TriumphPay is in the midst of a gradual rollout of LoadPay, a service aimed at owner-operators that will pull together the cross-section of services offered by the parent company, Triumph Financial.
“LoadPay at its core is a commercial bank account built for truckers,” Melissa Forman, the president of TriumphPay, said in an interview with FreightWaves. “We are a bank at our core that allows us to be able to do things that other providers might not be able to do, which means we can move money 24/7, 365 days a year, without being reliant on an ACH [Automated Clearing House] transfer or the Federal Reserve.”
The competition to get drivers paid quickly is fierce, as this article from FreightWaves shows, as well as this article and this one. (There are others as well.)
With functionality in payment processes identical for the vast majority of the basic services provided, Forman was asked how TriumphPay expects to differentiate itself for those last percentage points.
That’s where the Triumph Financial setup comes into play. The publicly traded company (NASDAQ: TFIN) is essentially three parts: a bank that attracts deposits to create a capital base; a factoring division, which provides standard factoring services; and TriumphPay, which will include LoadPay as well as the quick-pay operations that were the first offering of TriumphPay, and the open loop auditing and pay network created with the 2021 acquisition of HubTran. That network is now formally referred to as the Network, with a capital N.
How to get set apart in a competitive marketplace
“We truly think that is the 5% difference,” Forman said, when it was suggested that similar products throughout the trucking fintech world overlap with 95% functionality.
Forman gave a broad example of how LoadPay would work. A broker that has signed up as a client for the Network uses its capabilities to approve an invoice for payment to a carrier. As Forman described it, the invoice could be a standard 30-day payment or a quick-pay invoice that for a fee pays the carrier earlier than the 30-day-or-more waiting period.
If the carrier is a LoadPay client, Forman said, “they can route those funds to their LoadPay account and have those funds available within seconds.” The money can be deposited to a debit card or some other type of account owned by the carrier.
The LoadPay option, which company executives have touted on recent earnings calls, is also available to Triumph Financial’s factoring operations, Forman said.
“Triumph Factoring also has the ability, when they are funding their carriers, to fund them to a LoadPay account,” she said. That would be faster than routing the payment through current processes even within TriumphPay.
In a follow-up email, Forman said LoadPay would not pay a factoring company directly at present. But in a review of the payment channels, she described a situation in which the end result doesn’t really look all that different.
“A carrier can receive payment through the TriumphPay payments Network for quick pay or standard pay transactions to a LoadPay account in seconds,” she wrote. “Triumph Factoring can pay carriers for factored receivables into their LoadPay accounts in seconds as well.”
Graft’s letter lays out an example
Triumph Financial CEO Aaron Graft, in his most recent quarterly earnings letter to investors, a lengthy missive that covers a wide swath of activities at the company, gave his own example of how LoadPay would work. The key difference he focused on was the idea of the network that never sleeps.
Graft identified a Triumph factoring client, Ally Recovery and Transport, that has been a beta tester of LoadPay. The company hauled freight on Saturday, Oct. 12, with the shipment being unloaded at 7 a.m. After getting the necessary documents signed, Graft wrote, they were submitted to the authorization system within TriumphPay called Instant Decision.
Graft said the invoice was approved in nine seconds and the payment was made to the carrier’s LoadPay wallet in 21 seconds. “This means the carrier had money in their account from a completed load in under 30 seconds after submitting the invoice,” he wrote. “Not only did this occur on a Saturday, but it occurred on a Saturday that preceded a bank holiday on Monday (Columbus Day). Without LoadPay, Ally would not have received their funds until Tuesday morning.”
Both Forman and Graft also used the term “density” to describe why LoadPay can emerge near the top in a crowded field of payment processes all aimed at speeding up the task of getting money into drivers’ hands quickly.
Bubbling under 50% of the market
TriumphPay has said the services it offers are touching just under 50% of total freight volumes handled by brokers. (Triumph’s figure on the total size of the market has been calculated internally, and the number has not been released publicly.) That figure includes payments that are processed through the full audit and payment Network or where TriumphPay services a quick-pay invoice. Payments can be made directly to the carrier that submitted an invoice or to the carrier’s broker. This does not foreclose the possibility that the carrier may have sent an invoice to a factor as well, and then TriumphPay will pay the factor that already paid the carrier looking to get cash quickly.
“You can build technology, you can build solutions, but you have to have density and the distribution path to get it into the hands of the people who use it,” Forman said, touting the number that Triumph is heavily focused on: the percentage of the brokerage world that uses some aspect of TriumphPay’s offerings.
With that figure sitting just below 50%, she said, “the density is there to make LoadPay a valuable tool.” “It’s not like a carrier is going to get paid one invoice a month out of it.”
The third-quarter letter from Graft made much the same point.
“Triumph pays billions of dollars to carriers on behalf of our TriumphPay network of brokers and from our own factoring business,” he wrote. “This is a very large marketing funnel for LoadPay. This is important for investors to understand: many fintechs spend too much time thinking about their product and not enough thinking about their distribution. We believe we can do both well.”
Graft said the primary target of LoadPay is an individual owner-operator, whom he defined as having one to three trucks. The internal Triumph Financial estimate is that the universe of owner-operators is about 200,000, which Graft conceded in his letter is fewer than the 350,000 estimated by the Owner-Operator Independent Drivers Association. He added that Triumph “[does] not believe all those owner operators are active.”
“We believe that each O/O LoadPay account will generate about $750 of gross revenue annually at inception,” he wrote. “We hope that number will go up over time, but even if it remains at that level of revenue, it will be very profitable to Triumph.”
It will generate that revenue, according to Graft, through interchange fees “generated from embedded debit cards.”
In the battle to get money into the hands of drivers quickly, factoring competes with quick-pay programs; Triumph Financial offers both through its factoring business and quick-pay operations under TriumphPay. There are numerous reasons why one carrier might choose to factor and another to go to a quick-pay program. And the many channels to get paid are complicated when there is a broker involved, as there often is.
Forman noted that even with all the ways to get paid quickly, there are still carriers that choose not to pay a fee for that speed – known in financial circles as a “haircut” – and that are on the more elongated payment schedule.
“The average payment term for carriers from brokers is still 30 to 35 days,” Forman said. From shippers, that 30 days might extend to 60 days.
But Forman added that for the freight transactions handled within TriumphPay’s network – again, almost half the total available market – about 55% are for payments that are sped up from the base terms, “which means a carrier is willing to pay a fee to be able to get paid sooner than what their payment terms are.”
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