Behind the Swipe: Why Your Payment Processing Doesn't Have to Be Static

Are you quietly losing up to 1% of your hard-earned e-commerce margins to hidden credit card processing fees?

In this episode of The Disruptor Podcast, host John Kundtz sits down with Viktor Popovic, Co-Founder and President of Avendo, to challenge the static, locked-in pricing model of the legacy payments industry.

Viktor reveals how merchants can bypass traditional middle layers and force payment processors to compete in real-time for every single transaction.

But this isn’t just a story about fintech innovation. Viktor shares his extraordinary journey of starting over, from fleeing the civil war in Yugoslavia at age 18 and living on food stamps as a refugee in Hungary, to building a national e-commerce business, surviving Google's devastating "Penguin" algorithm update, and successfully exiting after 21 years of bootstrapping.

If you are a small business owner, fractional CFO, or consultant looking to plug margin leaks and bring radical transparency to your payments, this episode is your blueprint.

Key Takeaways From This Episode:

1️⃣ Stop Accepting Static Pricing: In legacy business operations, you compare the cost of inventory, shipping, and equipment from multiple vendors. Payment processing is the only major expense where merchants select one processor and stay locked in for years without knowing if they are still getting a competitive rate.

2️⃣ Bypass the Middlemen: By acting as a neutral decisioning layer rather than a payment processor, Avendo sits directly between the merchant and the processor. This eliminates up to three traditional layers of independent sales agents, saving merchants up to 1% per transaction.

3️⃣ The Millisecond Auction: When a consumer enters a card, Avendo automatically requests real-time rates from approved processors. Within milliseconds, the transaction is routed to the processor offering the best rate, with zero change or delay in the buyer's checkout experience.

4️⃣ Radical Transparency over Hidden Markups: Many businesses use flat-rate providers (like Stripe) advertising standard rates, but end-of-month assessments can quietly climb above 4% due to unrecognized network fees. Real-time transaction optimization provides consistent, predictable margins.

About the Guest:

Viktor Popovic is the Co-Founder and President of Avendo, a patent-protected fintech SaaS platform that helps e-commerce merchants access competitive, transparent card processing.

Previously, Viktor spent 21 years founding, operating, and successfully exiting Ultimate Washer, growing it from a dropshipping startup into a nationally recognized brand.

Today, he applies his decades of merchant-side experience to give online businesses massive leverage over legacy payment systems.

Links & Resources Mentioned:

Avendo Official Website: avendo.tech

Connect with Viktor Popovic on LinkedIn: Viktor's Profile

Transcript

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Welcome And The Big Idea

John Kundtz 0:00

Beyond the swipe, while your payment processing doesn't have to be static. Hi everyone. I'm your host, John Kuntz, and welcome to another edition of the Disruptor Podcast. For those that are new to our show, the Disruptor Series is your blueprint for groundbreaking innovation. We started the podcast in December of 2022. Our vision was to go beyond conventional wisdom by confronting the status quo and exposing the raw power of disruptive thinking. And today's guest embodies that spirit. Viktor Popovic is the co-founder and president of Avendo, a fintech SaaS company building a neural decision and orchestration layer that helps online merchants access more competitive card processing. Today we explore how to disrupt and challenge that static payment processing model, forcing processors to compete for every transaction in real time. Welcome to the show, Victor. Thank you. Thank you for having me. I'm excited to be here. It's an interesting topic because from a consumer, if you will, I've noticed that in the world today with the price pressures, more and more merchants are sort of putting these transaction fees right up front as a separate line item on your bill. And where in the past you would get a bill and you'd pay for it with a credit card, and you didn't know how much money was actually being spent. It was just to process that transaction. But interestingly to me, is now I'm seeing more and more people putting that up front. So I think this is a very relevant topic because now the whole payment processing world is being transparently put in front of us as

From Refugee To E-Commerce Founder

John Kundtz 2:00

consumers. But before we get into that, please tell me a little bit about your background, your education, your experiences. How'd you get here? Start anywhere you want.

