Pay by bank explained: Aeropay CEO Dan Muller on Trends, Risks, and Growth

Podcasts like Legends and Leaders give founders a chance to explain not just what they’re building, but why it matters.

Hosted by Ben Weiss, the show has featured notable guests including Kevin O’Leary, Shark Tank investor; Martin Cooper, inventor of the mobile cell phone; and Jenny Just, billionaire investor.

Payments is one of the most critical (and least understood) layers of the economy, shaping everything from consumer behavior to business operations, despite being built on complex and often outdated systems.

In this episode, Aeropay CEO Dan Muller joins Ben to discuss how pay-by-bank is changing money movement.

Dan shares his path into payments, the global trends that inspired Aeropay, and why building with risk and compliance at the core has been key to scaling. He also breaks down inefficiencies in card networks and why the U.S. may be nearing an inflection point for open banking adoption.

Below is the full conversation.

Ben Weiss: We’ve got a new episode of Legends and Leaders, and today it’s great to have Dan here. Dan, you’re behind a company that is changing the way payments are done. Payments is a fascinating space. There are a lot of companies in this category, and it breaks down into peer-to-peer, business-to-business, and many other areas. But you’re focused on the way we interact with banks and how to improve that process. I’m excited to have you here and to get into your story and what you’re building.

Dan Muller: Thanks so much for having me, Ben. I’m a fan of the show, and I think there’s a lot of good stuff to talk about, especially now. It’s been a fast-paced start to the year, and we’re right in the thick of it, so we’re excited.

Ben Weiss: Dan, what made you interested in the payments space? Let’s start there.

Dan Muller: I’ve always been a very curious person. To spare you the full backstory, I graduated at the height of the financial crisis and recession and kind of fell backward into technology. I worked for a company that built digital solutions for brands and retailers, and we were one of the leaders in the space, really taking advantage of the mobile boom.

One of the things we realized every time we did an implementation was that payments were one of the hardest things to make easy. The solutions were antiquated, legacy systems run by incumbents that were slow, expensive, and created a lot of chargebacks and other issues. I felt like I had a good blend of product and business acumen to dig into that problem and really understand how it impacts people firsthand, from merchants paying a lot of fees to consumer prices going up and affecting the way we shop online.

With that experience, I jumped headfirst into payments. There’s no real payments education course. Everybody learns by doing it, through the school of hard knocks, and I definitely fall into that category. I learned it, became obsessed with it, became an expert in it, and started Aeropay right after that. That was my entry point into payments. Not super orthodox, but it was fun.

Ben Weiss: Specifically with the company you’re at now, Aeropay, what made you interested in being part of the revolution the company is building? Why do you care so much about bank payments?

Dan Muller: As I was starting the company, I realized something important. I’m of South American descent. My mom is from Argentina and my dad is from Uruguay. When you look at emerging markets and developing countries, money movement, cash payments, and payments innovation are critical to core economic development.

Blending what I was seeing firsthand in the U.S. with my experience visiting family in a very cash-dominant environment, I thought innovation was coming whether we liked it or not. Developing countries might actually leapfrog the U.S. in going from cash to real-time rails. A lot of those ideas were starting to bubble up: UPI in India, Pix in Brazil, and real-time rails in Asia growing quickly. Those were all bank-driven payment rails—less card-centric, less credit-centric.

I thought, if those efficiencies are going to prove true in those countries and that innovation is going to move that quickly there, eventually it will make its way to the U.S., maybe in a different way, where merchants drive consumer adoption and consumers get more comfortable linking their banks for tools and services.

Entrepreneurship is obviously a lot of hard work, but a lot of it is timing too. Seeing those signals internationally, combined with people having enough of the way payments were being handled in the U.S., made for the perfect Venn diagram for starting Aeropay here.

As you’re starting, you also look for verticals where payments is a noisy problem and where cards may not be as dominant. In more regulated verticals, there were greenfield opportunities to establish our payment innovation right away. I’m sure we’ll talk about our entry point in those verticals and how we’ve solved for them, but that was the genesis—why Aeropay, why now, why me, and the journey we’re on.

