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Cathy Corby Iannuzzelli
Co-Founder and Chief Payments Officer, KindTap
Age: 64
Industry experience: 38 years
Cathy Corby Iannuzzelli was working for a client in Denver a few years ago when she recognized the challenges the cannabis industry faced with payments. She had spent her career working at the intersection of technology and financial services – even before it was called “fintech” – and had been involved with projects such as launching debit cards, electronic bill payments and online banking. With cannabis products illegal on the federal level, Corby Iannuzzelli saw the payments system as “broken or nonexistent.”
Corby Iannuzzelli began working with executives from the payments and cannabis industries on a solution that would not involve traditional credit card networks. She co-founded KindTap Technologies in 2019, and the Boston-based fintech last month launched a digital debit and credit product for the cannabis industry, starting with the Massachusetts market.
Q: What is KindTap?
A: KindTap is the first digital payment product for cannabis purchases that works the same way that payments work in every other industry. What I mean by that is for consumers, we have a pay-now product that pulls money from the consumer’s bank account to pay for purchases, and we have a pay-later product that’s really a revolving line of credit. It’s essentially a credit card, but a digital credit card. And we’ve integrated with the retailer check-out systems and shopping carts so that the consumer experience is pretty much the same as if they were paying with a Visa or PayPal. But behind the scenes, we’ve built out this proprietary network that moves funds between regulated financial institutions, so we never touch the MasterCard or Visa rails, where cannabis is not allowed.
Q: What barriers do consumers and cannabis businesses currently face with payments?
A: As long as cannabis is considered a prohibited business from the card associations and the networks, most of the sales are taking place in cash. That creates all sorts of problems for retailers. You have safety and security issues. You have theft issues. You have high cost of moving that cash around. And customers have high costs because they have to go to an ATM and often pay a fee both to the ATM operator and to their own bank if it’s not their own bank’s ATM. You’ve got safety issues because now they’re carrying cash. And often, what they can buy is going to be limited by how much cash they have in their bank account at that moment. It’s inconvenient for consumers, and it’s impacting the growth of the business. We say cannabis is growing so fast – it could be growing even faster if it was being supported by a mature payment system, which it’s not as long as it remains a cash-based system.
Q: How does the KindTap platform work?
A: We integrate with the retailer’s point-of-sale and e-commerce platform, so that when a consumer is on that retailer’s site or if they’re in the store at one of our kiosks, then when they pay for the first time with KindTap, they’re actually taken to our site where they go through the application process, which takes about one to two minutes. They can be approved for a credit line, or they can have the bank-pay product. Then every time they come back, whether it’s at that merchant or another KindTap merchant location, their account will be active. Behind the scenes, we are integrated with the retailer’s bank account to deliver the money from the consumers to the retailers.
Q: Why are you starting in Massachusetts?
A: We will be operating in any state where cannabis is legal. Our focus is in New England right now to get started. That is where the company was founded. I’m down in Florida, but most of the company is up in Boston. It also has to do with state licensing. We have to get licenses where required, and so it worked out that it’s starting in New England.
Q: What license did you need to offer this product?
A: It’s the lending licenses that we are getting at the state level. We partner with financial institutions, so we are not moving money ourselves. We do that through licensed and regulated financial institutions. We don’t need money transmitter licenses, but we are the direct lender to consumers on the credit product.
Q: Do consumers connect their bank account with KindTap to make payments on the line of credit?
A: That is how they make payments. Having the revolving line of credit we think is incredibly important because, especially with medical patients, they need to get access to their medicine when they need it. If it’s entirely cash-based, they can’t budget; they can’t plan ahead. For retailers, they have no ability to control the flow. They have tremendous peaks and valleys in their stores because everybody shows up on payday and then the lines are out the door.
Q: Are there any regulatory or legal issues in using this platform?
A: Zero regulatory issues in using it. There were tons of regulatory issues in designing it so that it was entirely within the legal and regulatory framework of the country and the state. A lot of the innovation in putting this together wasn’t the technology. It was how we put this all together to work for consumers and work for retailers the way they expect it to and still fit within the regulatory framework.
Q: What were some of the regulatory matters you faced in designing this product?
A: We avoided any workarounds or any shortcuts. There are several players who have come to market with cannabis payment solutions, and when you get behind the covers, you find out that they’re at risk of being shut down. For us, it was bringing our understanding of the regulatory environment to the design of flows, disclosures, interactions and security. We are partnering with well-established payments processors and leveraging those secure, reliable, scalable platforms for this particular purpose, rather than trying to design something and build it ourselves. Whenever you’re in the payments realm – in cannabis or elsewhere – you’re a target for fraud. You have to make sure that you have a real ironclad approach to how you built the product.
Corby Iannuzzelli’s Five Favorite Countries She’s Visited:
- Australia
- Pakistan
- Scotland
- United Arab Emirates
- Italy
