Jordan Thaeler on Merchant Choice and the True Cost of Payments

EPISODE SUMMARY

In this episode of Wrestling Payments, host Joe Casali sits down with Jordan Thaeler to explore how embedded payments lock merchants into costly, inflexible systems. Jordan explains why many software providers bundle payment services with their core products, leaving merchants with few choices and rising costs. He shares how this model drives up payment fees over time while reducing merchant leverage and support.

Jordan describes the risks of a market where software and payments are tied together. He uses examples like Toast and Shopify to show how merchants often pay much more than the market average, with little transparency or recourse. As more processing volume moves to embedded payments, Jordan argues that choice and competition are critical for a healthier payments ecosystem.

The conversation turns to dual pricing models and the global push for bank-to-bank payments. Jordan makes the case for more options and education, so merchants are no longer “hostages” to their software providers.

GUEST-AT-A-GLANCE
Name: Jordan Thaeler
What he does: Co-Founder
Company: POS+
Noteworthy: Known for exposing hidden payment practices and building tools that give merchants more choice in payment processing.
Where to find him: https://www.linkedin.com/in/jjthaeler/
Guest Company Website: https://www.posplus.org/

KEY INSIGHTS

Embedded Payments Can Trap Merchants in High-Cost Systems

When software providers bundle their own payment services into their platforms, merchants lose the ability to shop for better rates or support. Over time, these bundled arrangements drive up payment costs while locking businesses into a single provider, making it tough to switch even when fees rise or service drops. This lack of competition leads to higher margins for software companies, but often leaves merchants paying far above the market average. The friction of changing systems, along with limited transparency, means that many businesses end up stuck with unfavorable terms. The core insight is clear: without real choice and portability in payment workflows, merchants risk becoming hostages to their own software—paying more for less flexibility.

Choice and Transparency Lower Merchant Payment Costs

Giving merchants freedom to choose among payment providers can restore balance in the payments ecosystem. Integrating open payment workflows into popular software platforms allows businesses to negotiate better deals and demand improved service. When payment options are unbundled, outside experts and local providers can step in to educate merchants, offer support, and keep costs in check. This shift not only reduces the risk of inflated fees but also promotes honest pricing from software vendors, who must stand behind the true cost of their core products. In a landscape where margins are tight, especially for small businesses, having more transparency and options directly supports their bottom line.

Transcript

Wrestling Payments - Jordan Thaeler

Season 3, Episode 23

[00:00:00] Jordan Thaeler:\A dual pricing model is the fairest model in payments, which is if you want to pay with card. Me, as the merchant, it's not my responsibility to pay for your airline points. You need the credit. You pay for your credit and a discussion. If you need a loan, why am I paying for your loan?

[00:00:16] ​

[00:00:45] Joe Casali: Hey, welcome to Wrestling Payments. I am very excited today. We have Jordan Thaler here. he's my first heel. but, I'm a mark. I love, I love wrestling the good guys, but, the bad guys have a great, following as well. And I also, he's a, he's a double, he's a two hit wonder from a, um, not only as I'm marking him as the heel.

[00:01:07] Joe Casali: He also is a fighter, a real fighter, not a TV fighter and watcher like me. Jordan, you wanna in introduce?

[00:01:14] Jordan Thaeler:Yeah. No, thanks Joe for having me on. So, Spent a number of years spitting up the body, but I actually thought fighting was safer than playing, football or a contact sport where you're kind of blindsided, Andy, you have a referee to stop you if things get too outta hand. So, it's an enjoyable sport.

[00:01:32] Jordan Thaeler:I, we've got two, two young daughters and we've put them in jiu-jitsu to try to get them there and, the youngest one's taking the oldest one does not like it, so we'll see where we end up in five or 10 years.

[00:01:43] Joe Casali: Excellent. Excellent. so all that aside, that was fun. I guess, let me get the other thing out of the way that we ask. how did you get where you are? How did you, so we usually have payments people on, how did you find what you did? Did you plan as a kid to do what you do?

