Latest / Craft Brewery Financial Training Podcast / Your Brewery Is Overpaying for Credit Card Processing

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Your Brewery Is Overpaying for Credit Card Processing · Craft Brewery Financial Training Podcast

• 0:00
  Speaker 1: Today on the podcast, we dive into the wonderful world of credit card processing fees with Patrick McClellan from Merchant Cost Consulting.
• 0:06
  Speaker 1: Patrick's firm is able to save clients, on average, about 20% on their credit card fees and if you do the math on that, it can be a significant sum.
• 0:15
  Speaker 1: We talk about the main components of these fees, how to identify hidden or unnecessary charges, and we talk about how Patrick can help you negotiate with existing processors and get better rates.
• 0:30
  Speaker 1: So for now, please enjoy this conversation with Patrick McClellan from Merchant Cost Consulting.
• 0:35
  Speaker 1: Welcome to the Craft Brewery Financial Training Podcast, where we combine beer and numbers to provide you with tips, tactics and strategies so that you can improve financial results in your brewery.
• 0:47
  Speaker 1: I'm your host, kerry Shumway, a CPA, cfo for a brewery and a former CFO for a beer distributor.
• 0:53
  Speaker 1: I've spent the last 20 years using finance to improve financial results in our beer business.
• 0:58
  Speaker 1: Now I'm helping other craft breweries to do the same.
• 1:01
  Speaker 1: Are you ready to take your brewery financial results to the next level?
• 1:05
  Speaker 1: Okay, let's get started.
• 1:07
  Speaker 1: Just a quick note.
• 1:13
  Speaker 1: We'll be right back to the podcast.
• 1:15
  Speaker 1: I want to let you know about a new network for beer industry professionals.
• 1:19
  Speaker 1: It's called the Beer Business Finance Association.
• 1:22
  Speaker 1: It's an organization of financial pros just like you, looking to improve financial results, increase profitability, connect with your peers and share best practices.
• 1:32
  Speaker 1: So I'd love to tell you a little bit more about this.
• 1:35
  Speaker 1: If you are interested in learning more, please email me, kerry, at beerbusinessfinancecom.
• 1:41
  Speaker 1: That's K-A-R-Y at beerbusinessfinancecom.
• 1:45
  Speaker 1: Or you can visit bbfassociationorg.
• 1:48
  Speaker 1: That's bbfassociationorg.
• 1:52
  Speaker 1: To learn more.
• 1:52
  Speaker 1: Hey, patrick, welcome to the podcast.
• 1:56
  Speaker 1: It's good to see you this morning.
• 1:57
  Speaker 1: You as well, cary, thanks for having me.
• 2:00
  Speaker 1: Absolutely so.
• 2:02
  Speaker 1: We're going to talk about the wonderful world of merchant card processing, credit card processing and dig into all the details, but why don't you give us a little background on you and your company?
• 2:13
  Speaker 2: Yeah, absolutely so.
• 2:14
  Speaker 2: Again, I'm Patrick McClellan.
• 2:16
  Speaker 2: I'm the Director of Business Development here at Merchant Cost Consulting and we are a cost reduction and consulting firm here out of Boston, massachusetts, and we help businesses to reduce their credit card processing fees without actually having to change from their current vendors.
• 2:33
  Speaker 2: Me and my team we actually used to work for a processing company here in Boston and we kind of learned the ins and the outs of the business and the industry and fortunately we saw that there's a lot of unethical sales tactics and business that's not in the industry.
• 2:51
  Speaker 2: So that's why we decided to flip the script to help businesses get a better understanding of merchant services, what they're paying and why they're paying different fees and hopefully save them some money along the way.
• 3:04
  Speaker 1: I love it.
• 3:04
  Speaker 1: That's great and that's one of our missions here at Craft Brewery Financial Training and Beer Business Finance trying to save people money, particularly in areas where it's not going to impact the customer experience or impact the business.
• 3:17
  Speaker 1: Negative, Because you always think about cutting costs, is usually you have to give something up, right.
• 3:21
  Speaker 1: But in this way all you're doing is identifying an existing service and trimming those costs back a little bit.
• 3:28
  Speaker 1: So I love that.
• 3:29
  Speaker 1: Why don't you break down kind of the main components of those fees and where you see merchants often overpay?
• 3:40
  Speaker 2: Yeah, so typically with our process and how it starts is we audit and we take a look at a recent merchant statement from a business and that way we can do an analysis.
• 3:53
  Speaker 2: We go through it line item by line item and we identify there's a few different areas where we can save a business on their money and we would categorize it into three pillars.
• 4:06
  Speaker 2: You have the interchange charges or the charges from the card brands, so Visa, mastercard, discover and American Express.
