Payment Trends September 2023 | Biz To Biz Podcast

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 Chuck Daly of payment processing himself, Allen Kopelman. And we'll be providing you educational information about fintech, small business payment processing, and the technology businesses are using in the world today. And in today's podcast, it'll be the, uh, payment trends for September 2023. A lot of stuff in the news, um, lots of stuff in the news to go over. I really, um, so yeah, man, it's that time of month. So you know what we do around this time? We do a little wrap-up of all the stuff that we thought was, uh, interesting or intriguing, important, uh, all of the above. So yeah, man, how you doing, sir?

I'm doing good, you know. Busy, busy week. Fast and slow, but it was busy for me.

So indeed.

How are you doing?

I'm great.

All right, that's cool. Yep, got some good projects in the works, so that's exciting.

So yeah, ready?

We're ready to jump into it.

I, I mean, yeah, I got nothing.

All right, so, you know, the, you know, the Senate this time— usually it's the House, you know, and I don't know why each— everybody's got to have their own cannabis bill. So now they have this bill, the SAFER, the Secure and Fair Enforcement Regulation Banking Act, otherwise referred to the SAFER bill. And they, you know, move through the Senate on— through a, uh, committee. And, you know, news of that, cannabis stocks went up 1 to 3% the last couple of days. But now, you know, people need to understand that bill needs to go to the floor and they got to vote on it on the Senate floor. Then they got to send it to the House and the House has to vote on it. On the House floor, then it goes to the president who has to sign it into law.

Right. So I don't know, like any other bill.

Right. But I'm just saying, I don't know why everybody gets excited when these committees vote because they tend to vote just to make everybody happy. And then that's about where it usually stops.

I don't know. I think people are trying to be optimistic.

Yeah, I get it.

Right.

Yeah. No, people are being optimistic. So it's a big, big buzz in the news. Is, is Congress going to finally pass this? I mean, I just can't see why they don't. I mean, here we have a huge federal deficit and they could be collecting tax from all these business owners, of which they're collecting tax from some of them, but not all of them. So it's a big problem and banking is a big issue. For these, uh, customers, for these businesses. Plus they don't have the ability to take credit cards.

That sucks. Yeah, yeah.

So, you know, they're just perpetuating the issue. And then the other, you know, crazy thing in the news is, you know, Square, you know, had a huge outage that lasted almost 2 days where some businesses who had Square Many of them were unable to process credit cards. Yeah.

I know a person that had Square and it didn't affect them.

Yeah. It wasn't, it wasn't like system-wide. It was—

Yeah. A lot of people, I was, I don't know. Oh yeah. It affected—

I don't know.

It must've been very related to a certain area or something.

Yeah. It affected like the point of sale system, mostly like their point of sale in restaurants. And that stuff. But people, some people were able to process transactions online and some people couldn't. They were having, the system was going on and off, right? Now they've, and then, you know, also they've been seeing like more competition because they do have more competition coming into the market, you know, where you have more companies who are offering Square-like services and products and pricing, right? Right. So they saw a lot of pressure from that, and then they were also trying to—

what do you mean they saw pressure from what?

They saw pressure because they weren't like having us, you know, they were like, they were getting, gaining clients every month, right? And then all of a sudden, you know, now they, they've been flat, they've been flat and, and going down.

You're saying that's because of the competition?

Yeah, competition coming into the market. So competitors entering the market like Adyen and other PayFac companies, you know, there's, there's tons of them now where they offer specific, you know, there's a lot of companies that offer specific software for specific business types.

Right.

So as more of that comes into the market, you know, Square is going to lose they're going to lose customers. So they saw that they lost a lot of customers. Another thing they were trying to do was go after bigger clients, of which they saw that they were— when they were doing that, they signed people, but then there was margin compression because bigger clients are already used to like interchange pass-through pricing, which is a little more complicated.

Right.

Right. To understand where smaller businesses will pay the flat rate you know, to have a simpler, you know, understanding of what they're paying. And when they were going after those big companies, even though they were processing more dollars, it was bringing in less profit. And they, you know, so that had— they got more, you know, they got caught in margin compression. And then to top that off, for whatever reason, Jack Dorsey's coming back, you know, fired the CEO and some other people, and he's coming back.

They didn't fire— she resigned.

Oh, resigned. So, but he's coming back to run the company now.

