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Victor Zheng, mx51: Building the Payments Platform Banks Compete With.

July 1, 2021 · Hosted by Dexter Cousins

Tier One People starts a new financial year with a new season of Fintech Chatter Podcast.

Join Dexter Cousins as he chats to mx51 CEO Victor Zheng.

Victor Zheng is the CEO of mx51 and previously the co-CEO of Assembly Payments.

mx51 partners with banks and acquirers to deliver exceptional merchant experiences. Through a white-label Payments-as-a-Service platform, mx51 seamlessly connects the world of commerce into multi-channel payments.

Victor chats about payments innovation, pivots, splits, team rebuilds and leading throughout a pandemic.

And a special mention to Fintech Chatter Podcast no1 fan Harry Cousins who stepped in as production assistant for this episode.

Subscribe on your favourite player and if you like the show, please leave us a review as it helps other Fintech fans find the show and makes us feel good!

What we talk about.

  • Why Assembly Payments split in two, and why one management team could not build both businesses at once
  • What a white label payments-as-a-service platform actually does for a bank or an acquirer
  • Cutting 35% of head count when the pandemic hit, and rebuilding from just over 50 people
  • Breaking a crisis into distinct problems instead of one big one — Victor’s core leadership lesson
  • Why Mastercard invested, and what the merchant side unlocks for a card network
  • Going remote first: engineers who never want to come back, and everyone else who does

Links from this episode.

More on payments.

Full transcript.

Lightly edited for readability — filler words removed, wording otherwise unchanged.

Dexter Cousins
This is Fintech Chatter, presented by Tier One People, leaders in fintech executive search. I’m your host, Dexter Cousins.

Today I’m joined by Victor Zheng. He’s the CEO of mx51 and previously the co-CEO of Assembly Payments. mx51 partners with banks and acquirers to deliver exceptional merchant experiences through a white label payments-as-a-service platform. mx51 seamlessly connects the world of commerce into multi-channel payments.

Before we start today’s show, I just wanted to say thanks to everyone for the support that you’ve given. It’s been a huge year for Tier One People and a big part of that is the podcast. I’m genuinely humbled that so many of you listen and enjoy the show. We’ve got a lot going on in terms of roles and opportunities here at Tier One. We’re currently looking for CTO, GM level partnerships and client services, and senior solutions architects and delivery heads. So if you are thinking about a move and something like that fits your bill, get in touch with Tier One People.

Welcome to the show, Victor.

Victor Zheng
Thanks, Dexter. Great to be on Fintech Chatter, and thank you for having me.

Dexter Cousins
Great to have you. It’s the first time we’ve got together since before the pandemic hit, so it’s really great to have you on the show. We would have had a coffee before now, I’m sure, had we not had a pandemic to deal with.

Victor Zheng
I know, it’s a bit surreal. It’s 18 months ago, but we’re in our second lockdown here in Sydney. It’s almost like back to the past, like having kids now during school holidays at home. They all seem to hit at the school holidays, these lockdowns.

Dexter Cousins
I know, the timing’s crazy. Anyway, as a nation we’re still very, very lucky compared to the rest of the world.

Victor Zheng
Yeah, absolutely.

Dexter Cousins
I thought it would be great if you could share with our listeners a little bit about mx51, and also some of the backstory to the business.

Victor Zheng
Sure. mx51 was spun out about 12 months ago from a company called Assembly Payments. Simon Lee and myself were co-CEOs and co-founders of Assembly Payments. Assembly Payments had two businesses, essentially two divisions. There was one division that was a platform and marketplace payments business. It was a direct-to-market brand and it really did the workflow of payments between buyer and seller in a platform marketplace. And then it had a second division which was building a white label payments-as-a-service platform for banks and acquirers.

One of the things we realised about 18 months ago was that it was so difficult to build one successful business, let alone trying to build two, and it was really tough for the same management team to try to build two of these businesses in parallel. So the board made a decision to spin the two businesses out and give both businesses its dedicated management focus. The regional Assembly Payments platform and marketplace business was basically put into a joint venture with Standard Chartered and really focused in that Asian market, and the payments-as-a-service platform business was spun out as mx51. I went with that business to focus on mx51.

Dexter Cousins
Fantastic. Can you tell us a little bit more about who mx51 helps and who your clients are, and who some of your competitors are as well?

Victor Zheng
That’s a great question. mx51 is a white label payments-as-a-service platform, and our customers are banks and acquirers. The problem we’re really trying to solve is how do you drive the right payment experience for the merchant, and really focus on that interaction between commerce and multi-channel payments.