• 4:12
  Speaker 2: Depending on the type of card that's taken, they have different fees associated with that.
• 4:18
  Speaker 2: Some processors pad those or there could be surcharges added onto those.
• 4:22
  Speaker 2: So we want to make sure that those all align.
• 4:26
  Speaker 2: And then there are markups from the processor.
• 4:28
  Speaker 2: So there's usually a percentage and a per transaction fee where the processor makes their money.
• 4:33
  Speaker 2: We want to make sure that those are in line with the industry that they're in, that we essentially know what the fair market value is and really what they should be paying and just making sure it is something competitive.
• 4:44
  Speaker 2: And then there's all sorts of other miscellaneous fees, whether it be surcharging or just add-on fees that the processor can put on, and we essentially know which fees are bogus, which are not, which should be on their account and that's where we can come in and just make sure that the business isn't overpaying in different areas, because when you take a look at a merchant processing statement, there's so many different line items, it can be very convoluted and it's almost like it's done on purpose it's to confuse the business, so it's tough for them to figure out what exactly they are paying and why.
• 5:22
  Speaker 1: Yeah, I would think so.
• 5:23
  Speaker 1: You know, it's interesting, as you were saying that I'm like is that something that customers regularly get?
• 5:30
  Speaker 1: I mean, is this like what?
• 5:31
  Speaker 1: Does it come in the mail?
• 5:32
  Speaker 1: Is it emailed?
• 5:32
  Speaker 1: Is that like a routine I'm just trying to think of when I've actually seen a merchant processing statement, you know, do they send it or do you have to ask for it or go find it?
• 5:45
  Speaker 2: Yeah, so I mean it is a back end expense, so it's definitely something that's not looked at all of the time and it depends.
• 5:48
  Speaker 2: It depends on the processor.
• 5:50
  Speaker 2: Sometimes they do send it in the mail.
• 5:52
  Speaker 2: I know that the businesses that I deal with they typically just like any sort of your cable bill, your insurance bill, usually goes right in the trash.
• 6:00
  Speaker 2: Some processors they do give you the ability to obtain the processing statements on an online portal, but you'd be surprised that a lot of businesses don't even know that they have that capability of doing that right.
• 6:14
  Speaker 1: Exactly I would.
• 6:15
  Speaker 1: I would think that would be.
• 6:16
  Speaker 1: Step one is know that, you know it's out there and then figure out how to find it and then, yeah, get to the point of untangling.
• 6:23
  Speaker 1: What the heck does this thing even mean?
• 6:24
  Speaker 1: It's got all these line items.
• 6:25
  Speaker 1: Take us through, um, so we you know our audience is is primarily breweries, and you know they'll have some sort of point of sale system, um, and maybe take us through this sort of bundling or unbundling, like a lot of point of sale systems have their own, like processing fees kind of baked in or or they kind do it together.
• 6:46
  Speaker 1: Maybe take us through how that works.
• 6:49
  Speaker 2: Exactly, yeah.
• 6:50
  Speaker 2: So a lot of the POS systems are kind of transitioning, where they're doing the processing in-house, so they're the one-stop shop, and they're providing the whole solution, whether it be the POS system, the actual processing itself.
• 7:03
  Speaker 2: So they're providing the equipment, the software and the processing, but with that there can be some added or additional costs.
• 7:11
  Speaker 2: It definitely does make the business's life easier in terms of just having to deal with one vendor as opposed to many different other vendors and bringing them all in together.
• 7:22
  Speaker 2: So that way it definitely does make sense and it's becoming more and more popular as these software and POS companies are starting to do their own processing.
• 7:31
  Speaker 1: Gotcha.
• 7:32
  Speaker 1: And are you, are you able to run your same, your same process whereby you do that audit and analysis?
• 7:38
  Speaker 1: If someone has a processor that's, or a point of sale that's a one-stop shop, like how would you, I guess?
• 7:44
  Speaker 1: Yeah, you can unbundle it yourself.
• 7:46
  Speaker 2: Yeah, exactly.
• 7:48
  Speaker 2: So we don't want to impact the relationship between the, the pos company, the, the processor whatsoever.
• 7:55
  Speaker 2: So with our services it doesn't affect those relationships whatsoever.
• 7:59
  Speaker 2: It's just making sure that the business is being priced fairly.
• 8:02
  Speaker 2: And that's where we come in and try to find those inefficiencies or just areas for improvement.
• 8:08
  Speaker 2: But yeah, we don't want to have them to change anything on their end whatsoever.
• 8:14
  Speaker 2: So with our services, the business would keep everything the way that it is, so their system remains unchanged.