Yeah.

And then they're going to try to have a more focused effort on certain verticals, according to the article and the story. And let's see, and also Elon Musk is in the news for doing all kinds of crazy stuff, but he's been in the news lately because He's trying to put up— he's, he's been going out to like several states getting, uh, money service licenses, and he wants to turn X into PayPal, like the next PayPal.

He said that?

Yeah, he wants for creators, for a way for creators to make money. So he's trying to come make X into a payment system. Okay, that's his next, uh, big push.

I mean, I didn't— I just heard that he's trying to set up payments, like in-app payments. That's all I know. That's all he's talking about, is setting up a way for people to send money to each other. That's what I thought it was.

Yeah, well, he's saying it's directed towards like the creator economy. Yeah, for creators.

He's always been saying Yeah, I'm just saying.

So now he's moving forward, getting more, more and more money service licenses. So he was able—

that's a good or a bad thing?

Well, he's— he wants to be a major player. So if you're going to be a processor, you have to have a money service license in every state. So like the credit card processing—

I'm saying, like, why is this in the— why is this a big deal?

Because I guess PayPal doesn't like it and his competitors Facebook doesn't like it. So it's a big story.

Why doesn't PayPal like it?

I guess because he used to work at PayPal, or he part was part of PayPal at some time. So that's, you know, so it's, you know, it's in this, it's in the news about what they're, what they're doing every time he goes out and gets more licenses.

No, I know, I've been seeing it. I'm just wondering why this is a big deal. Why is it a bad thing?

It's another payment company. That's it. It's going to be in the news. And then Chase Bank came out, and for whatever reason, all of a sudden they're saying that they're not going to allow any crypto transactions or crypto companies to use their bank in the EU. And it's also rumored that they're going to crack down on it in the US. So that's been in the news. And then to top that off, you know, Binance, they shut down their whole payment crypto service where people could pay with crypto. Yeah, they shut the whole thing down.

I never used it.

I don't know. No, I never used it either. I didn't even know they had one, but it closed it all down. And, uh, you know, and then, then the other big story is the FTC going after Amazon, which I don't even understand this. They're saying you're on the Amazon website, you're making a purchase on Amazon, and then they have you check out using Amazon, you know, using their system. So now the FTC is saying that it's a monopoly.

How can it be a monopoly when there's like 17,000 different ways to pay?

I don't under— I don't know. I'm just telling you what's in the news. They're just saying it's a monopoly. Amazon Says they're going to fight it, that they let people pay with whatever credit card they want.

That's what I'm saying.

Like, they don't know why the FTC is coming after them because, what, after you sign up for Amazon Pay, it's always just going to show Amazon Pay?

What did— that doesn't make any sense.

And I guess they don't like it that people are also signing up for it and then putting it on their websites that aren't related to Amazon, and then you can pay with Amazon Pay on like justinst-shirts.com, but it's being shipped from Amazon. No, it's being shipped from Justin, but you're enabling people to pay with their Amazon.

In order to take Amazon Pay, you had to be like a fulfillment— you have to be able— you connected to Amazon.

Well, it's an extra service now that they have.

It's always been that way.

No, I'm saying it's an extra payment option that they're let— like they made a deal with Shopify to allow Amazon Pay on Shopify websites.

Yeah, because most of the time their products are shipping from an Amazon fulfillment center.

Well, I don't know if what rules go with that, but whatever.

So now that I'm just saying, that's what I was— I, that's how I thought it worked. I don't know, don't quote me.

So whatever, the FTC, no matter what it is, the FTC's like investigating it and they're going to court.

They're going to lose.

Yeah, I don't see how they can go after Amazon with that. So how they can say it's a monopoly And then, you know, another thing that's been in the news is this like Pays, which is a service that's connected to Zelle, which was going to be where merchants could put this Pays button on their website. Pays. We signed up to do— to, um, to be— get some test sites for them, but now they're going to delay it until maybe the second quarter of 2024. Because they did some tests. I guess maybe they ran into some problems, but it's a really unique way to check out. So you have your same merchant account that you have now, but then you add this extra button. What the extra button does, it connects— if your bank is part of the Pays network, which a lot of bank— most banks are part of the Zelle network, so they're all part of that network. And if you're part of that and you hit the button to pay with that You put in your, you know, you, you do the one, a one-time like sign-up deal, and then they send you a text. But then when you're going to more websites with Pays, you're able to do a quick checkout because you just hit the button, pick which card you want to pay with, boom, they send you a code, you put the code in, and the transaction is done. Kind of like how they have it on Shopify. Um, so if you buy from a merchant on Shopify, they have like that Shop Pay, sort of does the same thing. Oh, sends you a text because it—

that's cool though.

