5 Reasons The Credit Card Competition Act Will Fail

5 Reasons The Credit Card Competition Act Will Fail

It’s 2023, and our public officials are coming after Visa and MasterCard in an alleged attempt to save consumers money. In this video, I explain why the Credit Card Competition Act will ultimately fail.

Watch this: https://youtu.be/7uAkZWsnm1c

Durbin Urges the Senate to Bring His Credit Card Competition Act to the Floor for a Vote: link to summary

Summary of Credit Card Competition Act: link to one-pager

If you’d like to submit your opinion on how the legislation should be drafted, please submit your thoughts here: https://keithsconiers.com/credit-card-competition-act-survey/

As a business advisor my role is to work with you, your accounting team, bookkeepers, and CPA to make sure all the systems you use to run your business are working well together. If you need any help with evaluating the systems you’re using to grow your business, or are looking for ways to protect your business from software fee increases, reach out to schedule a conversation!

If you’re tired of having payment processors increase your rates when you’re not looking, download The Entrepreneurs’ Guide To Payments and learn how we consistently save business owners $10k to $20k per year without having to switch processors or charging fees to their customers.

Make sure you subscribe to The Entrepreneurs’ Catalyst channel to get the latest news and tips on ways to cut your costs and increase your profit in your business!

How Entrepreneurs Should Manage Software Fee Increases

How Entrepreneurs Should Manage Software Fee Increases

As entrepreneurs in 2023, the one thing we all have in common in today’s world is we all pay for software to help us run our businesses. It’s interesting to think that once upon a time we use to buy a license for the software we used, downloaded it on a floppy disc or CD, installed it on our computers, and then we returned for another license if we felt it was critical. Back then, we owned our software. Today, it’s much different.

 

A Subscription World

 

In today’s world, the software companies, many who are also our payment processing provider, have access to our bank accounts and we don’t own our software. This means they debit our bank accounts monthly for their software and/or payment systems. This has brought about a significant improvement in many cases as software companies can, sometimes, build products and services that make our lives easier and more streamlined. Software companies can build new capabilities that we need to run a better business and then push a download to us and fix the issue without us ever having to leave our office to buy one of those floppy discs.

 

How It Impacts Your Profits

 

The upsides are endless as to how this has helped consumers, entrepreneurs, and the organizations that build software to improve lives around the world. One of the potential downsides you have as an entrepreneur is the fact that these recurring costs, especially when they involve payment systems, show up every single month and the costs continue to rise. These costs not only rise in direct proportion to your revenue, but also as software and payment system organizations decide to change their fee structure to increase their profitability. This is important to your bottom-line because the combined costs associated with software and payments can easily be one of your largest expenses outside of payroll.

 

How To Manage Your Software Costs

 

One of the best ways for you to stay on top of these costs is to keep an organized list of all of your subscriptions for software and payment systems. Once you have this list, have your accountant, bookkeeper, and business advisor discuss whether the systems you’re currently using are working well, what they cost, if there’s any overlap, or if there are additional ways that would help you get the same or better results with a lower capital commitment. You essentially want to see if there are any paths for you to save money on these systems without it negatively impacting the growth or productivity in your business. You could accomplish this by finding software that could help you consolidate providers, or by working with your provider to optimize your account by removing features you don’t need, thus lowering your expenses.

 

Take Control Of Your Profitability

 

Once you’ve removed unnecessary costs and fees from your business, you want to implement a system that allows you to track your expenses for your business. This can be done in conjunction with working with your accounting system, accountant, bookkeeper, and your business advisor. This would allow you to have an easy way to monitor what is happening with certain vendors as it relates to certain fees they charge for their services. It is also a good idea to periodically check with your providers on new features they have or are planning to implement that could help you with further consolidating and integrating your systems, which should lead to increased productivity and profitability. You could establish a quarterly meeting with your advisors and doing so would help you make sure your business is moving in the right direction towards your goals.

As a business advisor my role is to work with you, your accounting team, bookkeepers, and CPA to make sure all the systems you use to run your business are working well together. If you need any help with evaluating the systems you’re using to grow your business, or are looking for ways to protect your business from software fee increases, reach out to schedule a conversation!

