The team behind Arcum Partners thinks the merchant services space is missing something pretty critical. “For an industry that has the word ‘services’ in it, there is a huge lack of services,” co-founder Sebastian Builes explained to Hypepotamus.
The Atlanta-based team built out an analytics platform to help payment processors better understand their merchants and why they might leave for a competitor. The goal, Builes added, is to take on the massive problem of churn within the payments space.
“Payments are fairly commoditized, so anybody can offer credit card processing to businesses,” Builes said. “[Most businesses] don’t know too much about credit card processing. Their concern is with starting the business and making sure that customers are happy with the product. Credit card processing is one of the last items on their priority list. As a result, a lot of merchants get taken advantage of.”
In these cases, unhappy merchants will ultimately churn and search for a different payment processor. Arcum helps payments companies leverage historical data and patterns of behavior surrounding their merchants in order to better predict future churn. This, Builes explained to Hypepotamus, can give a company time to repair that relationship before losing that customer forever.
Targeting The Payments Space
Arcum Partners borrows its name from the Latin word for bow, which was “the first ultra-targeted weapon developed by humans,” Builes explained. “We figured Arcum would be the name since we leverage data to help our clients increase their bottom line and at the end of the day we create insights that increase overall profitability in an ultra-targeted way.”
While Arcum’s initial go-to-market strategy was focused on the small-to-medium-sized business market, it became clear over the past several months that the big players in the payments space wanted to tackle the problem of churn now. Builes said that has “shifted the entire timeline and the type of clients” the early-stage startup plans on going after in the short-term.
This type of service could be particularly beneficial for players in the payments space looking to retain customers during uncertain economic times.
“If we enter a recession, churn will go higher. I think a lot of the bigger organizations have seen the writing on the wall and have determined they can’t wait for the recession to hit. They ought to start figuring out solutions now,” said Builes.
The Arcum Team
Raised in Colombia and Florida, Builes earned both his bachelor’s and master’s degrees at Florida State University before moving to Atlanta. He initially started looking at customer churn while working for a consulting company that helped newspapers and other publications better understand their subscriber base. Builes later went on to work as a financial analyst at Evo Payments, a public financial services and payments technology firm.
Arcum grows out of Builes’ experience in the analytics and payments space. He co-founded Arcum along with Taohang (Tad) Zhang and Mikhail Dmitriev, Ph.D., a current FSU economics professor who taught Builes at both the undergraduate and graduate levels.
Zhang and Builes were colleagues at a consulting firm before both entering the payments space.
The team was bootstrapped for the first three years before raising a small friends and family round via WeFunder earlier this year.
Most recently, the team brought home the top prize in the 2022 Fintech South Innovation Challenge.
The team may have been all smiles at Fintech South earlier this month, but they are quickly getting back to work and ready to scale the platform to prepare for larger clients.
“Our solution is trying to do is put the word service back into the industry. We’re able to work with processors and let them know when a client is unhappy and why they’re unhappy, so they can ultimately improve that service or provide a better solution,” Builes said.
Featured photo provided by Arcum Partners. Photo from left to right: Co-founders Tad Zhang, Sebastian Builes, Mikhail Dmitriev