Paystand Moves Money and Refuses to Take a Percentage of It

There are eighteen trillion dollars of commercial payments in the United States still moving by paper cheque. Jeremy Almond’s pitch is not that Paystand digitises them. It is that Paystand does it without taking a percentage.

The problem, in an insurance company’s words

Almond’s worked example is an insurer collecting monthly premiums. Miss the payment date and the coverage lapses, so getting paid on time is not an accounting preference, it is the product working.

An insurance company has two bad choices today. They either can use paper cheques, which means they have to wait, they have to collect, takes them a long time — and then if they don’t get the money on time, basically you lose your insurance coverage for their business. Or they take credit card payments.

The second option costs about three percent. Almond does the arithmetic that makes it absurd at scale.

If you’re a fifty or a hundred million dollar company, just to receive your money might cost you a million dollars, which is absolutely insanity for effectively moving ones and zeros back and forth between banks.

He is careful about why cards do not belong in this transaction at all. These are counterparties with a decade of history and contract terms sales teams argued over for years — net 30, agreed in writing. The interchange model exists to price risk in an anonymous transaction, and there is no anonymity here.

The Netflix framing

Almond reaches for the same analogy twice, and it is doing real work both times.

We kind of think of us as like the Netflix of the industry, which is we’re trying to move the industry from a transactional model — sort of this Blockbuster go in and rent something — to a fixed cost SaaS model.

The second use of the analogy is about migration rather than pricing. Netflix shipped DVDs in red envelopes for years while teaching people not to go to Blockbuster. Paystand does the equivalent: it does not require its 50,000 network businesses to go fully digital on day one, and a meaningful share of its own cost base is the legacy banking infrastructure it federates with — 18,000 banks — to meet customers where they are.

Which side of the network pays

Latka multiplies 50,000 businesses by $1,500 a month and arrives at a number that would have made this a very different interview. Almond corrects him, and the correction is the strategy.

We have sort of two sides of the network. We have a receivable side and the payable side. We basically charge for the receivable side of the product because effectively you as a CFO care about speeding up your time to cash, getting your money quicker and at lower cost.

Most of the industry charges the payables side. Almond calls that a vitamin: nice for accounts payable not to write a cheque, not a boardroom priority. The receivables side is where the pain is measurable. He will not publish the split, but describes the network as asymmetric — each receivable company has at least a hundred customers on the other side — and places the paying cohort in mid-market, “like a HubSpot,” more than a hundred and fewer than ten thousand.

The growth line, and the number he will not quite give

Paystand launched in 2014. Growth on volume ran 5x in the first couple of years, nearly 4x the previous year, and Almond expected around 3–3.5x for the year in progress. Almost all of it net new rather than expansion, because at this stage the priority is network coverage rather than depth.

Latka asks when Paystand passes $5 million in annual run rate, and gets the same answer three times.

We’re not far off from doing that.

The GetLatka profile records $4M for the date of the interview, which is consistent with a founder who will say “not far off” and will not say the number. Volume he describes as “tens of millions a day.”

Why the churn number is structural

Almond reports net negative revenue churn annually, and the reason he gives is not about product quality.

Once you get people in the payment network that’s entirely digital, you’re not moving back to paper cheque.

Payment rails are the stickiest software category there is, because switching costs land on both sides of every transaction. The vast majority of American businesses, he points out, are still using an instrument invented in the Middle Ages. The hard part is the first conversion, not the retention.

Banks as partners, not customers

Paystand does not sell to banks and does not take referral economics from them. Almond frames the relationship as each side staying in its lane.

The banks know what they’re good at and what they’re not good at, and the reality is they’re not software companies and companies like us are not banks. We can create great enabling software for a digital age, and banks can do all of the things that they’re good at — regulatory licensing, compliance, trust, risk models.

Almond had raised about $12 million by the time of this conversation. The team was thirty people, most in Scotts Valley, California, with a fast-growing office in Guadalajara opened that year and a very small one in Canada. He describes his own background as fifteen years of B2B commerce, starting as an engineer at a nanotech startup that Veeco acquired.

Asked what he wishes his twenty-year-old self had known, he declines the premise of the question entirely.

I don’t know, my twenty-year-old self was very happy and my thirty-year-old self is even more happy. So I think life is just — it’s a blessing and I feel grateful for the journey.

Sources Jeremy Almond’s interview with Nathan Latka, recorded 6 August 2018; revenue and funding rows from the GetLatka Paystand profile.