[00:01:59] Jordan Thaeler:I worked at a large company, so background is finance and engineering. Did the finance route. always have really enjoyed math. I found that a lot of the rules that were out there to me just seemed, arbitrary and didn't really. Protect much or just impeded, uh, value frankly. And so I've just had the last 15 or so years of my career in smaller companies, startups, more entrepreneurial endeavors.

[00:02:28] Jordan Thaeler:'cause you can make your own set of rules, right? And you can break a few eggs. one of the periodicals that I write is very controversial, very provocative. And I would say. You read it, you go one of two ways. You either absolutely detest me and think I'm the worst person in the world, or you think this is amazing and why hasn't anyone else brought this to light before?

[00:02:52] Jordan Thaeler:And full irony, we'll get cease and desist for the periodical from large processing companies that we expose. And then you go look at the list of subscribers and it's the executives of all these companies. So we say things that everyone talks about behind closed doors that no one will talk about in public.

[00:03:12] Jordan Thaeler:And quite often a lot of the ideas for the content that we publish come from inside the four walls of the organizations that are. Committing these acts, you, you quasi whistle blowing if you will, where you have people internally that ethically say, Hey, this is not right. I don't like this. Here's what's happening.

[00:03:30] Jordan Thaeler:Let me show you the evidence, and we will opine on those. Those changes.

[00:03:35] Joe Casali: Thanks. and that's why we are here today. That's, the topic we're wrestling with, as far as today goes. Can you, so, you know, you had me at Cease and desist, which is like, whoa. none of this is, I'm not a lawyer. None of this is as consulting advice, but, you know, talk about your, your earlier work and, and we really want to talk about what's happening right now, but I just want to give folks a, a snapshot of, of what else, you've accomplished and, and could you.

[00:04:02] Joe Casali: Reference again, your websites.

[00:04:05] Jordan Thaeler:Yeah, so the, the periodical is reforming retail.com. I got involved in payments by happenstance, so came into the industry recognizing a number of problems that persisted in brick and mortar, in particular with the absence of data and the ability to harness data to create value, and sort of learned over time that the only groups of people making money.

[00:04:33] Jordan Thaeler:In all of, kind of card present commerce, frankly, were the payment companies. The software companies were the scraps of the table and the payment companies were making five, 10, sometimes even more than the software companies, despite delivering on a value basis very little frankly. And so that, you know, you kind of follow the money and you, you learn to understand how the money is made.

[00:04:54] Jordan Thaeler:And that has, turned me into someone that understands well enough. How the sausage is created in the payments industry and over the past, let's call like a decade, Joe, you've had this swing to embedded payments, which is awesome, by the way. So the concept of embedded payments is, Hey, I have a software, I have a payment provider.

[00:05:17] Jordan Thaeler:They typically have been disparate and distinct entities, and whenever there's been a problem, even if it's a problem for payments. The payments company will say, Hey, well it's not really my problem, it's a software problem. So the software company, by default was supporting all the payments, under investment to make this merchant run.

[00:05:35] Jordan Thaeler:And over the years the software companies say, wait a minute, if we're doing all the support, we're delivering all the value for the software, why don't we just go ahead and verticalize the payments internally? And so you saw this with Square was kind of the first big one to fall and. there's a growing trend in embedding payments because it's convenient, right?

[00:05:54] Jordan Thaeler:The, the merchants get, uh, kind of consistent support from one entity merging of the payment data and typically the ERP or point of sale or CRM data from a software very impactful. and in theory, if you're generating margins off of the payments that can be reinvested into the software to keep expanding the value for the merchant.

[00:06:18] Jordan Thaeler:What we've seen as software continues to embed is at some point that software company is out of TAM. There are no new merchants for them to really go acquire. And what happens? Well, you kind of learn from the best, which is you take that crank and you keep turning it and turning and turning it. So that merchant who was paying, I'll make a number up, Joe, a hundred dollars a month for software.

[00:06:47] Jordan Thaeler:Was paying $50 a month in margin for payments, and it grows from 50 to 75 to 112 to 157. And this is how the software companies continue to make their margins. And as you see, the first generation, these embedded companies go public. You can transparently scrutinize these numbers and you can see like sure enough, you run out of TAM and the payment rates get higher and higher and higher and higher.

