Today we are joined by Angela Morisette from Scratchpay. She walks us through Scratchpay’s various services and pivots and how they go to market with large consolidators.
We also hear a detailed description of the user’s experience and some interesting findings when working with veterinary groups.
Welcome back to Consolidate That! Ivan, great to see you again today. Really excited about our guest.
Hey Ryan, I am Ivan Zak, very exciting to have Angela Morrisette on our podcast.
So Angela is a strategic thinker with entrepreneurial spirit. Currently on a mission to help all humans and pets afford care they deserve by accessible and transparent financing. Angela is a Vice President, Business Operations at Scratchpay. She is an associate member at Revenue Collective. Previously she was a manager Strategic Initiative and Analytics at National Veterinary Associates.
Angela, welcome to the show, and thank you for finding the time.
Thank you guys for having me, looking forward to it.
So, maybe out of the gate for those that do not know what Scratchpay is, and everybody should know and see what Scratchpay is about, but tell us what it is.
Sure. So Scratchpay, we started in 2016 as a way to give, kind of put the power in the vet clinics’ hands to not have to deal with payment plans. So what we do is we provide an all-digital experience for clients to apply for funding if they cannot afford the total cost of care right at payment. Then we go ahead and give them up to 24 months to pay us back. And we paid the vet provider upfront and in full, minus a small facilitation fee. So we are really trying to help, that has been our mission historically to help veterinary practices not have to worry about any pesky AR on the books.
All right. Well, I have not been to the exam room as a veterinarian for the past – I think it is coming up to six years, maybe a little less than that. I remember that the CareCredit, is that your competitor? How are you different from them? Or maybe I am completely in the wrong sector of the business.
You nailed it. So that is typically, when we talk to practices about our payment plan functionality that, the first name that comes up – so we have a couple of points of differentiation from CareCredit.
One, we are a little bit easier to use for the practices because we are not a credit card and we are not a bank. We are able to more quickly approve applicants, and there is not sort of all this regulated training that a practice has to go through to use us. A couple other points, we do a soft credit pull for clients versus a hard credit check you are going to have with any credit card when you apply. So that makes the conversation a little bit easier when maybe a team member is asking a client to apply for financing. You know it is not going to hurt their credit score.
Then one cool thing we do is risk-based pricing. So instead of, like a traditional credit card is just going to have one interest rate for anyone that applies. We actually evaluate a client’s holistic profile to give them an interest rate that is applicable for their background, so we can give clients that have more advantageous profiles a little bit of a lower rate. So that is typically helpful to you.
Am I right to think, maybe outside the veterinary space, a product and a lot of people would be used to seeing in the checkout screens online is Affirm.
Correct, yeah exactly.
Yeah, because I think that is one that I started doing more and more online shopping. It just sort of popped up and then took over, and has been really a hot commodity across the board there. Is that pretty similar in the idea of allowing people to have that flexibility of payment options and being able to make those purchases at the time it makes sense to him?
Totally, that is exactly right Ryan. What we have developed in the last couple of years, we actually released a product that we call Take 5. That is a 0% APR plan. It allows the client to, when they are at the practice, just put down a %20 down payment, if you will, and then it gives them eight more weeks to kind of line up with your paycheck to make the remaining four payments. Which is very similar to Affirm or Klarna. Our CEO came from Klarna.
Did they just get acquired or tie-up with somebody I feel like?
They ground up funding then they just…
There you go, a good place to be.
I think they are working with Stripe now too.
Awesome. Well, we understand a bit and I know coming from the PIM Space, we were integrated with Scratchpay and thought highly of the product and the team there. How does it go to market with a large consolidator? I understand the idea of a one-to-one doctor or the front desk bringing on the client to use it. But how are you guys working with large consolidators and making sure that it is something that makes sense of them on their financial portion, and keeping the payments in place, and everything like that?
