Payment Processing Demystified: A Guide For Start-Ups | Boost Profits | B2B Vault | Episode 166

Yo, what's up everybody? It's Justin live from B2B Vault, the payment technology podcast sponsored by Nationwide Payment Systems, hosted by this guy, the Tom Glavin of payment processing himself. Allen Kopelman, and we'll be providing you educational information about fintech, payment processing, small business, and the technology businesses are using in the world today. And in today's podcast, we'll be giving you a, a guide for payment processing for startups. You know, maybe, uh, I don't know if a guide is a, you know, the good word for it, but you know, just, you know, basic basic, uh, instructions for startups when, uh, you know, you're trying to get paid.

Yeah, things to think about with your— when you're starting up a business.

Yeah, I mean, because there's a lot of stuff that comes with that. I mean, and number one, if you're a business, you want to get paid, right? So we're going to talk about it. And, uh, yeah, so how you been, man?

I've been good. We're getting ready, we're going to event tomorrow. Hopefully it doesn't rain too much and attendance is not curtailed.

Yeah, the weather in South Florida— if you're not, uh, if you listen to the podcast and you're not in South Florida and you don't know, it's hurricane season down here. So we are preparing for— from what I've seen, it's supposed to be just a regular season. Nothing too spooky they— that they're predicting.

I don't go by the predictions too much, but this time of the year it rains, it thunders, it lightnings. Rocky gets scared.

I mean, it's South Florida. It's—

that's part of it.

Yeah, subtropical environment. I mean, they say if you don't— if you don't like the weather in Florida, wait 30 seconds.

So yeah, June through October, I mean, they say it's going to rain, but that doesn't— you know, here it doesn't rain Everywhere it rains, it could be raining in Fort Lauderdale and be completely sunny in Boca or Davie or Hollywood or across the street, right? Exactly.

Like, I've literally seen it pouring on my side of the street and it just beautiful on the other side. There was rainbows, like, it was crazy. It was, it was one of the coolest things that I've seen during the hurricane season.

One thing you can watch out for is like here, like you're walking. Let's say you're out walking, like I'm out walking Rocky, and then all of a sudden there's like this cool breeze starts.

Yeah, you go inside. That's the time you better start running because it's raining somewhere really close to you and it's coming towards you. That's why you feel that breeze.

Yeah, that's like time to start getting the hustle going.

That's a fact, Jack.

You're about to get rained on, and the sky could be totally clear, and all of a sudden, boom, there's some rogue cloud that's just flying by you and just, you know, I've been caught in so many scattered showers since living here.

It's hilarious.

Yeah, basically just drop, you know, when it rains, just drive safe. I know people that new to living down here, like, don't put on your flashers and stop in the middle of the road. If you're scared, get off the road, pull into a parking lot. Because if you just—

staying on the road is just not a smart thing to do. If you're afraid or if you don't know how to drive in that type of conditions, you shouldn't drive.

No, but I'm saying if you are driving and it happens, yeah, pull over, pull off into a parking lot for sure, sit there, you know. And also do not drive into what looks like a puddle unless you are exactly sure how deep that puddle is. You know, and because some of these puddles can just swallow up your whole car.

So yeah, I've seen some pretty tragic situations. But yeah, man, other than that, life is good, man. You know what I mean? So yeah, well, uh, guide for startups. First of all, you know, there's so many different types of, you know, needs to get paid, right? Like what type of business are you at? What kind of business? Yeah, what kind of business do you have?

Is it a a product, a service? Are you a bar, restaurant? Are you starting a website where it's an internet business? Are you starting a SaaS company?

E-com.

E-commerce. You know, there's a whole host of different type of companies that people starting. You know, a lot of people— SaaS is a very— software as a service is a huge business type. They nowadays. Yeah, and especially like with AI.

I was about to say AI is coming for systems as a service.

It's coming for it. Oh yeah, I see, I see the— I see definitely a lot of these SaaS companies are starting up and then they want to charge monthly for their software. And you know, a lot of them are getting shut off because they're not set up properly. They don't have— we'll get into some stuff with e-commerce.

Why I say AI is coming for that is because people who are smart are going to be able to use AI to, to not, you know, have to pay for these, these people's software. Yes.

Oh yeah, the day is coming where there's just going to be a lot of more freeware, and then you'll have to be—

yeah, man, because people are smart, you know, and A lot of people are— anyway, we can— this is a whole nother podcast about—

another podcast, the AI podcast.

Yeah, but there's, you know, there's obviously there's— you got to be aware of how you're getting paid for your business type, right?

