The Payments Experts Podcast
Expert payments attorneys discuss the electronic payments industry from a legal perspective.
The Payments Experts Podcast
Merchant of Record: The Compliance Model Everyone In Payments Is Talking About And Why | PEP114
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“Merchant of record” sounds official. The problem: card networks don’t even define it the same way. That ambiguity can get businesses shut down overnight. Want the bright line between MOR, PayFac, and PayFac Light?
California can be the place where fast-growing commerce companies learn an expensive lesson: states are no longer “too busy” to chase remote sellers, platforms, and cross-border transactions. We talk through how post-COVID enforcement changed the game, why the California Franchise Tax Board is viewed as uniquely aggressive, and how seemingly small registration triggers can spiral into back taxes, penalties, and years of exposure.
From there, we zoom into the payments industry’s most misunderstood label: merchant of record. Christopher Dryden, Esq., and Jeremy Stock talk with Matthew Steinbrecher of Sound Commerce (https://sound-commerce.com/) explaining why “MOR” often isn’t clearly defined in scheme rules, how Visa and MasterCard treat similar behavior differently by market, and why that ambiguity creates real business risk. We break down the practical differences between a true payment facilitator (PayFac), PayFac Light models powered by a single acquiring rail, and MOR-style setups that require disclosure at checkout, customer support, and a clear party responsible for the transaction.
• why states start treating tax enforcement as a revenue generator
• how California registration can be triggered by surprisingly low thresholds
• how a forum selection clause and a lawsuit can force registration and scrutiny
• why “merchant of record” often lacks a consistent definition in network rules
• the difference between a true PayFac, PayFac Light, aggregator, and marketplace behavior
• what Visa and MasterCard care about most: disclosure and a clear support path for shoppers
• how indirect sales tax and economic nexus risk shifts when you act as the merchant
• how to hedge operational risk when relying on a merchant of record
• why POS and embedded payments stacks keep growing despite the premium cost
We also get tactical about risk mitigation. If you’re a merchant relying on a merchant of record, a shutdown can hit revenue overnight. If you’re building embedded payments, POS software, or a platform business model, consolidation can be powerful, but it concentrates compliance and operational responsibility. We close with a look at where fraud and risk controls may head next as AI and agentic commerce reshape how transactions happen.
California’s Franchise Tax Board may be more aggressive than the IRS. If you sell online or run SaaS, a tiny trigger can force registration and taxes. Are you accidentally “doing business” in CA right now?
What if one bad actor changes the rules for everyone? A fraud case pushed MasterCard to pressure acquirers to “nuke” noncompliant models. If you build embedded payments or platforms, are you prepared for a sudden crackdown?
**Matters discussed are all opinions and do not constitute legal advice. All events or likeness to real people and events is a coincidence.**
PEP Links:
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A payments podcast of Global Legal Law Firm
Why States Started Policing Online Sales
SPEAKER_00I would say like up until COVID, the states didn't have the infrastructure to police this stuff. So, like, I mean, yeah, if you were Amazon or Wayfair, like they're gonna come after you, right? Like you're doing tens of billions of dollars in revenue. Like they they want some tax money, right? But first, most of these guys, e-comm selling t-shirts or you know, supplements or even like SaaS companies, like they didn't give a shit, man. They didn't have the people to police it. And then you're exactly right. Then they were like, wait, this is a revenue generating department, especially with California. We had all these people leave since COVID, you know, like myself.
SPEAKER_04But we haven't, we haven't. And you know what's funny is we're not losing people uh year over year, we still have positive population growth. I love hearing all that.
SPEAKER_00It's it's tax, it's tax growth, I would say. It's like a lot of the a lot of the large tax losses. So they they look at that and they see tax revenue going down, even if population's going up, right? They'll still look at that and then they now are investing to the policies that are creating that.
SPEAKER_03But yeah, that yeah, but they'll but they'll definitely look at the reduction. Yeah, yeah, exactly.
SPEAKER_02Welcome to the Payments Experts Podcast, a podcast of global legal law firm. We hope you enjoyed this episode.