And that's going to cut down on like fraud, friendly fraud. People are not going to be able to say, I wasn't there, right? I didn't make that purchase. I didn't get my stuff. You know, there— it's going to be much harder to do a chargeback.

That's good.

So that was, you know, and I think that, you know, all the credit card processors should, should adopt that. The other thing that's, that's crazy in the news is what's going on with the Credit Card Competition Act. Justin knows this is like one thing that I just, I just, just can't— I just can't wrap my head around, like, the whole thing. I see these Senator— this guy, Senator Durbin, he's been on this thing since 2010, and it's all BS. But I am happy that Visa and MasterCard came out on Wednesday, went to the Senate and made a speech and made their point as to why they're not the problem. Okay, so I'm happy that they finally did that. And also we have this other group which is the Electronic Payments Coalition, and they were actually outside Congress, and they've been up there in Washington, D.C. now for like the last couple of weeks. They got a couple of food trucks handing out donuts and coffee with the message, "Keep your hands off our rewards," getting consumers and businesses to oppose this Credit Card Competition Act. In fact, I got into a discussion with a guy on Facebook the other day, and then he removed all his all of his, um, stuff that he wrote. And I told him, call me on the phone, let's have a phone conversation. Because I told him, I said, you don't know what you're talking about. And when I explained what was— what the underlying things of the— of what was going on, he was like, oh, you're right. And, and he goes, I'm looking at this the wrong way. Because you can go and look at— I've told everybody, I've posted the link to this, we'll post the link again. You need to let your senators know you don't want them to pass this. They passed laws like this in Canada. Everybody has to pay with debit now. Getting a credit card up there or getting any kind of credit is next to impossible. In Europe, the same thing happened. Australia, the same thing happened. Where— and then the cost of banking is driven up also. So then you're paying higher interest rates on loans, which we're already paying high enough interest rates, with rumors that the Fed is going to do 2 to 4 more raises, and that's just, uh, I don't know, that's not good. I hope that that does not happen. But like, buy now pay later was born in Australia and now it's going big into Europe. And the reason it was born in Australia was, is that consumers in Australia, like, whatever, the middle class, middle of the road young people, you know, basic consumers could not get credit cards. And then if they wanted to buy something, right, they wanted to buy something. You've used Buy Now Pay Later before, right? A bunch of times.

I have no choice.

Okay. So that's the problem. So because you can't get credit, people can't get credit. Now you have this Buy Now Pay Later.

I can't afford to buy it. I can't afford to buy it. So that's why I got no choice but to use Buy Now Pay Later.

But I'm saying is, as opposed to people can't get enough credit.

Oh, I can't even imagine.

Yeah, right. So you can't get credit in Australia, so you're forced to use this buy now, pay later. These buy now, pay later companies are losing millions, if not billions of dollars because they don't run credit on people. Now it's building into going into Europe because Europe did interchange reform, you know, to lower interchange. So now people in Europe can't get credit, don't have credit cards, have to use debit. Buy Now Pay Later is going in there having all kinds of problems, especially with businesses. Businesses in Australia, businesses in the EU, they have to start offering their customers— let's say I was selling these microphones and somebody needed to buy some but they didn't have a credit card, they They have to use buy now, pay later to get that, because there's no other— what— no other form of credit for them to get. And that's why we don't want this Credit Card Competition Act, because Durbin has this idea that there's this third-party fantasy network out there which doesn't exist. This is just going to open the door for companies like Amazon, Walmart, you know, Winn-Dixie, the bigger— you you know, Targets, right, these big companies to put up, uh, you know, some kind of like third-party network. And then there's going to be no consumer protection. You're not going to be able to do a chargeback. There's going to be all kinds of problems associated with that. No more rewards, no more cash back. The banks are going to go, oh, you got a $5,000 credit limit, now it's $2,000. When you get it past $2,000, now it's $1,000. And they're, you know, they're going to eliminate, um, people from getting credit the same way they have in Canada, Australia, and Europe. So I don't even understand how they can, you know, the, uh, the people in the Senate and the House can even look at this. And you already have the—

can I, can I, can I take, like, looking at it on the other side of the spectrum?