[00:07:15] Jordan Thaeler:Bill Shopify toast. These are software companies who earn substantially more of their revenues now, even net of interchange, from payments than they do from their core software endeavors. So it's a, an addictive drug. And in our observation, it's a fatal drug for the merchant over time. And so we've been working over the past year and a half to develop a solution that counters that problem, that gives the market and gives a merchant choice, so they're not in that position of being a hostage.

[00:07:50] Joe Casali: So you built up, what you've been working on. So I have questions, but let's, let's continue down. What have you been working on?

[00:07:58] Jordan Thaeler:So we still believe in embedded payments. We just think it's incredibly dangerous when there's no choice. Okay? So if you are going to have embedded payments, which is sort of the pinnacle of the value that can be created, you need to do so in a way that's competitive and fair. We've seen many instances where not only are the rates.

[00:08:20] Jordan Thaeler:Disastrous for the merchant. The support is non-existent. The features to be competitive and relevant in the market, non-existent as well because the software's got no impetus to actually build or support these things, like where are you gonna go? The cost of moving softwares is very high. There's a lot of friction, and the software company knows that we've worked and built a solution that allows, and I'll use the quotes here, anyone.

[00:08:50] Jordan Thaeler:To integrate payment workflows into an existing software. In particular, the softwares that have been deemed inaccessible by the market. So for instance, I verticalized on mindbody, on ServiceTitan, on jobber, on square. These are all softwares where if you're a merchant, you have one option for payments, and that's the payments offered by the software.

[00:09:18] Jordan Thaeler:Not anymore. We have ways to fully integrate payment workflows into all of these softwares, whether they run in the cloud or whether they're an older software that even runs on a desktop. All of this can now change and it gives the merchant choice.

[00:09:33] Joe Casali: So I did, let me back up because, we talked the other day. We just introduced each other and planned this meeting. you mentioned toast then, and then you just mentioned it again and I, visited your website and I saw can you, you know, for the audience that may not know. Can you explain the toast issue?

[00:09:52] Jordan Thaeler:Yeah. So Toasts is a company that's executed incredibly well over the past 12 or 13 years. They are the dominant player in the upper end of the kind of SMB restaurant market. Okay. And if you use toast, you have to use their payments and the. Average toast merchant, call it 1.2, 1.5 million a year of processing volume.

[00:10:17] Jordan Thaeler:Conventionally speaking, that merchant would pay about 20 basis points above interchange for payments. Okay? That's a lucrative amount of money for account that size, and today, again, they're public. You can look, toast is making three times that amount on payments and they're charging that merchant thousand dollars a month, maybe more.

[00:10:39] Jordan Thaeler:For the software. Okay? So there's a lot of margin in that restaurant and that restaurant is stuck. Okay? And so in, in concept here, right? So let's just give you a concept of what's possible. POS+ is a company here integrates the workflow into toast that allows you to extract the payment load. Hey, here's Joe Ali spending a hundred dollars on these items.

[00:11:05] Jordan Thaeler:Take that payment load, push it to. A partner the restaurant wants to work with for payments that's giving the restaurant whatever value they want, the rates, the support, the features, puts that payment somewhere else, and then reconciles that transaction back into the ledger and Toast. So from the merchant's perspective, everything is integrated.

[00:11:27] Jordan Thaeler:My reporting is accurate, my accounting is accurate. There's no discordance in the data, and I've got total freedom and total optionality. And where I wanna move my payments business. And so what happens at scale? This forces companies to be honest and straightforward with their customers no more. Oh, well, look, our SaaS is only a dollar a month.

[00:11:53] Jordan Thaeler:And don't worry about the rest. Well, the rest is we're gonna actually get you for 10,000 a month on payments. Once that moves somewhere else, the merchant has a choice to not pay 10,000 a month on payments. They can put that with a pardon that's gonna pay them or charge them 20% of that. All of a sudden that software company has to be honest about what it costs to run their software.