SPEAKER_04Well, it's interesting because California, I say this to people all the time. Like, look, I I'm I'm basically a lifelong resident of this state, and I'll be the first to say outside of maybe Illinois and New York, we are the most regulated state, period. Yeah, some of the regulation totally makes sense. Much of it is just random faces of nature a lot of times. But our taxing authority here, which is called the franchise tax board, they are the most aggressive taxing authority in the United States, even above the IRS. They want their money and they want it now. Yeah, and they will come at you even in the like the slightest delay of your obligation. And I and it's very interesting to me because a lot of people do business in the state of California. And the only way that we've run into it where I've seen registration, non-registration is if you want to file a lawsuit in the state of California, and many times people enter into agreements with California companies with a forum selection clause. If you get screwed in that contract and you want to file a lawsuit, you cannot maintain that lawsuit unless you register with the state of California. But the minute that you register, you're definitely people are going to look at you for from the FTB to figure out well, how long have you been doing business here? And did you file tax returns? And how much of your revenue comes from this state? And and then I started looking at what the registration requirements are. If you pay a worker $500 in a calendar year under the California Revenue and Taxation Code, you're required to register. Just required. So, like, there's dude, there's these low bar thresholds for uh requiring registration. And and I'll talk to people that are in disputes, and the person that they're in a dispute with is in California and they're not registered. And I'm like, you may want to look at this because uh I've seen this used against against you. I mean, like, I do you ever experience any of that like in the payments realm? In payments, you you you feel that? Yeah, well, you know, not you directly, but your your clients, right? Yeah, yeah.
SPEAKER_00And like when I was when I was building this old business, like we were knee deep in it all the time because we would get we did a lot of cross-border work, and when that South Dakota thing came out, all the states basically started, you know, it didn't matter if you were selling something from Hong Kong or Australia or the UK, like they would still come after you and send you a letter if packages were moving in or sales were made on their uh on their state. So I've been pretty knee deep in this a long time. And you know, I would say like up until COVID, the states didn't have the infrastructure to police this stuff. So, like, I mean, yeah, if you were Amazon or Wayfair, like they're gonna come after you, right? Like you're doing tens of billions of dollars in revenue. Like they they want some tax money, right? But first, most of these guys, e-comm selling t-shirts or you know, supplements or even like SaaS companies, like they didn't give a shit, man. They didn't have the people to police it. And then you're exactly right. Then they were like, wait, this is a revenue generating department, especially with California. We had all these people leave since COVID, you know, like myself.
SPEAKER_04But we haven't, we haven't. And you know what's funny is we're not losing people uh year over year, we still have positive population growth. I love hearing all that.
SPEAKER_00It's it's tax, it's tax growth, I would say. It's like a lot of the a lot of the large tax losses. So they they look at that and they see tax revenue going down, even if population's going up, right? They'll still look at that and then they now are investing to the policies that are creating that.
SPEAKER_03But yeah, yeah, but they'll but they'll definitely look at the reduction.
SPEAKER_00Yeah, yeah, exactly. So it's like, oh, it's not that that's not the problem, it's just the the number going down. But yeah, so they hire boiler room guys. Like I've talked to some of the the franchise tax guys in California, like they are straight up boiler room sales guys, door-to-door door kickers, and they are incentivized to fine you, and like they literally get commissions on the shit, and so it's it's crazy. And and Arizona's the same way, Texas is Arizona, Arizona's also, yeah.
SPEAKER_05Man, Arizona's gnarly. I've seen them too.
SPEAKER_00Yeah, dude, it's it's and it's pretty wild, you know. And then there's some states that just don't really care. But you know, you you're starting to see this shift where a lot of the states are now realizing that they can go after people and the fines, like, there's no four-year statute of limitations. It's like, hey, you've been doing business in California for a decade. We're back taxing you with penalties and interest on all that shit. And the only way to get around it is if you go and you know, register for the tax, and then you do a voluntary disclosure and tell them, like, hey, I've been doing
California Registration Triggers And Lawsuit Leverage
SPEAKER_00tax for a decade. My old account was an idiot, and I just found out from this guy that I need to register and pay. And like, I owe you guys 400 grand, and this is gonna suck for my balance sheet. Can we do a payment plan?
SPEAKER_04And plead poverty, right? Like at that point, like plead poverty and just go like I wasn't anticipating this hit. Can I get some sort of settlement plan?
SPEAKER_00And that's what they and that's what they do.