• 8:21
  Speaker 1: Got it.
• 8:21
  Speaker 1: And when you say priced fairly, how are these things usually priced?
• 8:25
  Speaker 1: Is it based on volume, I would assume like the bigger volume or are you able to negotiate kind of just on a basis of you see kind of what other comparable companies are paying, or how does that work?
• 8:37
  Speaker 2: It's interesting because there are just there's so many different variables that come into play and how a business is priced.
• 8:45
  Speaker 2: It could depend on just the sales rep, whoever is setting the account up and signing the account up, because essentially it's the processor's job, or these reps job to charge the most amount, because that's what puts the most amount in their pocket, and just because of that.
• 9:02
  Speaker 2: That's where the unethical sales tactics can come into play and the hidden fees and all of the different pricing increases.
• 9:09
  Speaker 2: So that's where there could be a brewery you know A and you have brewery B, right down the street from each other.
• 9:17
  Speaker 2: They're using the same processor, but once they could be on completely different pricing structures.
• 9:22
  Speaker 2: One could be priced you know where they're paying, all in 2%, and the other one could be paying 4%.
• 9:26
  Speaker 2: It just all depends.
• 9:28
  Speaker 2: There's really no rhyme or reason.
• 9:30
  Speaker 2: But that's where the businesses that are overpaying we want to make sure that they're getting that fair market value and they're priced competitively with other businesses in the industry.
• 9:43
  Speaker 1: Gotcha and are you able to?
• 9:45
  Speaker 1: Do you guys have like benchmarks or an actual understanding of what market rate should be Like in that example?
• 9:51
  Speaker 1: I mean, if you were able to, how does that work?
• 9:54
  Speaker 1: How do you identify if somebody's out of spec and paying too much?
• 9:57
  Speaker 2: Yeah, exactly so.
• 9:58
  Speaker 2: We use our data and analytics and that's where we essentially know that, based on the business and the industry, that they're in their monthly volume, their per ticket item, what types of cards they're taking, whether it's primarily consumer cards versus business cards or versus high-end rewards cards, and that's essentially the information that we have on our end that we can bring to the processor and that's where we know that they should be priced at.
• 10:27
  Speaker 2: And that's, yeah, exactly what we kind of use as the benchmark.
• 10:30
  Speaker 1: Gotcha?
• 10:30
  Speaker 1: Do you help at all with or get into like what cards if one of your customers should accept or not accept?
• 10:39
  Speaker 1: I know a lot of times it's like, oh, we don't take American Express or whatever.
• 10:42
  Speaker 1: Do you get into that at all?
• 10:59
  Speaker 2: We definitely have helped customers, or at least giving them the knowledge saying, hey, if you have the ability it's tough to tell a customer saying, hey, can you please use your debit card versus the card that has all the rewards, because people want to use that so they can get their flyer miles, their cash back, want to use that so they can get their flyer miles, their cash back.
• 11:10
  Speaker 2: But for the business, if they take a majority of debit cards, the debit card is going to be the least cost of processing.
• 11:14
  Speaker 2: It's the least risky transaction because the money is taken right out of their account and especially if there's with a debit card, you have a four-digit PIN number.
• 11:22
  Speaker 2: So if you give them the ability to enter in that four-digit number Again, it's even less risky, which in turn is less expensive, Whereas you have your American Express cards.
• 11:31
  Speaker 2: American Express is kind of a different beast in the payment processing world, where they have all the rewards attached to them.
• 11:37
  Speaker 2: Therefore their costs are a lot higher.
• 11:40
  Speaker 2: So it's the same with Visa and MasterCard.
• 11:43
  Speaker 2: You have the high-end end rewards cards and they're not the ones that are paying for those rewards.
• 11:47
  Speaker 2: That's where they pass along to the merchant.
• 11:49
  Speaker 2: So that's why you may see that some businesses don't accept american express at all because of their higher costs.
• 11:55
  Speaker 2: Um, but yeah, it can be tough for a business to dictate which card their customer is going to be using.
• 12:03
  Speaker 2: But if we can at least give the business the knowledge in terms of the differentiations between the types of cards and what their charges are, then I'd be obviously want to give them that leverage.
• 12:13
  Speaker 1: Gotcha so do you have a sense I mean, I imagine you have a data on this but on average, like how much you're able to save customers, or do you have any examples of clients you've worked with that you go in and you've identified savings, and what does that look like?
• 12:28
  Speaker 2: Yeah, I would say.
• 12:29
  Speaker 2: In a hospitality industry, our average savings is about 20% on their all-in fees.
• 12:34
  Speaker 2: So that's where they're, whatever they're paying.