If you’re tired of having payment processors increase your rates when you’re not looking, download The Entrepreneurs’ Guide To Payments and learn how we consistently save business owners $10k to $20k per year without having to switch processors or charging fees to their customers.

The 10 Lies Entrepreneurs Must Know About Payments

The 10 Lies Entrepreneurs Must Know About Payments

As an entrepreneur, software developer, or accountant you understand that the payment processing industry is essentially mandatory for you to engage with to accept payments in your business so you can efficiently get paid from your customers. For decades, it has also probably felt like lies and deceit are mandatory too. It isn’t. There are ways for you to avoid being taken advantage of by payment processing companies and it starts with knowing what the lies are, so you don’t fall for them and sign the wrong contract. The following lies are 10 of the most popular lies being told in 2023:

 

We Eliminate The Middleman

 

There are 12-15 payment processing platforms in the United States that authorize and settle daily transactions and deposit them into the business bank account. Fiserv, WorldPay, Elavon, and Global Payments are a few of the most notable payment providers that are considered ‘direct processors’. There are over 2k registered resellers of these platforms called Independent Sales Organizations. Regardless of who you are processing with, eighty to ninety percent of your costs are controlled by Visa, MasterCard, Discover, and American Express. This portion of your costs is called Interchange, Dues, and Assessments. The payment processing platform you’re using has no impact on these fees and is the same if you’re using a direct processor or an independent sales organization. The only impact on cost beyond that has to do with your provider’s markup. When I worked for a direct processor, I thought all ISOs had to mark up the fees from the direct processor and pass it on to the customer. I was wrong. As I met with prospective clients, I came across plenty of customers using a ‘middleman’ that were processing at costs we couldn’t beat or come close to matching.

 

You Can Process Payments For Free

 

The hottest craze in the payments industry has been merchant processing providers telling business owners they can process payments for free. Nothing could be further from the truth and, if done improperly, can lead to business owners paying thousands of dollars in fees. Payment processors promote these programs, not because they are better for your business, but because instead of charging you 2.5% to process payments, they get to charge your customer 4% and make a lot more money on your account. In my opinion, if the customer is going to pay more anyway, you might as well increase your prices and keep the additional profit you’re giving away to the payment processor and avoid having to pay Visa a $5k or $25k fine for improperly adding fees at the checkout.

 

It’s Illegal To Store Credit Card Information

 

I’m not sure where this started, but I’ve heard business owners say it’s illegal to process a credit card over the phone or to store the information. This in some cases has to do with PCI Compliance and probably had to do with some merchant processing company trying to find leverage to get a merchant to switch or to discredit their existing provider. PCI Compliance has to do with how you handle and store the credit card information you handle over the phone, on your website, or within your business environment. You can store credit card information securely using a secure website provided by most payment providers. It’s, of course, always best to make sure you don’t write down information on paper or in an Excel spreadsheet that’s unencrypted. If you need recommendations on how to store information securely, without being charged significant fees to do so, feel free to schedule a call with us.

 

We Get Better Rates From Visa + MasterCard

 

Visa, MasterCard, Discover, and American Express partner with banks to distribute their credit and debit card programs. This is when they determine what fees will be associated with those programs. No payment processor is involved in setting these fees so if you hear a processor elude to them having a special relationship somewhere, they are lying.

 

American Express Costs More Than Visa + MasterCard

 

American Express changed their billing model to match Visa’s over 5 years ago making them more competitive and affordable for businesses doing less than 1m in annual sales with them. This in combination with American Express cardholders spending more per transaction, makes accepting this form of payment a great decision for your business. If you find that your payment processor is charging you significantly more for American Express, you may not be on the American Express OptBlue program and will need to ask your provider about updating your pricing.

 

Debit Cards Cost The Same As Credit Cards To Process Payments

 

In 2010, the Durbin legislation was passed placing a cap on debit card fees. This cap was applied to all transactions involving debit cards that were issued by major banks like US Bank, Wells Fargo, Citizens Bank, Bank of America, Key Bank, or any other bank with more than $10b in assets. These banks are considered ‘regulated’ and the fee associated with these debit cards is .0005% and .22 cents per transaction. This fee is the same whether it is processed in person, online, or via the phone or invoice and represents a significant reduction in costs for businesses accepting debit cards in their business.