SPEAKER_04One one offer and compromise for a lump sum. Yeah, totally. You know, I I see that too. So many people are remiss to do that. And at at some point, though, unless you wind things down before it ever gets there, you know, they're there they're I I I personally believe that there's just too much commerce and there's too few state resources to police it properly manage and oversee it. But like, but I agree with you, they've got they've got some aggressive people in there that where they can find you, they will. And and look, COVID changed so much. I mean, the fact that you and I are on a broadcast right now, you're sitting outside, you know, it accelerated this idea of us communicating and having a relationship through a digital medium. And I think the more that states and and regulatory bodies see this, like it's it's funny. You know, if you went back 10 years and you looked at what you would consider high risk in the payment space, and now you look at every if you use that standard of 10 years ago and now you look at today's commerce, everything's high risk, right? Like, I mean, you know, like we've really kind of changed. So, well, you know, I think we're talking, yeah, we're talking about some of these things, but like, you know, I see hidden risks as sort of like this indirect tax taxation exposure, you know, the underwriting regulations that really exist. I mean, because every single contract says that, you know, KYC and to a certain extent, KYB, depending on what you do, uh, has to be there. But what are some of the other hidden risks that you see out there that are impacting your clientele? Because for all, you know, in case you didn't watch the last podcast, which was really good on Vamp with Matt Steinbrecker from Sound Commerce. That's Sound-Commerce. I'm gonna throw out the plug. I get paid for that, but yeah, I know you like that. I feel like I'm on Howard Stern all of a sudden. Um, but you know, Matt does white glove merchant relationships, and he's got merchants that operate in a particular manner or in a particular vertical, and he understands the risk associated with their business and how they transact, and he counsels them and consults them on that, and then you know, works with them on managing their payment relationships, and he does it on a very granular level that keeps them, you know, based. I mean, you can see just from the knowledge base in our conversation. But what are some of the other things that you're seeing with your clientele that have to do with some of these hidden risks or exposure that you might not be thinking about when you're looking at the big money opportunity of being a merchant of record?
SPEAKER_00Yeah, I think it's um I think a lot of the time it's just again, it c it kind of comes down to like posturing and not truly understanding that uh the term merchant of record doesn't exist anywhere on paper. And so it's like this ambiguous definition that the industry has kind of defined, but you can look at two different merchant of records in the industry and they are completely different companies. Like DLocal is a merchant of record, publicly traded company, and they're just an aggregator for Laddam and some other exotic markets. But Visa, from a scheme rule perspective, they'll look the other way on aggregation because they're like, yeah, if you can beat picks in Brazil and give us market share in Visa, like do whatever you want. Just win market share in Brazil. So we'll look the other way, but do that shit in the US, no chance. And they'll police it like that. So there's also ambiguity at the network level. You look at someone like Global E, they largely operate, also publicly traded, right? So they're in the public eye. I pick them out because they're not private companies that you know can largely operate without Wall Street's eyes on it. And so you look at them and like they're operating in the US and Europe and UK, where obviously Visa MasterCard have the largest footholds for cards. And, you know, largely they are playing by the rules because they're they're doing all those disclosures. And what I think the biggest risk is in the industry, and I've spoken with a lot of the ownership and merchant of record, especially after leaving my last role. You know, we were kind of one of the pioneers trying to like define it and have the schemes define it. It really comes down to the schemes, the networks. Like they don't have this defined. And as a result, you have this ambiguity of like, okay, well, this thing doesn't exist, right? Because you talk to a lot of heads of underwriters or people at Visa, they're like, Yeah, merchant records is not a fucking thing. Like, this is it's bullshit, right? It's just been like made up by vendors in the space who are just aggregators or just PayFacks or are just really large merchants or marketplaces, and they're just masking it as this other term. Um, and I think the biggest risk is the schemes. So, like, call back to MasterCard. We were talking about the the new scam protocol and stuff. So, MasterCard, so there was a merchant of record who was a bad actor who had a big three-letter organization come after him uh for just straight up running fraud. And it was like probably three or four years ago, and like the CEO and one of the other execs, like they were just running a fraud ring and just scamming cards on some like digital company, and it was all under their own business, which is real smart. But um anyway, they got screwed, and MasterCard pretty much came down and was like, we don't have this concept of merchant of record in our rules. And Visa has merchant, but MasterCard has like this platform merchant or PayFAC. And so what they did is as a result, the FTC obviously climbs up MasterCard's ass and it's like, hey, clean this up. You can't have these guys running this with no oversight through your acquiring principal members. So MasterCard goes to all their principal members in the US and is like, nuke them all, right? They either are a platform merchant or they're a PayFAC, and
Cross Border Commerce After Wayfair
SPEAKER_00there is no ambiguity of what this merch of record.