Right. So you guys—

because there's different SIC codes for businesses, different SIC codes.

And also, you know, like, basically, you know, the next kind of foray, that kind of question I put on there is based on your age, we find where do people turn for help. So the younger generation runs to, you know, the typical online areas of PayPal, Square, Stripe, Shopify. Now is that good or is that bad? It's, it's, it's good if your business fits into their business model, right? And you read their terms and conditions and you especially look at what is prohibited Okay, right, because if I tell you how many calls we get at the office, you know, doing this for over 20 years— oh, I set my business up on Stripe and then I found out that they don't support tobacco online, or I built my website for CBD or cigars on Shopify and Shopify Payments does not support CBD, Shopify Payments does not support tobacco. So they find out, you know, after the fact, after the fact.

So you really need to, because you've already put your investment in there, right? You've already bought your domain through Shopify, you paid for your hosting, blah blah blah, your monthly fees or whatever it is. You probably bought some extensions or plugins for your website to them. Well, you had to actually if you want to have it set up right. And then You know, so you got your whole investment in there and then boom, you make one sale. Now your site's shut down. You don't have an explanation, right? Besides the fact that you broke the terms and conditions and then you got to start from scratch.

So I recently noticed that Shopify changed some new terms and conditions because they're promoting like a lot of dropshipping.

Yeah.

And, and one of the things that they that they, um, that they just changed in their terms and conditions was that if the drop shipper is not shipping out the goods, you know, they have the right to shut your site down. Oh, well, and that's— and they're— but they're the ones promoting it. So I mean, you would think that they're vetting out the products.

And as an entrepreneur with experience using these, you know, the, you know, the typical PayPal, Zelle, Venmo, and all that to get paid. Um, excuse me. In my opinion, wasn't the smartest decision. Um, after learning about merchant services and, you know, the different opportunities that can arise through relationships, through, you know, you having a merchant account through, say, Nationwide Payment Systems Um, there's just a ton of incentives that come along with that, as opposed to— I mean, well, the number one thing with that is you're going to be— your fees, right? Like, your fees are going to be high, sky high, through all of these, the, you know, your typical providers, right? So, I mean, when we say is this good or bad, it— I mean, long story short, it's kind of bad, right? Like, if you want to look at— it's one way of looking at it, it's bad, right? Because you're gonna get— you're gonna get screwed. You're gonna get There's tons of fees, there's tons of stuff that you don't necessarily pay attention. You, you're just new starting your business, so you don't really— you're unaware of how things operate. And so every transaction there's a fee, every time you batch out there's a fee, every time you do all these other things there's fees, fees, fees, fees, fees. It's just something that, you know, there's a learning curve with that.

I think a small business, you're only going to do $5,000 or $10,000 a month. And it's, you know, mainstream, these services might work for you. Once you start hitting $10,000, $15,000, $20,000 a month, you're going to save a ton of money using a regular merchant service provider, whether you use Nationwide Payment Systems or somebody else. You're going to just— you're going to save money because regardless, right, be able to— you're going to be able to get a more customizable program for what you're doing. You know, so, you know, and then the other side of the coin is, is someone who sees it. What we looked up, a fact, the average business owner is about 40 years old.

Yeah, 40, 42 years old, right?

And then they've owned a business maybe prior when they were younger.

Typically they've all owned success businesses that are opposite, like the, you know, like a— I don't want to say successful, but like a functioning operating business right now. Is typically owned by a 40-year-old who previously owned a business.

Right. So, and you know, where do they go? They sometimes go to these services, sometimes they go to their bank, or sometimes they seek out a merchant services professional because they've already gone down that road. You know, another thing is to make sure is, you know, when you're first setting up your business, you know, make sure you're setting up bookkeeping along with that. We did a whole podcast about the importance of bookkeeping, because good bookkeeping as you're growing your business— and let's say you grow your business to where you're doing $100,000, $200,000, $300,000 a month in sales— that by having good bookkeeping, that's to your advantage. Especially you want to go work with a merchant service provider. Square doesn't care whether you keep your books or not, but we do. You know, and then we can go to the bank, we can negotiate better fees for you, lower rates. Let's say you have a higher risk type of business. Yeah, right, where you have a reserve instead of a 10 or 15% reserve, you could have a 5% reserve. You know, instead of paying 6, 7%, you could be paying in the, you know, 2, 3s.

Yeah, I mean, bookkeeping So important, especially for a business that's starting out. You got to keep track of what's coming in and what's going out.

You got to start, start off in the beginning and set up bookkeeping. Yeah, you know, QuickBooks has a free version, you got FreshBooks Zero, and you could connect PayPal if that's the route that you're going to it.