That is a great question. So, I will cover a couple of different ways we have worked with larger groups. The first one is just with our classic payment plan offering that we have been talking about today. That is a pretty simple implementation. We work with large groups all the time, there are a couple different protocols, it takes about, I would say 30 minutes for the practice to really get the hang of the product. Because it is really not that complex and we put so much of the application on to the client to get a whole group up and running.
We have done 300 plus site rollouts to consolidators in less than a quarter. That is really because we try to keep our products simple, it is all digital base for payment plans. There is nothing really to install so to speak.
So we have worked with consolidators just to equip their practices to be able to offer payment plans and some of those practices. Just because you brought up CareCredit as well, we do work kind of jointly in tandem with practices that do you have CareCredit. It is just really good with over 50 percent of millennials saying that they have or will put something on a buy now pay later product in their future purchasing. It is just a great option to have it at any practice.
So we have spread the gamut of, we have some exclusive relationships or clinics just have Scratchpay, or consolidators want us to be kind of the first look. We have also done rollouts with their payment plans where we are kind of an additional option as well.
Then the second way we have worked with consolidators and you brought up, I think the good point of kind of that digital Ecommerce experience. It is actually doing some really exciting stuff with pilots of not just having Scratchpay payment plans but also actually offering a full payment processing suite.
So we recently partnered with Stripe, we are a payfac with them. Now what we can do is, in the checkout experience, we can really emulate that Ecommerce one. Wherein we know that when a clinic goes to talk to a client, they can actually offer Scratchpay on that invoice. So that way again, it kind of takes the awkwardness of the conversation if a payment plan was needed. And really just equips the team with the resources they need to really offer that like Plan A level of care, versus feeling like maybe they need to take something out of the recommendation because the client cannot afford it. They just know that in that checkout flow, there is going to be the Scratchpay payment plan. So we have a couple of limited pilots going with that right now, which is been really exciting to see how the adoption rates have been with those payment plans.
Speaking of the payment processing, so right now you guys are stepping into that as well, and how does that flow work? Can you walk me through as a user if I am checking out of the clinic? What does that look like?
Yeah, great question. So when Covid hit, the first payment-processing product we developed is actually a text-to-pay and email-to-pay. So think, if you are the clinic and you are trying to trigger out an invoice to a client, most clinics were doing curbside right? So they would actually type in a client’s cellphone number, the total, and we had some kind of preliminary integrations with like AVImark and Vetspire. Where it can actually just send it direct. But the client would actually receive a link on their cell phone. From there they could click that link, it would open an invoice, which is kind of fully customizable to whatever payment plan and payment processing options the clinic wants to show.
So we have certain consolidated groups that really wanted to minimize the merchant fee. So they were really promoting banking as an option and actually just connecting the client’s ACH account directly, because that is going to traditionally just remove some of those network fees and be the cheapest option.
And so yes, the client would receive that invoice. They would select their preferred payment method, whichever one the clinic or consolidator wanted to offer, and just complete the payment right from their car. Then the clinic would receive notification immediately like “Hey, Angela has paid her a 150 dollar bill” and they would then walk out the pet to the car knowing that, that payments been complete.
That was our first kind of foray into payment processing, was really solving for that curbside use case. And now we actually have physical terminals with digital screens that can, we are working on that, putting that payment plan right on the screen. So when someone is in the clinic as well they can see that and opt in.
I have to say, I think it is interesting, the angle of going about that. We had another company that did payment processing on the show before. And it is something that we have talked about with them and a lot of other people. I do think it is kind of interesting for the idea of Scratchpay to expand into that, because in the payment processing space, and Kevin Burke, he was pretty clear with us and saying it can be pretty a race to the bottom on what the rate is for a lot of people, and then people are just providing customer service to be able to expand upon that.
But it is interesting that if someone already is using Scratchpay, it is probably a much easier conversation to add in a new payment processor versus trying to come at people with the payment processor. So, an interesting and unique angle coming into the market there.