Viktor Popovic 2:09

Okay, thank you. Appreciate that. Thank you for that intro. My story is really about starting over, just building through building through trial and error. Initially was really my life led me into a country, Hungary, because of the civil war in former Yugoslavia, where I was born and raised. As I started Ultimate Washer in the early 2000s, yeah, everything has been really uh bumpy for me. Not an easy ride from early age. But yeah, like I said, born and raised in Yugoslavia, my life changed very early. My father passed away when I was 17, and that civil war broke out, and I had to make serious decisions about what's next. And since I didn't want to take a part in that war, I moved to Hungary and became a refugee. And this was one of the hardest periods of my life during that time in the mid-90s. And so I had to I didn't know the language, I didn't know the system, I didn't have any friends. And so my high school girlfriend today, my wife, we decided to uh settle in Hungary. We had to figure out our legal status in the country and really how to build a future. And so like everybody else, moving to a new country, it's you're poor. You don't come with a loaded loaded bank account. And initially we really lived off of uh food stamps and donations and try to get the whatever jobs we could get because we didn't speak the language. So I I worked, I remember, uh initially as a uh delivery driver for a bakery, and then later I worked for the clothing company factory actually, as an I think they would call that today iron working man. I was ironing the the clothes is the uh is the is was the job because again, without speaking the language, you just took the job you to eat. Fast forward a little bit, I uh had an opportunity to come to US early or late 90s, graduated from Embraer Riddle Aeronautical University, and uh eventually started Ultimate Washer, the e-commerce business. Of course, I had no perfect plan in the beginning. I mean e-commerce was very very new to to the world, and uh manufacturers and vendors uh in in my industry, they uh they had a hard time believing that we could sell heavy-duty equipment online. Uh and so it took me six months after starting the business to uh really convince the first vendor to trust us that yes, we can put your products online and we can sell them that way. Because it back in the day used to be you would don't typically demo the product and from that people then buy it. Fast forward a lot of fluctuations uh up and down. 2017 we lost pretty much all of our rankings due to Google um a change. I think uh they call that the penguin update back in the day. We went from being top three on all our search results, the Google search results pages, to page three, four, and no page at all. And so I had to uh figure out what's next and decided to really pivot. And instead of relying just on our website, now we shifted a lot of our focus on Amazon and Walmart. That of course required us to get a bigger space with a lot more warehouse space, a lot more money putting it into inventory where it used to be dropship business with maybe fifty thousand dollars in inventory, now it became $500,000 inventory business, and a lot of risk taking that way, not knowing whether this is gonna work. We hired a consultant who was specialized in Amazon growth marketing, and so that pivot was a success for us, and then for fast-forward 2024, I've decided to sell the business and uh move on from it. So 21 years. Congratulations.

John Kundtz 6:59

I've heard that story in various forms or fashions, particularly in the mid-90s or early 90s when e-commerce is coming in, a whole bunch of people telling me nobody will ever buy a mattress online, right? Or you nobody will buy a refrigerator or a washing machine, and all of a sudden it's like everybody does it. And you're not the first person I've talked to that had a pivot once Google changed their algorithm and all of a sudden went from almost all of their business coming through Google search and all going down from 100% to almost 0% overnight and then really scrambling around trying to do it. It's scary.

Viktor Popovic 7:36

You have employees, you have bills to pay, you have inventory, and now you're now selling that equipment. It's not a little stressful, it's a lot of stress.

John Kundtz 7:47

Yeah, like I said, you're not the first person I've talked to that it went through that lovely transition. So congratulations for making that through and

Why Card Fees Now Feel Personal

John Kundtz 7:55

selling your business. So now you're on to something really cool and something new. So we'll talk a little bit about this whole payment processing industry. Like I said, it's become very transparent as the merchants start to tell you, okay, if you pay for this on a credit card, I'm gonna charge you X dollars more. So, what do you think some of the biggest mistakes are that you see on online merchants make when they're taking more of a traditional approach to credit card processing today?

Viktor Popovic 8:24

You know, merchants don't have any easy cards dealt with them at all. The margins are getting pushed down, everybody's is squeezing out from vendors raising their prices. Obviously, you have inflation, and then you have employees that you have to take care of, so the salaries are there, and then the credit cards obviously is one of those expenses that it used to be where the merchants would just take that expense on and built it into their their prices. And because the margins are becoming so so thin, I think they're just trying to find a way how to pass on some of these uh expenses to to consumer. And it's not an ideal situation because a lot of consumers don't like to participate in covering the technically the business cost because it's the merchant who hires the processor and the processor charges the merchants. Not ideal situation, but there's more and more industries, restaurants, hair salons. You'll see, and they'll say if you pay cash, it's this price, gas stations. We've known that for years now. Paying cash would be we would get one price, and if you're paying with a credit card, they'll either tackle on two or three percent to the total bill. I think everybody's just trying to figure out what's the best way. I when I ran Ultimate Wash in my business, I came to a point where I didn't want to charge or pass on that fee, credit card fee onto every sale or consumer, but it was for larger ticket items, which we marked as $3,000 enough. So if your order was $3,000 or higher, at that point we would charge that. And believe it or not, we actually got very little resistance. I believe that mostly came because sales that we had or for these larger items were coming from businesses. So it was a B2B type situation. I think less questions were asked. But if you were selling to I because you would definitely would question that merchants are trying to find different ways to pass on those costs and mitigate. And so that's why we introduced the Vendo, is really to help merchants get better rates through this sheer competition amongst credit card processors.