So like, you know, and merchant accounts connect in there too, right? Yeah, we can help you connect to your QuickBooks account.

Yeah, we can connect to those, you know, invoicing. You know, let's say you're doing invoicing—

integrate is the correct term—

integrate. You know, let's say you're doing invoicing for your business, you know, that's something to consider because when you're doing invoicing, you know, are you giving your customers terms or are you just sending out the invoice? Oh, you know, you need, you need to make sure that the customer knows, hey, you need to pay this, you know, or you're going to get in your car and go drive over and get a check and then take it the bank and then wait 3 to 5 days to find out whether it's good or not. It's easier to just send them an invoice, have the link in there, pay with a credit card, boom, done, get your money.

Bingo bango.

Yeah, get your money up front, not waiting. I mean, we're in a very dicey economy right now, and you know, now's not the time to have people owing you money.

It's tough.

Yeah. If you're owed money every day, that you're owed money, you're basically losing about 20 basis points or more based on the current Fed rate.

Right, right.

So it could be, it could be higher. It might be they're raising the rate again. Then every day you don't get paid, it could be 25 to 30 basis points.

And what's a basis point for some, for the startup guys that don't know?

A basis point is point. So you take, like, let's say you're owed $10 grand— I don't have my phone, so I can't do a calculator— times, let's say, 20 basis points. So you do times 0.2 and then hit the percent button, and then that would tell you what the— how much that is. I think it's about $20. Yeah, a day. So if you're at $10 grand, you're losing $20 a day. On, on 10 grand.

Or the 2, huh? 20%, you said?

No, you hit 2.2 times and then 0.2. So you said if you owe 10 grand, time, then hit times 0.2%, hit the percent button, equals $20, right? So if you owe $20 a day and then you don't get paid for 30 days, how much money did $600, right? So that's $600. So let's say you're—

that's $9,400, right?

So let's say your profit was, let's say, $2,000 on that. Now you lost—

you down to $14,000.

You lost $1,600 bucks. Yeah, right. You, you essentially, you lost it because the value of the, of the money went down.

Yeah.

So every day you don't get paid, you're, you're losing money. So if you have somebody with an outstanding invoice for like 90 days, let's say they have a $5,000 invoice for 90 days, that's $10 a day times 90 days, you lost $900. You know, that, that's what people have to understand.

Bookkeeping is key.

Yeah, bookkeeping is key. Making sure what, what are your terms of how you get paid. I mean, I know I have guys that come to my house and they're like, oh, I'm doing your cleaning your roof. When I'm done, it's $500. They want to get paid when they're done. Yeah, I don't want— not sending you an invoice, oh, pay me in 30 days. I want to get paid now, typically. And, and that's what, you know, people need to understand that when they're setting up a business, of how do you want to get paid.

Go to a restaurant, that should be one of the first things you should be thinking about, because regardless of your offer or your whatever that you have, right? Whatever you call it. You know, I say offer because it's just universal. And, um, how are you going to get paid for that?

And you want to make it easy for people to pay you too. So if you're seeing somebody in person, you know, get the— we have an app, goes on your phone. You don't even need equipment. You can take a credit card from them right in front of them, right? You know, or you get a little device that hooks up to your phone. You, you got to figure out a way so that you can get paid easily from your customers, because if you can't get paid easily, then it's gonna— you're gonna— you can either not gonna make a sale, right, or you're going to be chasing money, and you don't want to be doing either one of those, right? So, you know, it's important to understand and weigh out like, oh, what kind of business do I have? You know, how am I going to accept payments and what's the easiest way and make customers the most comfortable? Like, I have customers and they feel like, oh, I should have a device, um, with the phone, right? The little dongle.

Yeah, we're getting into that, right? You're jumping the gun.

Okay, I'm jumping the gun on technology.

Yeah. So, so the advantage and disadvantage of each of these, we kind of, you know, we kind of talked about that already. Right? Yes.

Whether the—

you know, based on your volume, business volume, average ticket, you got to make sure you, you know what you need for your business and make sure you read the terms and conditions. Yes.

Whoever you're working with can handle the type of business that you're going to do, right?

And then this kind of, for me, it leads into how you're getting paid, right?

Right.

So like, what kind of technology are you going to use?

Yeah, so what kind of technology do you need? I mean, if you have a retail store, you need a point of sale system. You know, more, more and more businesses need point of sale so that you can track all your inventory.

And vice versa, the, the businesses who are like brick and mortar, they now need websites.

