Latest / Financial Survival Network / Potential Future Of Electronic Payment Systems - Jeremy Lessaris #6056

Transcript

Potential Future Of Electronic Payment Systems - Jeremy Lessaris #6056 · Financial Survival Network

• 0:00
  What does it cost to actually process these transactions, even on the crypto side.
• 0:04
  At some point somebody's going to get the gimmick Visa MasterCard did it.
• 0:07
  They're like, we give rewards to the consumer, the consumer will fight to
• 0:10
  keep those things, and then we can put in whatever other fees we need
• 0:14
  to at that point. And that's what's kind of occurred at this point,
• 0:17
  like I'm not giving my two percent cash back either, and I'm like on
• 0:20
  the other side of the fence advocating not to charge that much. So it's
• 0:23
  a it's a really unique problem. All of the law right now is focused
• 0:28
  on the Visa MasterCards of the world. That's not the problem. You are
• 0:31
  listening to Carrie Letz's Financial Survival Network, where you get valuable information you just
• 0:37
  can't find anywhere else to thrive in today's trying times. You need the Financial
• 0:43
  Survival Network now more than ever. Go to Financial Survivalnetwork dot com and get
• 0:49
  your free newsletter and gift. Financial Survival Network now more than ever, Ed
• 0:59
  and welcome. You are listening to and watching the Financial Survival Network. I'm
• 1:03
  your host, Carrie Lutz. Well, Jeremy Lasarus is with us. Now.
• 1:07
  Look, if you take credit cards in your business, and you're taking
• 1:11
  in more than fifty thousand a month, you have to hear what Jeremy has
• 1:17
  to say. You're paying a ton in merchant fees, and Jeremy can save
• 1:23
  you big bucks here. Jeremy, welcome to the show. Really appreciate you
• 1:27
  coming on helping the FSN community. I know there's a bunch of you out
• 1:34
  there that live on credit cards, literally on receiving credit card payments and debit
• 1:42
  cards as well. Jeremy, how do you save people money on their merchant
• 1:47
  fees? So I think it's really important to start with saying that in the
• 1:53
  industry, when you talk about credit card processing, everybody need jerks. I'm
• 1:57
  not switching. I don't want to switch my process, sir. I don't
• 2:00
  want to go through underwriting and set up a new account. I don't want
• 2:02
  to get into terminal. I don't want So it's important that I kind of
• 2:07
  start this conversation at least by saying what I do has nothing to do with
• 2:12
  changing credit card processing at all, because I'm immediately tied to the stigma of
• 2:16
  that industry, which is really not good. I work with existing credit card
• 2:23
  processing vendors and we use a machine learning tool to identify the profitability of that
• 2:29
  processor, and we use that data to negotiate. So it's just data driven
• 2:34
  negotiation. And okay, we can call it AI, but it's machine learning
• 2:38
  where we're identifying the cost of those transactions. All those transactions are routed a
• 2:44
  lot of the technical pieces of what the card cost is, and then we're
• 2:49
  taking that data back to the processor and using it to negotiate the price down.
• 2:53
  So it's a pure plain cost reduction exercise. Interesting. Interesting, what
• 2:59
  kind of savings can you get? People? Leader? So I know that
• 3:01
  this is a weird one to say, but every deal is like a stealthflake.
• 3:06
  There is no two deals that are the same, and so revenue to
• 3:08
  profitability or revenue to cost there is no such thing. I have a small
• 3:14
  dental practice in Miami. They do one hundred and fifty thousand dollars a month.
• 3:17
  We were able to save them six thousand dollars a month. On the
• 3:21
  other side of it, we had a national hotel train that everybody would recognize.