 

Typing In Credit Cards Is Always More Expensive

 

Many businesses using companies like Stripe, PayPal, and Square have become accustomed to paying three to four percent for typing in a credit or debit card to process it and this is because these providers charge more for typing in payment information. In some cases, Visa & MasterCard charge more for transactions that are processed without the physical card being present, but it isn’t always the case. When set up properly, a business can still expect to pay rates as low as 2.5%-3% for credit card transactions and less when processing debit cards. The key in all scenarios is choosing the right payment provider and getting the most transparent pricing, which is called interchange plus.

 

Signing A Contract Will Save You Money

 

Contracts do not save you money. There is no stipulation in Visa or MasterCard’s pricing matrix that indicates a merchant will save money on payment processing if they sign a contract with the merchant service provider. Point-of-sale, software, and merchant services companies often require merchants to sign a contract with hefty termination penalties so they can recoup the cost of hardware and so they can increase the profitability of the accounts that they onboard. This has nothing to do with the true cost of processing payments in your business and you should have an advisor familiar with payment companies and their agreements before you sign any long-term contract with a company that has access to your bank account. I’ve seen companies levy termination fees as high as $20k per location for local small businesses, which is harmful to their cash flow and capital reserves.

 

Rates Are Going Up Because Of The Economy

 

Payment processing companies can be notorious for increasing rates and blaming it on Visa, MasterCard, Discover, or American Express. The same has happened with the volatility in the economy. Payment processing companies are blaming rate increases on market conditions, when in fact, there is no material reason for a payment processor to double the markup on their accounts other than the routine desire to increase their profitability. Visa postponed many of their rate increases during the pandemic and payment processors still handed down unreasonable fee hikes. If you’re tired of having to deal with rate increases on your own, schedule a call with me to see if your provider is being honest with you about the rate increases. I can tell you whether it is a legitimate fee increase from Visa or MasterCard, or if it is just a profit grab.

 

It Costs More Because It’s Integrated

 

Integrated payments is the process of a software company embedding payment processing into their software so you as a customer have one solution to run your business. I’m a huge advocate of using an integrated system as it can streamline your operations and help you run a better business. I’m not a huge advocate of you having to pay 2x as much to process payments for your business just because it’s integrated though, especially if you’re paying a monthly software fee. This isn’t always your software company’s fault as payment processing companies take advantage of software companies too. Software companies are experts in building, hopefully, great software. They aren’t experts in evaluating processor fees or hard costs charged by Visa, MasterCard, Discover, and American Express. They sometimes partner with the wrong payment processor to offer payments and it results in them charging more for payments just to justify the cost of doing the integration. As a business owner, it’s important for you to know that it shouldn’t cost you more to process payments within your software as there is no true hard cost that makes it so. This is a profit center for payment processors and software companies and the costs should be reasonable while also being easy to justify, especially if there are tools being provided that help you grow your revenue and serve customers at a greater level.

 

How To Avoid The Lies

 

The best way to avoid these lies and control your costs tied to accepting credit cards is to work with an honest provider that is dedicated to doing what’s right for entrepreneurs. Since 2006, my work at PaySuite has been focused on helping entrepreneurs manage the costs and services related to accepting credit and debit card payments in person, online, or within their software. Whether you are a startup, a seasoned entrepreneur, or a software company wanting an honest solution to handling payment processing, I’d love to serve you. If you have any specific questions about handling payment processing in your business or software, feel free to schedule a call with me so we can talk.

Also, if you’re tired of having payment processors increase your rates when you’re not looking, download The Entrepreneurs’ Guide To Payments and learn how we consistently save business owners $10k to $20k per year without having to switch processors or charging fees to their customers.

Why Every Entrepreneur Should Have A Payment Consultant

Why Every Entrepreneur Should Have A Payment Consultant

In 2016, I resigned from the 5th largest payment processor in the country. I left the industry without any intention of ever operating in sales or in the payment processing industry. The primary reason for me leaving the job that I had was because of a disagreement I had with my employer on how it handled the acquisition of a point-of-sale company and the service that wasn’t being provided to an entrepreneur that I was introduced to that wanted my help. When I think about the last 9 years I’ve been involved in the payments industry as an employee for one of the largest platforms in the world and as a consultant to hundreds of entrepreneurs, the one thing I think about is how complex the industry is and continues to be. This is the primary reason I believe every business owner should have a payments consultant, not just another sales agent or merchant services broker.