• 12:37
  Speaker 2: We call it their effective rate.
• 12:39
  Speaker 2: You can get your effective rate by taking the total fees you pay and dividing that by the total sales, and that's what we're usually able to reduce that by 20%.
• 12:47
  Speaker 2: All in Sounds pretty impressive.
• 12:51
  Speaker 2: I like that.
• 12:51
  Speaker 2: Yeah, there can just be there Again.
• 12:54
  Speaker 2: There's so many different areas for improvement, whether it's just renegotiating the contract itself and just areas for optimization.
• 13:01
  Speaker 2: Got it.
• 13:03
  Speaker 1: All right.
• 13:04
  Speaker 1: So step one is understand what your fees are.
• 13:05
  Speaker 1: Get that, got it All right.
• 13:05
  Speaker 1: So step one is you know, understand what your fees are, get that statement, get all the details.
• 13:09
  Speaker 1: Step two is you know, send it to you guys.
• 13:11
  Speaker 1: You do the audit and analysis, identify, you know areas where you can, you know, save some costs.
• 13:17
  Speaker 1: And then what happens next?
• 13:19
  Speaker 1: You have to negotiate with who.
• 13:20
  Speaker 1: What do you guys do at that point?
• 13:22
  Speaker 1: If, like, you get in and you say, all right, we can save this, this and this, how do you actually achieve those savings?
• 13:28
  Speaker 2: Yes.
• 13:29
  Speaker 2: So the business is interested in utilizing your services, assuming we found that there are savings to to be obtained with their processor, they they would engage with our services, which would then give us the ability to contact the processor on their behalf.
• 13:42
  Speaker 2: So it's very little legwork on their end.
• 13:44
  Speaker 2: We take care of all that doing the renegotiating, having the conversations directly with the processor and bringing our data to them and saying, hey, we know what they should be paying, we can reduce these different areas or remove these fees from the account completely.
• 14:01
  Speaker 2: So we're kind of working with the processor directly.
• 14:04
  Speaker 2: So it's again it's not affecting their businesses day-to-day operations whatsoever and it's not a, you know, time consuming for them either.
• 14:13
  Speaker 1: Gotcha, and do you find that there are times where you have to recommend, like switching providers entirely, or is that part of your process?
• 14:22
  Speaker 1: So if you're doing the negotiation and let's just say the merchant processor is not budging, and how, how might, how might you go about that?
• 14:34
  Speaker 2: Yeah, I mean there could be the instance where, for whatever reason, the processor just does not want to adjust their pricing.
• 14:42
  Speaker 2: They think that they are at that fair market value.
• 14:44
  Speaker 2: When they take a look at their margins it's already summing up so they can't make the adjustments.
• 14:48
  Speaker 2: If that is the case, we want to tell the business saying, hey, you're actually in a good spot and we initially, during the initial audit, we'll tell them that they are priced competitively and our services may or may not be a good fit.
• 15:00
  Speaker 2: Initial audit will tell them that they are priced competitively and our services may or may not be a good fit.
• 15:04
  Speaker 2: But then at that time, if they want to make the switch, we do have relationships in place with processors or knowing the industry, what other businesses, what they're using.
• 15:13
  Speaker 2: But again, just changing processors can be difficult.
• 15:16
  Speaker 2: It can be time consuming, there's a learning curve with everybody trying to adjust to the new POS system, entering in all the menu items, and there could be an upfront cost for new equipment.
• 15:26
  Speaker 2: So it's not really a bread and butter.
• 15:28
  Speaker 2: We don't encourage to make the change just because of the time and cost component of it.
• 15:34
  Speaker 2: So obviously that's why we want to take that headache away from them.
• 15:38
  Speaker 2: If they don't have to change it, we can still save them money.
• 15:40
  Speaker 2: Then that's where we want to try to help.
• 15:42
  Speaker 2: But if the business has outdated equipment or they're just again their processor isn't willing to make the changes and they're still being overcharged, then we want to obviously make the recommendation saying hey, if you were to switch processors, this is what it would look like from a savings standpoint, so it may be worth it.
• 16:04
  Speaker 1: Gotcha.
• 16:04
  Speaker 1: You know we're all familiar with the credit card brand names.
• 16:07
  Speaker 1: You know Visa, mastercard, american Express, discover, on and on.
• 16:11
  Speaker 1: Who are these processors?
• 16:14
  Speaker 1: I hate to say they hide in the shadows, but how many of them are there?
• 16:19
  Speaker 1: What are they banks?
• 16:20
  Speaker 1: I'm not even sure I know what.
• 16:20
  Speaker 1: What are they banks like what?