[00:12:16] Jordan Thaeler:And so we think this is great for the market. we think of things as kind of like the bundling and unbundling, right? So cable. It unbundled, then bundled. Now streaming is bundled and it's unbundling again. same principle. Embedded payments are bundling everything into a particular point software, and we think it'll unbundle again with choice.

[00:12:39] Joe Casali: lots of times, uh, I do some training and I do a lot of that. other things I have to figure out where am I standing when I'm doing that? Who am I in the situation? So I, I'm leaning right now to my merchant hat and from a merchant perspective, my son, we try to start a restaurant for him.

[00:13:00] Joe Casali: And from a expertise and knowledge perspective, our knowledge ended at you need a, you need a gateway, you need someone to provide it. Here at NEACH, we just converted over our database and our last. Database company said, you have to use them for your, for your merchant processing. And we went, okay.

[00:13:23] Joe Casali: We na didn't even think of it. Didn't even, but that's those how do folks get more educated about their options?

[00:13:30] Jordan Thaeler:So, so the reality is the types of merchants that are likely to self-educate are larger. B2B. Merchants, the smaller merchants just don't have the scale. They're wearing 10 hats and, they can't. There's just not enough time to do everything. When you allow an unbundling, what'll happen is your son's got the restaurant. Let's assume he's using toast. Okay? I don't wanna pick on toast, but the rest

[00:13:54] Joe Casali: Yeah, no, not picking on toast.

[00:13:56] Jordan Thaeler:so toast commands, Hey Joe, son, you have to use our payments. a discussion, and you might have had five or 10 people knock on your son's door that were payment vendors. They saw that toast logo on the point of sale.

[00:14:12] Jordan Thaeler:They walked right out. They knew there was nothing they could do. Those 10 people might have had payment expertise. Wisdom to share with your son to explain how payments works. Maybe give your son better support than the outsource support that toast provides. Now with POS in the picture, you have the ability.

[00:14:32] Jordan Thaeler:For those 10 sales reps, those 10 ISOs agents, the payment expert folks to come in and actually say, Hey, this business is a viable business for me to support. Let me sit down with you and educate you on payments so you understand why you're paying too much or not getting good support or not getting the features you want.

[00:14:51] Jordan Thaeler:And allow me to integrate to your system for you and provide you that value so you're not stuck with whatever toast dictates. So as the SMB, I believe that the channel for education is gonna come from the local expert. It will come from third parties that are not toast, that recognize the opportunity to serve your son and say, there's still plenty of money for me to serve your son.

[00:15:19] Jordan Thaeler:I don't have to charge 60 basis points. I can go back to the historical average of 20. And your son's like, oh my gosh, 40 basis points to ebitda. That's a lot of money.

[00:15:29] Joe Casali: Mm-hmm. Especially in the restaurant

[00:15:31] Jordan Thaeler:Especially in restaurant, you're talking a 3% margin business that's over, you know, 10% of your, your ebitda. Right? That's a lot.

[00:15:38] Joe Casali: Right, exactly. this has been great. what can you, you mentioned some numbers earlier as far as, what the growth rate is as far as what, the problem is

[00:15:46] Jordan Thaeler:yeah. So, uh, Bain has said, and this is actually a bit old, but we find it still as a heuristic to be accurate, Bain said in 2020, Hey, 16% of softwares today are embedding payments, okay? And that represents, 16% of US processing volume coming through a software, but it's growing at mid-teens rate.

[00:16:10] Jordan Thaeler:And so you take that number when you. Projected out and by the end of the decade, so 2030, more than 70% of us acquiring volume is going to come from embedded payments, which is great. That's awesome. Our contention is the embedded payments should come from anybody, not just the software, because if it only comes from a software, you have a monopoly situation, and that merchant is a hostage.

[00:16:38] Jordan Thaeler:There's no choice. There's no freedom. They are a prisoner within the walls of that software.

[00:16:43] Joe Casali: I think we're gonna go into a opinion mode right now, but so we, we do training on payment systems and I will tell you that card is our, our lowest, Expertise level. We know about it. We could do a training on card, but we focus more on ACH and faster payments. we have lots of check stuff

[00:17:04] Joe Casali: in the model of cards and how they work and just opinion only.

