Creating a great purchase experience may start with a frictionless checkout process, but it doesn’t end there. In fact, it takes a lot of effort to create a well-functioning payment platform and a cross-functional operations environment to keep a business running smoothly and customers happy. Like most things in life, it’s easier to talk about doing this than to do it. So it helps to learn from someone else’s experience about what has worked or hasn’t worked for them.

In this episode, we go big – talking with two Google leaders, Luda Sokolov and Aarti Bharathan, who have been on a relentless mission to make the work of the Google teams supporting payments for billions of people worldwide more efficient, stable, and scalable.

Yvette Bohanan:

Welcome to Payments On Fire, a podcast from Glenbrook Partners about the payments industry, how it works, and trends in its evolution.

Hello, I’m Yvette Bohannan, a partner at Glenbrook and your host for Payments on Fire. Have you ever wondered how a large global company manages payments? What pieces of their payments infrastructure do they build? What do they buy? How do they track and reconcile everything in all of those currencies for all of those customers? Payment acceptance when done well enables everything a business wants, a great customer experience before, during, and after the purchase. Failover and redundancy mechanisms to ensure there are no delays in making a sale the highest possible approval rates, and importantly, minimal disruptions that pull teams away from other work to investigate and resolve urgent issues that can impact a company’s sales and their reputation.

Achieving a well-oiled payments environment can be elusive. What it takes to process a payment, comply with the rules, create effective policies, onboard the right payment service providers, and keep things running smoothly, might only be understood by a handful of people in a company, and fewer still understand how these pieces should fit together to achieve great results. Joining me on this podcast are two leaders who have collaborated with many cross-functional teams to create a best in class payments environment at scale. And they’re here to share some lessons learned and industry insights from their experiences. I’m delighted to welcome Luda Sokolov, director of Payments Partnerships, and Aarti Bharathan, director of Product Payments platform at Google. Luda, Aarti, welcome to Payments on Fire.

Luda Sokolov:

Hello, and thank you for having us.

Aarti Bharathan:

Hello. Hello, Yvette. This is so amazing to be here.

Yvette Bohanan:

I am so thrilled that you are both on this podcast. This has been a long time in the making. I think this all started when Luda and I were having drinks at this really swank sixties-themed bar in San Francisco, and I said, “We really should do a podcast on this.” And you said, “Yes, we should.” So thank you so much.

Luda Sokolov:

And then I roped in Aarti.

Yvette Bohanan:

There you go.

Luda Sokolov:

My partner in crime.

Aarti Bharathan:

Yes,

Yvette Bohanan:

An innocent bystander.

Aarti Bharathan:

No, right now, it’s you get one free. That’s the deal that’s going on.

Yvette Bohanan:

I love it. I love it. Well, thank you both for being here. I think this is going to be really interesting and informative for our listeners. We have a lot of folks out there that are going to get a little bit of a fly on the wall kind of feel for what goes on at a very, very large and complicated enterprise when it comes to payments processing, and your backgrounds are amazing, and we always like to start our podcast by asking our guests to share a little bit of their background. So how you landed in payments and what brought you to your current role at Google. So Luda, can we start with you?

Luda Sokolov:

Sure. Well, I would say my compliance and banking background led me to Google, but Google is really where I found my passion for payments. So before joining Google, I spent time across many wholesale business lines, banking business lines, as part of the bank’s audit services group at Wells Fargo. During this time, I’ve gained experience in evaluating risk management and control design effectiveness across regulatory and financial compliance operations, and even to some extent information security. I also spent some time in the bank’s international compliance team working with our international business groups and ensuring that they can comply with all the money movement regulations, so KYC, AML, expert compliance, et cetera, and across the regions, so APAC, US, and Europe.

And so this experience was super valuable and really kind of led me to join Google where I first worked on Google Checkout, which was our externalized payment product, and I was part of a compliance function and finance where we had to support a gamut of payment compliance needs. So it really resulted in me wearing many, many different hats similar to what I experienced at the bank. So having that exposure really helped. I dealt with network brand compliance and content monitoring to even running our unclaimed property rights and various other state level reporting regulation requirements to ensuring that we have certain procedures and programs in place to comply with various rules and regs. And it’s in this space where I was actually exposed and became super interested in the ecosystems that powers the payment.

