Tim Murphy: Yes. So we didn’t change our guidance for CPV, and we do have this large personal lending customer who has been ramping throughout the year. That’s one driver of it. We do have the Business Payments growth that I mentioned. We think it’s going to be higher in Q4 than Q3. That’s another driver of it. So those are a couple of factors where we think that it could potentially lead to a higher number. But again, we didn’t change our CPV volume range specifically.
Michael Infante: And then maybe just a quick update just in terms of where you are in terms of getting some of the AR functionality onboarded and how you’re thinking about the near- to medium-term impact of that.
Tim Murphy: AR and B2B, we have the functionality in place. Generally, we’ve been optimizing payment acceptance within B2B, which is one of the reasons for the higher take rates and margins. We have refreshed some of our integrations. So we now have more capabilities within those integrations like Sage, for example. We added Microsoft Dynamics on the AP side, and we’re enabling that on the AR side. So we have good momentum in AR, and that has been a driver of some of the growth in take rate and margin improvement this quarter.
Operator: The next question comes from Joseph Vafi from Canaccord Genuity.
Joseph Vafi: Nice to see that double-digit adjusted organic growth. Maybe kind of talk on software integrations. You’re doing really well, good performance, always adding to those portfolios. How does the competitive environment look there versus the last few quarters? And obviously, Payix has been acquired, and I kind of consider them a competitor and how that may be affecting the competitive landscape on the software integrations. And then I’ll have a follow-up.
John Morris: Joe, it’s John. Yes, so we have 257 of those software partners as mentioned, 161 of those are on the consumer payment side, which we wouldn’t really compete with Payix on that side of it, and 96 on the business payment side. And we actually are very focused on the ones that we can truly help monetize payments. And as we’re really streamlining how we partner with them to go to market, we actually expect a really good runway in looking in ’24 on that. Obviously, some things take time, but the way some of those unique relationships are stacking up for us, as I mentioned a couple on our call, we mentioned PDI doing some things on the business payments side, we mentioned Blackbaud on how we’re going to integrate an embedded payable solution for them to roll out on behalf of their clients, and then some existing large relationships that we have on the AR and the AP side, we will look to continue to really streamline that as we have been working on that whole customer journey client success model.
Joseph Vafi: And then I know you called out the instant payment growth again being really high. Could you just kind of remind us how big that TAM might be and how the economics look on that payment volume versus some of your others.
Tim Murphy: Yes. Thanks, Joe. So Instant Funding is a product we utilize Visa Direct to Mastercard Send, and we’re funding loans directly. So that’s the primary use case for us: to fund personal loans. And that’s a great growth driver for us. It’s been growing really nicely. As our customers adopt more digital payments, they also want to digitize the entire funding part of the process. And so this helps them do that. And then if you recall, if we fund directly on to a debit card, they’re more likely to set up the repayment of the loan on that debit card as a default mechanism. So it also gives us the opportunity to increase acceptance on debit cards within personal loans by funding the loans directly. And so it’s a pretty big opportunity of our thousands of lenders.
We probably only have a few hundred using it today. So there’s still a long runway to go. And you’re funding the loans, so the ticket size is much larger, versus the repayment streams, which ticket sizes are lower, but the economics are more like an ACH where it’s a per transaction fee. It’s not basis points on the funding volume. It’s per transaction. So the ticket size isn’t as relevant in terms of the actual economics to us, but there is a lot of volume flowing through there. And then we pay a typical card brand fees and bank fees. But overall, it is a lower-margin business. That’s why I mentioned one of the reasons we didn’t increase gross profit guidance because this is a driver of revenue growth but it’s a little bit lower margin.
Joseph Vafi: The funding of the loan could be lower margin. But if the consumer repays off that same card, then it’s got some nice benefits over time, I get it.
John Morris: Yes. That’s a perfect example of when we talk about monetizing payments through the whole ecosystem with embedded payments, both outflows, that would be an outflow, and then an inflow back and a multi-modality. That’s a different modality, although it may be card-based it’s going down a different rail in some respects, than debit, your funding, your sitting credits versus pulling debits. And so that’s kind of key to our overall long-term core strategy of a network to all networks that move funds to and from.
Operator: The next question comes from Bob Napoli from William Blair.
Bob Napoli: John, the debit interchange bill, how would that affect, Tim, your business if debit interchange gets cut significantly? John, when the Durbin Amendment came through, I can’t remember if you were running this business or not?
John Morris: We were, yes. And we benefited. In the past, we benefited. If you look at some of our pricing models, the way it’s priced, if you think about a convenience fee or you think about some type of fixed rates in pricing, if it were to go down, that we would benefit in some form there.
Bob Napoli: So you benefit. I mean could your revenue come down, your cost comes down more or what?
Tim Murphy: No. I mean if you’re charging them a fixed fee and our costs come down, we’re still charging them that percentage of volume. We just have lower costs, which would increase margins.
Bob Napoli: Right. Do you think there would be pressure on your gross take rate over time or not immediately, but over time?
Tim Murphy: I don’t think so. In that particular pricing model, we would be still charging. If it’s, call it, 1.5%, it would still be 1.5%. So I don’t think that would change the actual revenue, just be that we would have lower cost and better flow through the P&L.
Bob Napoli: All right. Appreciate it. You mentioned buy now, pay later in your press release. Just wondered if that’s if there’s anything significant going on there or if you think there could be.
Tim Murphy: I mean it’s definitely an addressable market opportunity. We have a handful of those names now, and we’re talking plans when everybody pays on time and it’s 4 or 6 installments, and it’s simple, then there’s no need to have a processor like us. You could use Worldpay or any other e-commerce provider. But when those installment plans start to look more complex and look like loans where there’s delinquencies and interest and fees and penalties, it’s started to feel a lot more like an installment in growth driver for us, but it’s certainly a market we can address.
Operator: We’ll see if there are any further questions before we conclude. Ladies and gentlemen, we have reached the end of the question-and-answer session. And I’d like to turn the call back to John Morris for closing remarks. Thank you. Sir?