• 16:21
  Speaker 1: I'm not even sure I know what, what role they play, where they come from yeah, I mean there's, there's thousands.
• 16:28
  Speaker 2: To be honest with you, it's they.
• 16:30
  Speaker 2: They really start at the, the bank level.
• 16:32
  Speaker 2: So you know, you have your wells fargo and they're the, the processing bank, and then there's different types of companies.
• 16:38
  Speaker 2: You have global payments, heartlands, um, just to name a couple, and then, yeah, the banks do the actual processing themselves.
• 16:46
  Speaker 2: And then you have independent sales offices, which are smaller mom-and-pop shops.
• 16:53
  Speaker 2: There's so many different types of processors out there, but especially in the brewery and the hospitality industry, you have toast as a big player, which we see a lot of them.
• 17:06
  Speaker 2: So, yeah, there's a lot of them out there.
• 17:10
  Speaker 2: It's tough to distinguish who are the good or the bad guys, but, yeah, that's typically where we just try to follow different trends.
• 17:18
  Speaker 2: If we're seeing that there's, you have your processors or POS providers that cater to specific industries.
• 17:26
  Speaker 2: That's where we want to kind of make sure that they're set up correctly and kind of aligning with their industry as well.
• 17:33
  Speaker 1: Gotcha.
• 17:35
  Speaker 1: One of the other issues I guess surrounding this processing business is like the time to actually get the funds.
• 17:44
  Speaker 1: Is that standard or how does that work?
• 17:47
  Speaker 1: So I come in, I buy a beer, swipe my credit card.
• 17:50
  Speaker 1: How long does it take to actually get that money in the bank for the brewery?
• 17:57
  Speaker 2: It should be 24 to 48 hours.
• 17:59
  Speaker 2: Better processors do have the capability of setting you up with next day funding.
• 18:05
  Speaker 2: It's of no charge to them but sometimes they do charge the business for having that next day funding as kind of a benefit to them to get their money faster.
• 18:17
  Speaker 2: But essentially there are a lot of processors out there that do not charge anything.
• 18:23
  Speaker 2: But it should be next day funding, or the next business day at least.
• 18:27
  Speaker 1: Gotcha, and is that part of your audit or analysis?
• 18:29
  Speaker 1: Do you kind of go in and see how fast the money is moving, or is that outside of what you guys do?
• 18:35
  Speaker 2: No, we absolutely help with that process.
• 18:37
  Speaker 2: So if that's a concern for the business and saying, hey, the turnaround time to get our money is taking much longer than we anticipated, we'll help to get them set up on that next day, funding making sure that there is no cost associated with it.
• 18:51
  Speaker 1: Gotcha Okay.
• 18:52
  Speaker 1: Are there any processors that you can't, for whatever reason, audit their statements, or are there certain ones where you typically would find more savings?
• 19:02
  Speaker 1: In other words, are there processes like oh yeah, I know typically where these guys are overcharging, or this process, they're usually very competitive.
• 19:11
  Speaker 2: Square is probably their payment facilitator and in order to have a conversation around pricing with them, they like to see a sales volume threshold.
• 19:23
  Speaker 2: So a business typically has to be doing over $100,000 in sales volume per month for them to even have a conversation around the pricing.
• 19:34
  Speaker 2: So that's one that we haven't had a ton of luck with, but their pricing is relatively competitive.
• 19:42
  Speaker 2: Toast has been a little bit more difficult lately in terms of having conversations around their pricing as well.
• 19:49
  Speaker 2: That actually just started within the past few months.
• 19:52
  Speaker 2: Could just be a pause on that just again to get their strength in numbers back up.
• 19:59
  Speaker 2: But again, we've had plenty of success with Toast in the past and hoping to regain and making sure that businesses are price appropriate with them.
• 20:11
  Speaker 1: You mentioned earlier, we've got the three main fees.
• 20:15
  Speaker 1: I think if I get this right you can just correct me if I say it wrong but interchange charges, markups for your processor, and then there's miscellaneous fees, add-ons, and you said there could be some bogus charges in there.
• 20:26
  Speaker 1: There's an ancillary charge.
• 20:27
  Speaker 1: Are you able to give examples Like what sort of charges might you find that you're like oh yeah, that shouldn't be there, that shouldn't be there, a big one is a non-PCI compliance fee.
• 21:09
  Speaker 2: So, businesses, if you're accepting cards, you must complete what's called a PCI or payment card industry compliance survey, and it involves basically completing a survey making sure you're storing your credit card information legally and securely and you're not just writing a credit card number down on a notepad and a lot of businesses just it, something that is time-consuming.