So I’ve always kind of leaned into the compliance side of it, but it really exposed my eyes into how payments are critical to the business, the different user preferences and experiences that can lead to lost sales or the players that are involved to make the payments happen and the diversity of those players, and also all the things that can go wrong in the backend given the handoffs between systems and messages, and also just the immense opportunity that exists to improve all of these links and infrastructures. So this is where when we deprecated checkout, I really leaned into the partnership and ecosystem side of payments, working very closely with our product teams and cross-functional teams to evolve Google’s internal payments capabilities into what we call today, the payments platform. And I would say I guess the rest is history and here I am today.

Yvette Bohanan:

Thank you. So we’re going to touch on a lot of the topics that you’re bringing up that drove you into this space and how that alignment with your passion kind of helped you spur a lot of the developments that we’ll be talking about and engage people across the organization. But before we do that, Aarti, you have an amazing background as well. You had a lot of interesting twists and turns in your journey, so tell us a little bit about that.

Aarti Bharathan:

Luda, I’ve learned so much about you today, that’s amazing. So I like to say that I’m super long in product and big tech, medium long in payments, and right now I’m short-lived in Google if I think about my career, so what does that mean? I actually started out in my career as a product manager or as a PM as it was called at Microsoft. And so really big tech, had to learn a lot in those early days. I was working on Windows networking, moved to Windows Phone, did some really cool zero to one work when I was first PM on maps, on Windows Phone. It was a ton of fun. I rode that mobile wave into PayPal and that’s when I moved actually from the Pacific Northwest to the Bay Area. And when I moved to PayPal, I knew nothing about payments. I was the first PM on PayPal here if anyone remembers that. So the little point of sale dongle.

Yvette Bohanan:

It was the little triangular one. I was just going to say that. Yes,

Aarti Bharathan:

I was basically the first PM on that with David Marcus heading up the effort. So it was fantastic getting to work alongside. I learned a ton about how to build zero to one products, how to understand that SMB market, how payments is so price sensitive. And then I was also leading onboarding. So much like Luda, those very first steps into payments was really all about KYC and KYB and launching the product in the US, in the UK, Australia, few other countries in the APAC. Coming from big tech where the margins are incredible to suddenly it’s not just important to ship a great product, it’s actually important to ship a viable business along with a great product. So I learned that pretty quick. We had a bunch of twists and turns in that. Ultimately, we realized that it was too expensive to run this business, especially for an organization like PayPal, which was predominantly online.

So I transitioned from there to another part of PayPal where I got the opportunity to actually define the strategy for marketplaces and e-comm platforms that resulted in the development of the commerce platform. At PayPal, we were ultimately powering AliExpress Facebook marketplace, Instagram shops, manage the eBay business as well. It was super fun. I learned really what it meant to be a PSP, learned a ton about enterprise SaaS and learned a ton about meeting and working with so many different merchants from the other side of the payments world. And then when I joined Google a couple of years back, it was super fascinating because I’d met with so many other merchants and obviously I’m biased, but I love the range and depth of the payments platform here, the thought that’s gone into it, the level of true Google scale that’s been applied to the number of countries, the number of users and people that we power. So it’s just been incredible.

Yvette Bohanan:

Yeah. Okay. So you’re also touching on a lot of things that I wanted to bring out here. And the first thing I want to do is make sure people know what we’re talking about as we go into this conversation because we’ve had other folks on here talking about Google Pay. We had Steve Klebe. And when he was with Google talking about the product, this is Google’s payments platform, not Google Pay. Maybe you can clarify the difference before we dive into the conversation.

Luda Sokolov:

Sure. I can jump in here. So maybe first, let’s define what Google Pay is. So users can store their payment credentials with Google, and you can think of Google Pay as a fast, secure, and easy way to check out using those credentials across apps, websites between friends and even in physical stores. So for example, when you use your phone to tap and pay in store, Google Pay doesn’t send your actual card information, but instead ensures that the merchant receives a unique encrypted number and then the merchant can process that transaction.

And alternatively, when shopping online, users can use virtual card numbers to protect their card info. And then Google will create and share a virtual card number with the merchant to facilitate that online exchange. Payments platform powers, Google’s products such as Ads Cloud or Play Store, YouTube to accept payments and process payouts globally. So think of it as an end-to-end monetization engine. And on top of the core payment processing functions, which is I think we all think about when we say payments platform, it also supports all the ancillary processes that are required when accepting payments and enabling a payout. So this includes robust real world identity verification, risk management to identify risky transactions and disputes and key functionality to support financial reporting and some of that back office operation.

Yvette Bohanan:

How many products are you monetizing right now through this? Do you have an idea? Is it hundreds, millions, because Google’s big?

