Why We Built Highnote: A Q&A with Highnote Cofounders John MacIlwaine and Kin Kee

On September 28, Highnote emerges from stealth as the most modern purpose-built card issuing platform, with customization and speed-to-market capabilities never before seen in the market.

In this Q&A, cofounders John MacIlwaine and Kin Kee talk about why they built Highnote and what they expect from a future where emerging enterprises have the ability to innovate in the embedded payments space.

Why tackle embedded finance? And why now?

John: Embedded finance is in our DNA. Kin and I were at Braintree and Lending Club together, and I was at Visa before that. And when you spend any amount of time in this space, you start to see the opportunities – what works well and what could work a lot better. And you start to recognize and anticipate the trends.

There has been an amazing amount of innovation on the “front end” with fintech – better customer experiences (digital cards like Apple Pay, mobile-only banks), frictionless payment experiences (Uber, DoorDash), and more forward-thinking business models that embrace embedded finance (earned-wage access, seamless and instant B2B invoice settlement).

Unfortunately, many of these innovations are still ultimately encumbered by the lack of innovation and the increase in complexity on the processing side. Today, legacy players still account for most card processing volume. To us, that shortcoming in the industry translates to a major opportunity.

Highnote enables increased innovation by serving as an end-to-end processing solution. It’s a platform – an enabling product – designed to solve existing and future needs so enterprises can accelerate the adoption of modern embedded finance opportunities across the board.

And then there’s the timing. We’re at this moment where winners in the race to embedded cards have begun to emerge. There’s a market here. There’s a wave of capability and an accelerating thirst for a customer-focused solution.

Kin: There’s so much opportunity for improving on what’s out there. Even if you just look at the technology – the leaders in the space today are built with REST APIs, which were industry standard 10 years ago but are actually really limiting for the kinds of iteration and customization businesses expect today. We built the Highnote platform from the ground up to meet the demands for innovative use cases across many products, with speed and agility. This is achieved with a technology platform that provides maximum control and flexibility to our customers.

John: One thing we’re excited about is that we’re actually delivering on the promises that a lot of platforms out there are making. We’re not just enabling unprecedented speed to market – I’m talking weeks, not months – we’re also making it possible for our customers to change their offering once it’s launched.

What were the options for becoming a card issuer before Highnote?

John: Pre-Highnote, companies that wanted to offer embedded finance capabilities had two options. The first is to partner with one of the existing players in the space – but as I mentioned, most of those offerings were designed 10 years ago to meet customer needs from 10 years ago.

Many of those platforms have actually pivoted considerably along the way from what they were originally designed to do. The world has changed tremendously – especially in payments. So really, existing players can’t readily meet the needs of companies looking to offer the kinds of embedded finance options today’s customers expect. A more modern approach is long overdue.

The second option is to DIY it. This can seem like a good idea because it enables businesses to dictate the exact terms of their partnerships and products and have complete oversight of their platform. But in practice, it’s a prohibitive undertaking.

You have to establish partnerships with all the players required for card issuance – issuer, processor, banking partner, card network. But before you even get into negotiating these partnerships, you have to research the space to understand who’s the right fit for your business. We’ve seen companies spend six months just aggregating a list of potential banking partners.

And once you find a match, contract negotiations start.

The entire process can take years and it requires a lot of in-depth knowledge that many businesses don’t have in house. It also requires a lot of capital up front to stand up the appropriate functions internally (compliance, risk, finance, ops etc.).

Still, some companies choose the DIY route because they perceive it as the best way to get the best economics and rates possible from all the partners involved (sponsor bank, card networks, card fulfillment, KYC / KYB, compliance tools, BPOs, etc.).

In reality, though, companies are limited in negotiations by the simple fact that they’re negotiating only against their own volume. Partnering with a solution like Highnote – which negotiates based on the volume of all the companies it serves – is a better path to the best value. And because it eliminates the work of finding and managing partners, it lets businesses minimize total cost of ownership while maximizing revenue they can capture through their card program.

A Highnote partnership also lets businesses launch their cards faster. In the DIY model, the years-long period of research and negotiation must happen before any actual card product gets launched.

Kin: Highnote is an end-to-end program manager, which means that we’ve done the work of vetting these partners and negotiating contracts. And because of our team’s experience in this space, we’ve secured best-in-breed partnerships while also ensuring that we are able to pass on the benefits of scale to our customers.

Instead of focusing on the logistics of card issuing, our clients can focus on how they’re going to better serve their customers via innovative embedded payments applications.

And those innovations become differentiators for the businesses offering them?

John: Exactly. It’s already happening. Look at Uber and Instacart and DoorDash. Consumers may not have ever heard the phrase “embedded finance,” but most of them have experienced the ways embedded finance applications make their lives easier.

Eventually, consumers will start to expect these kinds of capabilities and whatever new capabilities industry leaders introduce next.

Kin: This is why the platform’s scalability and adaptability are so crucial. Nothing is static. Businesses need to know that they can try different things as their users’ needs and behaviors change.

John: Because the capabilities that are differentiators today will become table stakes tomorrow.

And Highnote is the best way for businesses to keep up?

John: Not just keep up. Lead.

Kin: We built Highnote specifically so enterprises could innovate and try new things quickly. This is especially important in an increasingly competitive and dynamic fintech landscape where product and service innovation cycles can be compressed to months instead of years.

John: That’s really important to how we as a team view the work we’re doing, the idea of innovation. We’ve spent time with really innovative companies: Google, Venmo, PayPal. I don’t think it’s an overstatement to say we have assembled the most advanced payments team in the market.

So on the technical side, how does Highnote make innovation possible?

Kin: We built our infrastructure from the ground up. We created a unified platform that provides flexible money movements faster than anyone out there. And importantly, we created it within the past year, with technologies that weren’t around 10 years ago, when some of the incumbents in the space were launched.

One straightforward example is that we built Highnote with GraphQL APIs, which allows for unparalleled customization. The outcome for clients is that they can A / B test, respond to outcomes, and make better business decisions. Our data models and application domains are architected to support configurations and customizations that unlock use cases that are deemed too difficult to overcome by some rigid platforms out there.

Our infrastructure also enables us to deliver speed to market that’s unmatched in the industry. We’re talking launches in weeks, not months.

John: The status quo meant that emerging enterprises were excluded from being able to innovate in ways that let them differentiate via embedded finance. Our platform lets them realize their potential and deliver exemplary products and services to their customers – and therefore truly compete on a more level playing field.

What do you see Highnote enabling your customers to do?

John: We’re making embedded payments accessible to our customers and we know that by doing this, they'll innovate in ways we can't even imagine right now.

This is on the scale of how Uber couldn’t have existed without the smartphone.

It’s going to unleash the creativity of emerging enterprises. One of the reasons we’re so excited about coming out of stealth is that we absolutely cannot wait to see what our customers build.

Kin: If you can dream it, you can realize it on the Highnote platform. Our platform is that flexible.