregg:
No one was like, “Oh no, we think we should be whipping out a checkbook for like the next 20 years.” It was going to change its own pace. I think now, if you layer on safety and other concerns, it just changes the dynamic for people wanting to remove paper from their business processes. And so I think that that’s certainly accelerated it. I don’t think it was there to begin with. It just certainly has accelerated it and that’s kind of here to stay. And I think all of that’s here to stay, to be honest. I mean, it’s happened in the consumer world too, right? People are… Restaurants now don’t give you paper menus and you can check out contactless that when I get my haircut. All these places are now really changing how they expect people to check out and to pay for things. And I think that a lot of that is here to stay.

George Peabody:
Yeah. Couldn’t agree more both on how do you run your own business to what’s our experience out there. So knowing that, sort of, what’s on RoadSyncs roadmap, what do you see as the next set of challenges?

Robin Gregg:
Just continuing growth, right? I mean, there’s just so much opportunity in this market. So continuing to ramp up our vendor network and expand that footprint is very important to us and figuring out new ways to give value to those vendors. I mean, there should be ease of payment and having a more professional checkout experience is one of the reasons you use RoadSync, but BigRig411 was another reason for our vendors to start to use RoadSync.

Robin Gregg:
And really having people start to conceive of us not just as a instrument for checking out or facilitating payment, but also that on the other side, that payers will say, “Oh, I really want to go to RoadSync locations because it’s going to be easier for me.” Or, “I may get to choose between two repair merchants. I’m going to choose the one that uses RoadSync, because I know I’ll get the data in a certain way and I know it’ll be automated and I know the checkout will be faster.” And so, we’re really looking at leveraging both sides of that and creating more and more value to both sides of the transaction. So I think that’s a big part of what next year is about.

George Peabody:
So for the payers exposing APIs and that kind of thing so that they can pull it into their fleet management software that [crosstalk 00:24:04].

Robin Gregg:
Well either they can integrate it into their own. They could integrate it to their own back office. Or even just having the data in one spot and captured is better than what they have today, which is the data and a stack of paperwork. Right? I mean, even letting a driver know, “Hey, these are the transactions I’ve actually submitted on to somebody else to be a reimbursed.” Be able to check them off in a digital way. And there’s just a lot of stuff that doesn’t really exist in terms of workflow management around these expenses. And so we think there’s a way to keep layering on top of that.

George Peabody:
Got to be a huge boon for all those drivers who have been struggling hanging out with receipts for years and years and years just to get reimbursed.

Robin Gregg:
Yeah. This is an industry that still have fax machines at truck stops. If they want to get their documentation onto somebody else. Now, a lot of them are scanning with our phones, but they’re still fax machines at truck stops.

George Peabody:
Well, thanks so much. Really interesting. I think I didn’t ask you that we should have talked about?

Robin Gregg:
No, I think we’ve covered. I think we’ve covered a lot of ground, so it’s always a pleasure to talk to you and think about the business a little bit more and sort of at a strategic level. So I appreciate your time.

George Peabody:
Yeah. You bet. Thanks very much and best wishes for this year. As we all craft what this new business environment’s going to look like.

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