Aarti Bharathan:

Yeah. I think we’re looking at definitely five of our largest product areas, which are ads and cloud on the B2B side of the house. Play, YouTube, the Google store on the B2C side of the house. And then there’s a whole slew of other product areas. So we have Waze, we have maps, we have pix. There’s just so many more.

Yvette Bohanan:

So you have kind of this long tail of things that have lower revenue streams running through them, but you have sort of the curve that has this 80/20 rule going on here.

Luda Sokolov:

Let’s clarify that in Google, long tail, it can still be pretty sizable businesses and still complex.

Yvette Bohanan:

Still complex, still global, and you have to get it right. It doesn’t matter to the consumer, it doesn’t matter to the person you’re distributing money to if they’re on this side of the curve or that side of the curve when it comes to the revenue stream. The payment has to be right, it has to be-

Luda Sokolov:

Compliant.

Yvette Bohanan:

Compliant, all of that good stuff. So you’re sitting on top of this platform, money coming in, money going out, there’s a lot of work to be done. Now this is where the fund comes in because that work means a lot. You were talking about not just having a great product at launch, but it has to stand on its own. It has to do everything that it’s supposed to do, and it has to do it in a way that’s really useful to all of the different stakeholders that you were raising before. So not every company can build what Google has created to manage a customer’s payment experience. We’ll just say that upfront. Not everybody does this. There’s only a handful of companies out there that really have done this at scale and globally, and that’s okay. Even if those of you listening are at a company that can’t build all of this in-house, these insights hopefully in the next 30, 40 minutes here that we’re going to be sharing will help you think about your customer’s payments journey, the provider strategy, how payments can be a business enabler.

Those big ideas where how does the payments team add value to the organization, add value to the customer, what does it take to do that and do it really, really well, whether you’re building it on your own or you’re going out to a provider. And there are a whole bunch of providers out there these days now that can help with this way more than 20 years ago or even 10 years ago I would say. So that said, let’s talk a little bit more about the scale for a moment. When we talk about how many processors and forms of payments that you’re managing on this platform, just to give people a sense of, it’s not only about the products, but now you have all your providers that you’re relying on to help you, the banks, the PSPs, the gateways or whatever, and forms of payment by country. So how do we think about those dimensions?

Aarti Bharathan:

Yeah, and I think this ties back so well to who are the kinds of users and in what context we’re serving them. And so if we think about the fact that these are users on some of the most touched properties in the tech world today, in our world today and one point we used to call it the web, but now it’s evolved beyond that. It’s every day around our lives. And so we have the responsibility to really enable these users. And so I would say that it’s been an evolution, but where we are now with reasonably mature and sophisticated as a payments platform and cross our pay in and payout, we’re serving billions of users in nearly 200 plus countries.

And so when we think about that and then our mission where we have to enable safe and secure payments for every Google user, we actually have to support payment methods that are most commonly used for these users everywhere that they are. So in a mature market like the US, it means almost every kind of card scheme and banking rails and eWallets. But we know that as we expand outside of the US, as we start looking at Europe, as we start looking at Asia, as we start looking at LATAM and Africa, these are markets where there’s a plethora, an explosion of banking rails, real-time payment rails, products, carrier billing, and we support all of them.

Yvette Bohanan:

And you have to, to reach everyone.

Aarti Bharathan:

Yeah. And so it’s not just that we also have to think about it in the context of being able to accept these payments locally. So what that means is it’s not just important to accept card payments in Nigeria. They have to be local card payments. They have to be the card payments that someone can pay with using their domestic credit card on Naira. We have to accept that.

Yvette Bohanan:

Right. And a lot of times these countries will say, “If you’re doing that, not only do you have to have a provider in country, you have to be in country.” So you have several different acceptance models, and depending on the regulations in a country, you’re going to employ a particular acceptance model. And that comes with all sorts of interesting conversations with tax, treasury, legal teams, everybody weighing in on how to do this properly. So getting that right and then having a platform that can support the different acceptance models for the different forms of payments using different providers.

Aarti Bharathan:

If you think about it on the B2C side, it’s micropayments, it’s in-person payments, it could be subscription payments as well. And all of that is when someone’s paying in a very discretionary manner. And then we contrast with the B2B side, these are potentially larger payments in mature markets. So how do we support that? It’s maybe invoicing, it’s bank based payments. And then if we look at many of the emerging markets, we’ve got SMBs coming up, we’ve got the Gen Z starting their businesses. And payments is so local, it’s very personal. And so what a user in the UK experiences and how they choose to pay and how they want to pay is going to be very different from a user just on the other side in Germany, a very card friendly market, a very bank friendly market or debit based market, and how do we allow for that?