Yeah, they need websites too. I mean, when you have a business, you got to have at least a— you have to have a website. And you should figure out like, hey, after I establish myself that people know who I am. I need to get— take the next step and turn that website into e-commerce site and have either all your items or your most popular items on that site so people can buy them.

Absolutely.

Other ways you can get like linked up with technology where you can create pay buttons that you could just post on social. Yep. And then a person can buy like a particular item or make a donation to your—

like the same way that Facebook lets you put your— upload your products into the marketplace. You can be doing that on your own, bypassing their fees, and then sending out links through social media, and you cut out the middleman, and now you're making more money, right?

And you can do that for a nonprofit too, take donations that way.

Yeah, I, I love— shout out to social media and what it's been able to do for people in small businesses and, and nonprofits, right? But You're, you're the user, the, the people who— everyone is not there, right? Everyone is not. So you have to kind of expand your mind and, you know, think outside of the box and realize like, okay, my customers, my fans, followers, etc., you know, believers in my organization not every one of them people are on social media. Actually, a lot of them aren't, you know.

Yeah, well, you know, you— when you use Paylinks, you could do that through email.

Exactly. Text messaging, you know, or straight through your website. But that's what I might— guess what I'm getting to.

Yeah, like I was showing this church, I was like, you know, you set up your page online, then make a QR code, have the QR code at the church, right? So then people want to make a payment, they can just scan the QR code with their phone. Everybody's got a phone. Scan the QR code with the phone. Yep. Goes to the donation page and boom, they can do their donation.

Absolutely.

You have to think outside the box. Like, you know, I always say this, I've said it a million times on the podcast. Well, probably not a million because we haven't done a million episodes, but I've always said technology is the great equalizer. If you can take technology and use it in your business You know, that can help you save man hours, help you make more sales, create customer loyalty. You know, you can do all these different things with, with technology. Technology is a big game changer.

I say use the technology, don't let it use you. Um, you know, just don't get it and then, you know, don't know anything about it. You know, you do the knowledge. Get with— get the equipment that you have, learn about, learn how to use it, and so that you can, you know, it's useful to you and it's just not a piece of equipment sitting on your desk, you know.

Yeah, like if you're gonna have a restaurant, research these point-of-sale systems, what's going on, you know. Here I was telling Justin earlier, I was talking to somebody about a potential client. They were telling me, they were like They're getting feed to death by Toast, and Toast charges them, you know, a higher— a high— pretty high rate. Plus they have ancillary fees like $1 for an online order, $1 for a QR code payment, and those add up. And then I just saw a post on one of the forums that I read for the business, you know, credit card business, where now Clover is going to add for every online order through Clover, $1.49. That's the same. I mean, that's just crazy. It just, just— I don't want to say it's a tax, but just adding a ton of cost onto businesses that—

that's crazy—

make a really low profit margin.

Yeah, I was— I'm thinking about the people that are like making, you know, let's just say 10 sales a day.

Yeah, well, that adds up. $1.49, $1.49 on every one of them.

That's what I'm saying. Like, I That's a lot for a small business to be paying.

Yeah, and even if you had a popular restaurant where you're doing 20, 30 to-go orders, that's insane. What they're going to be paying, like, yeah, that's an extra $30, $40 a day for your business. I mean, that's just—

that's not okay, man.

No, they— you know, the thing is, is that a lot of people don't understand when they—

what was their reasoning for it?

They don't have to give a reason. I think Clover was—

well, yeah, I mean, everyone is doing it. I— my insurance called, they after they, they, they sent me an email after I, like, I got a bill and my rate was up. I probably got an email prior, I just didn't pay attention. But they raised my insurance like $60. And a month? Yeah.

Wow, that's crazy.

And so they—

insurance went up too. I recently had to switch and they just said that they were—

they said that everything costs more, so we had to raise our prices. That was their— literally, that was the excuse the woman on the phone said.

Yeah, I had the same insurance for probably since I'm 18. I'm 63, okay, for my car, right? So that I didn't notice— I noticed that it went up. I was like, man, that's really high. So I was renewing my homeowner's policy and that went up like $1,000 a year. And I was talking to the guy who does my homeowners and I was like, man, my auto is like crazy. I said, can you look at my auto policy? Because it's not through him. So I sent it to him, and then I ended up getting— for what I was getting, the current company was charging for 6 months, he got it for me for that, for less than that, for the whole year.

Really?

Yeah. So you got to shop around for insurance. Someone else told me about another homeowner.

How much you had to pay up front?