The best way to think about this is to have a think about the disruptors who have really nailed this area. If you think about Stripe, Braintree, Adyen, Square, these guys have really nailed this experience. They’ve made it really simple for merchants to be able to sell in store, online, and integrate the world of commerce and reconciliation and marketing and loyalty all together with payments into that one platform. Really what these disruptors have done is they’ve solved for the pain points that merchants need in this space, and as a consequence of that they’ve taken market share from the traditional acquirers and banks that previously dominated this space.

So what mx51 is focused on is providing that same capability, but instead of competing against banks and acquirers, we want to work with banks and acquirers and provide a white label platform so that they can compete against disruptors.

Dexter Cousins
The Assembly business went absolute tear and was one of the big success stories of an Australian scaling fintech, Victor. How big is the mx51 business now that you’ve split?

Victor Zheng
mx51, we’re doing about annualised one, one and a half billion dollars in volume processed if you annualise the volume, but we’re growing very quickly. When we first launched, Westpac was a major investor and partner, and Westpac had exclusivity for a period of time. That exclusivity ended last year, so pretty much our business today is on the back of Westpac, and we’re now starting to work and develop new relationships with other banks and acquirers. I think because of that you’re going to see our growth to be exponential in the second half of this year and into next year.

Dexter Cousins
And in terms of how many people, how big is the business?

Victor Zheng
When we did the demerger split with Assembly Payments, we had about 80 people, 85 people at that point. And then within a month the pandemic really hit, and so we had to, like every other fintech, we went through really tough decisions. We cut down probably 35% head count. So we’re now sitting at just over 50, but we’re starting to recruit again. We’ve gone through a really tough period like other startups and other fintechs, but now we’re sort of back into that growth phase.

Dexter Cousins
There’s been some challenges you touched on earlier, having the two different business models, the co-CEO model that was required because of those two different business models, the investment by Westpac and then being your main or only client for a while. Sounds like you’ve had some really tough situations to overcome. Victor, when you look back over these last few years, what do you think is the biggest challenge that you’ve had to rise to?

Victor Zheng
I would say that it’s been a really tough 12 to 18 months. I think with every startup, having cash and being able to fund your business is so critical, and when the pandemic hit we were planning to do a raise around mid last year, and when the pandemic hit it really stopped those plans. So survival was the toughest part of it. But not only just surviving, but keeping morale high and keeping people motivated and believing that there is light at the end of the tunnel. That’s been really, really tough. But I don’t think we’re unique to that. I think a lot of businesses went through the same hardship.

Dexter Cousins
As you look at this last 12 months, what would you say have been some of the wins that you’ve had to keep the team motivated, keep yourself motivated and really focused on just pushing forward?

Victor Zheng
What was really positive is last year we had April, May were really tough months. The pandemic hit, payment volume dropped, especially for a business where we’ve got a multi-channel strategy. We’ve got in store that’s live and doing really well, and e-commerce will launch later this year. But when the pandemic hit, our in-store business took a big hit, and that was really tough. But the great thing was we saw a bounce back really strongly starting from about, I’d say, July. July, August, September, October, the business really went forward, and it was quite significant. By December we were processing three, four times the volume compared to January before the pandemic hit.

Dexter Cousins
From an innovation perspective, what are you seeing here in Australia in the space that you’re in? It was amazing, I went to Officeworks the other day and was seeing Square terminals, Zeller. It’s just incredible that we can now, as a small business owner, even pop into Officeworks and get yourself a merchant terminal and start taking payments. What’s got you excited about the space right now?

Victor Zheng
There’s so much innovation in this space, in payments. Australia is a great market for disruptors to come in and test their proposition because we’re such a mature payments market. In the bottom end, so the micro SME, you’ve got Square, you’ve got Zeller. Then if you move into commercial, you’ve got local players like Tyro for in store, but you’ve got Stripe really dominant, Braintree, and then if you go to the top end of the market you’ve got Adyen up there. It’s such an exciting space.

I think where this market is going is it’s really moving beyond payments. If you think about Stripe and Adyen, really great experiences for online payments. Adyen’s a true multi-channel player, so it’s got in store and online. Stripe’s moving that way, so Stripe started off from online and now aggressively moving to in store. So now we’re looking at a multi-channel payments world, because most businesses today operate across in store and online, so you’ve got to make that seamless interaction between in store and online.

But what’s got me really excited for the future is the ecosystem beyond payments. You look at someone like Square, for example, in a closed loop environment. They’ve got in-store capability, payments capability, online payments capability, they’ve got point of sale, but now their ecosystem includes order ahead, invoicing, appointments, Square Capital. There’s a lot of that ecosystem play, and I think payments is at the heart of it, and at the heart of that, data. Then you can really use that to pull together this ecosystem of value-added capability around it.

Dexter Cousins
You mentioned that it is a hot market, and you talked about some of the challenges earlier, but there was some good news at the end of May this year where Westpac had announced some further investment. Could you tell us a little bit about that?

