The Payments Experts Podcast
Expert payments attorneys discuss the electronic payments industry from a legal perspective.
The Payments Experts Podcast
Secrets and Solutions for Merchants Trying to Obtain Processing with David Goodale | PEP040
Dive into the complexities of merchant processing and arm yourself with powerful insights shared by industry experts in our latest episode. As the landscape of payments continually evolves, business owners face unseen obstacles that could impact their ability to thrive. During our engaging discussion, we explore the hidden costs associated with merchant agreements, ensuring that listeners gain a profound understanding of what affects their processing rates.
Learn about the myriad factors that influence processing terms, including trading volumes and product risks. Uncover the often-overlooked importance of having a supportive relationship with your payment processor, ensuring that you aren’t left stranded during challenging times.
This episode equips you with the knowledge needed to negotiate effectively, emphasizing preparation and an understanding of industry standards that can dramatically impact your success. Our aim is to empower merchants, nudging you towards informed decision-making and offering actionable strategies for navigating the often murky waters of payment processing.
Join us as we delve deeper into effective practices for avoiding unfavorable conditions and building successful partnerships with your processors. Don’t let lack of knowledge hold you back – tune in now, and transform how you handle your merchant processing! Remember to subscribe, share this episode, and leave a review if you found value in our conversation.
David Goodale has 24 years expertise as CEO at Merchant-Accounts.ca and specializes in online and multi-currency payment processing, helping clients in Canada, the USA, UK and Europe.
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**Matters discussed are all opinions and do not constitute legal advice. All events or likeness to real people and events is a coincidence.**
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A payments podcast of Global Legal Law Firm
That would be my cue to exit. I'm like, because you know I'm not sitting here saying that all merchants you know behave appropriately and you know the evil banks or the evil processors, they take advantage of them. There are, you know, bad processors, bad banks, bad merchants.
Speaker 2:Welcome to the Payments Experts Podcast, a podcast of Global Legal Law Firm. We hope you enjoy this episode. Welcome to the Payments Experts Podcast, a podcast of Global Legal Law Firm. We're very excited. Today we've got a remote podcast In studio. Joining us is Senior Associate Attorney Bryce Vandermoor, as well as our special guest. We've got David with us from MerchantAccountscaore, as well as our special guest, we've got David with us from MerchantAccountsca. David, it's a real pleasure. We've been looking forward to this for a while now. Right, you remember you and I were talking a few months ago, so I'm glad that we're now finally doing this. Merchants have a difficult time getting processing in this day and age. There's lots of reasons why, and we're going to be talking about that today. Bryce, I want you to know David. He has a ton of experience working with a lot of merchants who have a lot of issues getting processing, oftentimes related to match list, reserve funds, things we can talk about. But it's a real pleasure having you. Why don't you tell our audience a little bit about yourself?
Speaker 3:Absolutely, guys. Thanks for having me. So I have been working in payments for 24 years. I'm the founder of merchantaccountsca. We provide mostly card-not-present credit card processing primarily in Canada. Back in the day a long time ago not to go way off on a tangent, but Google didn't care about the location of your website, com couk. But because we have a Canadian domain, as people became more aware of where we're based, we dealt with a lot more or we do deal with a lot more Canadian customers. But I also work with merchants in the US, europe and UK Basically, and I particularly tend to work with people when there's complicated stuff. You know where there's some level of finesse needed for approval or things like that. I like a good challenge and you know that's what I've been doing for a pretty long time now Impressive.
Speaker 2:The payment space is a unique animal, isn't it David?
Speaker 3:Yes, it's. You know, just to call it out honestly, it's one of those industries where there's a lot of really good players and there's some folks that don't treat businesses right, and that's why I think that this discussion can be helpful to business owners, because you don't want to get stuck in a bad agreement with a bad partner. Maybe we can help someone out today.
Speaker 2:Awesome. Yeah, I hear that. One of the first things that comes to mind, David, as we jump into this discussion, merchants are if they're making a profit at all, it's usually you know hairline, you know margins. Can we talk maybe to start this conversation off? When it comes to onboarding merchants, getting them processing, I'm sure their rates are a huge question mark. What is that conversation like? Where are you at with that, david?
Speaker 3:You know it's so funny because I had some notes, obviously to prepare for a discussion, and the literal first. I'm going to read it verbatim Everyone's first concern is rates. Rates are important I'm not dismissive of that, but dot, dot, dot, dot dot, you know. So the pricing is very important. I'm not dodging this question, but I just want to make the point. Awesome rates only matter if you get approved. Awesome rates only matter if the processor doesn't hang on to a big piece of your cash. Rates only matter if the processor doesn't hang on to a big piece of your cash.
Speaker 3:And you know, I often tell people like, early in the conversation I say like the wrong time to shop for house insurance is after it got leveled by a hurricane. So a lot of the when I have a potential client we get into the rate discussion, but I always start by finding out what they're doing, because what they're doing will literally impact the rates. It's going to impact whether they get approved at all and otherwise you're just wasting your time. You know, when I say it I don't mean it in like I don't want to waste my time. It's more like for the client that I'm thinking of. Don't do paperwork and send an application, all this stuff.
Speaker 3:But I want to try to address your question directly now. What are the things that impact rates? Because not everybody's, not every business is equal. So the very first thing that impacts rates are your trading volumes. Like Walmart, I think fairly, at least in the payments world fairly famously negotiated custom lower interchange rates for themselves, which I didn't even know that was possible. But then again, I'm not Walmart.