Yvette Bohanan:

And there’s a lot of strategy that’s going into the design work and creating a scalable environment and understanding the different nuances around the checkout experience. And as you were saying, it’s not the web anymore. Let’s start with the customer journey and the UX and the experience because you have a lot of them going on and they’re getting more complicated. And we talk a lot on this podcast about embedded commerce and you have that as well going on here too. So what pro-tips do you have when it comes to the checkout experience and design right now for a complex global environment with all of these different channels that you’re supporting?

Aarti Bharathan:

So checkout is very important to Google. And why is that? It’s that surface where the buyer interacts with us and we want them to get access to that purchase in the easiest possible way. And so for us, it’s really key that we meet people where they are. And so that means, as I was just saying, checkout is available on the web, on mobile, of course, but also there’s the assistant or there’s TV for YouTube TV. And then as we were just saying, it’s so local and personal. So we want to make sure people can pay in the language of their choice. And then we also work hard to ensure that the local payment method is displayed in a way that is familiar to the user.

So a credit card that’s displayed in the US, it’s going to look a little different from one say, shown to a user in India. There’ll be slightly different schemes. The ordering is going to be a little different and coming to the ordering, that’s also why ensuring users have access to their preferred local payment is so important. And so that’s iDEAL in parts of Europe. That’s the card scheme in Africa. It’s UPI in India. Alipay in Southeast Asia. It’s very much about making sure that all of these come together. So this is really about how the payment method, how it’s ordered, and the context in which it’s shown to the user.

Yvette Bohanan:

And all of that nuance totals up to, pardon the pun here, totals up to actually conversion rate and do you go from a browser or involuntary churn? So all of these different little indicators that make it as personal and as appropriate to the experience as possible are really… They do add up. I think people don’t realize how important that is. I’m going to put you on the spot. Can you think of an example of something that you shifted that had, it was a small thing, but it had a really big impact on conversion? Just to give an idea of how much detail you have to be watching on a platform of this size.

Aarti Bharathan:

There’s so many of these, but I’ll just talk about something that we are really proud of. So you talked about involuntary churn and subscriptions, and a couple of years ago, the team started working on a fairly sophisticated ML, AI-based retrial strategy. And that meant that if a user signed up for a subscription, say Saturday, someday of the month in the afternoon or late in the night, when the renewal comes up, there’s a higher chance of that transaction actually failing if it’s retried at that exact same time.

And you realize that because you’re like, “Yeah, when the issuer sees this, they may not have the opportunity to surface a challenge right then.” Some kind of an SEA right then. And so they’re relying on the fact that this is coming in as a merchant initiated transaction, and so how do we make sure it’s really successful? How about if we actually tried the transaction Monday morning? Much higher likelihood of success. So it’s little things like that. And so we took all of these retry strategies and as we applied it, we found that it resulted ultimately in about 8% of one of our business lines.

Yvette Bohanan:

8% of all attempted purchases?

Aarti Bharathan:

Yeah.

Yvette Bohanan:

Holy cow. That’s a lot. That’s huge. We measure stuff in basis points normally, right?

Aarti Bharathan:

Yes. So this was over a couple of years. It wasn’t just one experiment, but we stopped, we took stock and we were like, “How much was this? That’s incredible.”

Yvette Bohanan:

That’s incredible. That’s huge impact, huge impact. I mean, when you think about customer acquisition costs versus churn… And then on the customer side, people are saying, “Why did you try to do this in the weekend? Why didn’t you just wait until Monday? And I would’ve seen it or known about it or whatever. My bank would’ve asked me.” So yeah, so really being aware can make a huge difference. I’m going to go on the other side of this coin here and talk a little bit about the provider side. And Luda, you’ve been on this side of the coin for a while and there’s no single provider that does everything for you, even the best of them, having the right set of providers is crucial, and there’s so many now. So I guess my question is how has your selection and implementation thinking around providers, how has it evolved over the years?