[00:17:09] Joe Casali: the merchants the loser in this situation. Like when something goes bad, they have to take the hit. They're paying all the costs can. Can you elaborate? I seem like I'm right on that

[00:17:22] Jordan Thaeler:A hundred percent right. I think it's outrageous that countries like Brazil and India have 50, 60, I think, uh, India's 80% UPI adoption, which is bank to bank, you know, instantaneous bank to bank transfer. What really happens? Again, opinion zone in the world of credit cards, okay? You're adding a 3% tax in everything that touches a credit card.

[00:17:46] Jordan Thaeler:And me, as Joe Consumer, is forced to pay that tax because the merchant, if they're smart enough, is marking up their items by 3% to cover that tax for the consumer. And so in reality, I am paying the tax of, of effectively credit for people that cannot afford to pay bank to bank. RTP ACH I'm a big proponent and we do this with a ton of private equity companies, and it's a massive growing trend.

[00:18:14] Jordan Thaeler:I have other information we could share with you on this. A dual pricing model is the fairest model in payments, which is if you want to pay with card. Me, as the merchant, it's not my responsibility to pay for your airline points. You need the credit. You pay for your credit and a discussion. If you need a loan, why am I paying for your loan?

[00:18:36] Jordan Thaeler:And you have a two tier pricing system, cash discount or dual pricing, one price for people that need the credit. One price for people that are happy to pay RTP, you know, fed. Now, when that gets to scale and can instantaneously settle that transaction bank to bank, right, Kroger and Walmart are working on bank to bank payments.

[00:18:57] Jordan Thaeler:The problem for those guys since with Fiserv, the problem is they have to figure out. How to convince the merchant to change their pattern, because if you're only gonna gimme a 1% cash back, and my rewards card is 3%, I'm just gonna use it my, my, my card. I would love to see the, what used to be MCX when the large retailers got together to try to build their own payment system, became a currency.

[00:19:21] Jordan Thaeler:Same idea, right? Build a, a consortium and actually do dual pricing and roll that out across. Tens of thousands of locations nationwide and force the consumer to be confronted with the cost of payments.

[00:19:34] Joe Casali: You know, that's fascinating because. the we, um, one of the things we do is we see what are other countries doing, and everything you just said about a consortium could be said about Germany because they're trying to do the same thing to, to get around the, the interchange fees. not the interchange fee.

[00:19:52] Joe Casali: I don't know, I don't wanna offend anyone. No cease and

[00:19:54] Jordan Thaeler:I, yeah, I'm okay with that. You, you can paint me the bad guy

[00:19:57] Joe Casali: But, uh, but cards are easy. There, I mean, there, I, I could start a business this weekend and be processing credit cards this weekend. Yes.

[00:20:06] Jordan Thaeler:It depends on their risk. if you go to like a lot of the pay facts like Stripe that say you can do that, they're actually gonna withhold funds and they won't settle them in your account until they've done proper underwriting. But yes, in theory, you could take cards,

[00:20:19] Joe Casali: Right. Not so much with ACH.

[00:20:21] Jordan Thaeler:so much with ACH. Yeah.

[00:20:22] Joe Casali: so much with RTP Fed now. so it's, from my son who doesn't know anything about anything card's, the answer, right? Because it's easy.

[00:20:31] Jordan Thaeler:It is easy. everyone has at least one card in their wallet, sometimes four, sometimes 10, right? so it is easy. It's ubiquitous, that rail exists. It's just incredibly expensive, and you get into these dangerous situations where you have an asymmetry of knowledge and the software companies. Use that to their advantage on these merchants and that merchants paying, again, in the case of Toast three times market rates, but, certain softwares Advanced MD that Global payments own and is trying to, spin out, I don't know, probably seven times effective market, which should be, I've never seen an advanced MD merchant that wasn't paying 200 basis points of margin.

[00:21:13] Joe Casali: Wow.

[00:21:14] Jordan Thaeler:what happens. This, this, these are the use cases and this is why post exists. That extortion, I'm sorry, that's not free market. That's that. That's extortion. That should be fixed.