Speaker 3:So if you do enough volume, I guess you know the higher volume you do, the less margin the processor has to make in order to like service the account and still make a decent profit. You know? And something else that impacts your rate is the product risk. Like there's some things that are you know. And something else that impacts your rate is the product risk. Like there's some things that are you know a speculative crypto investing thing is going to be higher risk than selling a computer mouse, right, and that will lead to chargebacks and stuff like that. So you know, I'm curious to know because I actually did plan on talking about interchange today and pricing models Is that where you want to dig into right away? I'm curious to know what you think would be most useful to your viewers.
Speaker 2:What do you think, bryce? I mean, interchange is not something that we're necessarily. Interchange is interchange, yeah.
Speaker 1:It's whatever the credit cards decide their cut's going to be. And you're right, I don't think that's something that can be negotiated because they're just too huge, and so I mean, from that standpoint, you're probably not going to make a lot of progress trying to tackle interchange. But there are other things you can do to, like you know, cushion the blow. Yeah, cushion the blow. I don't even think that you get notices of changes in their rates. They just slip something in. By the way, you're going to come to understand that I have a way more cynical view of the way things are right now. They probably just slide something in on a merchant statement saying there's a change in your rate, and you don't tell us that you're disputing that change, you've adopted that change, and then they get, like you know, three, four months down the road and they're like, hey, what did they? When did this happen?
Speaker 3:And and uh, it's already, it's already gone that would be the hallmark of a bad provider, which I referenced earlier on, because not everybody does talk. Listen. It's like people accept so much unethical treatment in the industry. I was talking to a client. This was a long time ago, but I'll never forget this point. I was talking to someone quoting them and he was talking about his current process and he said sorry if I'm speaking too quickly. He said they raised my rates, and I mean I know processors raise rates, it has to happen, and I just couldn't believe how conditioned he was to accept rate increases. Give me, I can think of one scenario no two scenarios ever where rates should go up. One interchange goes up.
Speaker 3:Interchange for any viewers that don't know it just means like PayPal. I always use PayPal as an example because everybody knows PayPal. Paypal charges 2.9% per transaction. They don't make 2.9% per transaction. They have a cost back to Visa and MasterCard. The industry term used to describe that cost is called interchange and the Kohl's notes. All you really need to know at a high level is it's set at a country level? If so, if you're an American merchant or a Canadian merchant or wherever, you're going to be on the same footing as every other merchant in your country and whichever processor you choose makes no difference. The cost structure back from Visa and MasterCard is the same to all the payment processors, and so you know what I went off on a tangent. Where were we just a second ago? I was building to such an insightful point.
Speaker 1:You have to take or leave interchange, but you have to take it, oh no it was repricing.
Speaker 3:That's what it was, and so if pricing goes up in the payment processor, if a merchant is on a flat rate that does not fluctuate back in the day, a long time ago merchants usually got a rate that just it was what it was. You're paying 2.7% per transaction period, and that was a really lovely pricing model because it was honest and it was easy to understand. The problem is, if interchange went up above 2.7% on at least some card types, the processor could be at risk of loss. But I want to be super clear this is very extraordinarily rare, especially in today's world. So that is the. That is the one of two very unlikely circumstances where your costs should go up, and the other is if a merchant just blows up their account, they have like a zillion chargebacks and they're just kind of a bit of a problem customer and the processor is just spending boatloads of time. You know, then maybe your rate's going to go up.
Speaker 3:But I actually didn't have this in my notes today. But such a good point Don't ever, for any reason, ever, ever, ever accept a rate increase from your processor, and if they try to pass one on to you, they should be able to explain very clearly why, and if they don't, you should get out. And interestingly, in Canada I think Canada you guys could actually tell me about this I believe Canada has more protections for merchants than the US, because in Canada we have the code of conduct for the credit card industry. One of the things built into it is, if a processor jacks up your rate, you can exit your contract penalty free and there's nothing the processor can do, and I like that rule. I don't know if they have anything like that in the US, though.
Speaker 1:Well, if they did, then it's probably been cut in the last six months. That's the way that it is now. Anything that might actually protect anybody is gone. For now I guess I don't know how we're going to deal with that one. But if I can weigh in here, my experience over the years that I've been doing this is that it is borderline impossible to to be successful as a merchant. Everybody has to get their cut and and you can just see like the the fee structure is is like a mile long. It'll be an entire page. I think we had one where there were like 82 different fees. I'm out of the frame right now. I'm sorry about that.
Speaker 1:So you know, the merchants basically just get the scraps after everybody else takes their cut and hopefully those scraps are enough to keep them afloat and get them successful. Hopefully those scraps are enough to keep them afloat and get them successful. But you know, I mean you know they always used to say back in the day or they say now, like 98 percent of of businesses go out of, you know, go out of business within the first year, I think it is, and I used to think it's like, oh well, it's because it's really hard. Well, yeah, it is hard, but it's also hard because everybody has a hook into you and everybody needs to get their cut and they're not going to budge on it. So if you even want to have a chance at success and this goes to all merchants, young and old, but predominantly younger the negotiation of the merchant agreement is probably the most important point in the entire relationship and I see every day that it gets the least amount of of um of attention.
Speaker 1:They, they did, they're just, they're in a hurry. They got margins, they're good. You know they're going to make their millions. We don't have time to read all this stuff. I'm in time to read these in terms of conditions, sure, I'll. Whatever you say I'll, I agree, I'll sign it. Boom, get me processing, and then it all falls apart in like three to four months.
