Payment Trends May 2024 | FED Now | Cannabis Rescheduling | B2B Vault - The Biz To Biz Podcast | Episode 246

You are now watching the Biz to Biz podcast with Allen and Justin. Yo, what's up everybody? It's Justin live from B2B Vault, the Biz to Biz podcast sponsored by Nationwide Payment Systems, hosted by this guy, the Johnny Bench of payment processing himself, Allen Kopelman. And in today's podcast, we'll be discussing some payment trends for May of 2024. Today's date is Wednesday, May 29th, 2024, approximately 2:28 PM. It's not 2:28. 12:28. Sorry, a lot of twos in there. Yeah. Uh, anyway, how you doing today, man?

I'm doing good. Had a shortened week. Memorial Day.

Memorial Day was Monday.

Yeah, yeah, Monday. We had a little extra day off there, so that was kind of nice.

Mhm.

And, uh, finishing, finishing up month 5. It's kind of crazy. Time's flying this year. I don't know why. So how's your week going?

It's going great. Yeah.

All right.

Yeah. Nothing spectacular anyway, but yeah, no, it's going fantastic.

So pick a story, dive in, or you want to talk about the new one that I popped in?

Yeah, you go ahead and talk about that if you want to.

So California. It came, you know, they've made all these crazy laws over the last couple years. So one of them was where certain businesses, restaurants, had to pay for employees' health insurance. So a lot of restaurants started adding a 4%, like, line item fee onto, like, all their bills. So you would get your bill, let's say it was $100, you'd have your tax, whatever that is, and then you'd get this 4% charge for insurance. Then COVID came along, and, you know, the whole dual pricing, cash discount, merchants started, you know, adding another fee onto the bill. And then with all the pressure with minimum wage, they'd have like the, you know, now their minimum wage is $20. So even before that, it was high, and a lot of restaurants, in order to keep staff, started to do like a 20% automatic gratuity. So now you get your bill, you've got sales tax, 4% insurance tax, a 20% gratuity, and then they're whacking you with another 3, 4% for the credit card processing or service charge. So altogether you got 20, like 35% added to your bill, which is crazy. Okay, so now they passed this law. They don't want the restaurants to do that anymore. So they want the, they want the restaurants to like take all those fees that they have that they basically created right? And Cal— they created most of this stuff, forced it, right? They want them to bundle that and then add it on to the food items. So if you go in and you got like a $10 item, and then they're going to add whatever, 40%, they were— instead of line— lining it all out, right? They're going to have to add like 40% to that, 35, 40% to that, to those things, and jack up all their menu prices. So if you got a— I mean, I saw out there, like, you go to McDonald's and, uh, basically like a burger, a drink, and fries is anywhere from like $18 to $25 depending on where you go.

I mean, even, even about the same down here.

Yeah. What, really?

I don't—

I know that I just heard like Wendy's is like $15, $16.

I mean, yeah, McDonald's is the same shit.

And then you see all these restaurants closing up left and right. You know, they're just going out of, you know, every day there's a new, a new a new list. I saw BurgerFi closing up, Red Lobster closing up.

BurgerFi's closing?

They closed like already like 20 restaurants.

I mean, I never was a big fan of their burger in the first place, but I don't eat meat.

Well, they have some kind of black bean—

No, they have a veggie burger.

Yeah, yeah, veggie burger.

Just the brioche bread bun is just It's not supposed to be on a burger.

You need a regular— like a— what kind of bun you like, a challah bun, or a— or you like a regular? It's like an egg bread.

I want a regular white bun.

A regular white bun.

It's just—

that's a burger.

Why does it have to be fucking fancy?

It doesn't.

It's not supposed to be. You grill it on a grill. And you put it on a bun.

Yeah. And you eat it. And also BurgerFi's adding chicken now. Oh Lord.

Because it's, they might as well just close all their stores.

So.

That doesn't make any sense. The business is BurgerFi, not Chicken BurgerFi, whatever. Good luck to you guys.