Ben Weiss: What did it take to get Aeropay started? From a resource standpoint, what did product one look like as you got going?

Dan Muller: My background is in product management, so I was heavily involved in the technical aspects. Our V1 alpha product was actually more retail-oriented and less online. It was an application with a Bluetooth component, so the OGs at Aeropay will remember those days.

It was a pretty unique experience. Early on in retail, I thought a lot about the dining experience. If we were launching in restaurants and retail, the process of handing the check off and waiting for it to come back felt outdated. If we could create a dynamic pay-from-table experience, we could provide value from a customer experience standpoint and from a backend standpoint, where merchants would save on fees and maybe create incentives for consumers.

So we started by going door to door in Chicago. We had more than 150 restaurants and retailers of all types accepting Aeropay. It was an interesting micro-test to see whether a merchant feeling the pain of payment processing could make the connection for consumers around new payment methods, adoption, and behavior.

That was a small experiment in what could become a broader exposure to this payment method over the long term. We’re obviously at a different scale now, but starting it was a lot of trial and error, a lot of pain, and a lot of survival. We learned so much along the way, and I wouldn’t trade anything about what we did in the early days.

Ben Weiss: What was it like going to banks and explaining what you were doing? Banks aren’t exactly known for moving quickly all the time, even though they’ve gotten better. How did you communicate effectively to them, and what was the response like?

Dan Muller: There’s a small crop of very innovative midsize financial institutions. It’s interesting when I talk to fintech founders because they often perceive this differently. Capitalism is an interesting thing—it forces a high level of innovation, research, and exploration.

When we started, we worked with some larger banks, but we were also looking at more regulated verticals where we could prove our model. We weren’t going to go to a top-five bank and say, “Partner with us in cannabis, because there’s a good payments innovation opportunity here.” They’d say, “Cannabis? We don’t want to touch that.”

But there were regional credit unions already banking that industry, and state regulators were aware of the problems related to the cash burden in those industries—the risks associated with handling that much cash, for employees, the wider industry, and transportation. There was effectively an open call to the private market: we need help, we need compliant digital solutions that work with banks in these industries.

That became our entry point around 2020: partnering with regional credit unions already working in these industries under strict compliance protocols, while we acted as a technology layer on top of that. As we’ve moved through our journey and entered new verticals—not all of them high risk or highly regulated—the specialization of those financial institutions in certain verticals has made them perfect partners for us.

Hopefully the very large banks are beginning to see that payments innovation is not one-size-fits-all, and that you don’t have to be scared of everything. There’s a way, even for a big bank, to toe-dip. And for a small bank, there’s a huge competitive advantage in establishing yourself as a technology enabler in a very compliant way. We started seeing small banks take advantage of that.

Ben Weiss: What does integration look like from a technology standpoint on your end? I know fintech companies try to make it as seamless as possible, but there are still a lot of moving parts. How did you think about that process, and how complicated is it?

Dan Muller: It’s a push-pull dynamic in the early days. Do you use a third-party service where it’s easy to integrate one API and that one API gives you bank relationships and other services—like the typical BaaS model? Or do you go closer to the metal, which is harder but gives you better unit economics?

We took a pretty typical early journey. We integrated with some third parties just to get up and running. Then we realized we really needed our own bank relationships if we wanted to enter certain verticals in a compliant way that also opened the lane for us. We also realized we needed to build our own bank aggregation tool because we couldn’t rely on a third party to tell us yes or no or charge us an exorbitant amount.

So we had to build more of the infrastructure ourselves. That takes time and the right product decisions at the right time. I wouldn’t discourage an early entrepreneur from getting up and running with third parties, but eventually you do have to ask whether you should be building more of your own infrastructure.

You also have to think about how to take a manageable bite out of that infrastructure and coordinate with investors on the right timing, because in the long term—and we’re feeling this now—as you grow, people look very closely at transaction margin and unit economics. To raise Series A, B, or C, those become core questions. It’s no longer just about how many users you have or how fast you’re growing. It’s about long-term sustainable metrics and dynamics.