John Kundtz 11:01

That was exactly what came to my mind is that if you're in a B2B business, that they understand the how the price of doing business, so to speak. But if you're in a B2C business, it's that consumer that I think gets a little, wait a minute, why am I paying for this? Even though you've always been paying for it, you just didn't know it. I fully understand that, both sides.

Viktor Popovic 11:21

And I'm on the consumer side of this one. I don't want to participate. I don't want to be covering for those costs when I'm buying something. But yeah, it's we're all different. But yeah, you're right. It's the businesses seem to kind of be more flexible on that.

John Kundtz 11:34

But you're you're spot on. Everybody is just being squeezed in every direction every time you turn around. As you said, everything is more expensive. Vendors, the suppliers are pressing hard on their margins, and so it's a very interesting time, and I think a great opportunity for you.

The Cost Of Ignoring Statements

John Kundtz 11:55

And let's talk a little bit more about that. As we're talking, there seems to be a perception in the industry that the industry defaults really can't be changed when it comes to payment processing. If you were talking to a merchant or somebody, what would you suggest their mind shift needs to be or a habit that they should change when you're talking to business owners that they should adopt before accepting what I'll call the status quo?

Viktor Popovic 12:23

I was in business for 21 years operating the ultimate washer. And during that time, I only had two payment processors. The first one for about seven years, it was Bank of America, and then the second one was for 14 years, it was authorized, and only because a friend was part owner, and I knew I was gonna get good rates. It's interesting you asked that because we as business owners, obviously small business, I'm not talking about a large enterprise, we get entrenched with the day-to-day operations. Where's the next sale gonna come from? Who are we hiring next? Training. And so when you get that statement, the credit card statement, at the end of a month, you may look at it or not, and you're only looking at two, three, four, five pages, maybe more, depending on the number of transactions the business runs, and the terminology and description of these fees, and you just line them and flying them, and you're like, I don't understand it, I don't get it. You pass it on to your bookkeeper, they do the entry in the bookkeeping system, and that's it, that's where it ends. Because we were never given choices and options, and this is what stayed with me as being on the merchant side of things, it's like you have a choice when you are choosing the payment processor at the very start of that hiring or recruiting, and then they assign the rates to you, and now you have to trust that you are getting the best rate. But once you start transacting, or a year later, two years, or three years, you don't know no longer if you are still getting the best rate, and that that kind of bothered me always. There's gotta be a better way. How is it? I've had over 200 vendors, right? And I had choices, I had options. If I wanted to buy a pressure washer hose, besides the quality and the shipping cost, the next was how much is the cost of the item? And I said, option A, option B, option C, you compare and you buy. And that's not the

Routing Every Transaction For Best Rate

Viktor Popovic 14:45

case with payment processors. You have that choice at the beginning, but later on, transactions keep coming in, and you're like, Okay, yeah, that's what I'm paying. And so that's why that's how a vendo came about, is really trying to get payment processors to compete on each individual transaction. So whenever the card is entered into a checkout page, they will provide price responses, we call it, and then our algorithm will select the best available option and then route the transaction to that payment processor. So that way we try to get the best rate every time instead of just settling with one processor.

John Kundtz 15:31

That's what I perceived is the change or the habit, I think, is there's choices now, and there's easy choices. It's I used to describe the same experience most of us have with the cable company, right? And so we get this great price for cable television or whatever, or internet, and then two or three years go by, and then you have no idea if you're getting a good price or not. And it's not until you call them up and say, Hey, I think I'm gonna switch, and then they give you a great deal again. As you're running a business, that's the last thing you have time to do. You gotta you got too many other things that take over your precious time during the day. So is that what I'm hearing the the mindset shift that you that people should say is that there really are choices, and the choices are easier than you think they are. Is that a fair statement?