Speaker 3:And then, well, and if you caught something, finding a processor that's going to be receptive and willing to, you know, to uh, to listen or make a change, that's all, especially if you're talking about, like literally, a TNC in the contract, if you have a processor that has a three-year contract term and you catch it like guys, cool with this, some processor would totally adjust it, but some of them won't. That's the point. I did want to make a comment, bryce, you made me. This is just more of an interesting thought that popped in my mind because I actually want to take issue with one thing. You said that the merchant's helpless, and I wonder if, because you guys are payments lawyers, right, and I wonder if, well, this, I believe this statement makes sense. You tend to hear from people when they're upset, people who things are going really smoothly, don't, don't reach out to you, and I think one of the I just want to delineate because there are, let me let me make a 10 second story that'll illustrate my point perfectly. In Canada we have Kijiji. It's like the Canadian version of Craigslist, and back in the day there was somebody advertising for a job. It said can you read, can you write? Then you can sell and the S was a dollar sign and it was to hire people to sell merchant accounts like that. That says everything right, like the processor. That that that ultimately they would have been working with is not going to treat the merchant right. But I think if somebody wants clear to give yourself a leg up, these are the things that a merchant I believe has to do and it's probably like it is some work, it is some effort. I don't want to put a time frame on it, but I don't think it's an enormous project. Pull up the interchange table or go to a blog on the web and lead a.
Speaker 3:Read a little bit about interchange so you know what the cost is. First of all, are you doing retail transactions or card not present? Those are like the two main ways you're gonna. Most merchants will either process a card, then find out what interchange is on a regular Visa, on a regular MasterCard, on a Rewards Visa, rewards MasterCard Corporate Key, like. Just write like eight numbers down and those are the processor's costs. Okay, the first thing that does is it lets you know what a reasonable expectation is.
Speaker 3:I often tell people like if I plunked a five pound rare blue diamond in front of you and I said $2 million. Am I overcharging you by a million or undercharging you by 99 million? If you have no point of reference, you can't negotiate effectively. It's impossible. So you have to educate yourself a little bit. And then you have to demand interchange plus pricing.
Speaker 3:No other pricing model that should be acceptable, other than if you're a very small merchant and you are OK with flat pricing and your payment processor is willing to still do flat pricing. Many payment processors won't won't do flat pricing anymore, you know, and it's a very even though they're big companies. It's still. If you find a good partner, it's still relationship driven. So if you make ensure that it's a month to month agreement and you ensure that it's on interchange plus pricing and you make sure everything makes sense, you can at least give yourself some advantages.
Speaker 3:But the problem is if somebody is out to, if you have a convenience store, you can literally put on security bars, but if somebody brings a tank, they're they're getting through the wall. If somebody's setting out to take advantage of you, it is hard and I think the only way to protect yourself is to try and research the processor, maybe get a reference from somebody that's happy with their payment processor, because if you know, business owners should be able to find someone. Uh, you know, maybe ask for a reference. It's funny, I have very few people that ask for references. Uh, but that would be. That's one way to you have to be careful with references, for obvious reasons, because they could just give you somebody that you don't know. But uh, I've been going on for a long point. You've been very kind to listen for me going on so long. I'd love to know your thoughts on that.
Speaker 1:Well, first off, the saying is that a rising tide lifts all boats. So you've got to figure if the interchange fee goes up, everybody else's cut goes down. So they're all going to find a way.
Speaker 3:But not on interchange plus pricing. I'm sorry for interrupting Bryce.
Speaker 1:And I understand that. But I'm also realizing that these processors probably take in what a thousand you know conservatively applications a month and they just don't have the time. When you're getting that kind of action, I think that there is an aspect I wouldn't call it laziness but they just don't have the time to focus on the needs or the wants of one merchant when you've got 1,000 in your back room.
Speaker 2:Certainly that speaks to the big ones, right, the ones we deal with all the time? Yeah, but I mean Stripe and WorldPay, yeah yeah. All those major players.
Speaker 1:Yeah, stripe is take it or leave it, square is take it or leave it, although people probably don't know this, but Square has no actual bank, so it's your own bank that's going to be dictating. You know the way things go with Square, but I mean, there's a lot of ticket leave, but at the same time, there are a lot of options and merchants have to be prepared to shop and if they're not getting the reaction that they want I know I'm going to jump around here a little bit we also discussed this in an earlier podcast with Chris Dryden. You got to try to negotiate. Even if you know it's, there's absolutely no way they're going to go for it and need to get in writing, because if, if you say I want this price and they're like, no, I can't do that, um and and you're like, okay, well, you've tried to negotiate.
Speaker 1:Now it's a contract of adhesion, the courts hate that and you're going to have some ammunition later on down the road if something happens. So I mean, and also I think that merchants really need to take the time to understand their pricing. I had a case in litigation where this guy was processing and he thought you know his the on his merchant application was like 1.95% qualified, 1.95% non-qualified, and he thought oh, I know what he thought he went through the entirety of the processing relationship, thinking that he was being charged 1.95 flat when in reality he was getting hit at 3.9%.
Speaker 1:But he didn't understand his merchant statements, he didn't take the time to ask the questions in in the application process and he got for all in. You know that hand the bag of shit. I mean. You know and and and he and he didn't find out until you know his, like his, he blew through his volume or he decided to take some action without informing his processor, which is another thing I'm going to get to.