That was definitely a great episode to listen to that one as well. One thing that was interesting, just to kind of build off of that too, is, what we are really trying to solve for and what we have noticed a lot of the consolidator groups are looking for solutions to solve for is making the staff experience easier as well.
I think you guys talked a little bit about payment processor integrations with the different practice management systems, and that is something we have been really working to build out over the last six months has been, we definitely do not want to make life more difficult for team members that are already are slapped with, you know, all the people like me that got their COVID puppies.
But yes we have been working on ways to just reduce the time it takes to take a payment. Through working with practices in these consolidated groups I think what we found is, normally you can reduce the number of clicks or the time it takes to take payment by between five clicks and up to 30 seconds. And while that might sound small and like a per-transaction basis, we have actually found too, that if you can show that value as well to a group, you still want to have low fees. And of course, with consolidators, they can definitely command those lower fees with their volume.
But it really kind of changes the conversation away from that direct race to the bottom. If you can be a tool that helps your team have a better quality of life, if you can be a tool that helps your team you know get more pet parents to go for that plan A. So that is kind of the angle we are coming at it from Scratchpay, is, we definitely offer really competitive rates with our payfac relationship with Stripe, but we also want to make sure that we are solving for other business schools too with payment processing.
One other thing that, to a payment processor, kind of our philosophy is we should, as a payment processor, we should be proactively helping consolidator solve problems right?
So, take, for example, AR and AR balances at practices. That is one where, in theory, if you integrate correctly with a practice management system and you have the payments data from the clients, because you are processing those payments. We should be helping consolidators keep those balances as close to zero as possible. So we have kind of built out some tools and suites of options there to enable clinics at the consolidators, to do it at a macro level to collect on those payments, without being aggressive or anything.
But we really found that just having the ability to send a digital invoice versus a paper statement can drastically increase your collection rates on those outstanding balances. So I am really excited and I think we are really excited, as we are in the beginnings of this functionality, to keep working with our consolidator partners and understand what are the top problems you want to solve with regards to payment. So it has been an interesting journey so far.
There are a couple things going through my mind. This is from my experience working as an emergency vet. So one thing that I mentioned, CareCredit because I am old, and the other thing that is popular and becoming more popular but has a difficulty of implementing, is the Wellness Plans. So that is another option for payments and things like that. Then there is also insurance.
So, if I were the end-user and the pet owner – because I think it is a different product. One thing is that if you are thinking of doing something that you could not afford but you can stretch it through five payments, that makes sense. Then another situation, where I have to do this and I cannot afford it and I need to – are you reading this as two different clients? Because when you have insurance, because clinics ultimately need to decide what they need to do, do they leverage more Scratchpay as the method when people cannot afford things? Or push more on insurance, and that is a different thing. Do you see how, if you are competing in that space at all, or are they completely different philosophies?
I would say we are very complementary to both insurance and wellness plans. We started to have some conversations with different consolidators that have their own homegrown wellness plans. They have come to us with the need of – wellness plans are great, they cover a certain number of those core services. But what the struggle is, what we have seen with wellness plans, you want to keep that monthly payment pretty reasonable so you can get client opt-in.
But the issue or challenge is, clients do not necessarily read into the finer print, right? And they think “Okay, I am paying this monthly fee,” so the psychology there is you know “Hey, I’m covered, because I am buying into this.” Nothing wrong with wellness plans but they just do not cover all the experiences a pet might have, right.
And so what happens is a client will come in the wellness plan or insurance would not necessarily cover that you know emergency or that dental exam for instance. Then the client is having this poor experience of “Well, I’ve been paying into this thing and it is not going to cover what I, maybe wrongfully so, but had in my mind that it would cover.”
So what Scratchpay is trying to do, we have a couple things here. One, we are working on some really cool pre-qualification opportunities. So that way different consolidators can offer, “Okay if you have your buyer wellness plan, you are getting a special pre-qual offer, for maybe a 1000 dollars 0% APR with Scratchpay.”