• 21:36
  Speaker 2: A lot of businesses don't do the survey, don't even know they have to complete the survey, don't know what PCI compliance is, and because of that there are a lot of add-on charges, both monthly, quarterly and annual fees, especially if you're being non-compliant.
• 21:50
  Speaker 2: So that's just one of those fees that we want to be able to call out and help a business become compliant, to remove that fee completely.
• 21:58
  Speaker 2: And then again, it does depend on the processor and who it is, but some processors charge non-EMV assessment fees or risk assessment fees.
• 22:09
  Speaker 2: They almost call it different processors.
• 22:13
  Speaker 2: Call it whatever they want it to really, but it's just a surcharge at the end of the day, making themselves more profitable.
• 22:19
  Speaker 1: That's amazing.
• 22:20
  Speaker 1: There's like little opportunities hidden everywhere.
• 22:24
  Speaker 2: It really is.
• 22:25
  Speaker 2: And that's what makes those statements so difficult to read is because it's tough to figure out saying, hey, this is an actual fee, that is, you know, passed along from the car brands, or this is just a line item that they they just made up again to to make themselves more profitable.
• 22:43
  Speaker 1: What are the responsibilities of the?
• 22:46
  Speaker 1: I'll use the example of, like a tap room for a brewery.
• 22:49
  Speaker 1: You know you're taking credit cards presumably.
• 22:52
  Speaker 1: You know you take the card, you swipe it, you know, tap it, whatever, what?
• 22:57
  Speaker 1: Where does that data live Like?
• 22:58
  Speaker 1: Who's?
• 22:58
  Speaker 1: Who's responsible for sort of the protection of that customer's data?
• 23:06
  Speaker 2: So it's.
• 23:07
  Speaker 2: It's both on the business and the processor side.
• 23:09
  Speaker 2: So it's both on the business and the processor side.
• 23:10
  Speaker 2: You know you want to make sure that you have a safe and secure internet system.
• 23:15
  Speaker 2: You know your Wi-Fi, everything is protected that you don't have.
• 23:18
  Speaker 2: You know every single person in the business has access to different things or different backend systems.
• 23:26
  Speaker 2: You know, into the portal you want to make sure everything is password protected and same with the portal.
• 23:37
  Speaker 2: You want to make sure everything is password protected and same with the processor.
• 23:40
  Speaker 2: It's their job to make sure that everything is running smoothly through their own gateway, that everything is very, very safe and secure.
• 23:44
  Speaker 2: So they can't be compromised either.
• 23:45
  Speaker 2: So you obviously want to make sure you're using a reputable company.
• 23:49
  Speaker 1: Okay, and is that something you might look at for one of your customers to say all right, how are you actually safeguarding?
• 23:56
  Speaker 1: I mean, you're not in charge of the processor, but if you're working with a brewery, for example and maybe that goes back to the PCI compliance survey Maybe there's specific steps, checkboxes you have to follow.
• 24:07
  Speaker 1: What does that look like?
• 24:17
  Speaker 2: Yeah, it's something we don't really have a lot of insight into.
• 24:18
  Speaker 2: It's just not knowing how their system is really set up, what type of firewalls they have set up and kind of on that side of the business.
• 24:21
  Speaker 2: But yeah, again, I think just making sure that the PCI compliance is in place definitely does protect them, just in case something is compromised, that themselves as a business, that they're protected.
• 24:31
  Speaker 2: But yeah again, and it's usually not something much of concern either, so it can be tough for us sometimes.
• 24:44
  Speaker 1: Something to talk to the IT company about, I would imagine.
• 24:47
  Speaker 2: Exactly, yeah, you have an IT person on your staff, or yeah, some some, just make sure everything is set up properly.
• 24:56
  Speaker 1: Do you how about contract terms or clauses, things like early termination fees, auto renewals?
• 25:03
  Speaker 1: Are there any of these that you see that you can help your clients navigate or renegotiate?
• 25:09
  Speaker 2: Yeah, absolutely We've been able to.
• 25:11
  Speaker 2: Even if a business is in a current contract with their processor, we still have the ability to come in to adjust their pricing again, making sure that they're paying that fair market value.
• 25:22
  Speaker 2: If there is some sort of early termination fee or liquidated damages or canceling that contract early, we have had the ability to lower that fee or making sure that we can shorten the length as well.
• 25:38
  Speaker 2: So, yeah, we've definitely had success in helping them with their terms or just at least getting them on a month-to-month agreement, which you should be with your processor.
• 25:47
  Speaker 2: It's tough being locked into a contract with your processing company.
• 25:50
  Speaker 1: Gotcha.
• 25:50
  Speaker 1: So that's part of your process.