Nothing. Just, you know, you get paid monthly. Yeah, but instead of 4, it was 4 grand for 2 cars for 6 months. Now it's 4 grand for 2 cars for the year. So whatever that is monthly, you got your calculator, um, $400, less than $400 a month.

Yeah, it sounds like you're— we're paying about the same that I'm paying.

That's crazy. And I was like, that's way too much money. It's a lot of money.

It's another car.

Yeah, when you're operating your business, you got to understand your bills too. Like, oh, what kind of insurances are you gonna have to have? What kind of licenses do you have to pay for? I mean, I can't tell you— every once in a while we get a customer, oh, I forgot to— you know, we'll get a note from the bank, hey, this guy hasn't renewed his corporation, and then the person didn't renew their corporation, which you have to do every year in every state, you know. And you have your, you know, you have to have licenses. Like here at the office, we have a Broward County license, a Fort Lauderdale license, the state of Florida, the sales tax license. 4 licenses. I remember when I owned a restaurant, it was crazy. I'd have, I'd have my—

there's tons of licenses. So you got to be sure that you have to be knowing what you need in your state and area at all times, right?

Make sure you have all your licenses and all that. I mean, you sell liquor or tobacco, there's separate licenses for everything. So you got to make sure everything— you have all your licenses. Yeah, and that's another reason to have like point of sale system, because if you have the right type of point of sale system and you have multiple— let's say you might have multiple taxes, right? Let's say you owned a store and you sold— you had a liquor store, but you also sold cigars. So now you have, you have the liquor tax to pay, sales tax to pay, and tobacco taxes. So very important to have the right technology. And then let's talk about like websites.

So yeah, I mean, a lot of it's— I don't know, it's, it's weird, you know. Either you're going to set your site up on what, Shopify, Big Cartel, BigCommerce, um, I could keep going and going, Shopify, etc., etc., etc. Um, yeah, well, WordPress, I was kind of saving that.

Okay.

But the ones that I'm talking, you know, like the other ones that, you know, they kind of, they're, they have the payment processor built in, right?

Cookie cutter.

Yeah. So, you know, it makes it easy for someone who's starting a t-shirt company or a clothing brand rather, right? Like, okay, they're gonna go straight to Etsy and straight to Shopify, connect their PayPal, whatever, use Printful to fulfill everything, um, etc. But you know that, yeah, that makes you, you the business owner, your life easier, but you're not really making more money, or you're not making as much money as you should.

It's sometimes it's a good way to test to see if you're product is going to be viable.

Oh, for sure. I mean, if you're, if you're just like literally like this is an idea and you want to set up something in 24 hours, that's by all means— these, these tools that they— that are around are, are there for that purpose. Um, but like, you know, I— me being a web designer, a web developer, WordPress developer rather, for over a decade now, um, I've seen the growth of e-commerce Um, specifically WooCommerce and e-commerce. Uh, it's a crazy number. There's a— the majority of websites that you see are WooCommerce.

Oh yeah, definitely more than— I mean, at one point I think WordPress, WordPress was like—

it's still more than— still covers what— yeah, it's still like 82% of— yeah, the— for, for the sake of arguments, I say it's still over 75% of every website.

Definitely.

So like, um, I say use WordPress. You have more freedom, you have more control, you have more options, options, etc., etc. Um, WooCommerce has gotten better. It's not the greatest. Um, they're working at it, you know what I mean? There's a couple other payment gateways that you can use. WooCommerce is the most straightforward, right? Um, but then you still need to connect your bank account or however it is that you're going to get paid.

Services set up, right?

So that's the, that's the one separation through WordPress, right? Like, but you can connect PayPal, etc., etc., through WordPress. Um, but I would say to, to, to go the extra route and go get a merchant account. Um, if you're savvy enough to build your site and do your store and do all that other stuff on your own I, I would say you don't need to be paying these other providers the fees that they're going to be charging you, you know, for your e-commerce store, because you're over— your, your profit typically isn't just huge, you know what I mean? So like, you know, like the markup, you know, depending on what you're selling, right? But for a clothing, like a clothing brand, I was thinking of specifically, you know, if you put your time and your effort, you can't sell a shirt that you know, you got to sell it for $80, you know what I mean? You, you want to be able to bring all that money back to you. You don't want to have to share that. So I would say get a merchant account, um, definitely. Um, but yeah, you got to be mindful of, of all those different things. Um, you gotta, you know, packaging. Are you shipping stuff?

Um, yeah, what are the shipping?

Are they downloading Um, make sure your privacy policy, terms and conditions, shipping and returns, uh, you know, like the terms and conditions are all up there.