But I don't know how that.

Maybe if he stops serving the brioche buns and just did a regular bun and stopped trying to make a burger as like this fancy, uh, Michelin star meal. Bro, get out of here. It's ground beef.

Which burger? What burger place do you like?

I don't eat anything. I don't—

okay, well, you know, if one of your kids, what's their go-to burger?

They don't like— they like when I make burgers. Otherwise, if they go to If they go to eat, like they're having a chicken sandwich.

Okay.

They want, yeah, chicken sandwich. The original crispy chicken sandwich from McDonald's and they can't even get that anymore, I guess. It's like something else now. It's like a buttermilk battered, like bro, this is what's wrong with fast food. Like y'all have made it to the point where You're trying to compete with regular restaurants, and the point of going to McDonald's was quick and easy.

Yeah, simple, quick, and easy.

Yeah, stick to the chicken nuggets, french fries, and burgers. I don't— it's— yeah, it's funny. Stay in your lane.

It's like they all added on like salad. Everybody's got to have salad now.

Why would you be, someone going to McDonald's to buy a salad?

Yeah.

Bro, what's wrong with you?

I mean, if I'm on a road trip, I get off the highway and I have to eat and there's only a few places.

I'm not picking McDonald's, sorry.

Okay. That's not my first choice.

I'm stubborn that way and I will not eat for sure. Absolutely. The only— you'll catch me on a weird or whatever type of day is if— and this is me really, I have to be really like close to the edge of being past hangry and like there's nothing else. And I would go eat a Burger King Whopper. Impossible Whopper.

Impossible Whopper. Okay, so how does everybody— let us know, what do you think about, you know, what's going on with the fast food and the prices? And what do you think about this bundled pricing thing, like this all this bundle thing? A lot of the restaurateurs think it's going to chase people away, but I mean, I don't know, probably not.

Probably not. It's California. Yeah, we'll have a lot of money to spend in California. So I don't know. Yeah.

It's just gonna make the menu prices higher. If you got a, you know, you got a $50 item, now it's gonna be like $70, $65, $70. You know, they're just gonna raise all the prices and then the restaurants will have to figure it out on the backend what everything goes for, which is gonna be, a whole new accounting, and they'll just say whatever they want to say.

And then, well, then the price is going to be the same as what it was before they did all these fees and all this other— people in charge just want to just stick their fingers in the stuff that they have no idea what's going on.

Well, I think the government, when they stick their fingers inside of, you know, the public, you know, public, you know, regular, you owned businesses, right? The businesses have to react to that. They're not gonna just go, okay, well, we'll just leave the price the same and absorb all that. They're not making tons of profit. So they have to just add it all in. Yeah. All right, the next one up is let's talk about this, the cannabis rescheduling, because everybody's really confused about that.

Yes, that's the, uh, the elephant in the room right now for sure. I mean, real quick, uh, I spoke on it last week or whatever. Rescheduling is not really good, um, okay? Like, it's a plant. We want it descheduled, right? You don't want your cannabis scheduled in any list. You want it off the list.

Period.

Um, this— I was reading actually yesterday about how the descheduling can, can push back, um, like the feds, the government itself, for 50 years. This could take—

yeah, it's crazy because now they're gonna have to do testing and all kinds of stuff. And they still don't address like this, the SAFER Banking Act, which gives employees of cannabis businesses the way to get banking. And they don't address the Safe Banking Act. And the other thing this could actually do, it could destroy the cannabis business as it is today and push it into where the pharmacies— you can walk into Publix, right, or CVS and get your marijuana there.

Yeah, and then they'll be able to charge you $5,000 for an eighth because that's the price. And that's what the government regulated.

It's kind of like, it's kind of like this new thing would put, give the government more power over the cannabis industry. That's the scary part.