Speaker 1:That merchants really need to do and I'll say right now don't make a move outside of the confines of your original agreement without running it by the processor, of your original agreement, without running it by the processor, because if you take like a, let you pivot somewhere and they don't know what, why you're doing it. They're just gonna, they're just gonna, they're gonna terminate you. They're gonna terminate you, they're gonna match you. Uh, a lot of what I'm saying um applies to smaller merchants, but I, I think, uh, I, I think you, it always helps, like if your volume is going to be, is increasing exponentially over the course of a couple months, just tell the processor.
Speaker 3:Yes, of course, and they'll change the volume.
Speaker 1:But a lot of these guys and gals. They just do it and then they go surfing or something I don't know.
Speaker 2:I think they genuinely don't know, Bryce. They don't know they're supposed to tell because they're not reading the fine print like you said.
Speaker 1:Well, and that's the problem is, I just don't think that people appreciate the seriousness of the relationship and how bad it can go.
Speaker 3:Totally. I wrote a note down while you were talking because you made such a good point, which is that if they won't negotiate, so just you know. Personally, like I don't deal well with bureaucracy which is funny because I work in payments for 24 years there's some sort of cosmic joke. But here's my. Here's my math Big equals useless. Unless you're a huge merchanty's gonna get red carpet wherever sony goes. Okay, because it's sony. But if you're a small merchant and you're trying to negotiate and they won't listen to you, like listen to someone when they're telling you who they are, why would you think the relationship is going to get better from there? When they're trying to win your business, that's, that's the honeymoon. So I think for businesses that are trying to negotiate and can't don't work with that processor, there are lots of options.
Speaker 1:Yeah, don't I mean, but again, you know, most of the time these guys are coming to the processors They've probably just been terminated by their last bank and they got orders to fill and they got to move and they got overhead and they got lost revenue. They're just not going to take the time. I guess the only realistic option is to apply to several different processors simultaneously and try to work out the best deal.
Speaker 3:Yeah, but that'll hurt too, because they they'll do credit checks and they'll look desperate. I would never encourage someone to do that.
Speaker 1:I know, I know, I know, I just, but, like he, it's trying to deal with the reality of the situation and the situation won't, they won't allow it. It just, it's created a landscape where you're dead if you do or you didn't.
Speaker 2:Well, if I can say, I think it's one reason why we love doing podcasts like this because hopefully people will be educated over time. Right, since COVID, the number of people that are now doing electronic payments who knows, I don't know Quadrupled. I don't know the actual stats, but it's grown exponentially. So people are going to have to find education over time. So maybe because, david, I loved what you were saying. Right, you were talking about even finding a referral, asking about it. Our experience is as you're hearing from Bryce. Our experience is a lot of, especially mom and pop merchants, but even some fairly sophisticated business owners. They don't know they have the options. They've never done it before.
Speaker 2:So they go to right, they're just going to Elevon immediately because they don't know any other options. And I think that these kinds of conversations hopefully you know can help educate that merchant base out there to hey even ask a friend, ask someone who's in the liquor store business, ask someone who's in the e-commerce business who are you processing with, what's your relationship been like? And right there, you're already doing more than I think probably 75% of merchants out there when it comes to searching for their processing.
Speaker 1:Well, and if you're a small merchant, you also run the risk of the fact that if, if you run afoul of whatever rule they think ran afoul of they, they just terminate you, your revenue is gone and you you have no options because you you're a small, you're a small business, you have your, like I said, your margins are really tight. You probably don't have a lot of disposable income, so you can't fight, you have to take it. Now the Sonys and the Walmarts of the world. They got buildings full of lawyers to handle that stuff. But yeah, with the mom and pops, they really have to do their diligence.
Speaker 1:And would it kill you to break off a couple hundred dollars and have a payments attorney who deals with these agreements all the time? I'm not even talking about myself or this office, I'm just in general, or even just a regular contract attorney. I mean these terms in these agreements. I mean up until like two years ago, I didn't even know what non-qualified and qualified meant. So it took me all that much time like dealing with this industry the way I do. I mean what is somebody running a bodega in New York? I mean who's? You know, like middle age or something like they're not going to. They're not going to understand. It's a whole new world now, you know, especially since COVID, when everything moved online and everybody's now trying to like, navigate, online shopping, and then, on top of that, payment processing and and their bank relationship. It's just not. It's it's not feasible to go to loan. It's absolutely not. You have to find some kind of leg up, be it a reference or um, or an attorney I.
Speaker 3:You know. What's interesting to me is this whole discussion. Every facet of this discussion could be summarized by this sentence Don't try to solve the problem after it happened. Of course, the problem is like you said, but we're here in a circle because they didn't know it would be a problem. So it's almost more likely somebody would come across this content after they had a problem and if that's the viewer watching this, I would say, okay, so you made the point. Orders have to come in the door, like we got terminated. We don't know what's going on. We have to ship and I have.
Speaker 3:I listen, I talk to people not all the time in that situation, but sometimes, and I say you know it's, it's my job to give you my best advice, not the advice you want to hear.
Speaker 3:You can run to the wrong solution or walk to the right one and they're like well, I need to process today and it's like, okay, well, you know, there's PayPal, there's Strike, there's aggregators, but see, they adjudicate their risk reactively. That doesn't make them a bad company, but you've already had your account shut down. So I think, what if you're in a bad situation? Well, actually, the best advice that I could give you is find someone that you can have a human conversation with, which probably is not going to be a call center type like don't, I'm not going to pick on any particular, but pick one of the three biggest processors in north america. That's the wrong choice for you. Find like a company like merchantaccountsca or any small company with good reviews or something like that. Reach out to guys like you and say, hey, do you have any ideas where I could apply? Networking is a good idea in this situation.