SPEAKER_04And if they're a PayFAC, we need to they need to register they need to register in 30 days or we're shutting them down, right?
SPEAKER_00And it's like you can't you can't operate a payments business with with no MasterCard, you know, you'd you'd be screwed in the same way with Visa, you'd be even more screwed. So I think that was one of the things that really shook that industry.
SPEAKER_04It's so crazy that you say that though, because like recently I just went through an Elevon. Was it Elevon or World Pay? They have like a pay facre. Like it's crazy, but it's not it's not a true pay facre. It's like it's uh it's it's a merchant agreement. It uh like I would I would just call it a merchant agreement. Like it's very interesting. Yeah, it's very interesting to figure out. I mean, they sponsor the program, right? And there's like interplay between this pay facement that they have and a merchant agreement, and so you go back and forth with them, and you know, it's a little bit convoluted. You have to read it a few times to make sure you understand the interplay. But I I don't even know, like I don't know if that's a buzzword that is a great marketing tool, but they're out in the marketplace actually. I mean, and and look, Elevon is the most risk-averse of everyone because they're wholly owned by the member, right? Like, so it's uh it's one of those things where I see quite often the use of the term PayFAC, which I call PayFAC Light. That's a merger record to me, but um, you know, trying to understand the distinction between the legal and operational responsibilities between these different types of classifications, they're really blended. I mean, can you can you define a bright line anywhere between and I look a true payment facilitator? That's a simple one to me. Yeah, but all these little subclasses of what we would call merchant of record payfack light, aggregator, marketplace. I mean, for you to define these or bring some sort of clarity or bright line distinction, where do you go?
SPEAKER_00Yeah, it's it's hard to say because it's like there's there's so much garbage out there. It's like there there is no bright line. And I think that's what I kind of come back to is like, what's the biggest issue? It's like the networks, like they need to come in and better define the rules of like cool, okay, we acknowledge this type of business model, but don't call it pay fact light. They're an MOR, they take risk, they have to do XYZ to be the ultimate merchant, reselling whatever products that they sell on the back end. Um, but like they're the merchant, and that needs to be full stop how Visa approaches it. They won't because there's so much ambiguity that they'd rather just kind of police it case by case. But I would say, like, for PayFAC, very well defined, and you know, you have to register, there's a process, there's protocol, there's this PayFAC light thing where I don't think it's really it it is kind of an MOR model. The reason that it still is considered a PayFAC model of the way that I see it most of the time in practice is that you're only using one like acquiring rail. So you might only use, you know, Adion or Stripe or whatever. Like Stripe has Stripe Connects product, right? And that's basically a PayFAC light that all these ISBs can now use and board all their submerchants at will and you know, for anything from yoga studios to all types of stuff, right? And those are kind of pay fact light models that I think we call them embedded payments or embedded finance, whatever you want to call them.
SPEAKER_04Like a distribution channel.
SPEAKER_00Yeah, but they're white labeling Stripe, which which to me it says, okay, you are still abiding by PayFAC rules, but you're doing everything through Stripe or Adion or you know, PayPal, Elvon, World Pay, it doesn't matter, as long as you're sticking to a single provider. I think the moment you try to do that with multi-tenancy of oh, we use Stripe for this and Adion for that and World Pay for this and Lvon for that, that then now becomes okay, you are you're either a registered PayFAC with multiple nodes of acquiring partners, or you're just straight up a merchant of record that gets mids from multiple acquiring partners, board submits underneath yourself with dynamic descriptors or whatever, but you're still the merchant of record. And when you do that, you have to your terms and conditions need to be at the place of checkout. You need to be disclosed to the end shopper, you need to have customer service, you gotta have a phone number that shoppers can call and be like, what's up with Matt's t-shirts? You know, like I need to know where my order is or whatever. And you gotta have a customer service team that can field that. Whereas if you're a registered PayFAC, you don't need to do that, right? And then same thing with indirect sales tax, right? If you're a PayFAC, like you don't have indirect sales taxes, it it's a well-defined thing in tax legislature of oh, you're a payment facilitator, but MORs doesn't exist. It's like, no, you're a merchant, so you're you're responsible for these things.
SPEAKER_04And yeah, ultimately.