Policy, using like shipping software that keeps in touch with the customer, especially if the shipping takes more than a couple of days.

Absolutely.

Make sure the customers get emails, I mean, text messages. Yeah, shipping times so they don't do a chargeback. And also make sure you answer your phone.

Every business, you know, definitely need to have a customer service number.

You gotta have a customer service number. You know, you can go to these answering services. I always tell the story, when we first started in business, we went to an answering service that answered the phone for doctors and lawyers. It was very inexpensive monthly. So it's a great way to find someone that sounds professional.

You look bigger than you are. I mean, you don't have to worry about it. You'll get a list of everyone who called at the end of the day, or, or however you set it up. You know, this is a— that's a, that's good. That's a good idea, definitely. So yeah, man, if it's a website, I say get a merchant account right off the bat. Don't beat around the bush. This is coming from a person with mad experience. I've set up I don't even know how many e-commerce websites. I've seen the majority of them fail because they're not organized. There's no bookkeeping, there's no shipping and, you know, return policy. There's no, you know, all these things, you know, just constantly, you know, they just watch business fall apart.

So yeah, when somebody's working with us, we actually provide them with a website compliance guide so they know what has to be on the website. For them to comply based on the type of business that they have.

And a lot of people get upset.

Yeah, they get upset. They're like, what, I have to do all this stuff?

Well, because I get it, because they paid somebody to do the stuff too, a lot, right? So they're like, we should— why is it this already included? Well, if you didn't tell them that you needed this there, or if you didn't—

that's why sometimes, you know, people make the website, spend a ton of money. I had a guy recently, they told me they spent a ton of money. Then I told them that website was done completely wrong. The guy was like, are you kidding me? And I was like, yeah, you can't have— you know, there was a CBD site and they had the word cannabis everywhere. They used the word marijuana. They used—

you should have gave my number, I could have fixed it for him.

I told them, I said, I can refer you to a couple of people that all these blog posts that they paid somebody to write that were— had promises in it And then, you know, no privacy policy, no terms and conditions, no shipping information, you know, tons of just everything missing. And then the guy was like, you know, he was—

he felt—

he felt— I felt bad, but, you know, and then the guy got—

but you can't be feeling—

I'm—

I, I see, like me, yeah, I don't feel bad for people like that because if you're in that business, you should know by now that they're coming for you, man. You know what I mean? Like, they're coming for you if your stuff isn't tip-top. If all your i's and t's— i's aren't dotted and your t's aren't crossed, you're getting shut down. Do you know what I mean? And I keep telling that people who are starting these CBD, kratom, etc. types of businesses.

Even for vitamins, there's rules. Oh my God, tobacco. I explained to a guy, I don't even get into tobacco. No, they had to bet like a cigar site. Yeah, it's like, oh, you have to have all the— you have to have all the labeling on there that from the cigars. You got to have a— you got to have a warning on there. You know, I said you can just go— I sent them to a website, pick one of the warnings that the FDA says, right? Yeah, you got to post a warning on there. You have vape, you got to post a warning. You know, you got all these rules. You know, we only just tell you what the rules are so you can get approved for your merchant Do your due diligence, man.

That's what I def— you know, I like, if you're hiring a developer, I can't be the one, like, you can't expect me to know your industry. Yeah, you're hiring me to design a website for you that's gonna, you know, sell your product. That's all I'm worried about. If you don't tell me you need all these, you know, I'm not doing that. I'm just saying, right? Typically a web designer isn't going to do that.

Yeah, we—

I mean, I'll give you some advice, right?

If a lot of times somebody will come to me, they're like, I'm in the process of the website, can you help me?

Right?

You know, and then we go through the process. Like, we work— we just worked with a guy and they were doing a cigar site, and then we went through the process. Like, there was no product labels, there was no disclaimers and all that. The guy went in, they were just starting the site, so they were able to go in and fix everything. They fix everything, and then boom, when we send the application in, boom boom boom, gets approved right away because everything was, you know, spot on.

Because he listened to you.

Yeah, they listened.

I wish a friend of mine would have listened to me. He had a site for, I don't know, maybe a month.

Yeah, they got closed down, non-compliance.

So now he's trying to build it on Shopify. Good luck. I'm done. I'm out. I wipe my hands clean of that.

You have to understand what type of business do you have. Is it a low-risk business, a high-risk business, in the middle somewhere?

Make sure when you get your merchant account, you always go too fast with the low risk or high risk, okay? Because this is something that is really confusing even for me that I've been working around you for 2 years. So what is low risk to high risk?