It doesn't make sense at all. There's a few things, I mean, like, you know, we was talking about how, you know, this is just a, this is good for the pharmaceutical company, the big pharma. They're gonna push on for this, of course. They're probably the ones that are championing this. But to all the people who are consuming, if it gets rescheduled, that does not mean that it's now legal throughout the United States. That does not mean you can grow it, you can sell it to your aunts and uncles, none of that shit. Actually, it's on the contrary, you know, it's still very illegal. This could potentially have a lot of drawback to it.

Yeah, I think the main drawback is what we talked, you know, that the cannabis stores now could become obsolete.

Well, yeah, in a sense.

Yeah.

Yeah. I mean, for the company, for the states that just have, you know, medical programs like down here in Florida, I think it could be really bad. I think that it could really— like, it's, it's just going to set everyone back mad years, and it's, it's not advancing or helping, um, the cannabis business community in any way.

It's more or less, I think, just like they put it out there just to have something to say about cannabis.

For the election.

For the election.

Yeah, I agree 1,000%. And you know, don't be fooled, man. Do some research on your own. But yeah, cannabis rescheduling is not a big deal alone. That could take up to 5 years just to get done. Um, so don't hold your breath.

Exactly.

What you got up now, man?

Um, let's talk about the Earned Wage— correct— the Earned Wage Access. So a lot of people are confused about what this is. So to simply put it, is Earned Wage Access— if it's offered by a payroll company and they charge you a flat fee to access your wages, that's good. If it's a third-party company, it's probably not good, because if you're even a 1099, or you're an employee, they might not be looking out for your best interest in the way of taxes. And also there could be fees. So I'll explain the earned wage. Earned wage is, let's say you make $300 a day at your job, whatever, you're on hourly and you make whatever, $300 a day, you work 3 days, you already have have banked $900 in payroll, but you work somewhere where they pay you every 2 weeks, and you need some of that money now, you need $500. So if you work with a payroll company, most of the time they're gonna charge you, you know, somewhere around $1.50 to $2, and then they'll transfer the money to your bank account. Boom. But there have been some companies, and I just saw this morning South Carolina passed a law about stopping these companies from charging a percentage and treating it like it's a payday loan. It's not a payday loan, it's your earned wages.

Yeah, that's messed up.

So giving you earned wage access, similar to how like Uber and, you know, Lyft and those kind of companies, right? That's how you get paid through the wages that you earn. And then you take, you know, that money and put it transfer it from their app to your bank account. This is the same kind of thing. Employers can offer this to their employees because they bank a certain amount of money with the, with the payroll company, or they just get it out of their bank account each day and then transfer it to the employees. Employees can get their money in a day or two, and that way, boom, if they had it on if they were banked, like they had some money on reserve there, then the employees could get money right away. Nice. Sent right onto a debit card or to their bank account. So there was a lot of people at the end of the year when they're filing their taxes were using these third-party companies to get their tips. And then they were a little amiss because they found out that those companies were not deducting tax. And then some of the companies were charging a percentage and then that was causing a problem because then it's not earned wage, it's actually like a payday loan. And they weren't— they were advertising it as earned wage.

Same company's doing that.

Yeah, well, it's a big bait and switch. They're calling it one thing but doing something else. So that's something you should be aware of. I do think it's going to become very popular in the next year or two. Where businesses are going to have to start offering that to their employees, especially if you pay every 2 weeks. You know, people don't want to wait 2 weeks to get their money. And then, well, you know, FedNow is constantly in the news. FedNow, Justin's favorite.

I just think it's hilarious. The guy that was the— he's like the chief director of marketing or whatever, um, for FedNow was saying how, yeah, we're in a whole bunch of banks, 800 or less. There's 10,000s of banks in America, you know.

Yeah, we have more banks than any other country.

Yeah, no one's using this FedNow. Sorry.