Yeah.

Because the people who that this is really affecting, we don't care. Sure, you gotta look at it, but you gotta really think because it's not affecting us anyway. It will— we're not, we're not losing anything. We're not losing, we're not losing any rewards. We're not getting any credit.

Yeah, but the Ripple— I'm saying the Reddit—

yeah, the, the ripple effect is, it's already here. So like, it's gonna go opposite. It's going to go to the businesses are going to see the, the, the effect first. And the consumers that are who don't get the rewards because they're not credit using credit cards, they're not going to these establishments, we don't care. People, so that's— I'm, I'm trying to tell you, you just said the middle class is here, right? Which there is no such thing as middle class, okay? Because either you're rich or you're broke. Because I mean, I'm supposedly middle class, and we can go into this, and I don't want to get into a whole thing about it. Exactly. So I'm just saying, like, it— I think people don't— what I'm trying to get at, people don't give a shit because it doesn't affect us, right?

But the problem is, is that the ripple effect of what it's going to cause is going to cause prices to go up. Then it's going to cause banking— the cost of banking to go up. It's going to cost—

everything that you're saying is affecting a percentage of people.

Yeah, but it's not a percentage.

It's a very small group of people.

Okay, Justin, that all trickles down into higher costs for everything because now already, right? That's what I'm saying. So you're looking at Visa and MasterCard, pointing at them over 2% of what 2 or 2 Too many.

I guess what I'm trying to say is I don't, I don't use it. I don't have a credit card to go to a grocery store.

But what I'm trying to compare it to is you got Visa, MasterCard cost the average business, let's say 2 to 2.5%. Okay. Whatever. I'm just saying that's what the average cost is. Of course, inflation is at like 13, 14%. So what are you going to do? You're going to regulate credit cards? What are you doing about inflation? I mean, I could fix inflation tomorrow. Sure, I can. They just— all they need to do is say we're drilling for oil and start getting some oil out of the ground and drive the price and drive the price again. People don't realize the price of gas is not based on what's coming out of the ground now. It's what's coming out of the ground months from now. And the price of gas can go, go back down. And then the price of everything in the United States and the world Goes down. It's a known fact. I'm, I'm alive 63 years. I've seen the price of gas when it was 50 cents, and I've seen— and, and what— how that relates to consumer prices. And you see the price of gas, every time gas goes up, prices go up. It's simple. You need gas to get whatever it is you need. You need gas to go to work. You need gas You need gas to get food out of the ground. You need gas to get that food once it's out of the ground to the grocery store, to the distributor, to the grocery store. You need gas to go to the grocery store, get home, gas, gas, gas, gas, gas. So unless all of a sudden, you know, somebody has some magic and turns every car into an electric car tomorrow, you need gas to get everything what you need. So if the price of gas is going to be— we're going up to $4 again, we're headed there right now.

Cost me $50 to fill a gas tank up. I don't even care what the price is. I don't even look. It doesn't— if— I mean, what am I going to say? Not— I, I'm not filling up my gas tank.

No, I'm not saying that. What I'm saying is, is, is that ripple effect on the price of gas rolls through the whole—

rolls through the whole economy. Have to do with the credit because they're not addressing the They're not—

they're going, oh, the cost of goods is up because of Visa and MasterCard. No, the cost of goods is up is because of what you're doing. Rising interest rates from the Fed, the inflation at 13, 14%, the price of gas going through the roof, emptying the strategic reserves out. I mean, this is, this is, this is just an attack for everybody to take a look and go, oh, let's blame Visa and MasterCard for everything. Visa and MasterCard created the electronic payment system, make it faster for you to get in and out of a store, okay, move money around for, for, for business people and businesses. All right, now you're going to go attack the system because the government didn't create it. It's private business, right? They created a system that works, everybody's happy with. If so many people weren't happy with Visa and MasterCard, everybody's People have plastic and that's how they, that's how they, that's how it makes, that's how they pay for everything with plastic. You know, probably 90% of everything is paid with plastic and 10% is paid with, with cash. I don't know, I'm just saying that's the—

100% is paid with cash with me, sir.