Luda Sokolov:

Well, I would definitely say it’s been an evolution for sure, really starting with one or two products and with simple goals like, “Hey, we just want to get customers to pay us,” to really evolving in complexity of our products and markets that we were in, and also to demands of our products and our users that really wanted to focus on improving user experiences, improving that local presence and engagement that Aarti described. And so our strategy in a partnership side had to evolve with that. So in the beginning, it was okay to use a gateway that connected to an acquirer that then lit up the globe for us quickly to get the money in and out. But then over time it’s like, “Okay, well now we’re maintaining two integrations. Are we really getting the best we could be getting? Are we complicating back office operations?” So then we kind of had to pivot and say, “Hey, our volumes are also growing. Let’s have multiple acquirers.” And then you start to go more local and just accepting credit cards worldwide is not enough.

We really had to think about creating local experiences and enabling local payment methods for our products and also for the different models that we support. So we have B2B, B2C subscriptions, prepay, post-pay, one time. We also have complicated entity structures. So being local or accepting money across the globe has a lot of complexity on the backend as well. So then you kind of have to balance these demands of how many partners do I have because each of them have their different reporting requirements. We have to use engineering to integrate to their specs, and then maintaining those integrations. And some partners are better than others and more complex than others. So you’re adding all of that, and at some point we kind of have to stop and think, what do we do? And we really decided that we are going to build our own API where if we’re going to go globally across the world and try to connect to the local eWallets or the local bank transfer schemes or reference or cash payments, we’re going to create an API where the partners connect to us.

And part of the benefit to that is it actually helps us reduce some of that back office complexity because essentially it’s Google providing the instructions to how the partner engages with us. So we specify the fields that we need, we specify the reporting that we need, and those then flow through our systems as we expect it to do it. And obviously, I also recognize not every merchant is going to do that. And it also takes a lot of work because you also have to convince partners to integrate to you. And it was a new thing, so there was a lot of growing pains, but it proved really valuable for us to get to that scale and to handle that complexity, and we just couldn’t find a partner to your point of it or even a set of partners that would be able to do that in an efficient way.

So for us, that investment made sense. But I would say even within that decision, our strategies have also pivoted when it comes to partners. So initially we really kind of said, “Okay, well we have this API, we’re going to start integrating partners, we’re going to go direct to everybody. Everybody’s going to correct directly to Google.” And that kind of made sense in the beginning, especially when we were going after the large FOPs, forms of payments in a market. But then it’s like when you get to those smaller markets, which are important. Because at the end of the day, we want to provide a locally pleasant experience for all users wherever they are, but then they’re still the cost and the benefit. And so for those markets it’s like, “Are the partners even sophisticated enough to do these integrations?”

And then it’s cost for them to maintain them. So how do we get to those markets? And we really started to pivot to work with aggregators and connecting the aggregator to our API because then they’re able to provide access to a lot of these alternative payment methods without us having to go direct. So I would say that that’s kind of been the big shift. And I don’t know, I think at the time, maybe if there were more aggregator orchestration players, I’m not sure if we would’ve gone this route. But at the time, it just seemed to be the only way for us just given our scale and complexity. And also our competency as a company. We are an engineering forward company and we like to solve big problems. And so for us leaning into that and leaning into that competency really made sense. And there was really nobody there at the time to fix all of these issues that we were trying to fix. But partners are still important to us. We’re still enabling a lot of these things through partners, but there’s just certain aspects of our capabilities that we also build ourselves.

Yvette Bohanan:

I’m going to double click into this little space for a moment because like you’re saying, there’s a lot of orchestration providers emerging now. There’s a lot of different value propositions, the PSPs, you have full stack, you have orchestration, you have this, you have that going on right now with all of these different providers and merchants who don’t have the resources that a very large organization like Google has are getting inundated and they’re trying to figure out… And you’d think of a smaller company, even when you have a provider or two, you end up having to put a lot of resource into making sure things are working. And that’s not always obvious or intuitive or even feels logical to a leadership team at that organization.

They’re like, “We hired the provider. They should manage everything for us.” And you made a comment a little bit ago about the different providers, some are better than others, and that, and I just want to double click a little bit into this whole idea and this notion of what does a merchant have to do to manage their operations well versus what is your provider doing for you? And how has that evolved as you look at investing in tools to manage your payment operations? Google spent a decade creating a robust platform here to manage payment ops and tech stack capabilities and everything. Roll back time for a moment. You’ve been there for a while, Luda. Roll back the machine. What was it like for the payments team before the payment platform was in place before you had this API, before you had all the monitoring, what was day-to-day?