So that way it is using our traditional payment plan to augment the offering for the wellness plan. So that way if the client is caught off guard, with the service not being covered, we have Scratchpay in place, so it can help them just continue that sort of monthly payment philosophy.
And it is the same with insurance. We used to have a partnership with Trupanion, and what we did there with that partnership was, the biggest thing that a customer would kind of call in for on their support line is, “I thought this was going to be covered, I am upset.” So Scratchpay was an option that could help kind of ease the pain of that discovery. That is one way is a kind of CS is complementary and I am really excited for this upcoming year and what we are doing with some of these Wellness Plan conversations.
Now, with our payment processing too, we are actually working with a couple of partners on just being able to provide some of that back end billing and smart A.I. retry knowledge, to help with credit card decline rates and missed payments. Because, I am sure you know as well, the big challenge of wellness plans is, people might try to take some of those services upfront or those products upfront, and then maybe try to weasel out of it and cancel payments. So we are working on some really cool stuff there to help with that problem too, just on the payment process inside.
That is interesting I never thought about the wellness plan. This is creative too. Sign up for a wellness plan, get all the services, and then disconnect. Is that within the plans or do people have like, it is a commitment for a year and you can opt-out? That is just an interesting, from the listener’s side, question.
Not to step on Angela’s knowledge here. So VCP, which is a major wellness plan provider, they white label it for a lot of groups, that’s really what, as a clinic is paying for, is somebody to call and chase down the people that are taking advantage of the wellness plan and not paying for it. You are not paying them usually to make medical decisions and build out the plan and manage the UEI and UX of it. It is finding someone that is willing to be the bad guy, to collect the money without having to tarnish the name of the clinic. It is common for sure. That is a smart way to go about it.
I mean if you can distance the front desk and the staff from the payment collection piece, that is probably a huge thing. Because we noticed that with burnout triggers, people did not get into veterinary medicine to collect money. Ivan brought me along as the one to collect all the money for us. He said, “Ryan, I am a vet so you just collect the money and do this.”
But I think it makes a lot of sense because it is not the right experience usually, especially if it is a very big thing that is a life-saving procedure, I think compassionate people are more likely to say “Well, let’s figure out a payment option, or we can do it for less money,” or something like that. But Scratchpay, I guess the nice thing there is, you guys are taking out the need for the business to take the burden on it, and you’re opening up additional doors for the client. So it’s really cool.
Well, I know we burn through time really quickly and we try to keep them close to 20 minutes here for everybody, but there are two questions that we ask every single guest that we have. The first one is if there is a book that you recommend for people to read.
Definitely I would recommend, it’s little bit newer, it’s called Think Again by Adam Grant. So it basically covers how to – I am a big kind of pragmatic person, and I really like this book because he is an organizational psychologist, and he covers tools in the book on how to make sure that, as you grow and learn, you are able to rethink your standing opinions and biases and stuff like that. So I think that book’s really wonderful.
Especially as you know, Covid’s hit, it is still continuing. We want to stay innovative. Learning to question your assumptions and be able to rethink opinions is super important, and that’s philosophically what we try to do at Scratchpay too. So I love that book and would highly encourage people to read it.
Awesome. And then, if there is a guest that you would recommend that we have you were a recommended guest so you get to pay it forward on to the next person you recommend for us to have on the show.
Awesome, yeah I do not know if you guys had Scott Harper with ALLYDVM before?
We have not.
No, we have not.
I would recommend Scott. I think he would be great for the show for two reasons. He is the CEO of ALLYDVM, which is a technology that does reminders communications. And then prior to that, in a previous life he actually ran Ambulatory Surgery Centers, a group of those. So kind of the consolidator lean but in a different space. I think you can provide a really good perspective on both kind of technology, and maybe problems that consolidators might face.
I did not know that about Scott. I know him personally but I did not know that he was working in the ambulatory and emergency centers.
That is interesting, good recommendation, and definitely get him on.
Thank you for your time and thank you for bringing all the wisdom around.