SPEAKER_00That's the ambiguity, I think. There's that's like really the the line I draw on the sand, and all the definitions of pay fact light or aggregator or whatever, they all really they blend so much,
Merchant Of Record Versus PayFac Rules
SPEAKER_00and it also is a jurisdictional thing. But really, you know, most people just don't understand that clear distinction of like if you say you're a merchant of record, you have to do these things. Of course, there's bad actors that don't do those things, but you know, you have to be disclosed, and that's the big thing that the networks want to see because they want shoppers to be able to go and choke one throat instead of playing he said, she said to get customer service for their order.
SPEAKER_04Well, you know, and that kind of raises like we've been talking about problems. What about solutions? You know, I mean, how do you how do you hedge some of this risk that you're maybe unknowingly taking on, but like you're taking on risk associated with look, a lot of times I think people just kind of like hear the concept and don't really understand the where the rubber meets the road on how it's gonna operate. And so some of these risks, like, you know, they learn about them the hard way, but you know, obviously you've got some protectionist strategies to make sure we're minimizing a little bit of that, you know. I mean, without maybe giving away the the crown jewels, you know, like talk about some of those a little bit.
SPEAKER_00Yeah, I'd say so. The risk on if you're if you're a merchant looking at reselling through a merchant of records, for example, your risk is that if the merchant of records a bad actor and not doing things compliantly, like they could get shut down overnight. And that can result in your business having massive losses because whatever you're leaning on them for infrastructure is like critical for your business to tick, right? So that's always a it's tough because you can't have multi-tenancy with merchant of records like you can with an acquiring relationship. Because when a merchant of record is distributing your products, you know, if you're if you're a supplier of a product, Matt's t-shirts, and I want to use Chris as a merchant of record to sell it on behalf of me on my website or whatever, then I'm now totally leaning on you to make sure that you're facilitating all those payments and not being a bad actor with all of your regulators downstream. I'm also leaning on you to make sure you're paying California franchise tax for all the sales that come through and Texas tax and making sure that you're compliant as a party to the one that's liable for all this additional stuff. And that's one thing I would say is kind of the risk side for merchants. The benefit for merchants is they get all that stuff taken off their plate. Like merchants trying to navigate, like, dude, did I hit like economic de minimis in Florida this year? And do I need to register and then backpack, backpay taxes that like I didn't collect on my checkout? They don't know, like they don't want to deal with this shit. They sell whatever they sell, and they want they're marketers, right? They want to go and scale a business and not worry about taxes. Like, no one likes taxes, you know, even CPAs don't like taxes. So no one wants to deal with that shit. And so it's nice to be able to go and say, hey, you're giving me payment processing and acquiring, and you're gonna do my taxes for me and keep me compliant. That's awesome. Two for one, right? And some businesses will love that, some will hate it. They want, you know, granularity and want to control it themselves, but that's a huge benefit, I would say, to the model, and largely a main reason why a lot of people lean into this this merchant of record model versus going to a PayFac or a traditional acquirer.
SPEAKER_04Well, you know, where I'm seeing it more and more is POS providers. Yes. Because that's being a hub for business efficiency tools, right? So, and you know, I kind of saw this a little bit. We have one, we have one client, and he's a big thinker, and he's a POS company. And he's got all of these ancillary products and services, uh services primarily, but you know, that he is embedding and integrating into his POS. And, you know, this is where I've seen a lot of this in practice recently. And you know, even to like payroll. Like I, you know, I, you know, there's time trackers that get that that can get integrated into a POS system that runs as an enterprise system for the business operations itself, not just about payment. Right. And then, you know, not only does it do a tracker, but it'll do withholdings, they'll do the payment for it. Like, you know, all those services can be outsourced. I don't know if they're cost effective to be outsourced, but to take any regulatory liability off of you associated with a payroll company that's doing the withholdings, making sure that the amounts are correct so that you don't have to file the reporting, you know. I mean, all of that stuff being built into a central device that the business operates from, I think that's pretty cool. And like I'm kind of seeing this as a component, this idea of the merchant of record becomes a component of like that POS distribution. Totally.