Okay, but I'm just saying people have— it's, I'm just saying it's a— yeah, there are—

I mean, I, I just don't, I just can't really, I just don't like I'm just saying, the percentage of people that are in the, in the United States that go to the grocery store and buy groceries with credit card, almost probably with a credit card or debit card.

No, I'm not checking on credit. On credit, a lot. I saw where buy now pay later right now is being accepted at grocery stores. Yeah, I mean, and it's a pain. That's not right. That's a problem. I'm talking—

I did— I asked a question. What is the percentage of Americans that go to the grocery store and put their grocery bill on a credit card? I'm not—

I'm probably 25 or 30%, maybe more, because people want the miles, the cash back, and the rewards. So they use it and then they pay their bill at the end of the month.

So that's why— you understand my point?

What?

The other 70% of people, we don't give a crap, dude.

Yeah, but I'm just saying that's not making the price of groceries go up. What's making the price of groceries go up is everything else that's going on in the economy. They're just pointing out to these, oh, here's two bad people, the CEO of Visa and the CEO of MasterCard. Let's take a baseball bat, beat these both these guys over the head. That's what they're doing. And they're saying, oh, forget about inflation and gas.

I mean, that's what the government does, Allen.

I know that. I'm trying to make a point that we're, we're look, we're pointing, they're trying to make a The government, they're not even educated on how everything works. So none of them probably could even pass a basic test if you said, oh, what is a— how do you do a transaction? There's plenty of competition. There's no third secret network that Dick Durbin has in his house that he's ready to hook up to the system. Right. It doesn't exist. If there was a company who had a third network, they would have appeared since 2010. That's my whole point. And all of this is an exercise to take away from what the— of the job that they're not doing. Can we agree on that?

Sure.

They're not addressing the core issues, but you know, I wrote a whole article about it. You can check it out on my LinkedIn.

Yes, it's on the website as well.

And it's on our website. I wrote an article. I explained the winners and the losers. The winners: Walmart, 7-Eleven, Target. Companies who promised when Dick Durbin did his first thing in 2010, oh, we're gonna lower prices, we're gonna give discounts to people who pay with debit. That never happened. Never happened. Now they're saying the same thing again. They're not gonna do it. They're not gonna lower their prices because this is this very small percentage of what they have to spend to get paid. It's a very small percentage, you know, of what it is.

I mean, you know, I mean, you know best. Allen knows everything there is to know about the Credit Card Act.

So, well, I'm just saying, I'm saying when you look at what I'm just saying, when you look at your expense sheet, right, if you're paying 2% for credit card processing, that's not the makeup you're paying. 98% goes to all other expenses on your expense centsheet. You're not, you're not, you're not getting— you know, these grocery stores and cars like— and stores like Target, these mega Walmart, they're paying like probably 1.2% for credit card processing. They have special deals with the banks and everything, so they're not getting whacked. And they're, you know, so what are they complaining about? They just want to pay nothing and they want to mess everybody up, you know, put everything— you know, small businesses are the ones that are going to get hurt. By this and the consumers. And if the small businesses get hurt, the consumers get hurt, and the bank— and then the banks are going to lose billions of dollars in revenue. If the banks lose billions of dollars, who can the banks— maybe the banks can't stay in business, and maybe it's a conspiracy theory and the government's going to take over all the banks. We're going to have like WeChat like they do in China, and everything will be controlled by the government.

That's headed that way.

So, you know, I don't want that. I don't know about the rest of the people, but I don't want it. Maybe it is a big conspiracy theory that the Fed now and the central digital currency and Dick Durbin, they're all in cahoots and they're gonna disrupt the banking system and, and, uh, take over the United States and we'll all be on WeChat and they'll decide whether you can fill your tank up with with gas or whatever else that you can buy or not buy, because that's how it's done in China. I don't like it. I don't want to live like they live in China. That's, that's me.

Yeah, I don't want to. I don't know, man. This is— it's a sad little state. Anyway, man, everyone, I hope you guys have a good weekend. Please enjoy life. Kiss your babies. Hug your—

yes, hug your family. Love everybody.

That's all I got. So until next time, peace.

Peace out. Carpe diem. Sorry, I have to bash Dick Durbin. Fucking asshole. Right, Rocky? What do we do with Dick Durbin? Are you gonna post this today, or— uh, yeah. Okay.