Speaker 1:We refer people Unfortunately it's usually in the context of a match and we're like, can you take a look at this guy and beat him? But yeah, I agree with you Like bigger is not better. You're going to get a much. You're just going to have more leverage, I guess, with a smaller processor or a bank, and they're going to be willing to work with you. The big guys, they don't have to. They just don't have to. I'm frozen.
Speaker 3:Like they care more because they, because they're more important.
Speaker 1:Listen, I think I think also, to be perfectly honest, like they're closer to the mom and pop than they are, the, the giant conglomerate. So they, you know they, they can, they can bend the rules. They, you know they, they can make accommodations, they have that kind of flexibility. The big guys, the first eight is the Elabon. I mean, we don't recommend anybody ever go to Elabon ever. And maybe you need to strike that out, I don't know. But yeah, they just don't care, they don't have to care.
Speaker 1:And then you're also living within the context of the car brands, which oversee everything and everybody is in absolute terror of getting on their bad side. And so if they feel like there's even a scintilla of evidence that you're doing something wrong, they're just going to kill you. So I guess my other point, my other suggestion, would be make absolutely sure. So when you are approved for processing, you're going to get assigned's called a, uh, an mcc. It's a merchant category code and that defines exactly what kind of products or services you can sell. You've got to make sure that you understand the parameters of what that mcc code is, because there's literally thousands of them. Okay, I mean, and they all, I'm sure they all price differently, uh, they're all handled differently, but 90, man, 99, 98% of our cases that come to us is somebody did something, process something, or or just, you know, change something and didn't notify anybody and didn't find out if it was okay.
Speaker 1:And then then it's just like boom, you're, you're gone, you're out. I, you know, I, I can, you're out, I can choose to do business with you. I can terminate your contract anytime. That's standard in the agreement. That's fine. You can't force anybody to do business with anybody. But the next step is not only am I going to terminate you, I have to destroy your business for the next five years. Take away your credit card processing. I'm so afraid of some non-compliance assessment being handed down from one of the card brands or worse.
Speaker 1:And again, that's something else that when I talk to people about Match, especially in my circle, and stuff, they have no idea that any of this is going on. They have no idea that any of this is going on. And if you're not a merchant, why would you? And if you're not a merchant, why would you? And if you're not a merchant who's gotten sideways with his processor or his bank, why would you? And so your statement that don't try to deal with a problem after it's already happened. That is the best case scenario, but until I guess the education of the merchants matches what the sales agents or the processors are telling them, is level. It's going to continue to be this way. But then there's people like you and me who are trying to get the word out because we recognize the injustice of the entire situation.
Speaker 3:Yeah, I'd just love the viewers to know that it's not a loss because there's so many good processors. You know I like and I'm talking about my competitors, right, but there's so many people that are relationship focused and it's just, it's so obvious when you're in the wrong place, like with the benefit of hindsight a little bit, you know what I mean it's almost like hiring a contractor. You know I can think of one renovation I did. I won't even tell you about it, but with the benefit of hindsight it's like if I could just talk to, like the 30 year old me, you know, for five minutes you know.
Speaker 3:So like, don't be distraught if you're listening to this. There's a lot of hope out there.
Speaker 1:There is, but there is. But then they also have to be wary of the fact that they've they've signed up for 36 months. So even if they are uncomfortable or object to what is being done to them, if they terminate they're probably going to get all their funds wiped out on an early termination fee. So I mean, there's that too. So again, I guess I'm just beating the drum here. You've got to go in eyes wide open, you have to take the time to learn, and if something doesn't make sense to you, you ask them to explain it or ask somebody to explain it until you're comfortable. And that is just absolutely necessary if you're going to be emerging these days.
Speaker 3:Yeah, that's right and I would say sorry, jeremy. I just want to say just literally don't accept the contract term period Period. Say just literally don't accept a contract term period period. That's the whole end of that story. Like that's one of the things. If they work with you. It'd be like here are the things that we will never agree to. I'm just going to randomly. I haven't even heard of qualified and non-qualified pricing in like 10 years in canada. Like that is the least ethical pricing model I've ever heard of. By the way, 24 years. Just a little pat on my own back here. Never done that quote to anybody ever. We should all time. We should all time.
Speaker 3:Don't accept that. Don't accept contract terms. Also, you should be able to speak to the underwriter that's reviewing your account, that one's pushing the envelope because some processors keep an iron wall right but like, how can?
Speaker 2:you get things done.
Speaker 3:You know these are all reasonable.
Speaker 1:They're all reasonable requests, if you ask me they're eminently reasonable, and I don't want you to even think that I'm laughing at you at all. It's just. It's just that's an eminently reasonable request and it's just not. It's not happening.
Speaker 2:Well, it's one reason, david, it's why we're talking to you today, because we do. We work with a lot of processors that we do respect and they're great people and they fight hard for their merchants and we refer to them quite I mean really every day.
Speaker 1:Yeah, we have people on several different levels.
Speaker 2:On a regular basis, that we refer to depending on their needs?
Speaker 1:Right.
Speaker 2:And so, david, you're clearly one of those and I'd love to you know you and I can talk more. We don't often get Canadian clients, but from time to time they do. I want to ask you do you service merchants in the US as well, around the world, or where's your client base primarily located? Yeah, canada, usa, UK and Europe Located.