Victor Zheng
Actually, Westpac didn’t come into this round. They were definitely supportive of it, but we had new investors come in. We had four major investors come in. We had Acorn Capital, a Melbourne based growth fund. We had Commencer Capital, which was spun out of Investec in Australia. And then also Mastercard came in as well. So it was our first, call it a Series A round, for mx51 since that spin out of Assembly Payments.

Dexter Cousins
Visa and Mastercard are dominant, playing very heavily in this space. What do you see as the attraction for Mastercard to come in and back mx51?

Victor Zheng
If you have a look at Mastercard’s business, if you think about Mastercard you think about credit cards, the issuing side of the business. But if you have a look at what’s happening, and I use examples of this, locally you’ve got Afterpay, Zip, globally you’ve got players like Alipay and WeChat Pay. These businesses both control the consumer side and the merchant side, and so you’ve got this closed loop environment in some ways where you can drive not just payments between consumers and merchants, but you can also drive offers and redemption of offers and loyalty in that ecosystem.

So what you think for Mastercard’s business, they have strong issuing relationships with banks globally, and what they’re missing is really that merchant side of the business. They’re looking to build better capability to engage merchants, and suddenly then you’ll have this ecosystem effect as well, because of these massive pools of consumers globally. And now if you add in merchants, you can really start using that data to drive offers and loyalty and marketing campaigns. So no longer are you just providing a payment service, but you’re also driving relevant offers from the merchants into the right consumer base.

Dexter Cousins
I’d like to chat with you a little bit around the leadership side now, Victor. You talked about some of the challenges with COVID, and a lot of businesses have had to look at the workforce and make some cuts, and then things pick up again and you’ve got to hire again. What would you say from a leadership perspective has been the hardest thing around rebuilding that team and keeping the culture going as you’re going through that down period, and then it’s almost like it’s sprung back within weeks, when we look at the period that we’ve been through in these last 18 months?

Victor Zheng
I think the most important thing is, when things are really tough, the important thing is not to think of all the issues as one big issue. Sometimes you’ve got to break the problems down. There’s multiple issues, but break them down into distinct issues and then work through them in a rational, logical way. As a leader I think it’s really important to be able to do that, because if you don’t do that then what I find is this snowball effect, where there’s issues here, there’s issues there, and then suddenly things spiral.

So being able to slow down, stop, break the problems apart into distinct ones and then prioritise on what you work on, I think is critical. And then really being able to stay passionate and stay hopeful, and making sure that you bring everyone in the organisation along the journey. Being very transparent on the challenges, but at the same time being able to walk through a pathway forward through the difficulties. I think they’re really important things.

Dexter Cousins
How helpful has it been being able to retain some of the original people from the Assembly Payments business, and now taking you on this next step of the journey?

Victor Zheng
Really critical. The good thing for us is a lot of the core team is still together, and that’s really important. If you lose your core team, if you lose the key people, then obviously that’s really hard to rebuild. If you’ve got that core team then it’s much easier to build around that core team and to expand. So that’s been really critical, and we’ve been really lucky in that aspect, that we’ve been able to retain all our core team together.

Dexter Cousins
You’ve got people across Australia. How have you found, with working remotely, has that opened up the talent pool for you where you’ve now got access to anybody in the world? Or do you find that in a business it’s still 50 people or so, you still need to get those moments where you’re all together in the same room trying to build something?

Victor Zheng
I think it really has opened up the pool for us. The pandemic has proven that you can effectively work remotely. Most of our people are still coming into the office. Obviously before this lockdown we’re coming in one to two days a week into the office, and that’s worked really well. So the remote side has worked really well. About a month ago we actually changed our people and hiring policy to allow full remote working, and so in the last month we’ve actually hired three people that are fully remote. Two in Brisbane, and we don’t have an office in Brisbane, and one in Hobart. So that really has opened the talent pool, and that’s been great.

Dexter Cousins
How have you found being able to lead, particularly when you’ve got challenging times? It’s something that we hear more and more, where there’s cracks starting to show after 12 months of people leading via Zoom, that maybe it’s a little bit more difficult to inspire and motivate people and get everybody on the same page. What’s been your approach to overcome that and still get everybody pulling in the right direction?

Victor Zheng
I agree, that is one of the challenges. We have fortnightly all hands and we’re all on Zoom, and the challenge with that sometimes is not everyone has a camera on, so you can’t really read the body language across the organisation. But what we tried to do is once a month we try to have an event where we get everyone together into the office, or into another environment where we do an activity or team building, etc. So I think that’s really important.