[00:21:26] Joe Casali: Yeah. No, it's true in, still having on my merchant hat, in back of my head, I'm saying, yeah, well, that's what it costs. Yeah, that's what it costs, but that's not what it

[00:21:34] Jordan Thaeler:That's not what it costs. That that's, yeah. Not what it costs at all. again, small merchants don't have the time for education and they don't have the options as, as the embedding from a software provider continues to proliferate. They have no option. So even if they learned, even if someone educated you, your son learned how this works, what's he gonna do?

[00:21:53] Jordan Thaeler:What's his point of sale? It's a very, very painful experience.

[00:21:56] Joe Casali: Right, right. this is excellent. Alright, so, I think that's all the questions I have. What we, if someone wants to join, like.

[00:22:05] Jordan Thaeler:Yep.

[00:22:05] Joe Casali: Continue this story. where, what did they do? Where did they look?

[00:22:09] Jordan Thaeler:So for post, post is in beta for about a year. We've, our estimates are, we've unlocked about 300 billion of processing tan that was traditionally locked out because it was embedded from a single provider. We're growing integrations at a pace that puts us at about a trillion dollars of unlocked processing volume by the end of, next year.

[00:22:31] Jordan Thaeler:and we have a site, it's pos plus.org org and we will be announcing the self-serve portal by the end of the year, so anyone will be able to sign up and use the portal. By the end of the year, we'll be expanding our beta program. Coming. I don't know when this will be released, but on September 22nd, we will announce that, hey, we have a beta program that's expanding.

[00:22:57] Jordan Thaeler:Add your name to this list and you may be selected to participate in the beta program. Our intent is to have all of our integrations available for anyone to use with education and materials that train them, show them how to install it, and then using some AI infrastructure that we've built over the past few years.

[00:23:15] Jordan Thaeler:Roll out new integrations incredibly quickly for a very small amount of money. So you find a new integration that you need. We say, here are the guidelines that require, our team to, to look and scope this properly. Our partners submit that and we can turn out our integration for about a thousand bucks in three business days.

[00:23:35] Jordan Thaeler:So softwares that you couldn't even access for a thousand dollars, you can now access and once, once somebody pays for that software integration to be completed. It flows into the general pool for anyone to grab.

[00:23:48] Joe Casali: Oh, nice.

[00:23:49] Jordan Thaeler:it, it really is self-serve. We want the industry to move as fast as it wants to move to create the value.

[00:23:54] Jordan Thaeler:We don't want to be the impediment.

[00:23:56] Joe Casali: All right. And, I'm a lifelong learner. and I, I subscribe to a lot of, newsletters. do you have a newsletter?

[00:24:04] Jordan Thaeler:So for the periodical, reforming retail.com. We put a newsletter out once a week. When we publish a new article thereabouts. There is, I forget what the number is. You get so many like free views of content per month, and then you hit a paywall and the paywalls to, to fund litigation for all the cease and desist.

[00:24:27] Jordan Thaeler:So as ironic as that is, um, that's, yeah, that, that's how it works.

[00:24:32] Joe Casali: Is, that was great. alright, if you have questions, if you, you have a LinkedIn, it'll be included in the, the show notes. is there anything I didn't ask that I should have

[00:24:40] Jordan Thaeler:No, I, I, I think that we work with a lot of private equity companies that are kind of recognizing the value of, of integrating, out of their, in their portfolio companies, integrating beyond the software that the portfolio company uses and how accretive payments can be if done right. We think that if we are successful with POS+ it will change the way that payments work for the better.

[00:25:08] Jordan Thaeler:More transparency, more choice brings down the cost for everybody. Hopefully increases service, increases features so merchants are no longer held hostage.

[00:25:19] Joe Casali: All right. You just ruined my whole heel thing. You're not a heel. thank you. Thank you. I mean, thank you for what you do. This sounds great. how could anyone think of, of what you're doing as, as being a heel? 'cause it's, it's definitely transparency, definitely addressing a problem, that's out there that you may not even see.

[00:25:35] Joe Casali: but, I appreciate you joining me today. Thanks.

[00:25:37] Jordan Thaeler:Thank you, Joe.