 

Why A Consultant, Not A Broker

 

When I talk with people about my company PaySuite, they often compare us to independent insurance agents or multi-line insurance brokerages. I’ve always seen our role very differently from a broker and this is primarily because of the length we go to help our clients be successful beyond just providing them with a merchant account. In our view, while we provide many of our clients with a direct relationship with providers that allow us to set and manage the pricing and support for merchant services, we believe that we have a fiduciary responsibility to recommend the right products and services our clients need and this includes recommending providers like Stripe, PayPal, and Square or others in scenarios where it is in the best interest of the entrepreneurs we are serving. My view of being a merchant services broker is one of recommending only products and services that one is being compensated for even if they aren’t better for the entrepreneur. Not all brokers operate from this premise, but in my experience of being in the payment processing industry for almost a decade, not many payment processing professionals walk away from opportunities to make a sale when it isn’t in the business owner’s best interest.

 

The Benefit Of Having A Payment Consultant

 

The primary benefits of having a payments consultant or of having a payment consulting firm have to do with their understanding of the payments industry and the various methods of application that is relevant to your industry, and that they are committed to helping you do what is best for your business, not themselves or their employer. When you begin your search for a merchant services account, which is generally triggered by starting a new business or solving a problem with your existing provider, you will typically sign up for one online or you will talk with an employee that is hired to sell you a merchant account, whether their employer is the best for you or not. That’s what my role was when I worked for the 5th largest processor in the country, they never encouraged me to recommend other systems or providers that were possibly better for the merchant I was sitting in front of. In fact, the primary conversation I had with my sales leaders had to do with me being fired if I didn’t hit my quota.

You having the right payment consultant for your business will result in a number of improvements within your business operations in ways that far exceed just the fees you pay for merchant services. The right consultant will have the acumen to not only understand the different payment methods that can accelerate your cash flow and profit, but can help you accelerate your revenue by helping you innovate your products and services. This is the major difference between having a sales agent, a broker, and a payments consultant. It’s common for you to have very limited contact with a sales agent or broker beyond the sale as you generally get transitioned to the customer service number for the payment processor without much advocacy. With a payment consultant, you can have a relationship that can step in and help you as an entrepreneur to ensure your company’s mission and vision are aligned with your sales and revenue targets and the technology you need to get paid from your customers.

Having a payments consultant, with the business acumen relevant to your industry and a set of values that puts you first, can position your company to maximize profitability, optimize employee productivity, and supercharge your business operations.

 

MY Mission

 

I am on a mission to help entrepreneurs build better lives and businesses. If you’re an entrepreneur that wants to have a relationship that is dedicated to your personal and professional success, I’d love to serve you. If I can answer any questions about payments, technology, or growing your revenue, don’t hesitate to reach out.

Also, if you’re tired of having payment processors increase your rates when you’re not looking, download The Entrepreneurs’ Guide To Payments and learn how we consistently save business owners $10k to $20k per year without having to switch processors or charging fees to their customers.

Why I Started PaySuite

Why I Started PaySuite

If you’ve known me for very long, you’d know that after having 17 jobs over the course of 11 years, I eventually found some stability in the payment processing industry by working for Heartland, the fifth largest payment processor in the country. After working for Heartland for over 2.5 years, I decided to leave to follow my heart and work in the non-profit sector. I landed a job at Concordia University working with postgraduate students who either wanted to get their MBA so they could become executives, or MAT so they could pursue a teaching career. This was an awesome role that I enjoyed on a very deep level.

When I took the job at Concordia, I was confident that I’d never work in payments, and surely never again in sales. I was convinced that neither was for me. I was sick of working in a transactional sales environment that didn’t play to my strengths, which were customer service and building strong relationships. I was also tired of feeling like I had to sell what Heartland made available to me and the customers I was serving. After working in the industry for so long, I began to see the value of what other providers offered that Heartland didn’t and this led to me advising clients to do what was best for them, which wasn’t always in the best interest of Heartland. Ultimately, I felt like after leaving Heartland I would find a home working for a nonprofit university like Concordia that was focused on making a difference in the lives of those wanting to improve their education.