Luda Sokolov:

The day-to-day was… I would say we were probably very fragmented in terms of the systems and even the processes that we were supporting. For example, and maybe some merchants may face this today, but we kind of had a scenario where in some cases, for some of our B2B services, we kind of had everything completely outsourced from the technical integration part with the processor to the back office operations. And so you had kind of this complexity when something broke. It’s like, who do you go to? Because the party goes, “Well, we just did the technical integration, but it’s not really our fault that this underlying third party is down.” That way had its ups and downs.

And then we also had a stack for our B2C payments in some cases where maybe partially things were outsourced in a very manual way to then having some automated capability. And so having this fragmentation was really hard to actually innovate because you had all these different ways of doing business and it was also hard to get scale. So you had a lot of inefficiencies. You could have had two teams kind of doing the same thing because it’s two different platforms or this team’s working with the outsourced vendor versus that team is working with the acquirer that Google connected to directly. It was hard to innovate and be efficient, not just from a technical standpoint, but even just the operational standpoint to automate your processes.

Yvette Bohanan:

So it was super organic. It just sort of as the product grew up, there was no real overarching strategy around payments or payment operations. So it was all this fragmentation. Am I getting that correctly?

Luda Sokolov:

Yeah, I would say in the beginning for sure, because the first and foremost thing was the product, and then it’s like, “Oh wait, we have to accept money from customers. How do you do that?” I mean, great, we’re making money, but we have to accept them and then wait, we have to put them in a bank account, and then what do we do with this cash? So it really started from that. And if you think about that, I’ve been in payments for 10 years to where we are today, it’s quite incredible to what we’ve been able to accomplish and develop and grow and continue to innovate in.

So yeah, evolving I think is a good word for that. And like I said, and it’s fine, I think most businesses act this way. I mean, unless you’re a payments company and your remit is to do payments, you’re going to set things up. Even in those cases, there’s elements of organic development. I would say most businesses, they probably are in these situations where they’ve integrated things to get to scale or capabilities in a quick way. And now are in the situation where there may be some fragmentation that they’re dealing with. And for us, there was that moment. The challenge for us was to stop and say, “Wow, we’ve grown a lot. We are very complex. This is clearly a critical part to the business.”

As Aarti alluded to earlier, our businesses are selling things to users and we want to delight those users and this fragmentation is not going to cut it, and we need to innovate in this pace and we need to treat payments as a value add for our business, which we’ve evolved to. And so we had to make that tough call to combine everything together to get rid of tech debt. And during those times, probably a lot of our products weren’t happy with us because maybe we weren’t launching things as fast or maybe we weren’t launching things at all because we had to really clean things up. But what it unlocked after we did that is quite incredible. We can probably go into it in more detail, but we have our transaction optimization engine. We really can provide end-to-end solutions now for our products. And it’s been a big investment, but it was worth it.

Yvette Bohanan:

Go into a little bit. So you have transaction optimization engine. What does that do for you?

Aarti Bharathan:

Yeah, totally. So if you just take a step back, what we have holistically is we have checkout, which we just touched a little bit about. We have payment methods, and then we have also all of our regulatory compliance, identity taxes, fiscal dispute management. When you think about, okay, what is it that really holds this together? What’s the transaction life cycle and what’s the optimization in that? For us, it really meant that when we have this many users to meet needs for and a huge number of processors and partners that we work with, we actually need to be able to optimize our transactions massively. Whether in the early days, we actually built a really sophisticated router. It’s, very funnily, it’s called smart router.

Yvette Bohanan:

That’s probably better than some other ways to describe a router.

Aarti Bharathan:

It is. Which really began in the early days to just be able to switch across different processors. So if someone went down, well, how do you very quickly get across to another person to another router so that the customer doesn’t notice it? And that’s how it began just to really solve for redundancy. But then from there, it really became this incredibly sophisticated retry engine, which we just talked about a little bit. And then as Luda was saying, we’ve expanded to so many different regions. And so what we were able to do was really fold in things like verification optimization into that. So if we think about risk management, if we think about the other end of the life cycle, which is dispute and chargeback management, how do we know what is the right intelligence to apply here?

When should we actually dispute a chargeback versus very quickly pay the user back? How do we bring those things further up into the life cycle? We’ve got hundreds and thousands of data fields here. They need to be manipulated in real time with partners that have different needs. Each processor reads their message config differently. Each processor may think about how they respond to a request or each issuer may think about how they respond to a request or an auth message differently.

And so actually being able to understand that in real time and then really package and position every transaction to maximize for auth rate, to maximize for conversion. I mean, this is at sort of the bottom of the funnel, but if we think about that top of the funnel, it’s when the user comes in, making sure that we present the right payment instrument to them. That context is so important. Understanding where they are, all these hundred different payment methods that are there, the ones that they’ve added, the ones that they should curate and be offered for this transaction.