Viktor Popovic 16:22

That's correct. There's some companies that do do routing based on whether it's a debit card or a credit card. I think we are kind of pioneering this in a sense that we allow immun processors to provide rates based on the card information. And when we say card information, there's a lot of different things that are signals or elements, however you want to call them. Whether it's a debit card, commercial card, if it's a credit card, is it a gift card, is it a government card, a rewards card, right? These are all different fees, believe it or not, that these network, the networks like Visa, MasterCard, assign, they call them interchange rates, and then you have processor rates and ISO rates. So there's a lot of these layers of companies that are present and they're needed for the type of service they provide in these transactions, but they all take a little cut. And so that's why we're kind of inventing this and saying, yes, we want mergers to have more choices than just being a flat rate or this rate. Just let's do this on a transactional level.

John Kundtz 17:40

Let's dig into that a little bit more. So, yeah, you've created this sort of new payment category with Avendo. So tell us a little bit how how your approach is disruptive and how you're going forward. You started to hint on this, but let's dig into that a little bit. Tell our listeners a little bit

Who Takes A Cut In Payments

John Kundtz 17:55

more of what makes you unique.

Viktor Popovic 17:57

Yeah. I'll start just maybe explaining a little bit of I hinted earlier that there's different layers and companies that are involved in the transaction. And so you have you have a gateway or vault that tokenizes the information that comes from the consumer card. Then you have issuing bank, which is the card that issued the credit card, and then you have networks such as Visa, American Express, Discover, and MasterCard. Then you have acquiring banks, then your next layer is payment processors. This is now obviously all on the processor side of things. And you have independent sales organizations, we call them ISOs, then ISO agents, and then referral partners. So all these six, seven companies, they participate in some way of shape or form, allowing the transaction to happen from end to end. Where we come in as a vendor, we sit really literally between the merchants and the payment processor. We're not the merchant, we're not the processor. Why we're not a processor? Because we don't touch the funds, right? So that's a different category when you are handling the funds and when you're handling the consumer data, which is a sensitive type of C D number and uh the full number of the cars. We partner with a gateway that does uh this type of tokenization for us. Where we fit in is really we're the closest to uh the processor that you can be, uh thus eliminating at least three layers of uh agents or referral partners that are involved uh in typically agencies that uh recruit. When you when you see somebody like knock on a door and say, Hey, what's your what's your credit car rate today? What do you pay? That's what I'm referring to. That that piece. Just by virtue of that, uh, we are able to save upwards of one full percent to our merchants, uh, which is uh a huge savings. I go back to when I was running the business, I really never knew what my rate was. And that's not easy to determine. I'll tell you a story. Two weeks ago, I was speaking like this in a video call with one the owner of a PR software company. We're just casually talking, and I asked him, I said, Do you know what you're currently paying? And he was using Stripe. He says, Well, I know they advertise 3.3%. And he pulled out a statement and he calculated it quickly, and he says, 4.2 at the end of the month, after all the this fee, that fee, and then all that. I said, That's a lot. That's by all norms, just a lot. I said, We can save you quite a bit. My legal department is strangled. You can't promise people, you can't say it's gonna be this much. Okay, I'm not gonna say that, but really um the savings are tremendous. The the more processing you you do as a business, obviously the the these savings uh are greater. I'll stop there. I'm sure you have questions, but there you go in a nutshell, like where we fit in the whole scheme of uh ecosystem.

John Kundtz 21:29

So the way I understand it is you have the merchant and you insert yourself in between them and the processor. So then as the transaction occurs, as I submit my credit card for payment, if I'm the buyer, the your system goes in and finds it the best rate it can at that point in time, real time, then the rest of the transaction follows the process.

Viktor Popovic 21:52

Right. I'll elaborate a little more so it makes it easier. But yeah, you're a hundred percent right. The description is correct. So consumer enters the card online. We grab the card information. We send it out to multiple processors. Now keep in mind, this is all seconds and milliseconds, right? So this there's no change for the consumer. They don't see anything, they don't feel anything. It's just in the background. So we send the transaction with the amount and the card information to multiple processors. They return what we call the price response. And then based on that information, we're able to determine who is the best available processor at that moment. And then we route that transaction with the rest of the information, card information, to that processor, and then they complete it settlement from end to end.