 

The Shift To Entrepreneur

One day I got a phone call from a franchise organization asking me if I was still helping business owners with merchant services. I told them I wasn’t working for Heartland anymore but could help them answer some questions and perhaps point them in the right direction. I helped the franchise owner of theirs out and essentially thought that was the end of the story. I didn’t think that because I had a customer I was ready to start a business and quit my job. I was just trying to help the people that reached out to me. That’s all.

As I continued to work for Concordia, I began to feel like some of the tasks, specifically, the administrative workload, wasn’t the best fit for how my skillset should be utilized, and this, coupled with some new goals I discussed with my fiancé, led me to feel that the role, even though I loved it, was a better fit for someone who might feel more at home with the tasks and day-to-day responsibilities of the job. This made me begin to feel guilty, and soon after I put in my notice to let them know that they should open the role for someone else.

I wasn’t in a financial position to leave the job, but I didn’t want the feeling of taking money from an organization that had such a great commitment to helping its students be successful. I worked alongside so many great people at Concordia, and I didn’t want to feel like a bad teammate. So, I felt it was best to leave on good terms.

 

Why I Started PaySuite

Starting PaySuite the way I did was impulsive, which had been a new thing for me. When I quit Heartland, it was also impulsive. I quit Heartland because of a disagreement I had with a department on what we should do to take care of a customer. It didn’t go in the right direction I felt for the customer, so I quit. Like immediately.  I don’t typically recommend doing it that way, but I felt like it was the best thing for me to do at the time. Looking back on the decision, it was the best decision I could’ve made. It was one of many decisions I made during my tenure at Heartland that really helped me grow up and trust my gut.

When I put in my notice at Concordia, I could’ve gone back to work at Heartland or any other payment processor in the country if I wanted to. It would’ve been far more lucrative for me to do so, and I’d probably have a lot more hair left. But I didn’t want to and didn’t. Why? Well, I wanted to do something different. I didn’t want to make business owners sign contracts, push terminal leases, talk about endorsements, or why my company was the best payment processing provider in the world. I just wanted to help people. That was my only business plan and model. Just go out and help people and figure it out along the way. That is still our motto and business model today. Go out, help people, do the right thing, rinse + repeat.

Another ‘why’ that surfaced as I worked with entrepreneurs in their business was the memories that began to surface as I unpacked my childhood as an at-risk youth growing up in Fresno, California. I started to remember all the entrepreneurs that used to look after me when I was living with the daily adversity of growing up in a neighborhood that was struggling with the aftermath of the 80s crack era that decimated the inner-city black family. Drug, gangs, lack of educational resources, and much more was the daily reality of my life from fifth grade through high school. I’m not trying to paint a bleak picture. I was never directly involved personally in gangs but did find myself in neighborhoods and drug homes many times at the wrong time of night and early mornings as a young man.

As these memories of my childhood surfaced, serving entrepreneurs, and doing what I felt was in their best interest became part of my purpose and guided every decision I made as I ventured out to build PaySuite. It hasn’t been easy. In fact, it was much harder than anything I’ve ever done, and I’m not finished. As I continue to grow as an entrepreneur, I will continue to make improvements and bring new partnerships and capabilities to the entrepreneurs we serve at PaySuite. In fact, with the launch of my consulting firm Catalyst Training + Development, we will work synergistically to launch new strategic partnerships that will take our ability to help entrepreneurs to the next level.

If you know anyone that I would benefit from the work we are doing at PaySuite or Catalyst Training + Development, I’d love your help with an introduction.

If you’d like a free digital copy of the book I wrote on payment processing to help entrepreneurs understand how to avoid being taken advantage of, you can get that here.

Let’s make a difference together!

Thank you!

The #1 Way Business Coaches Lose Money

The #1 Way Business Coaches Lose Money

If you’re like most business coaches using Square, PayPal, or Stripe to accept credit cards, you are likely looking for ways to grow your business while also controlling your expenses. Accepting credit cards is one of the top 5 expenses a business coach or consulting company has regardless of the credit card processor they choose.