Speaker 3:Yeah, canada, usa, uk and Europe.
Speaker 2:Great, okay, wow, excellent. You talk a lot. We've talked a lot about rates, and that's important, and I think this conversation we've had so far is very important. Right, these are obviously you're seeing. We see it from the back end, right, we're seeing it when problems have happened. Now, david, obviously you with your merchants, these problems are not happening, certainly not on a regular basis. One of the things you mentioned is that needs to be considered when a merchant's looking at processing is support. Can you talk to us about why is that so important? Why can't it just be hey, find the best rate and move on with life?
Speaker 3:Because there's other problems that'll come up. So this is gonna tie so much into what we're saying. One of the questions that I would tell anybody to ask is hey, like, so the salesperson you're dealing with I already used the phrase it's the honeymoon period, right, because it is Three months, in six months, and I have a problem. Can I still talk to you, right, like, find out out, like, ask up front how is support handled? And it's like you know you don't want an answer, ideally. Well, you send it to inquiries at blackholecom, right, like you you want. Oh, yeah, you'll have an account. Be like you should have a dedicated account rep. That's also a reason we'll ask a lot of processor, even for small and mid-sized merchants. That's possible, and it doesn. A lot of processors, even for small and mid-sized merchants, that's possible.
Speaker 1:And it doesn't cost anything extra, and get it in writing. Sorry to interrupt, but get it in writing.
Speaker 2:Yeah.
Speaker 1:No totally.
Speaker 2:By contrast and I'm going to make this very quick because I want to get back to what you were saying, david but what our merchants experience, our clients experience a lot is they can't even reach somebody If they're trying to get ahold of Stripe. They're down some endless rabbit hole this customer service agent to this customer service agent who is not able to help them, and they sometimes spend hours and hours, if not days, trying to get somewhere and they usually get nowhere.
Speaker 3:You know like I'm not here to attack Stripe. Stripe has probably the easiest onboarding in the entire world and if you sell paperclips and it's $10,000 a month there's nothing complicated about your business. You'll probably never have a real speed bump, but if you hit one, good luck Right. Like that's the problem, I'm so much more of a hassle to deal with up front. I have to ask you things like how much are you going to process and this?
Speaker 3:But you're going to process and this, but you're much less likely to have a problem later on and if you do, you cut to come and complain to me, right like that's. So you know we were also just talking to about, like you asked about, support. It's not just support, so I will, because I know, uh, some people who might want to obtain a merchant account are going to be looking at this. I want to mention a couple of things that I think are really, really important. Ok, for you should work on a cover letter that described your, describes your business, and people think, oh, homework or what. No, I want you to bang it out in 90 seconds. I don't care about punctuation, I don't care about spelling. I want to know who you are and how you got into this business. You know. I want to know how long you've been running this business, exactly what you sell and who your customers are and how you reach them. I want to know how much you process per month and how much you process per transaction, and what you're doing is you're explaining all of the things that are not obvious on an application. I'm going to give you a really stupid example. Okay, so there's a new. Like you guys know, the viewers might not know, but airlines are like the atomic bomb of credit card risk to payment processors, right, and travel companies as well. So let's say there's like a travel company in the UK and it's a startup run by like a 25 year old and the volumes are going to be like 15 million a month. But what's not obvious on the application is the uncle is Richard Branson Right, like there's. There's all these background stories that all come in to point the picture. That was like a silly example, but my point is there's a lot that people don't know. You might look like a startup on paper, but it's because you had sold out two years ago and you had a two-year window where you weren't allowed to compete, and now you're starting another company. The application never lets you tell your story.
Speaker 3:That cover letter is your opportunity to paint who you are in the most positive light possible. You know it's very, and then when you write that out, it will help you be prepared for your negotiation when you end up talking to a salesperson, you know. So you spoke earlier. One of the very first things we spoke about was rates and I didn't give an answer and I want to give an answer Like what is a reasonable rate? Okay, so all of my new clients I put on a month to month contract term. I am able to do a fixed contract term.
Speaker 3:What I always say to people is I I simply refuse to put you on a fixed contract term other than something extraordinary, like if it was an airline and like they know what they're doing, and it's like a massive like situation. But for a typical smaller midsize business it's going to be a month to month term and let's say that they're doing $25,000 a month in sales. I would say, okay, well, I use Interchange Plus pricing. I explain what Interchange Plus is and I say I'm going to start you at 45 basis points. Every time you process a card, I don't care what type of card it is we're going to take, whatever the cost is, from Visa. We're going to transparently pass it on to you and then we're going to add 45 basis points on top In the future. If interchange goes up, it'll go up. If it comes down, it'll automatically be reduced. At some point you're going to decide whether you like me or you can't stand me. I believe you'll like working with us Once you've tried us out for a period of time, and I don't care if it's a month, six months or never, but the door is always open to you to come back.
Speaker 3:Hey, dave, it's been six months. You're pretty cool. Uh, if we did a contract term, can I beat you up on the rate a bit? Sure, okay, maybe I dropped them to 30 basis points. You know something like that.
Speaker 3:Like this is how business should actually work and and it just logically makes sense when you go through the process properly, you, if you are a really large merchant or a complicated merchant, you can also tier out your pricing in advance. This is one where you guys would be more in your area. You'd have to be involved to review the contract. But where a merchant is at least mid-sized, but they're really on this big growth curve and they don't want to have to renegotiate their pricing, you should be able to get a commitment. It's like okay, so you're doing a million dollars a month right now.