Now we’re doing a lot ourselves, but that’s unrealistic when you’re just getting started on a very lean budget. That was our journey, and I think it’s a pretty typical one.

Ben Weiss: Financial services is one of the toughest spaces in terms of regulation. It’s very different from selling a direct-to-consumer product. How did you think about which markets were worthwhile based on the size of the company, and how did you figure out your expansion plans?

Dan Muller: By the way, I have to say my dad was in the shoe business for a long time. He was the founder of Pony Sportswear in the ’70s and ’80s, so we definitely have a line of entrepreneurship in the family. I was always around the table hearing those conversations, and that’s a big reason why I took a big shot at creating value.

To your question, one of the things I tried to do when creating Aeropay was think on a very long time horizon. That’s a little different from some high-growth companies that may be aiming toward an acquisition or IPO.

There’s nothing wrong with that, but I kept thinking: how cool would it be to create a generational company that dramatically changes the way we think about money movement, risk, compliance, consumer financial literacy, and consumer pricing? Payments really touches all of those things.

Early on, we said: if we’re entering industries like cannabis, gaming, or predictions, compliance has to be core to what we do. We actually started there. In many cases, companies build a lot of technology first and then realize they need compliance once they enter a certain industry. For us, it was risk and compliance first. We established ourselves as experts from a risk and compliance standpoint, and then we entered those industries.

That has been a huge differentiator because when we go to operators, banks, or technology partners in those industries, we’re coming in as subject matter experts. We can say, “You should watch out for this,” or “This is how we read this memo that came out, and here’s our opinion on it.” It really helps.

A practical example is underwriting in highly regulated industries. One of the biggest issues is that it takes forever. But we come in with strong compliance expertise, and underwriting becomes a major advantage in speeding approvals with our financial institution partners.

So that core focus on compliance sets us up for foundational, long-term generational growth, while also delivering immediate tactical benefits in winning business, commercial go-to-market strategy, and more. That’s something I’m really proud of.

Ben Weiss: It’s a fascinating space. There’s a lot of upside, especially because the fintech consumer often represents a big opportunity. But the complexity is definitely real.

Dan Muller: Absolutely. And it’s only going to get harder. As anything grows, more eyes and more scrutiny come with it. That makes it even more important to do it the right way.

I’ve talked a lot about risk and compliance, but technology and scale matter too. We just had the Super Bowl, which is a huge day for the gaming industry, and the amount of stress that puts on platforms is significant. You have to prepare for it with a ton of load testing leading up to the event. We have special on-site teams and mission control rooms for moments like that.

That shows the level of scale you need to be ready for. I’m sure we’ll have similar days in other sectors, like Black Friday for retail shopping. As pay-by-bank grows into that ecosystem—and I’m confident it will—those will be major days for us as well.

Ben Weiss: At a higher level, why do you believe in pay-by-bank so much?

Dan Muller: Because it’s desperately needed. When something is needed, you need people willing to provide the service.

We talk all the time about why Chicago, why us. We’re not in New York or the Bay Area. We haven’t been funded to the tune of hundreds of millions, potentially billions. We don’t burn through capital. We’re very pragmatic in how we grow, raise capital, hire, and distribute resources.

I think it takes a company with that kind of DNA to establish the right roots for true pay-by-bank and open banking payments in the U.S. Large operators, merchants, retailers, and utility platforms want to work with partners that have a long view on payment methods.

The macro vision is that we want to be the fifth great payment network. We talk about the idea of a network all the time. You have merchants and consumers, and you want to create a strong connection between the two. But over time, they’ve been pulled apart, and a lot of interested parties have inserted themselves in the middle.

From swipe to settlement, you have more than 20 steps and a lot of toll-takers in the process. It drives up costs for everybody and creates friction for both merchants and consumers.

The U.S. is very practical when it comes to innovation. We may need to break some old habits and undo a lot of marketing spend that convinced us we need cards, and that cards drive rewards programs, and that we’re addicted to those rewards. But merchants pay for those rewards.