• 3:25
  They do millions of dollars a month. We're only able to save them
• 3:28
  three hundred dollars a month. So there's no direct correlation between revenue and potential
• 3:34
  savings. The one thing I challenge companies to do is to take a copy
• 3:38
  of their credit card processing statement, take the total fees, divide it by
• 3:43
  the total that they have in terms of revenue from their sales, and see
• 3:47
  what the percentages and anything above let's say two percent, something that you should
• 3:53
  take a look at. Okay, So it's interesting that that it so some
• 4:00
  people are actually getting a good deal already and they just don't know it.
• 4:03
  Huh. And you know, that's my favorite conversation have is, look,
• 4:06
  your processor is honest. They're charging a reasonable fee for the volume that you're
• 4:12
  doing. So I don't think you should make any changes or try to negotiate
• 4:15
  at this point. But we'll look at it again next year. Because the
• 4:17
  thing that we do know about processors, they change pricing at will and in
• 4:23
  some cases with no notice, because that's what the contract says. Visa MasterCard
• 4:28
  has three hundred different rates and fees, right you and I know, because
• 4:30
  like we swipe a card, I want two percent cash back here, I
• 4:33
  get like one point seven five percent cash here if I use it for fuel
• 4:39
  purchase. Like, there's very complicated interchange that's what it's called. So they
• 4:45
  have the credit card processing companies have to be able to change their price structure
• 4:50
  at will, because Visa's like, hey, when we'rew out a new card,
• 4:53
  or I'm going to change the interchange fee, so they have to be
• 4:56
  able to change their pricing. The problem is that it became predatory years ago
• 5:00
  when they realized no one's paying attention, so we can change the fee at
• 5:05
  will, and it doesn't have to be in step with when VS. MasterCard
• 5:09
  does it. So they'll add five basis points here and two cents there,
• 5:12
  and five dollars a month here, and no one's paying attention because they'll look
• 5:15
  at it and go, it's like three ish percent. That's the cost of
• 5:18
  doing business, is what I hear way too much. And more recently the
• 5:23
  companies came out with simple payments. It's just a flat two and a half
• 5:28
  percent and thirty cents of transaction, which everybody loves because like I get a
• 5:31
  statement, I can read it, I get it. The problem is like
• 5:33
  a debit card only costs point two five percent, a very low rewards card
• 5:39
  costs one point nine percent, So how much are you paying? Simple payments
• 5:44
  doesn't make it cheaper, that's all. So we we try to take the
• 5:47
  complexity and simplify it to find where the cost savings could be without making changes.
• 5:55
  That's the number number one thing that we do, all right, So
• 5:59
  I would think this would be sweeping the world now your system. Yeah,
• 6:02
  So it's just a matter of getting introductions right. And also, as much
• 6:08
  as I love being on podcasts and talking about it and getting it out to
• 6:11
  the world, I also don't want it to get full attention. We're not
• 6:14
  running ads, We're not trying to be big in front of all these banks
• 6:17
  and processors, because the last thing they need to know is there's a company
• 6:20
  like us that's out there trying to take their profits away. There's fifty billion
• 6:25
  dollars a year above the profit margin line of of research study that we did
• 6:30
  that we believe is falling on the shoulders of small to medium sized companies,
• 6:35
  not the big boys. Those guys are all negotiating and constantly staying on top
• 6:40
  of their vendors. They have sophisticated supply chain folks that are dealing with us
• 6:44
  every year. I think that most of that burden falls on the companies that
• 6:47
  can't afford it. They don't have supply chain people, they don't have you
• 6:50
  know, somebody doing vendor and elysis every year. They don't have the sophistication
• 6:56
  or education enough to understand the statement, so they're just they're just paying it.
• 7:00
  So I'm trying to bring that to the masses. But we're trying to
• 7:03
  also fly a little bit under the radar. I don't want the attention of
• 7:06
  you know, the big banks and processors. It's saying, hey, there's
• 7:09
  a company like this, let's not negotiate with anybody. So our hope is
• 7:13
  to try to reach those people under the radar as much as we can.