SPEAKER_00Oh, 100%. And it's it's one of those things where you know, anytime you consolidate all your vendors into one, you're gonna pay a premium, but it's the premium of convenience, you know, it's it's cost and convenience disposition, which is like that in a lot of industries, not just payments. So the more convenient it is, the more it's gonna cost you. You know, you want to get work done on your house, you pay a general contractor who hires a bunch of subcontractors, it's gonna cost you because He's going to mark it up, but he's aggregating all of that work into one and you only have one throat to choke. And that's why the merchant of record model is super powerful and why it is different from a pay fac. Uh, you know, like Square would be technically a payfack that kind of calls himself or toast would be a pay fact that kind of calls himself merchant of record, which a lot of people know because you use square and toast when you go and, you know, uh swipe your card at restaurants and bars and whatnot. And so toast would be considered like a merchant of record, but really it's a payfack because they don't take the sales tax and handle all that additional liability where a true merchant of record, they take all that from you. So we see that as a massive bolt-on added opportunity in the same way that you know, kind of doing embedded finance and different different things within new softwares and aggregating these. So that's a massive win. And a lot of the time, merchant of records do a lot of global business too. So, like this is what I did in my previous role. We were primarily targeting US-based companies who were selling internationally, and they weren't selling in local currency, they didn't have entities in those countries, so you have to go through cross-border interchange. Decline rates are higher because issuing banks in the UK are not used to doing business with US banks on the acquiring side, so it's cross-border rails through Visa MasterCard. That results in like poorer performance. There's all these long tail things that are impacted, so that gets consolidated through the immersion of record model.
SPEAKER_04Yeah, it's it's it's interesting because like I I not until on this, you said distribution platform, you know, like it it's actually uh an aggregation of everything associated with, and I guess I hadn't really like thought about it as a marketplace, right? Like a version of record being the marketplace, but that probably is what makes the most sense to me, like for me to conceptually see it and kind of taking off some of the burdens of the submerchants, you know, not just from a sales standpoint and a marketing standpoint, but from an actual compliance standpoint associated with revenue generation outside of just payment, right? I mean, it's you know, I I I think that was a good way to crystallize it in my mind because it is somewhat of a nebulous concept. So I think I I I actually think that was really beneficial. Are you doing that type of work at SoundCommerce where you're actually managing merchant of record, the submerchant activity for merchants of record?
SPEAKER_00Yeah, so I'm actually uh I'm consulting right now and kind of acting as an advisor to a handful of the more up-and-coming merchant of records, I would say, in the industry that are trying to they're growing really fast. You know, they're doing billions of dollars a month and they're trying to figure out like how do we solidify this position to those three regulators we talked about in the beginning, and how do we like help define this model when the networks are it's largely the ambiguity from the networks that causes all this confusion on the other side and a lot of these like lack of no clear nomenclature of what these terms and definitions are, and so I work with a lot of those more strategically, just you know, it's not like we place mids with them or whatever, or are always operating their back end uh in terms of orchestration, but we we do help them strategically, and that's a lot of what I've been doing recently is trying to like move the market towards something that uh is clear and making sure that when people are up and coming, they're not using ambiguous ways of saying, oh, well, we're actually, you know, a marketplace per class per classification of Visa, but we call ourselves a merchant of record on our websites. Like, nah man, if you're if you're a merchant of record, you have to do these things because that's what boxes you into this merchant of record. And so
How To Reduce Risk Plus SoundCommerce
SPEAKER_00that's largely what I've been doing recently is just helping a lot of these these players who are up and coming and they know the power of the model, right? That consolidation is super powerful from just like a go-to-market strategy perspective, just like with Stripe, they're now kind of a tech platform versus just being a oh, they are a tech platform, they're not a payments company.
SPEAKER_04Exactly.
SPEAKER_00And and and like the way they postured that is like, hey, we're tech, we've got all your tech is built into one integration and one API, so you don't need to go and shop three or four different SaaS companies.
SPEAKER_04Yeah, but the but the ease of access to the payment processing industry and how the ease of cutting off when they still have all your money.
SPEAKER_05Yeah, nobody's really looking at that side of it, but yeah, yeah. I was like, We're at the bottom of the hill for that one. We see that one all the time. Yeah, yeah.
SPEAKER_00I was gonna say there's a lot of smoke in front of that mirror, but um yeah, but you know, just at least the posturing side, it's like it's we know that this consolidation and convenience people are willing to pay because they can move faster. We're in the age of AI and you know, shit just moves quickly with business these days.