And then today a story came out about Visa is going to offer pay by bank. They rolled it out in Europe and it's doing okay over there. I mean, one of the things here is the, you know, pay by bank thing never really caught on because in the U.S. everybody's using credit cards, debit cards, which is mostly unsecured credit except for debit cards. So in, in Europe, you know, that it's much harder to get a credit card in Europe, right? It's much harder to get a credit card in Australia, in South America, all these countries. Everybody there, you know, deals on a cash basis. Most people don't have credit cards and they use whatever local forms of payment, which is similar to debit. Even like Puerto Rico has their own thing called ATH. It's in all the islands, all the islands like St. Thomas and Bahamas and all that, all use this ATH network. Basically it's just debit, and that's like the big— that's like their major form of payment. It's not that easy to get credit cards in other countries, so the, you know and an RTP, real-time payment network. All the banks have had that for quite a few years. Yeah. So people aren't rushing to this FedNow. And even people were making these videos, oh, one day you're going to walk into a store and you're going to have to get FedNow. You have to pay with FedNow and you're going to have a FedNow app on your phone. Like, that's not— I told people that wasn't happening. It was like a big rumor. Everybody, all these people were making TikToks about it.

No, it was going down.

Like the Fed now is going to take over all our money.

That was last year, right?

Yeah. And it was crazy. And now it's fizzled and now it's like fizzled out to the side. And then now they're getting more competitors coming into their— Visa is going to compete with them.

Never happening.

No, I don't know how popular the Visa thing will be because the bank to bank, the bank to bank payment is more like, let's say I bank at Truist and you bank at Truist, right? And we're doing business together. Let's say I manufacture a product. You're buying it from me. I send you an invoice. If, if they have bank-to-bank payment, you could just basically go in there, hit a button, send me a message. I accept. Boom. And you transfer me $50,000. Right. That doesn't— that doesn't— that's not like feasible in the US because we have 10,000 banks. It's like everybody banks.

Well, on top of that, you know, what about the taxes?

Well, it'd all be recorded.

I'm just saying, it sounds like an accounting nightmare.

Yeah, it would be an accounting nightmare because now what, the bank's gotta send out a 1099 'cause they're the ones transferring the money?

Sounds about right.

So somebody's, you know, especially with the new laws Biden put on all the other payment networks, right? That PayPal, Venmo, Cash App have to send 1099s. How are the banks going to deal with that?

So that's—

yeah, I don't know, that's a whole nother ball game.

Let us know your thoughts on the FedNow thing. Um, definitely would like to hear some other people chime in.

Yeah, let's hear— let's hear some, some comments on FedNow.

Uh, buy now pay later, I was just reading about this, that they ended up, um, passing Well, they're leaning towards going— they're passing, you know, the whatever bill, law, um, that buy now pay later should be looked at as the same way as a credit card.

Yes.

But some, like these bigger companies— Affirm, not so much, because I— they already do it like that, right?

Well, Affirm now has that thing where they issue you a card, right? Virtual.

That's what I'm saying. So Affirm's kind of ahead of the when it comes to that. But Klarna, I think, was the one. Yeah, it was Klarna that was in the article stating how credit cards and this buy now pay later is fundamentally very different. And I don't really see the difference. What is— what would be the difference? What are their— what's their— what are they arguing that's so different?

Because they don't want to change their business model. That's, that's what they're arguing.

But it doesn't really affect their business model, does it?

Sure, because now they're going to make their decision based on credit, and they're gonna have to report to the credit agencies, and they might turn more people down.

Everybody the— well, not everybody, because for whatever reason, I don't know, it said that I had a phone number, so I can't get a Klarna account. For whatever reason.

That's weird.

So I don't care, no big deal. Um, but yeah, I don't—

well, it just changes the whole rules. Like, now you got to check people's credit, now you got to report on their credit. Well, if that's not it, well, just don't.

I mean, they're giving them— they're pretty much approving everyone in any way, so what does it check the credit, but still you could still approve the account. Like, I don't understand the— I guess they don't have that bill because now they'll have it in there, like, on your conscious, like, oh no, uh, Allen from Florida, he really can't afford this $1,000 pair of Gucci slides, so should we give it to him? What are they going to have, like a Magic 8-Ball shaker?