Overspending on credit card processing can prevent you from being able to invest in technology that will help you grow your business.

The Advantages & Disadvantages of Stripe, Square, and PayPal

Square, Stripe, and PayPal are great credit card processing solutions. The advantage of using one of these systems is very straightforward. Their modern sleek interfaces make them easy to use, their streamlined underwriting allows you to launch within minutes, and a flat 2.9% +.30 per transaction makes them easier to understand. This can be great for a new business owner that doesn’t want to take a chance on working with the wrong credit card processor or if they don’t plan on sales exceeding $5,000 per month.

The downsides of working with one of these platforms are glaring for business coaches and consulting firms exceeding $5,000 per month in sales. For organizations exceeding $5,000 in sales monthly that focus on providing services to the real estate industry, they will likely overspend to the tune of hundreds, if not thousands, of dollars per month depending on their size.

They will pay a premium to accept credit & debit cards while still being at risk of having their funds held if they experience drastic increases in their sales volume. In addition to that, many of these platforms add additional fees that can cause business coaches to pay upwards of 3.5-4% for typing in the credit card number manually on transactions.

A Real Example: Merchant Using PaySuite

I recently, at my company PaySuite, set up a merchant account for a company that had been terminated by Stripe and wanted to share the results we are helping them get when it comes to controlling their payment processing expenses.

As you can see below, this merchant had sales of $35,936.99 with total fees of $865.57. They also paid $41.56 for our payment gateway, so their true total cost of acceptance for the month was $907.13, bringing their effective rate to 2.52%.

Had this merchant been using Stripe, Square, or PayPal for their online payment processing, they would’ve paid 2.9% +.30 cents per transaction. Let’s dive deeper to see what the outcome would have been. Below you will see the true breakdown of how many transactions they processed for each card type (Visa, MasterCard, American Express, Discover, etc.).

When we compare this merchant to Stripe, Square, and PayPal pricing we see that they would’ve paid 2.9% on net sales of $35,936.99, which would have cost them $1,042.17. There would have also been a $.30 charge per transaction which would have cost them an additional $99.60, bringing their total cost to $1,141.77, an effective rate of 3.18%!

Using Square, PayPal, or Stripe would’ve cost this merchant an additional .66% or an additional $237.18 per month. The reason these platforms are more expensive for e-commerce merchants is that debit cards often cost the business less than 1%. Per the image above, this merchant accepts more debit cards than American Express credit cards and almost as much as MasterCard credit cards.

Why Debit Cards Are So Much Less Expensive

In the image below you can see the true cost of accepting debit cards and where Square, PayPal, and Stripe profit most on most of their merchants. With most debit cards having a true cost of .0005% and .22 cents per swipe, these providers earn a mark-up of 2.65% + .08 cents when you factor in other costs that must be paid to debit card issuers like Wells Fargo, US Bank, Chase, and other banks and card brands. The total interchange (fees paid to the debit card issuer) for $4,695.49 was only $17.73 or .38%. Even when the fees paid to Visa and the payment processor are factored in, their total costs for accepting Visa debit cards total $26.97 or .0057%.

This is where the majority of Square, PayPal, and Stripe users can save a considerable amount of money. Being able to accept debit cards in your coaching or consulting business for almost a half of one percent and being able to recapture one-half percent of your sales annually can help you redirect that additional capital to important areas in your business needed to grow.

Debit cards are inexpensive to process for two main reasons, the first reason is there is no risk in accepting debit cards. If the money is available, the transaction is approved. The other reason is there are no rewards attached to a debit card to incentive consumer use. Because there are no rewards attached, the interchange fees are very low. It is only expensive in an environment where your average sale is less than $15. This is where Square has traditionally lost money on its users which has caused them to add a transaction fee to their new POS solutions.

What You Can Do

Securing the right type of merchant account for your coaching or consulting company will allow you to streamline your credit card processing costs and will allow you to leverage your profitability to acquire the technology you need to rapidly grow your business.

If you’d like to evaluate whether you’re using the best payment processor for your business, don’t hesitate to contact me!