• 7:16
  Seems to me there's like anti trust issues here too. There is. I
• 7:20
  mean they've signed real treaties with software companies to not change pricing, to fix
• 7:29
  pricing, to stop free market choice, like all of the things that you
• 7:32
  hear in these anti trust suits. They're doing at all, but they're just
• 7:35
  not getting caught in it because they're talking it up to like, well,
• 7:40
  we secure the payment and we bring a lot of value and all these other
• 7:43
  pieces. But I see you know processors charging five and six percent. That's
• 7:48
  a silent partnership. I mean, we're moving money here. This isn't as
• 7:51
  sophisticated as they've made it out to be. Don't get me wrong. I
• 7:55
  love what they do. I love that I can go in and thumbprint or
• 8:00
  you know, scan my face and pay for something in a seamless way.
• 8:03
  That's awesome. They've done a great job and it's secure and I don't have
• 8:07
  to worry about my money and if somebody steals my identity, all that's taken
• 8:09
  care of in a very seamless manner. Now that's great. But six percent
• 8:15
  it just seems too much when there are companies that are paying some too.
• 8:20
  So our goal is to help people get the transparency and see what they're paying
• 8:24
  one and to give them some power. I mean the power should rest in
• 8:28
  the small to medium sized company. Are they companies? So how do you
• 8:33
  get paid? Do you get a percentage of what you save that we're performance
• 8:37
  only so if we don't save you any money, we make nothing. So
• 8:41
  it's a performance based pay. And the way that we work is we do
• 8:46
  the analysis. We show people what we might be able to negotiate. We
• 8:48
  can't guarantee we can get one hundred percent of it. If we get it,
• 8:52
  we analyze it every single month and show them how much money we saved
• 8:56
  them if we split the savings with them. We do it for a short
• 8:58
  period of time so they have, you know, a period of time where
• 9:01
  we make money. And then after that, if they want us to analyze,
• 9:03
  we can charge for analysis. We can help them continue to monitor and
• 9:07
  negotiate. It's totally up to the customer. I love that. I think
• 9:11
  you could keep it ongoing because it's just the kind of I don't want to
• 9:16
  call it theft, but it's a game. If I change a pricing two
• 9:22
  basis points, you can't tell I mean attention to it. No, I
• 9:26
  can totally get this. Unfortunately, I've never been in a business where we
• 9:31
  relied on credit cards or unfortunately, on the one hand, you sell more
• 9:37
  and you get you know, you get paid instantly, have no receivables hand
• 9:43
  you're getting screwed. And this is a global problem because as more business has
• 9:48
  have gone to electronic payment systems, basically the potential for mayhem here is increased
• 9:56
  geometrically. It's what's even worse, we're hyper inflating the market now because what
• 10:03
  what just happened recently? There's an article I posted this on our website as
• 10:07
  well. But I think what you've seen more recently is merchants identifying the problem.
• 10:11
  They're like, why are we paying four percent? I'm passing this on
• 10:15
  my customer. So now you see, and i've if you've been in Miami
• 10:18
  or other you know, vacation zones, you see this cash discounting thing.
• 10:22
  It's like, what's this three percent charge? Is paid by credit card?
• 10:24
  And so Visa MasterCard initially had a knee jerk. They're like, we don't
• 10:28
  want our merchants to be able to do that. So they started fighting them
• 10:33
  and they realized they're like, wait a second, on average, we're getting
• 10:35
  two percent. Let's start charging direct. So now they're in endorsing to charge
• 10:41
  your customer three percent. Hey, we'll even help you. We'll embed that
• 10:45
  in your software and make it very easy for you to do that. So
• 10:48
  I think that's even gotten worse where we're going to then hyper inflate the market
• 10:52
  and start charging three four percent to the customer directly. It's like, this
• 10:56
  is not this is not the direction we want to go. And you know
• 11:01
  this is like making the argument for cryptocurrencies and cutting out the banks. They're
• 11:09
  going to cut their own throats and the clearing houses, right, because all
• 11:13
  Visa and Master Corridor are clearing houses. Right. Yeah, I'm not so
• 11:18
  on the crypto side, I think that the bigger challenge will be when there's
• 11:22
  no mining, what is the cost of transactions. That's a different discussion for
• 11:26
  another call. I love that stuff. I could talk about that all day
• 11:28
  too, but I think in general, like because I've looked at I've looked
• 11:31
  at it objectively and said, what does it cost to actually process these transactions?
