The Future of Payments
No one understands better than Marcelo Bernal that paying for needed goods and services is a visceral act for which most people need give little thought. “payments is moving from a stand-alone offering to a functionality in a broader software solution so we need to have a solution that is simple, easy to integrate and never goes down,” says the Co-CEO of payment processor Merchant e-Solutions, “so customers can rely on it without having to think about it.” And yet in his leadership position at the company, his job is to think about ways to achieve constant improvement in payments.
Owned by Brazilian based payments processing giant Cielo, the role of the Atlanta subsidiary company is evolving to become a laboratory for the future of payments. “We have an exciting opportunity here at Merchant e-Solutions,” he says.
Marcelo was born in Sao Paulo, Brazil in 1976, to a middle-class family with a father who worked in middle management and mother who was a physical therapist. “Brazil was a closed economy in the 1980s,” he says, “so we had no fancy toys, but we did have a maid and a cook. Also, public schools in Brazil are not as good as the US, so my parents spent between one third and one half of their income on our education.”
Brazil went through period of high – and even hyper – inflation in the 80s and Marcelo remembers all the things that the family had to do to cope with the problem. “With inflation at 100% per month, my parents would drive two cars to the grocery store to buy as much as possible,” he says. “We had a huge pantry and two freezers.”
At 17, Marcelo came as an exchange student to the US for nine months. “I lived with a Mormon family in Apple Valley, California. It was very exciting for me to learn how to adapt to a completely new environment and my English improved greatly, which was the main purpose of the trip.” Marcelo went on to relocate 7 more times during his career.
Marcelo entered the University of São Paulo, which just happens to be among the best business schools in Brazil, at 19. Like most Brazilians, he worked during the day and went to school at night. “My first job was with ING Barings,” he says, “being on the phone as an intermediary between the floor equity traders in Sao Paulo and the traders in New York, constantly going back and forth in Portuguese and English closing live trades. Let me tell you – it was hectic – those trades happen fast,” he says.
But two and a half years of working 12 hours a day with the traders and then going to school at night took its toll, so I left ING Barings and took the rest of the semester off ,” he says. “I did work with my step father in his import business, and that was a lot less stressful.”
After that short break, Marcelo worked briefly for Credicard, which ultimately became Rede – Cielo’s largest competitor in Brazil – and then in procurement at Nestle, but liked neither because he felt that he would not learn much in the jobs he had at these companies. “But then I got a job at the credit department of Citi,” he says, “which was very helpful, because I learned how to read a balance sheet and understand capital structures.” He stayed there a year.
In his fourth year of college, Marcelo went to Spain on an exchange program, which he says way both the best vacation he’s ever had and a fantastic learning experience. “I made friends that I still have today and learned a lot about the coming of the Euro, which was still one year off, as well as International Finance, the career he ultimately chose for the coming decades” he says.
After returning from Spain and graduating from University of São Paulo, Marcelo joined HSBC in an entry level position but was soon given a lot of responsibility. “My boss told me to start a new trading desk. I began with nothing but a pad, a pencil, a list of names and a phone to call them on,” he says. It took him about one year to get the desk operational, , but he began to get traction and was soon doing very well, so at 25 he was running the Institutional Sales Desk at HSBC Brazil. But there was a problem whenever the clients wanted to meet in person. “They didn’t know that I was a kid and I didn’t want them to know I was a kid, so whenever we had to do a meeting I would send my boss,” he says. With everything going so well, it was not a surprise when Marcelo was selected by HSBC for their international training program at age 26. The two-year program started with three months at a training campus in London, followed by six months of structured finance also in London, six months of capital markets in New York and then six months of credit options trading, also in New York.
In 2004 Marcelo joined the Latin America Capital Markets desk at HSBC in New York. At that time, HSBC was ranked 28th out of 28 banks in the industry he said, but by 2007 we were ranked number 1. “This is where I developed relationship building skills,” he says. “The truth was that on the surface, most top banks have the ability to deliver a good product. What ultimately gets the client to the finish line, is trust. The customer had to know that you will do exactly what you have said you will do and that their deal will be top priority for you. And you have to be good at problem solving, because problems will always come up.”