Yvette Bohanan:

Did you standardize the data that you get from files and reporting as well?

Luda Sokolov:

Yes, that’s the big draw where on the ops side, the teams definitely appreciate that. And again, something that was not necessarily solvable by having a lot of different partners and managing those different connections and then getting all the different reports.

Yvette Bohanan:

That’s pretty impressive. To get that at a global scale is really, really impressive. So you did a lot of things. What was your biggest challenge, building the platform, getting to this point with the platform?

Luda Sokolov:

Yeah, I think I alluded to earlier first that big decision that had to be made to actually do it at the expense of maybe not launching as many things for that short period of time. So that was kind of one challenge to get through and getting everybody on board that this is the right thing to do. And then I would say, yeah, the second one is identifying those areas where we were going to go ahead and leverage our capabilities. And building some of these things in-house. And so for us, given the complexity and variations in the business models, the different use cases that we had to manage, as Aarti mentioned, the thousands and hundreds of thousands of permutations that we need to address and package these transactions in a way like orchestration and routing and these kinds of capabilities just seemed like a no-brainer to go forward with. But I would say the challenge was just even making that call. And yeah, I think that was, I don’t know, Aarti, if you have anything to add from the product side.

Aarti Bharathan:

Yeah, it was realizing that we have an engineering organization, we have a product organization, and we have a lot of operational effort as well. And historically, Google’s been one of those organizations where you can launch a product and you can launch in all countries at the same time with very little overhead if you will, and payments is not like that. And so we’ve really had to figure out constantly how do we manage the issues that are happening? How do we stay super lean, and then how do we also address these problems?

What we realized is with every change in regulation, with every change in mandate from the networks, with every change in just user behavior and choice, the effort it takes to just stay on top of it is significant. So I would say embodying that in how we think about our planning, how we think about our strategy starts becoming really important.

Yvette Bohanan:

Absolutely. So the other part of this is staffing and structuring a payments organization. You’re representing two of many of the aspects that you’ve been touching on here. How do you think about roles and responsibilities when it comes to payments now?

Luda Sokolov:

First off, I think that as you just having Aarti and myself here, partnership and product is very intertwined. I think we influence product and product influences. Us and partners play a key role in enabling a lot of these capabilities because even to decide to build something, you kind of have to first evaluate, “Hey, what’s out there and does it make sense and is this worth investing ourselves or can we find the right sets of partners?” And even when you do build things, there’s still a lot of partnerships that are enabling a lot of those capabilities or supporting. I would say first and foremost is having a strong connection point between product and your partner team is key. And also creates kind of, I would say a healthy tension because sometimes product and eng just wants to build, build, build.

And so sometimes we’re there to like, “Well, maybe you don’t want to build this. Maybe in the beginning, maybe let’s try to use a third party. And hey, if it doesn’t work out, we can evolve and we can change our mind.” But the closeness of the relationship and being step and step in our strategy is really important. So at Google, our product strategy is our partner strategy. It’s one thing. It’s not like I come to Aarti and say, “Hey, I want these things from you for partner.” And she comes to me, “I want these.” It’s like we both decide that, hey, these are the things that we should be working on and investing. And we’ve considered the partner angle here, the ecosystem angle here, the technical angle here, and really try to work in a unified step.

I’m sure that sometimes maybe not sitting under the same roof makes things complicated, but we definitely try to stay connected. I think the other thing as far as org structures, so stepping aside from the responsibility, is as you mature as an organization, it’s really hard to make these local insights and decisions out of US or out of some global market. And so the other thing I think that’s been changing is really establishing some of these local teams in region. They can help you stay close to what’s happening in the market. I mean, they’re also users themselves, so they know what forms of payments they use and how they’re using what’s popular, and so really shifting to that model.

And again, there’s a cost to that as well. Besides the late night meetings and the early morning meetings, there’s real costs of having these localized presence, but I would say it is worth it, and there’s a gradual way of doing it and dividing and conquering. So in some cases we may have more BD folks sitting in a region and then in others we may have a product team member sitting in that region. And so again, going back to partnership product being together, we’re helping each other and dividing and conquering. But I would say that regionalized model has also been part of our organizational evolution.