Okay, so low risk would be like you're selling t-shirts. If you have inventory, that's low risk, you know, for a business. Low risk is retail, restaurant, card present businesses are all low risk. Anything that's getting shipped is going to be a little bit of a higher risk, and if you own the inventory, obviously the risk is lower. If you're using fulfillment houses the risk is higher. And then you have products where there's going to be higher risk, right, on the products. And, you know, and also Visa just changed a lot of rules for adult websites, streaming sites, content creator sites. They change the rules constantly on CBD and, and other, you know, other industries which are all considered higher risk industries. Now sometimes I look at high risk and I go, oh, people tell me, oh, I was told Oh, I'm high risk. I go, really, it's more like a niche. You have a niche business, right? Because there's a reduced number of banks or processors that could do that.

What's an example of a niche business?

So like CBD, there's maybe 5 banks that want to take CBD. You know, there's probably another 5 processors, but they're all going through the same 5 banks. So basically there's only really 5 providers. Let's say you're opening an adult content business where adult content is going to be online.

There's really like an OnlyFans.

Yeah, there's like 3 banks, maybe 4. That's it.

That's interesting. I thought there would be more.

No, the other banks don't want to deal with that.

What about strip clubs?

Strip clubs, there's not— there's quite a few banks that do not want strip clubs.

Really?

Yeah, they don't.

Why?

So because in strip clubs, the problem is not like the money at the door and the money for the drinks and the food. The problem is the money for the entertainers, because it's a cash business. You're paying— no, because you go in, let's say a guy goes into the strip club and blows $40 grand, and then he commits suicide. No, not commits.

And then his wife finds out, and then he commits suicide, and then he goes—

and then his wife calls up does a chargeback. And then the—

I don't mean to make it a joke, man.

I know you're making it.

I'm very serious. It was just ending Mental Health Awareness Month. We're just ending. I'm not making a joke of suicide. I'm just saying, like, the guy blows $40 grand in a strip club and goes back home and his wife knows about it. It's not going to be a good day.

Or the guy used the corporate card and the—

oh my God, we had that happen one time.

We had these guys from a car convention. There was a car show down here, and it was these guys from some car company went into the strip club, and they had this porn star in there that was this, uh, MILF porn star, and then she was the lookalike of Sarah Palin. I forget her name. So it was a whole big promotion. So they went in there, and these like 5 guys blew all together over a 3-day period like $50,000 on the company card. The company actually called the club up and said, hey, who did these charges, blah blah blah. They set up a 3-way call with me. We vetted out who this person was on the phone, that they worked for this company, right? And we told them what the deal was. We said, you want copies of the receipts. You're either going to send us an attorney letter and we'll give you the receipts, or you're going to go to your bank and say you want a retrieval request. And she went, did a retrieval request on every receipt. I mean, there was like 70 receipts, and the club had to make copies and send it all in. They got to keep all the money. It was legitimate charges, right? But a lot of banks don't want to—

there were probably some college kids, I bet.

It was some guys, they wanted to see that, that porn star. It looks like Sam Allen.

And they risked their job for this?

I don't know if they got fired or not. I never found—

man, I would fire you so fast if you went to go to some strip joint and spent 50 G's at the strip club. Yeah, I don't care who you think you are.

3 days?

No, I don't care.

No, but I'm just saying, that's why a lot of banks don't want that. Like, you know, okay, want those kind of business.

That makes sense.

CBD, I don't understand CBD because you You walk into the grocery store, you can get it. You walk in Walmart, probably has it.

So how come CVS has— there's got to be one of these big banks, unless they're what, they're able to filter out the CBD transactions at the point of sale.

They just look at it and they go, okay, CVS sells CBD, so what? They do $5 billion a year, they probably sell a million dollars worth of CBD, we don't care. That's what it is. Or they— or you look at gas stations.

So then that's super like— what's the word I'm looking for?

Well, it's not their main product.

It's bias.

Well, they look at it as it's not the main product. So when you're opening a store and it's that way, I understand store, then that's the main product of the store, and then that becomes the focus.

This is a good podcast. Sounds like a good podcast to talk about.

Okay, good podcast. And then, you know, make sure you set up your right legal entity, you go to a bank, you have— and the bank can offer you the service.

Get yours. Well, right, so the steps, obviously, if you don't know and you're a startup: number 1, do the research, find— make sure you find the name and that there's not 100 different companies already with the same name, right?

Name is important.

Number 2, go get your free EIN.

Yeah, but also don't stress on the— you know, maybe sometimes if you have a riskier type business, pick a generic corporate name and then file for a DBA.