Speaker 3:Start of next year, if you're doing two million dollars a month, I'll cut it down 10 basis points for you, but your chargebacks have to be under. You know one. Well, they have to be under one percent. But whatever, whatever amount the processor comes up with, and it makes a lot of sense, because why do you want to have to revisit this? Like everybody, like we can see where, where you want to go, so ask for what you want to ask for. It's up to the processor. The worst thing they can do is say no, you know. That's something that I think is really important.
Speaker 1:Well, david, I, I, I gotta, I gotta commend you because, uh, it sounds like your business model is one that you're really in for the long haul with these guys. Definitely you want it to work. You want it to work Not a one-size-fits-all business, and that's frankly refreshing. Because, again, yeah, you're right, we only see that people are in a hole, and it usually involves someone who thinks they're playing by the rules. They're not. There is no negotiation, but I like what you're saying. That gives me hope.
Speaker 3:Here's how to blow it up's here's the worst way to do it, and I get these calls rarely, thankfully, but I'll be trying to explain interchange. Look, I don't want to hear it. What's your, what's your best rate? I'm calling five places. Give me your best rate. And it's like I listen.
Speaker 3:I respectfully, totally get that you're in a hurry and you don't want to hear my song and dance, but if you do not educate yourself at the bare minimum, you are making yourself vulnerable and either people become receptive well okay, what am I worried about? Or what is your best rate? Give it to me. I gotta go and that like. So, excuse me, be careful with how you go about the process. You know what?
Speaker 3:I actually have a full blog post written out. It's one of my longer blog posts and it's about it's the person, it's the employee in an organization who gets the task put on the desk, find us a new credit card processor, and whoever gave them that task probably thought that that's like 15, 20 minutes of work and it's like no, you just gave somebody a project, especially if it's a bigger company, and then you end up, see, in my role I have to explain all this stuff. I have to explain interchange and all this stuff and then they have to go back and explain it to the people that they report into. So what I always say is like so once I get them educated, I'm like we both know this is complicated. Just set up a call so that the whole team can just hammer me with whatever questions they have, because it's not fair for you. You're never going to be able to answer these questions. It will be impossible for you. You know.
Speaker 1:so See, and I would say my reaction to your story about the, you know I want your best rate, that's it. Don't tell me anything else. That would be my cue to exit. I'm like, because you know I'm not sitting here saying that all merchants behave appropriately and the evil banks or the evil processors, they take advantage of them.
Speaker 1:There are bad processors, bad banks, bad merchants, and that scenario is like just a giant red flag that if somebody is approaching this as like a just the facts, you know it's just like, dude, you're gonna be gone in like six months. I mean, it's just you're. You're not going to be able to sustain yourself, being willfully blind and and have you know this huge ego, you're going to be the one who processes something that they shouldn't have and you're going to get nailed for transaction laundering and you're out on your ass. And then you, on the other, you know, have have dedicated all these resources to this dude. For what, right? I mean so. So, like I said, if somebody is coming at me like that, even in my land of work, I'm just like, you know, you're going to be a, you're going to be a problem, no matter what. And so I think you, I will try and I'm not. I'm not going to give up on anybody, you're just not receptive. We're not working.
Speaker 3:Well, exactly, there's something the wisdom of experience teaches you right you can spot. You can spot those things?
Speaker 1:Yeah, I learned all my lessons the hard way.
Speaker 3:Don't we all though? Yeah, that's it. I also wanted to talk. I had a note here that I wanted to talk about just scanning, for it was about product risk and how it affects pricing. I want people to understand the reason why product risk matters for pricing is if chargebacks happen, like the cardholder has to get a money back. A chargeback is not a refund, it's a dispute. The cardholder calls their bank this guy screwed me or I didn't get what I wanted, or whatever. It is right From the payment processor's perspective. If a business was to fail and stop operating and people didn't get what they paid for, the cardholder has to get their money back, like they're obligated to. That is card brand rules. But if the merchant doesn't have the money, the cardholder still has to get their money back. It comes from the credit card processor.
Speaker 3:So if you have a riskier product or service, another thing that can impact your rate is like it's the cover letter You're doing travel, for example. Right, let me give like a five second example. Maybe you have like a bunch of Airbnb or VRBO rentals in Mexico or something you own 10 properties. That's very high risk because people book today, they go in the future, but maybe they own all 10 of them. There is no debt and if any one of those properties was ever unavailable, all the properties are very similar in design. They're all three bedrooms. We could just reaccommodate a guest to another property. There's all like these little things that you can explain and it starts ratcheting down the risk, which, in the less likely the processor is to have a headache, the more receptive they should be in terms of giving you a lower rate. Well, I agree.
Speaker 2:Yeah, well said you know. I want to quickly say you know we've mentioned match a couple times. Matchless is a major issue that our law firm deals with on a regular basis. Bryce is really the spearhead of our firm, who handles those cases. And David, we're going to be on your podcast soon to discuss matchless. So please, if you're at all interested and you're hearing this podcast right now, go over to David's podcast and David, I'll let you, of course, give your advertisement there at the end, give you the last word, but we are going to be on there as well discussing match list, match list removal and that whole process and what leads to that, etc. So we're looking forward to that a lot.