They also did some innovative things. They were the first bank to create a marketable bond for drillships financing- large vessels designed for use in exploratory offshore drilling of new oil and gas wells or for scientific drilling purposes – combining structural aspects of project finance and the standardization and flexibility of the bond market. At an average cost of $800 million each and significant demand by Latin American companies, these vessels were in extreme need of creative capital financing. He was also part of the team that created the first Asia Private Banking distributed Subordinated Perpetual bond, which later became widely used by Latin American companies and banks to raise capital. “I made over 250 flights in 2010, at least half of those long-haul, doing several round-the-world roadshows with top Latin American companies,” he says.
In 2011 Marcelo was invited to join Goldman Sachs. In his first six months he rotated offices, spending one week in New York and one week in Sao Paulo. He was then placed permanently in Sao Paulo responsible for structured finance, which included Capital Markets and acquisition financing. In 2012 he handled the financing for the acquisition of a US company called Merchant e-Solutions by Brazilian payment processor Cielo.
Marcelo continues to work for Goldman for five years. In this time period, he and his husband adopted their first child, causing him to start to rethink his priorities. “While I liked life as a banker, it does demand a lot on your time,” he said. Then in 2014 he had the opportunity to adopt two siblings of his son. “life became quite hectic at that point and I decided to leave Goldman to focus on my family,” he says.
He spent the next three months concentrating on the children and began to think about what to do next. “My husband is an American,” he said, “and we decided that we wanted to raise the kids in the US, so a move north became likely.” In mid-2015 Marcelo met with friends at Cielo who raised the possibility of his becoming CFO of the company he had helped Cielo buy in 2012, Merchant e-Solutions. Part of the job was to move the company from Silicon Valley to Atlanta. He signed the contract in October of 2015 and started work in Atlanta in January of 2016.
“I was still back and forth to Sao Paulo quite a bit for two years,” he says. “Because of immigration rules, the kids weren’t able to move to the US until mid-2017, so I spent part of my time in Brazil and part in Atlanta.” Marcelo says that one benefit of this arrangement was that, without the kids around, he was able to get up to speed on his job faster and work on completing the move from California. “We had a lot of hiring to do,” he says, “because far fewer employees made the move from California than we thought, but this allowed us to start fresh and create a new culture. It has definitely paid off.” In the process, he believes, the team was able to modify, update and simplify their processes.
Marcelo says that being a CFO – and now co-CEO – rather than a banker has brought him closer to people. “As a banker you are always looking from the outside, but when working with an operational team you see the impact your decisions have on people. For example, when we decided to set up 401(k) matching, it was gratifying to see the effect it had on the employees,” he says, “because it made a real difference in their lives.”
As co-CEO of the company, Marcelo had been focusing on a three step strategy to stabilize, optimize and grow the company. “We had done the first two when Cielo decided to sell Merchant e-Solutions in of the first half of 2017. The sales process continued until early 2018 when they decided not only not to sell the company, but also to reinvest in the US business. Marcelo put it this way – “Cielo found a buyer and it was Cielo.” For a variety of reasons, Cielo decided that it made more sense to keep the company that to sell it. “A multi-year investment plan has also been approved,” says Marcelo, “with the aim of creating the payments company of tomorrow – the go-to payments partner for integrated payments.” “Payments are moving towards being solutions,” says Marcelo, “and in this movement banks and payment processors will become technology companies.
Merchant e-Solutions has a very broad customer base, but over 90% of their customers were obtained via partners like NetSuite, Synovus and others. “We’re in a unique position in the industry,” says Marcelo, “to fully leverage fundamental industry trends and create the next generation payments company with the support of a very large shareholder.” “We believe we have a good understanding of what clients will look for in the future and we feel we are uniquely positioned to provide that payments experience to our partners and clients” he says, “ as we have the funding, the technology and the talent to get us there”.
Marcelo lives in the Pine Hills section of Buckhead with his husband and three kids. He earned an MBA from Cornell University in 2011.