John Kundtz 22:42

So from the consumer perspective or the buyer perspective, they have no idea what's going on in the background anyway. They never do. All I know is that you press the button and the thing spins for a second or two, and then boom, you're done. So from the business perspective, though, I'm guessing as part of your disruptive approach is you're making this quite easy. As you mentioned, we don't go and check our rates because it's just too hard and too cumbersome and takes too long. But if you can easily insert yourself into the middle of this process, then besides saving money, if you can do it seamlessly or the setup is fairly easy, then it should be of value, particularly to a small or medium business,

Three Lines Of Code Integration

John Kundtz 23:30

which doesn't have teams of IT people working on stuff, correct? Exactly, exactly. Yeah.

Viktor Popovic 23:35

That was the key. I've always thrived to create processes and steps that I was when we sit with the team. I'm like, okay, let's be in consumer shoes. How do we want this experience to look like and make it as easy as seem like like just it's almost like self-explanatory where they just click a next? And that was the same mindset. So what with the way this works is when the when the merchant comes, they will fill out the application form, like they normally do. If they want to if you want to switch a processor, you have to fill it out and you'll upload the basic documents. Again, same same routine, like if you're switching a processor, a bank statement, maybe a previous uh credit card processor statement, a couple of things like that. And then we forward that information to all the participating processors. Processors do the same thing, they underwrite the merchant based on the risk of the industry, with volume that they process on a monthly and yearly basis, and they assess that as a risk, and then they decide yes, we want to underwrite this merchant and support this merchant, or maybe not, if it's a high-risk category, if it's gaming, maybe website, or it's maybe they're selling cannabis, or some of these higher-risk here industries, some processors uh simply don't underwrite, which is okay. That's why we have a lot more processors that that will. Then once they get approved or underwritten by processors, we have what's called a merchant dashboard, in which then they will be informed now that they uh can start the process of really mitigating or moving to the new uh platform in sense of the code. So we generate a code, which is literally three lines of code that they copy paste, they grab that and put it into a checkout page, backend, whatever they use. I don't know, topside or whatever the software using. So they take that code and just paste it into that shopping cart, and really that's it. That's as as simple as it happens, right? There's no no coding where they have to write or do some acrobatic transfers, anything like that. And and then once that happens, obviously we test the connections, and from that point on, it's good to go. They start receiving orders, and consumers start entering card information, they're in business. We start transacting for them.

John Kundtz 26:14

Appreciate you digging into that. Those that have listened to the show before know I'm a big advocate of the user experience. And I worked with a lot of entrepreneurs and not-for-profits and other smaller businesses. You can have the best technology in the world, but if it's just not easy to use and you're not providing a valuable experience, nobody cares. Believe me. I worked for IBM for close to 40 years. We came up with some really great stuff that was technically superior to anything on the market, but it didn't meet the user's needs, and it wasn't necessarily always easy to use, and therefore nobody bought it. So I appreciate you digging down into the front end experience. So this is a great conversation. I I really appreciate you digging down into it. I think it I find it fascinating.

How To Connect And Partner

John Kundtz 27:00

So let's talk. Tell me a little bit about how can people learn more about you, your services, your product, what's the what are your socials, what's the best way for people to get a hold of you?

Viktor Popovic 27:09

Yeah, absolutely. As far as the business, you can find us on uh vendo.tech. And if they want to reach out to me directly, by all means do that. You can find me on LinkedIn. Just DM me and whenever I have time, I I check messages and I respond. I'm very open book. People sometimes come with questions, and if I know the answer, I'll share it. If I don't, sometimes I'll find out for you. So by all means reach out and uh yeah, that's me.

John Kundtz 27:42

Perfect. I will of course always provide those links in the show notes. Please uh reach out and uh connect with Victor. All right, so Victor, I am going to give you the last word before we wrap the show up. Is there anything I haven't asked you or something you'd like to share with the audience?

Viktor Popovic 28:01

With audience, let's see, I would probably where I would just mention this. We are actively looking for referral partners, and there are three categories fractional CFOs, business coaches and consultants, and then accounting firms. So if you're one of those three, please reach out and I will explain the program. But yeah, we're looking for a mutual referral type partnership. Please let us let us know if you're not be one of them.

John Kundtz 28:39

Alrighty, buddy. Great talking to you. Wish you the best of luck. Don't forget, everybody, reach out as appropriate. And again, I'm John Kunz. Thanks for joining us in this edition of the Disruptor Podcast, and have a great day.

Viktor Popovic 28:54

Thank you for having me on the Disruptor. I really appreciate the opportunity to share the story and talk about how we're building a vendor.

John Kundtz 29:01

Excellent. Thanks. You're welcome.