Yeah, you don't have to necessarily jump right into the LLC or, or a C-Corp. Well, you could do an S-Corp. No, but what I'm saying, you don't need to do that right away though. You could just do a DBA, do a business as, right? Use your social, single-member LLC, or a single-member. That's what I went with. That's a very easy— that's the best way of going away about it because small business Yeah, go get your EIN number from the feds. It's free.

Don't—

it's free. It's free.

Don't pay $300 like a friend of ours got ripped. Somebody sent him a text message, right? Cost him $350 to get an EIN number.

I looked— I couldn't believe that that was—

I—

anyway, a guy we know.

Yeah, I thought he was mad after he figured it out.

He said, well, I'll never happen again. I was like, well, that's, you know, that's good to know. But yeah, so go get your EIN and then, and then go to your bank, set up a business banking account. It doesn't have to be your bank, you know, because you got to be— do some research on that because the fees on the bank, the minimum balances, etc., etc., they're going to be crucial to your business when you're first starting out.

Get a business credit card too if possible, you know what I mean?

Try to, you know, establish that. Hopefully, you know, yeah, you can establish that can happen and then, and then do all the other things that we've already got to get a merchant account.

And when you— same thing with the bank and the merchant account, make sure you can get the technology you need, they work with your business type, right? You know, and all of those.

You don't have to use your bank for a merchant account, right?

You could do not use your bank.

I would say do not, you especially at PNC. I'm sure, I will shoot shots at PNC all day, every day.

Now banks?

I've been banking with them for over 10 years and they still don't offer me nothing.

No, but banks, the problem with banks is they don't know all the little, I don't wanna call 'em tricks. Like you go to your accountant to do taxes, you come to Allen for your merchant account because I'm gonna help you. Like recently I was helping a guy today that has a medical lab. And when they showed me the merchant statements on the Zoom call, they only showed them to me, the guy wouldn't send them. I noticed on there they were not getting medical interchange, and they were through their bank, and I was like, you're overpaying interchange. And the guy goes, well, why do you care? Don't you make money from that? I go, no, we don't make money from interchange. So I was explaining to him, I said, you're paying like 40 to 50 basis points higher because you're on a retail business interchange versus a medical interchange. Change and you're a medical lab. So because you're a medical lab, you should get the medical, you know, doctors, same thing like the doctor's office get, get the correct interchange levels. How—

so how many times— this is just random and we got to wrap this up, but how many times do you think you do that and then they just go back to their current merchant provider and then they get their—

I've had people where I explain that to them They go to their bank and their bank goes, that guy doesn't know what he's talking about. Oh, and then they come back to me and then I show it to them. I go, you can— I said, if you don't believe me, here I go, I'll screen share with them. I showed this guy today, I said, here, go to Visa, um, interchange fees, Google it, pull up the chart, you'll see that there's an interchange category for medical. And the guy was like, yeah, you're right. My bank is wrong because I was like the third meeting I had with them, right? So hopefully they're going to switch. So that's the story. You know, we're a wealth of knowledge.

Hit up Allen if you need a merchant account. Follow B2B Vault, the Payment Technology Podcast, at Twitter, Facebook, Instagram, TikTok. LinkedIn. And don't forget to subscribe to the channel on YouTube at B2B Vault Podcast. Yeah, we got our new handle on there. Um, got the followers are going up. Smash the subscribe button for your boy Jay, please, for the one time, please. Uh, yeah, anything else, you can find us on every digital streaming platform you can imagine. If we're not there, let us know. Uh, head over to b2bvault.info. The site's a— I don't even know what it looks like right now. It's under construction. I should have like a just— I'm— that's what I'll do.

I'm gonna launch a new site soon.

Yeah, I'm gonna put a just a bulldozer over there. Um, other than that, you know, we're heading over to, uh, the Broward and Beyond. Broward and Beyond tomorrow. So, uh, yeah, there's that. And then we'll be heading over to SEAA. So over the next couple of weeks If you notice some spotty posting or whatever, it's because we're busy and that we've got a lot of stuff going on.

We got going to industry convention. Yeah, learn a lot, gain knowledge, meet new vendors, stuff.

Knowledge is key.

So yeah, add some more services to the bucket.

You could follow him @AllenKopelman on Twitter. @AllenKopelman, that's his name. I don't need to spell it for you, you can spell it out. Mine is @jrowings, not Owens, oh, wings like bird. So yeah, man, um, that's all I got.

That's it. Peace out. Carpe diem.

Peace, everybody.

Have a great day. If you're in Florida, stay dry. Be careful. Okay.