SPEAKER_04And so people want, but you know, even agentic AI, like generally speaking, you know, you if you look at fraud controls of even uh CMP transactions, right? Like people are looking at cadences of how somebody types or mouse movement, or and now when you have an agentic, you know, agentic commerce person that you've programmed, an AI person to go out and shop for you. How are you supposed to detect you know fraud, you know, propensity for fraud at that point? Like yeah, it uh we're almost getting to a place with AI that the model that we operate in, uh I'm not sure how much longer it could be sustainable, you know, unless the gatekeeper shift a little bit, but we'll see. I mean, that's I think that's a whole other podcast too that we you know get into down the road. We'll see. But it's it's interesting because you know, we see these inherent, I don't want to call them flaws, because I don't like with what the card networks do, they have to hedge risk. And sometimes I think they don't know how, and so they just do a blanket like here's the hedge, right? And we're just gonna blanket say no, no risk, no transactions, no risk. And it seems unfair, but at the same time, I think it's because they don't know how to, and don't don't get me wrong. I mean, I think that these are for-profit monsters that look really in a self-serving model, but they don't know how to control the risk associated with some of this stuff, and that's why they just take that stance. And so I, you know, I I I I hardly ever want to say anything good about a card brand, but I I will I will give them the benefit of the doubt on that one. Uh, it does seem at times where they don't really know how to wrap their head around it, and they're not really in the granular associated with it as you are. I mean, I think I've been plugging SoundCommerce this entire time just because I'm highlighting all of your knowledge base, but um, you know, we're getting to the end of it. What's what's the elevator elevator pitch for SoundCommerce? What do you want our viewers to know?
SPEAKER_00Yeah, well, on the merchant of records side, I obviously do a lot of consulting, just being knee deep in this super niche topic of the industry for the better part of a decade. Um, I do a lot of consulting on that side, so that's fun. But our primary gig is we kind of come in and are a payment operations agency. So a lot of the time we'll come in to businesses that just aren't quite at a scale where it makes sense to hire a bunch of in-house payments expertise, and we kind of come in, help with orchestration, help with your tech stack, help with understanding what mid-structure you should have.
SPEAKER_04You're an outsourced CPAO. That's exactly what I was thinking, Chris. There we go. That nomenclature comes from another one of uh the people that we do a podcast with that is based in um in Europe. Yeah, but she has said that a lot of organization organizations, depending on size, they might need a C Payo instead of a CFO. And so that I'm gonna give you that, man. Like you should you should use that. We're your outsourced CPAO. Yeah, I like it. Yeah. Yeah. That's yours, bro. Yeah, appreciate that.
SPEAKER_01Yeah, exactly. Well, hey, that's that's we love having you on. Chris uh was blowing you up, what, two or three times in this podcast because we want you to come back on the podcast, Matt. Yeah, really conversations. Yeah, it's it's great.
SPEAKER_04Yeah, you know, I mean, it's funny. Are you going to SCAA? I'm not, no. Okay, but just by the way, everybody, SCAA, uh Miami, uh June 8th through 10th, the 10th. They don't they don't give me any money for saying that. I'm just gonna happen to be there. It's at the Fountain Blue in Miami. Um, but this is that's one of the reasons I go to the conference. I don't always think it's a great opportunity necessarily for us to pick up business as much as it's to see existing business and have conversations like this where you know I learn from having these conversations and Matt, you know, giving knowledge. So I hope our viewers are equally interested in and what Matt's saying, because I think that you're getting a level of expertise for free here that that you wouldn't normally get from somebody who's deeply ingrained in some of the things going on.
SPEAKER_00Yeah, 100%. It's a good knowledge base for it, no doubt. Awesome. Awesome.
SPEAKER_01Matt, anything you want that we want the last word? Anything you want to leave our uh our viewers with?
SPEAKER_00No, I'll do some more research on scam, and next time we come on, we'll we'll talk about MasterCard's new scam policy. How about that?
SPEAKER_04Okay, perfect, man. Hey, look, thanks for being on here. Matt Steinbrecker, SoundCommerce LLC. Really appreciate you being on, Matt. Really enjoy having these conversations with you until the next time.
SPEAKER_02Thank you for listening to this episode of the Payment Experts Podcast, a podcast of Global Legal Law Firm. Visit us online today at global legalaw firm.com.
SPEAKER_01Matters discussed are all opinions that do not constitute legal advice. All events or likeness to real people and events is a coincidence.