• 25:52
  Speaker 1: As you say, send me the contract, send me your merchant statements, and then you kind of go through and know what you're looking at there Exactly.
• 26:00
  Speaker 2: Yeah, it's not necessary, but it is very helpful if we're able to see the contracts, because you'd be surprised.
• 26:05
  Speaker 2: You sign a contract at one price and you look at the statement and it's completely different.
• 26:12
  Speaker 2: It's 2x of what you signed up for.
• 26:14
  Speaker 2: It's because in their fine print and the terms and conditions, the processor says that they have the ability to adjust their pricing at any time, with or without notice.
• 26:24
  Speaker 2: So, yeah, we want to take a look at that to see where those discrepancies lie and if they are locked into a contract, which is typically in the fine prints as well.
• 26:35
  Speaker 1: Contract compliance is tough because, just being human nature, we don't read those contracts very well, do we?
• 26:41
  Speaker 1: We just sort of sign, sign, sign and you're off and running.
• 26:45
  Speaker 2: Exactly, it's like the Apple terms and conditions, where you scroll, click agree and you move along.
• 26:55
  Speaker 1: So it's very similar.
• 26:57
  Speaker 1: How about ongoing monitoring?
• 26:57
  Speaker 1: Right, so you guys come in, you identify savings, you renegotiate To your point.
• 27:01
  Speaker 1: The contract might say they can change it at any time without.
• 27:04
  Speaker 1: What does that ongoing monitoring look like, or what do you guys do in that regard to make sure that the rates are staying competitive long term?
• 27:14
  Speaker 2: Yeah.
• 27:14
  Speaker 2: So that's probably where we can make the most impact in helping a business is because we're monitoring their statement monthly to ensure that their rates stay at that bottom line, just because, again, these processors they have the ability to change their pricing at any time.
• 27:32
  Speaker 2: So we typically notice a trend where most processors will adjust their pricing towards the beginning of the year, the middle and the end of the year.
• 27:41
  Speaker 2: So we essentially know, especially with the processor, when that is coming up.
• 27:48
  Speaker 2: So we try to prevent that, get ahead of it for our clients.
• 27:50
  Speaker 2: But let's just say if we didn't know ourselves, after we monitor, audit a statement, we'll catch that increase or an added fee and then we'll contact the processor to get it removed as well as refunded.
• 28:03
  Speaker 2: So always making sure the business is paying the least amount per month.
• 28:09
  Speaker 1: Gotcha, one of the hot topics that comes up pretty frequently these days is passing the surcharges on to the customer and as a consumer myself, you know you see it pretty regularly out there where it's a gas station or a restaurant or you know you name it.
• 28:26
  Speaker 1: So I wouldn't say it's pervasive, but it's pretty darn close to that.
• 28:30
  Speaker 1: What is your take on that?
• 28:33
  Speaker 1: I know you guys have kind of like some resources and I can share that with folks as like pros and cons considerations.
• 28:39
  Speaker 1: Um, how would you, if somebody asks you that question like, should I do this?
• 28:46
  Speaker 2: how would you help them make that decision?
• 28:47
  Speaker 2: Yeah, exactly, carrie.
• 28:48
  Speaker 2: So it does have a lot of pros and cons to it and it is something that's becoming a lot more popular because these processors are pushing it, because it makes them more profitable.
• 28:58
  Speaker 2: But, yeah, it depends on the industry that you're in.
• 29:01
  Speaker 2: If you do have a surcharge, if someone wants to use a credit card, first you want to make sure that you have the in writing somewhere, whether it's on the receipt, whether it's at the front counter, just making sure that you have a display saying hey, if you use a credit card, there's going to be a 3% surcharge on top of that.
• 29:23
  Speaker 2: But then it gets into.
• 29:24
  Speaker 2: Are you going to upset any customers?
• 29:27
  Speaker 2: Are they going to come back?
• 29:28
  Speaker 2: So you have to weigh those options out.
• 29:33
  Speaker 2: But if you're looking to completely cut costs and reduce your merchant fees and seamlessly and just passing those fees along to the customer but just again making sure, because there are a lot of gray areas you just want to make sure that everything is set up, it is compliant, because I know there are a lot of reps out there from the car brands that if you are to get caught and you don't have the proper terms in place, you can be subject to a lot of fines and then being even put on lists where you can't accept cards at all in the future.
• 30:08
  Speaker 2: So that's the most important part is this if you're going to do it, making sure you're doing it correctly, working with your processor to making sure everything is is just set up legally, um, and depending on the state you're in, they have, you know, different terms and what you can and cannot do.
• 30:26
  Speaker 2: So, yeah, again, it's just, it's weighing out those options gotcha, gotcha, okay, um, and then so for your.