We’re actually just planning our first offsite, and hopefully COVID will not spring on us again in September, but in September we’re looking to take everyone to a two day offsite. So I think remote’s good, but you need that face to face element as well. I think that’s really important. One of the things we are really looking forward to is once the vaccine rollout is out there, once most people have the vaccines, it’d be great to see whether or not we can get people back into the office more regularly, maybe two days a week or maybe three days a week, because you need that face to face.

Dexter Cousins
You talked about changing your approach and policies to be remote first. Has that then had an impact or a bearing on the qualities and characteristics that you look for in people and talent when you’re hiring?

Victor Zheng
I don’t think so. I think one of the things it does make really important is the communication side is so important, because one of the things I do miss face to face is, if something goes wrong in a meeting, there’s misunderstanding, the face to face element really helps with pulling someone aside afterwards and saying, look, I don’t think that quite went right, this is where I was coming from. I think it’s harder in a remote setting.

We’ve always emphasised on finding the right people, but really importantly that the person’s a fit to the organisation culturally, and as part of that communication is a key element of that cultural fit. I think if nothing else, we’d really focus on making sure that in that remote world we are actually looking even deeper into that cultural fit and communication side of things.

Dexter Cousins
With the move that you’ve seen to being fully remote, what kind of feedback are you getting from your people as to how they enjoy it and how they find it works for them?

Victor Zheng
It’s funny, because we find that the engineers love remote work. They love their remote working. They’ve got their three monitors up, they’ve got their headphones on, there’s no one that’s going to tap them on the shoulder, they can just code away all day. And then you see the non-engineering roles, the business development, account management, product, design, I think in those roles you see people wanting more to come back to work. So it’s really by role. But I do think though, even in the engineering side of the business, I do think most people want to come in at least one day a week. For the last sort of nine months we’ve had that at least one day a week and I think that’s worked quite well.

Dexter Cousins
That pretty much sums up, I think, Victor, every conversation that I’ve had with business leaders around remote, that you’ve got this very polarised situation where the developers and engineers, as you say, will work remote for the rest of their life if they can, but are really missing that human interaction. Particularly when you’re building something, I think it’s so important to have that connection with people.

Victor Zheng
Absolutely. When we do increment planning, we try to get everyone in face to face. There are certain milestones or certain events that we really focus on getting people in face to face.

Dexter Cousins
We talked about some of the stuff that’s happening in payments that’s got you excited, but when you look at fintech a little bit more broadly here in Australia, what’s got you excited at the moment, and what do you think is worth people being aware of?

Victor Zheng
The fintech community here is quite strong. We’ve got such great companies. Obviously I’ve got a bias towards payments, but you look at open banking, there’s some great things happening in open banking. You think about buy now pay later and you look at the Australian organisations like Zip and Afterpay, and there’s Openpay, there’s so many of them, and you’d say that’s market leading globally in that space as well.

There’s so many great businesses. You look at the AFR and every week you hear about an Australian business that’s done really, really well, bought by a global company, whether or not it’s in the education space or the software deployment space or the cloud space. There seems to be a lot of innovation in the Australian market, which is great to see.

Dexter Cousins
And what can we expect from mx51 in the next 12 months, Victor?

Victor Zheng
Our focus in the next 12 months really is to work with different banks and acquirers in the Australian market, and that’s really important. I think we’ve got great product market fit. The next is about scaling that business.

The second area of focus is really to drive out and build out our multi-channel solutions. So we’ve got a really great capability for in store, we’re in current development in online, and bringing that in store and online together in that multi-channel world, and then being able to go beyond just in store and online payments into the ecosystem of value-added services that we talked about earlier. Whether or not it’s being able to bring in people with cash flow lending capability or marketing capability or loyalty capability, being able to bring them into the ecosystem, building up that solution is the second area.

And the third area is really maybe beyond 12 months, but having a great investor like Mastercard on board and having a commercial relationship with Mastercard, we actually see a great opportunity to be able to work with Mastercard beyond Australia. You think about globally, they’ve got over 20,000 banking relationships around the world, and we really want to leverage that relationship with Mastercard to be able to penetrate other markets.

Dexter Cousins
Brilliant. And where can people find out more about mx51?

Victor Zheng
Follow us on LinkedIn, come to our website, mx51.io, and Google us. I’m sure you’ll find a lot of press about us recently.

Dexter Cousins
Victor, it’s been great to have you on the show. You can find me at Dexter Cousins on LinkedIn and Dexter Cousins on Twitter. For early access to new shows, subscribe to our newsletter by visiting the Fintech Chatter page on LinkedIn. Thanks for listening, and if you enjoyed today’s show please consider leaving us a review, as it helps me bring on great guests like Victor.

Fintech Chatter is presented by Tier One People, leaders in fintech executive search. We’ll help you launch, scale and innovate by delivering world class talent, and you can find out more at tieronepeople.com. Until the next episode, stay safe.

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