Now you’re seeing surcharging on those cards. You see it on your bill and think, “Why am I paying for that?” You’re paying 3%, maybe earning 2% on the card, and the whole dynamic feels broken to me.

If you paid with a cheaper payment method and the merchant could save that 3%, maybe they could pass some of that value back to you. We’re also thinking about innovative ways to create our own incentive structure that doesn’t rely on merchants funding rewards. We’ll have more to say on that later this year.

Our focus is to build a sustainable, long-term, consumer-driven payment brand that doesn’t hurt merchants in the long run and actually helps the broader financial ecosystem.

Ben Weiss: It’s a great goal. I do wonder why pay-by-bank hasn’t seen broader adoption yet. You guys are almost pioneering it. It seems like it should be a very convenient way to pay, but I guess the technology hasn’t fully been built out.

Dan Muller: There are a few reasons. It’s been tried in the past. Open banking in the U.S. is not driven by a central government-oriented entity, and that’s one major difference compared to international adoption. Again, look at UPI in India or Pix in Brazil. Those are central bank-driven initiatives where corresponding banks have to provide and support the service.

Here, we’re more flexible, partly because there are interested parties who don’t want to rock the boat too much. But we’re not avoiding it entirely. We had Section 1033 with the CFPB, and while there’s push and pull there, the general direction is that open banking is acceptable and actually good for consumers who want to link their bank accounts to fintech or payment services.

That’s still a relatively new concept. Once that foundation is in place, the next question is: if I can connect my bank easily, how do I move the money from point A to point B? We’ve revolved around ACH for a long time, but now there’s RTP and FedNow, and there’s a new service called RFP—Request for Payment—which is a real-time push payment that more banks are adopting.

Now the rails are there. The next challenge is handling risk. That’s one of our main differentiators and specialties: we manage the entire risk of the money movement. Historically with cards, if a chargeback happens, the merchant has to deal with it. We’re saying the merchant doesn’t worry about it, the consumer doesn’t worry about it—we worry about it. A lot of our technology is built to mitigate fraud, NSF risk, disputes, and related issues.

You need all of those pieces to create the foundation for what modern pay-by-bank can be. Historically, those foundations weren’t solid. The old version looked like manual routing and account input, micro-deposits that took two or three days, and then a blind send of the transaction where you hoped it landed. If there wasn’t enough balance, it bounced like a check.

So it took a lot to get to where we are. I think we’re at an inflection point now, and the next challenge is distribution, consumer adoption, and incentives.

Ben Weiss: Last question: what are the steps you think you need to take now to get this to the next phase? Is it mostly an awareness issue?

Dan Muller: I think awareness and belief both matter. We’re still at a stage where we have to evangelize the concept a lot through conversations like this. We have to explain that it’s real, that we take on a lot of the risk, that it’s cheaper, that it’s fast, and that it can really help businesses grow.

I recently wrote a piece on payment processing during volatile markets, and the point was that this is just as applicable in times of high growth as it is during corrections.

Another key piece is domain expertise within organizations. Companies need to recognize that payments is an area worth investing in. They need people who have learned this space the hard way and can specialize in optimizing payments. If you do it right, it can save or make a business a lot of money.

So we need to keep working with our counterparts at client organizations and say: pay-by-bank is here, it’s real, and you want to accept it. It can save money, and if we work together on adoption, it can also drive revenue through higher basket sizes, faster money movement, and lower risk—not just savings versus other payment methods.

Then we’re going to launch our own consumer incentive programs to really drive adoption. I think that’s when the flywheel starts turning and we begin to realize the dream of becoming the next great payment network. That may take years, but we’re trying to plant the seed, and right now we’re in the middle of that inflection point.

Ben Weiss: Dan, I appreciate you taking the time and sharing what you’re building. I think it’s a really good idea, and it definitely makes a lot of sense. It’s kind of wild that it hasn’t already reached mass-market adoption. I think you’re going to have a lot of success with this, and I’m excited to see where it goes. Thanks for coming on.

Dan Muller: Thanks, Ben. Great chat. Thank you for having me. I love talking about this, so anytime.

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