• 30:36
  Speaker 1: How does your firm get compensated?
• 30:40
  Speaker 1: Like, what are your?
• 30:40
  Speaker 1: What's the fee structure?
• 30:41
  Speaker 1: Because you're coming in, you're doing a lot of work, right.
• 30:43
  Speaker 1: You're analyzing statements, you're looking at the contracts, you're negotiating with the payment processors.
• 30:48
  Speaker 1: How do you, if you're guiding a client, maybe take me through that process?
• 30:52
  Speaker 1: I'm a brewery.
• 30:53
  Speaker 1: I give Patrick a call because I want to check this out, what happens next and how do the fees work?
• 30:59
  Speaker 2: Patrick a call because I want to check this out.
• 31:01
  Speaker 2: What happens next and how do the fees work?
• 31:02
  Speaker 2: Yeah, so if a business is to utilize our services, we're able to obtain them savings.
• 31:05
  Speaker 2: We're strictly a contingency-based firm, so the only way we're compensated is by sharing in the savings that we're able to obtain for a business.
• 31:11
  Speaker 2: So we don't have any upfront fees.
• 31:14
  Speaker 2: There's no monthly consulting fees.
• 31:16
  Speaker 2: It's strictly based on the savings month over month and that's where we'll put together a savings breakdown to showcase exactly where the savings took place.
• 31:25
  Speaker 2: So we would show them the business, the old fees they were paying before our services and then the new fees they were paying after because of our services, and then we would list each and every line item out, showcase exactly where we were able to achieve those savings and then, yeah, we just ask for a certain percentage of that for a certain time.
• 31:44
  Speaker 2: Length.
• 31:45
  Speaker 1: Gotcha Okay.
• 31:46
  Speaker 1: So I imagine most everybody listening to this takes credit cards, has these fees and we just sort of pay them and maybe grumble about them or wonder if we can.
• 31:56
  Speaker 1: So if somebody is listening to this and they're like all right, well, this sounds interesting.
• 32:00
  Speaker 1: I'd like to talk to Patrick.
• 32:01
  Speaker 1: How should they get in touch with you?
• 32:05
  Speaker 1: What's the best way to do that and learn more?
• 32:08
  Speaker 2: Yeah, I think just even going to our website, merchantcostconsultingcom, just to learn a little bit more about our services, the different industries that we cater to.
• 32:17
  Speaker 2: But it really starts with us taking a look at a recent statement and we can put together the analysis.
• 32:24
  Speaker 2: There's no commitment for that and there's no cost, but just to see what the potential savings look like and we can report back, just to see if our services are a good fit or not, there is the chance that we can come back and say, hey, you're priced appropriately, you're doing what you should be doing and just.
• 32:42
  Speaker 1: There's no need to utilize a service like us.
• 32:43
  Speaker 1: Yeah, sounds like a no-brainer to me.
• 32:53
  Speaker 2: Any questions?
• 32:53
  Speaker 2: I didn't ask, but should any topics that you feel are important for us to cover?
• 32:56
  Speaker 2: No, kerry, I think you covered all the main ones.
• 32:57
  Speaker 2: Yeah, the surcharging is definitely something that's been more prominent and something we're seeing more and more of.
• 33:03
  Speaker 2: But even if any listeners have questions just around credit card processing, merchant services in general, I'd be more than happy to just have a conversation around anything, just because it can be a complex industry with a lot of moving parts.
• 33:22
  Speaker 1: Absolutely Well, Patrick, this has been great, great information.
• 33:24
  Speaker 1: It's funny.
• 33:24
  Speaker 1: You dig it.
• 33:25
  Speaker 1: You take what is what is a relatively, I think, straightforward and simple fee, and then you break it down.
• 33:31
  Speaker 1: You're like that's not straightforward, nor is it simple, and there's lots of ways to maybe save some money.
• 33:39
  Speaker 2: So I appreciate you sharing your time and knowledge with us today Absolutely.
• 33:40
  Speaker 2: Thank you so much for having me, Kerry.
• 33:42
  Speaker 2: I really appreciate it.
• 33:43
  Speaker 1: Thank you for listening to the Craft Brewery Financial Training Podcast, where we combine beer and numbers so that you can improve financial results in your brewery.
• 33:51
  Speaker 1: For more resources, tools, guides and online courses, visit craftbreweryfinancialtrainingcom and don't forget to sign up for the world-famous Craftbreweryfinancialtrainingcom.
• 33:58
  Speaker 1: And don't forget to sign up for the world-famous Craft Brewery Financial Training Newsletter.
• 34:03
  Speaker 1: Until next time, get out there and improve financial results in your brewery today.