Aarti Bharathan:

I mean, the thing I would perhaps add is none of this happened all of a sudden. If there’s one thing that we should all keep in mind is this is continuously about change. Right now, we’re all seeing a lot of growth and payments in various parts of the world, and we’re also seeing a lot of regulatory pressure, fraud pressure. And so just like we make sure that we meet users where they are, as Luda was pointing out, it’s important to look ahead and see what does one’s org strategy look like? We begin with being very focused in one region and one group, but then as it evolves, are there value in having certain teams in certain regions or even rebalancing across time? So I think the thing that I’d probably add is it’s not one and done. In fact, it changes continuously.

Yvette Bohanan:

So given that it’s not one and done, here’s my last question for you both. What’s the first… We often will say one simple thing might not be simple. What is the one or two things though that you would say is advice of actionable things to do, next steps to take to an organization that’s maybe where Google was 10 years ago with all of this and they’re looking to level up their payment operations. What’s the first step or two that you would say after listening to this, go think about this or go talk about this or go do this?

Luda Sokolov:

I mean, again, it’s a hard question because it kind of depends on the complexity of the business and how many products they have and what’s the infrastructure that they have. But I do think this concept of relying on third payments versus building things yourself, maybe piggybacking of what Aarti said, it’s not a one-time decision and then you’re done and you go, “Woohoo, I fixed my payments.” And it’s not a final decision. So just really assess based on where you are today in terms of your complexity and what kind of resources you have, think about where it makes sense to maybe things that you’re trying to do yourself, it actually makes sense to work with a third party provider. Think about is this an area that as a company I want to invest in? Is this where I have competency? There’s other problems that we uncovered and we’re fixing, or even the transaction optimization, it’s a constant investment. But for us it was about, okay, well these are our competency. And also it’s okay to change right in the beginning, like we said at Google in the beginning, we just wanted to get a partner to just light up the world quickly. And sure it was messiness and we had manual processes, many reports, but that was right at the time. And as our business changed, there’s going to be those tipping points. And so recognizing when that is for you to say, “Hey, maybe this is a place where I should do something myself” versus “You know what, I’m doing this myself, why?”

Yvette Bohanan:

So know your core, know what you want your core to be in that moment in time, and that might shift over time, but really assess. Great advice. I get to listen and summarize. I have the easy job here. Aarti, what would you add?

Aarti Bharathan:

I think we often underestimate how much work it is once we build something ourselves. And so I think the thing to constantly think about is this a build? Is this a partner or is this a buy decision? And know that once you start building, there’s no backing. It’s very difficult to back away. Everything is, as they say, is it a one-way door or is it a two-way door? Almost most things are two-way doors, but some two-way doors are harder. And when I talked about earlier around what I did as a business at PayPal, it was selling solutions. And sometimes these solutions were sold to really large organizations as well. Why? Because they wanted to grow out a new area or a new market. And at that time, it’s so much easier to just go with one of the solutions in the market or to speak with a few people and see where exactly, do I need that expertise?

That way as an organization that’s focused on customers and maximizing experiences for customers, one can actually focus on doing that while just bringing this payment expertise in. And then as one matures and you’re like, “Yep, this bet actually makes sense. This market makes sense. In fact, this is so critical that we should own this.” Because yes, every time there is an integration with a partner, there is a little bit of that partner’s flavor that becomes part of one’s product. And at some point when it’s more important to really own that experience, then there’s enough revenue, if you will, that justifies making that investment.

Yvette Bohanan:

Well put. Okay. Well it’s that special time. We have to stop. I’m so sad.

Luda Sokolov:

So soon I can talk about payments all-

Yvette Bohanan:

I know. We’ll have to have you back to tell us more about what you’ve been doing. Aarti, Luda, thank you so much for joining me on this podcast. It was an absolute pleasure to hear about what’s been going on under the hood at Google, if you will.

Luda Sokolov:

Great, thank you.

Aarti Bharathan:

Thank you for having us.

Yvette Bohanan:

Our pleasure. Thank you for being here. To all of you listening, thanks for joining us and until next time, keep up the good work. Bye for now.

If you enjoy Payments on Fire, someone else might too, so please feel free to share this podcast on your favorite social media outlet. Payments on Fire is a production of Glenbrook Partners. Glenbrook is a leading global consulting and education firm to the payments industry. Learn more and connect with us by visiting our website at glenbrook.com. All opinions expressed on our podcast are those of our hosts and guests. While companies featured or mentioned on our show may be clients of Glenbrook, Glenbrook receives no compensation for podcasts. No mention of any company or specific offering should be construed as an endorsement of that company’s products or services.