• 11:37
  Even on the crypto side, at some point somebody's going to get the
• 11:39
  gimmick the some massacred did it. They're like, well, give rewards to
• 11:41
  the consumer. The consumer fight to keep those things, and then we can,
• 11:46
  you know, put in whatever other fees we need to at that point.
• 11:48
  And that's what's kind of occurred at this point, Like I'm not giving
• 11:50
  my two percent cash back either, and I'm like on the other side of
• 11:54
  the fence advocating not to charge that much. So it's a it's a really
• 11:58
  unique problem. All of the law right now is focused on the Visa Master
• 12:03
  cards of the world. That's not the problem like paying two percent for cash
• 12:07
  back rewards isn't the problem. It's what they charge above that. And that's
• 12:11
  not Visa master Cards problem. That's the credit card processors problem. And so
• 12:16
  yeah, these clearing house are making and you can see them. They're gobbling
• 12:20
  up all of the other ones and making these incredibly large companies. So it's
• 12:24
  it's dangerous. Sold. Where do I sign up, Jeremy, I'm sold
• 12:31
  the business. I just get the wires and ah's I don't do credit cards
• 12:35
  because I don't want to pay three or four percent. So it's they're coming
• 12:39
  after you next. And by the way, so you take AH. Yeah,
• 12:45
  you know, AH costs nothing if you look at the actual national laws
• 12:48
  and how how those transactions move, there's no cost of these things. Now
• 12:50
  they're like super secure and there's no like there's really no risk. So phosphor
• 12:56
  risk and compliance and other things are huge hurdle. And I understand that cost,
• 13:01
  So not trying to discount that. Visa master Cards shouldn't charge some of
• 13:05
  these fees. But they're now going after AH and I more recently, what
• 13:11
  it used to be ten cents of transaction or twenty cents flat rate, now
• 13:15
  they're starting in charge a percentage and you're going to start seeing that number move
• 13:18
  up really quick. So I've now seen that Stripe and others have gone down
• 13:22
  the path to charge you know, a percent per transaction for ACCH. That's
• 13:28
  not that used to not be the case. So I see what's happening now
• 13:33
  because people are understanding how to do this cheaper? Can you negotiate with like
• 13:37
  Quicken into it? No, QuickBooks not happening. This non negotiable. They
• 13:41
  have a flat rate system for a reason. If you have significant volume,
• 13:46
  it's worth the shot. But you're going to have to be doing you know,
• 13:48
  one hundred two hundred thousand dollars a month in transactions to have any kind
• 13:52
  of clout, to have any leg to stand out with them. I've done
• 13:56
  successful negotiations with quick Books directly. But it's also when you look at it
• 14:01
  in terms of business, it's not really a commercial grade processing company, right,
• 14:07
  Okay, we're a small, small to medium business sized company. All
• 14:09
  right, it's really exciting. I think a lot of you out there can
• 14:13
  profit by this. Jarmey, what's the website? How do we connect with
• 14:16
  you? Super easy payment Brokers dot com, Aiman Brokers dot com link in
• 14:22
  the show notes. Make sure you go take a look at the show notes
• 14:26
  at Financial Survival Network dot com. While you're there, at sign up for
• 14:28
  your free newsletter JARME. Very exciting service and we wish you the best.
• 14:33
  Thanks Man, great to meet you, Thanks for listening to Carrie Letz's Financial
• 14:37
  Survival Network, your solution to today's trying times. For the latest, go
• 14:43
  to Financial Survivalnetwork dot com. Financial Survival Network now more than ever,