I don't know. That's how they do it now. I'm sure that's why they don't pull credit on people.

That's what's the difference. That's what I don't understand.

That's why those comp— well, they're not reporting.

So, well, I mean, I— the one thing I do agree with it is about them reporting to the credit agencies about— I mean, if you're making payments towards something and you— it's essentially it's a loan, right?

Yeah, it's a loan.

I mean, you're making payments for it, so you should be, you know marked as good towards your credit.

So yeah, I was reading like a whole thing where like now there, there are some companies or your bank or there's a way like where like if you pay rent, you can have that reported on your credit.

I've been trying to do that shit for forever and it does.

No. So I was reading about a new company that says like, oh, if you pay your rent through their platform, which is not up yet.

Exactly. And the other one is the same way that they're going to report it. You have to attach your bank account to it. I'm like, no, I'm not doing that, bro. What? Because they're like, well, how will we know? I'm not evicted. I don't know how you will know that I'm paying my rent, but like, what, you need to see the transaction?

Yeah, supposedly it's going to help people get loans for houses and stuff like that if you're reporting. I know when I was buying my house, I was renting for a couple of years and I had to show them like all my bank statements and highlight all the rent payments. It was ridiculous. I was like, well, I can only get 13 months. So they were like, okay, get the 13 months. And I had to highlight all my rent payments on there to show them I paid my rent on time.

Okay, that's fine.

So that's what the mortgage company wanted. That's crazy.

I mean, a mortgage company wants $5,000 a month for, for a house right now.

So it's great. The interest rates are crazy. One thing is my home insurance went down for the first time, a few hundred bucks. So there you go. Thank goodness for that. But, uh, yeah, the Consumer Protection— Consumer Financial Protection Bureau, they're saying buy now pay later is like credit cards and these companies need to make changes. So It's going to happen.

Sounds about right.

And then so let's talk about this Visa MasterCard lawsuit. So this is the postcard that they send out. And if you get one of these postcards, this is, this is where you want to go file. And they just put a 90-day extension, extension on it. So now you still have 90 days if you don't know your merchant number. You can just put in your federal tax ID number and register your business. So you should definitely do that. There you go. You might get money, might not get any money, but if you don't do it, you won't get paid. And don't use any of the attorney sites because they're going to take 10, 20% or more of your money.

Justice Department is still suing Ticketmaster and Live Nation. Price fixing.

It seems to be a hot topic.

It is.

Everybody's complaining about the junk fees. Everybody's complaining about this surge pricing thing that they do. So when they see like, oh, tickets go on sale at 10 AM, when they see, let's say it's a 10,000-seat place, and they see 40,000, 50,000 people to get on there, the problem is they're jacking the ticket prices, right? Insane. No, yeah, no, it's crazy. Making tickets, you know, $1,000.

I mean, like I said, we were talking earlier, like a lot of that is the artist, you know, the artist has built that into the, if the venue only holds 10,000 as opposed to an arena at Lone Depot Park.

What the collusion is, is they're saying now these artists are signed with Ticketmaster, they're signed with Live Nation. So it's like a partnership.

Yeah.

And they're all in collusion to drive up the prices.

Sounds about right to me. No, I'm just saying, not that it's right to people who want to go to the concert. I mean, $5,000— uh, $500 to go see an artist is just, you know, kind of—

so like, I'd listen to— like, there's Kid Rock, right? He says he controls his prices and he keeps it reasonable and he doesn't, you know, and that's it. That's what he does, keeps the prices reasonable for his shows. All right, I guess he figures he has enough money. Well, whatever. Well, I mean, some people take that approach.

Yeah, no, I mean, people— that's a good person if he's really doing that. Good for him, for sure. Well, most, most more artists need to follow suit. Anyway, that's payment trends for May 2024. If you got any, uh, you want to, you know, give us your two cents on anything, chime in on some of the subjects, hear back from you, man.

Chime in, let's hear it.

All right, that's the pod.

Peace out. Carpe diem.