PaySimple and the Long Tail

Eric Remer is the founder and CEO of PaySimple, a leading provider of small business merchant accounts, mobile and electronic payments, and ACH processing services. He also founded Conclave Group, a direct marketing services company, and co-founded I-Behavior, a leading behavioral targeting and database marketing organization. He began his career in the investment banking field, with Kidder, Peabody, & Company.

In this video segment, Remer describes the origins of PaySimple and the gap in the marketplace he was seeking to fill. He explains how PaySimple fits into the payment processing space alongside bigger players such as MasterCard (NYSE: MA  ) and PayPal (NASDAQ: EBAY  ) . The full version of the interview can be seen here.

A full transcript follows the video.

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Tom Gardner: I'm here with Eric Remer, the founder of PaySimple. Thanks for spending some time with us and telling us a little bit about what's going on at PaySimple -- the concept of the business -- and it will give us a little bit of context on payments online, what's happening with small business services, etc. When did you start PaySimple? What was the motivation for it?

Eric Remer: First, I appreciate the opportunity to talk a little about it.

I started PaySimple in the early part of 2007. The motivation was, it actually evolved out of one of my earlier businesses. The thought at the time was, as we saw this gap in the marketplace, can we create a product, and really a solution, that simplified and empowered the lives of small-business owners? Because what we kept seeing was no small-business owner starts a business to collect payments. It's a necessary evil.

They start a small business to bring their passions to their communities. If we could provide a small tool or solution that they could avoid that piece of their business, which they don't really enjoy -- again, a necessary evil -- and allow them to bring that energy to their communities, it was a net benefit for all stakeholders involved.

Gardner: How is PaySimple different than, let's say, PayPal? Or, let's say, MasterCard?

Remer: Very different than MasterCard.

Gardner: OK, good.

Remer: A little closer to PayPal.

Gardner: MasterCard is a holding in our portfolio, so I want to hear a little bit of that in that context too, but anyway, go with PayPal first.

Remer: I could start with the big picture. MasterCard provides an ecosystem for consumers and merchants to safely pass money. They created this worldwide conduit to allow that to all happen, which is great.

You bring that down a level, and I'm a merchant. I'm a small-business merchant. PayPal did a phenomenal job, really, with consumers, allowing them to pass money both to each other and then maybe to online merchants.

What we're really focused on is to take it a step further -- offline merchants, small-business service-related companies, which, again, you'll hear me probably say a few times. That service-related company ... when you think about the small-business communities right now, there's 27 million small businesses, which are one to 20 employees. Seventy-five percent of them are actually in the service sector. Only 7 million, or 25% of them, are in the retail point of sale.

All innovation that has evolved -- really from PayPal to Square to LevelUp to GoPayment -- all these companies you know very well in the valley are focused on that 7 million, that retail point of sale. PaySimple is focused on that long tail, which is the 20 million, but they don't transact as much. They're not as quick with transactors but they have bigger issues, bigger problems.

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