Speaker 3:David, it's been a great conversation with you so far today. Yeah, I've really enjoyed it and I just have to tell you, for any merchant that feels overwhelmed, I've done this for 24 years. I can guarantee I'm going to learn so much talking to you guys about match. So don't feel bad when you don't know everything. Nobody knows. Nobody knows even close to everything in this industry.
Speaker 1:It's just too complicated oh, I, I, I learned something new. Uh, in every case, unfortunately, it's usually like oh, I cannot believe they did that, I can't believe they did that, but but you know, it's like, this is crazy. But you know, yeah, yeah, I mean this, this is a, this is still new. I mean, you know, like, it's like this is crazy, but you know, yeah, I mean this is still new. I mean, you know, like I say, all the time, when COVID came along, we had the lockdown, cash and checks were gone. It's a total, it's an online economy. Now, I mean, you know it's card, not presence. You know it's just, and the landscape is constantly shifting and the rules are constantly changing because everybody is so afraid that they're going to get ripped off, and so, yeah, it's hard work keeping apprised of what's going on.
Speaker 1:So why would you put yourself automatically in a deficit just by closing your ears? You got to do your due diligence and you have to. You also have to stay in regular contact with your processor. You're right, this is what I'm doing, this is what I'm processing. I would actually like to expand to process this. What do you think about that? I mean just quit making moves and think and just hoping for the best, or you have to really police yourself. You have to police yourself and you have to really police yourself. You have to police yourself and you have to ask the questions. You cannot, you cannot be timid about this. This is your livelihood.
Speaker 3:It's totally true and you know, I think almost everything in life is who you know. I mean that, I mean that almost literally. And so if you know your vendor, if you know your provider of services and you have a problem and you've gotten built a rapport, when a problem happens, there's a big difference between hey Bob, listen, I've got to talk to you and you just end up in a call center, right. So again circling around this again, but don't try and solve your problems after it happens. Put the work in so that you're ready.
Speaker 2:Yeah, percent. David, would you you want to give us, our audience, a little bit of some contact information? Where do you want them to find you? Clearly, you know you've got a lot going on with your, you know, with merchantaccountsca. We, like you, know everything we've heard today, as Bryce was mentioning as well, you're approaching this from a merchant centered perspective, which I think is fantastic. So where can our clients, merchants, our audience today find you? And maybe what sectors are you kind of most primarily focused on?
Speaker 3:Great, Thank you. So the easiest place to get us is always our website merchantaccountsca M-E-R-C-H-A-N-T and then the word accounts A-C-C-O-U-N? O? U n? Ts. So it's plural dot c a for canada.
Speaker 3:But don't be misled, we don't just work with canadian merchants. We deal with canadian, us, european and uk-based merchants. Our real expertise is multi-currency processing, more complicated stuff point of sale machines, like if you need a pos machine on the counter of your you know sub shop or something that's not our thing, but anything that's card not present. So e-commerce over the phone, online invoice, payments, recurring, billing, multi-currency, cross-border and international e-commerce. And we work with small and large businesses. A lot of people think actually a lot of people in the industry think also they always want to win those big accounts of. People think actually a lot of people in the industry think also they always want to win those big accounts. But those big accounts you're fighting for a couple basis points with zero loyalty and there's no relationship there. So I love working with small merchants.
Speaker 3:I can honestly say I'm pretty much friends with most of my clients. I have hundreds of clients. But like it's I, I am like you said. I'm in it for a long haul. You know I want to. I always tell people I have an absolutely broken memory so I can't lie because I can't remember what I said. So you just tell people the truth. Do the best you can. Mistakes and problems are going to happen, no matter which processor you choose. I will mess up at some point like mistakes happen in life. But try and have someone that can help you out when that happens. I think that's the best advice I can give.
Speaker 2:Maybe we should have you back on at some point, David. I'm curious, the multi-currency focus.
Speaker 1:I think that could be an interesting conversation, Absolutely, I mean at this point with all these online businesses, it really doesn't matter where you're located anymore. I mean, I know that there are certain. You know what I'm looking for. You know borders in regards to you know where you can process, but yeah, I mean, just because you're in Canada doesn't include your processing payments. It just doesn't even matter where you're located.
Speaker 3:No, there's nothing that stops you from collecting a sale, but, as an example, visa and MasterCard assess cross-border fees. As an example, visa, mastercard assess cross-border fees. And if you're a Canadian merchant selling to a US cardholder in US dollars, the cross-border fee from the card networks is 1%. So there's all kinds of which. If you're a small business, do you have any idea how much money I'd have to be saving before I want to volunteer myself to introduce the IRS into my life on top of the CRA? Like it better be a lot, but there gets to be a point where it's a lot, right, so there's a lot that you can do. And then, do you want to be paid in the currency that you process the payment? And, by the way, the answer to that is always yes every time. But anyways, I don't want to go down that rabbit hole. I would love to come back and maybe we can have a conversation about that I think we could spend all day just jumping down rabbit holes.
Speaker 1:There's always a lot to talk about when it comes to payment processing.
Speaker 2:Yes, definitely 100%. So thank you so much for listening this long to the Payments Experts Podcast. We've had in studio again with us Senior Associate Attorney Bryce Vandermoor, as well as our special guest David Goodale with merchantaccountsca. And again, if you're interested in more information about the match list and match list removal, we're about to do a podcast with David, so go check that out as well. Thank you, bye-bye, david. It was a pleasure. Thanks for having me guys. Thank you for listening to this episode of the Payments Experts Podcast, a podcast of Global Legal Law Firm. Visit us online today at globallegallawfirmcom.