PayPal VS. Merchant Account | PayPal or a Merchant Account? | B2B Vault | Episode 158

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 John Elway 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, we're going against the age-old question: PayPal versus a merchant account. You know, what's the difference? Is PayPal a merchant account? You know, what are your limitations? There's just a lot of difference— differences between PayPal and a traditional merchant account. And Allen, you know, being the expert that he is himself, thought it'd be a good time to explain the differences, the benefits of having a merchant account, you know, the pros and cons and all the stuff in between. So yeah, man, what's new?

Well, we did see an interesting video where a guy was talking about this, and we thought it was a good topic. Oh yeah, no, I mean like what's new, what's new in the world, uh, we're looking at a lot of new rules that Visa is rolling out, so merchants might be confused about that. We'll have another podcast on that. Other than that, feeling better from being sick. So that's much better. I'm not coughing as much, driving everybody crazy. And, uh, we had a lot of rain here still. Yeah, I'm a little— I'm not, not too happy. I don't see like the state and the county responding to that very well.

Yeah, my sewer is still full to the top, so if we have like any rain, we're going to be flooded.

Yeah, it's crazy. I saw a video that, um, Dave took going down one of the streets near his house, and you just see like outside everybody's drywall, all their furniture. Yeah, all piled up down the whole side of the road for like, for like miles.

Yeah, it was crazy. It was like that last, last week for us. They were doing special pickup all week, and they just didn't really— I mean, it makes sense because that's not healthy to, you know, all that mold and whatever. Yeah, they did it. They, they got rid of that real quick. I wish they could have did that the same way they got rid of the water, but I don't know. Well, here, whatever.

Do something about that. So, you know, we always get the question like, oh, PayPal, you know, what's the difference between PayPal and having a merchant account? And is Pay— the question always comes up, is PayPal a payment processor, or what is PayPal, right? So the explanation is PayPal is the technical term we call them is a PayFac, or another technical term would be a third-party aggregator. But in essence, to understand really what PayPal is, is PayPal is the merchant. So when you use PayPal, they're the actual merchant, and you— they're allowing you to be a sub-merchant in their system. So you don't have, like, they might give you a number, but you don't really have a merchant account. And okay, you don't have a merchant account. They're the merchant of record, so they make all the rules.

What does that mean?

Well, when people get billed You know, they get billed and it says PayPal, Justin's T-Shirt Shop. Doesn't say Justin's T-Shirt Shop, right? Always has like PayPal next to it.

So got it.

Other companies who are similar to them are Stripe, Square. Toast is a, is a payfac also. Whenever you go to a restaurant that has Toast, it always says TST.

Okay.

When you go to a store and they're using Square, it'll always say like SQ. Etsy is a PayFac. So if you sell your products on Etsy or you sell products and you have a Shopify website and you use Shopify payments, you know, those are all PayFacs. So it's always, you know, it always says Shopify right next to that. It says Shop. Now they call it Shop. Say shop next to the transaction. So those are all, those are all PayFacts. You know, one of the things that God mentioned in the video is say, oh, Google, PayPal shut down my business, Square shut down my business, this place shut down my business, right?

Yep.

Most of that, you know, it, you know, like most of that is caused by that people don't understand some of the rules that PayPal has or these platforms.

Yeah, side note, yes, having glasses is a pain in the ass. Sorry, man, always smudged.

And yeah, I know, it's always cleaning disaster. So, you know, that, you know, they— so, you know, they have rules. And, you know, Justin was in the room, we had a meeting with some guys, and we're talking about, you know, you have to be— you know, you get— you sign up for PayPal, you know, you have to be honest with them about what— or any of these services, you know, you have to be honest with them about what you sell. So I've seen many merchants, they'll make a CBD website on Shopify and then they'll apply for the payments part, and then they go to find out Shopify won't process payments for for CBD, and then they have to go—

well, they are now.

They are now. Well, maybe on— they don't accept it.

Yeah, they do.

They do.

Cookies, the CB— like the huge cannabis brand, their website is through—

yeah, but that doesn't mean it's Shopify payments.

Oh, I— yeah, it's a Shopify website, right?

They'll let you have the website, but they won't process the payments.

Okay.

Yeah, so you gotta add— you gotta bolt on a payment processor.

And a gateway where you had to be clear, man, because you know what you were saying.

No, no, I'm saying like they don't process the payments for, for that, for that industry. So when you go to use one of these services, you need to make sure what's in their terms of service. Just because they'll let you use the— they'll let you use the platform, right, doesn't necessarily mean that because they let you use the platform doesn't mean that they're gonna allow you to process payments on it, right? So people sign up, sometimes they sign up for Stripe, and then Stripe says, oh, sorry, we don't process payments for that. So some of the things that are restricted are like adult content.

Yeah, before you get in that, real quick, just for— right, poops and giggles— explain PayPal again. Okay, so PayPal the difference between— so PayPal basically is like a middleman, right?

No, PayPal is— they're, they're basically a big giant merchant. That's what they are.

Okay.

And then they can— and because they have the status of being a PayFac, right, or a third—

what's a PayFac?

A third-party aggregator. So they're allowed to have— they're allowed to have— they're allowed to be a merchant and and then let other merchants be under them.

Okay.

So that's how all these other companies operate. And other companies like that are Stripe, Square, Toast, Shopify, Etsy, Amazon even, because some people have an Amazon store and then how do people pay? A lot of times it's Amazon Payments.

And so one of the main things is, you know, when you sign up to these companies it's their way or the highway.

Pretty much. It's their way. They make the rules.

And that's that.

And that's it. And a lot of times they don't answer. They don't have a phone to answer. It's all done through— most of those companies communicate via email, right? Maybe chat if you're lucky. If you get big enough, maybe they'll talk to you on the phone.

Right.

But in most cases, everything's done through an email.

Absolutely. So it's important that you read the terms of service, make sure that you know what you're signing up for, that if you can sell the product that you have, etc., etc., right?

Make sure what, what you're, what you're dealing with. Like the Shopify, you know, they'll let people build a website even for something like ammo, guns, weapons, firearms, right? And then The person will apply for the payments portion, they'll be like, sorry, we can't process your payments. So then you have to go, you, you know, you have to go out and get a merchant processor and a gateway. And there's a few gateways that link on to Shopify. And the same thing, like for eBay, PayPal is not the only solution. You can get— you can use a merchant account with Authorize.net and link that into your eBay store, right? So, you know, the, the thing is, is a lot of times I will see merchants that have— they know that a certain, you know, demographic of people like to use PayPal, right? So they'll have it all. You know, when you go to a website to check out, you'll see multiple ways to check out, you know.

So, you know, that Highly Edibles.

Yeah.

They rebuilt their website on WordPress, right, without my help.

Okay.

Um, they installed Square. Okay. Ran it for 2 weeks and they just got shut down. They said— they said— they— they're the only explanation they give them, they didn't follow their product guidelines.

Well, to have specific, you know, CBD has specific product guidelines, and we've talked about in that in some other podcasts, you know, about having your COAs for every single product, showing the product labels, you know, everything has to be— all the, all the, the COAs, which is the certificate that shows the test, you know, so people know what that is, and it might not know. That's the test that shows that it's 0.3 or 0.03 or less THC. All of those have to be on the website and they have to be less than 12 months old. And I've heard even about some, some— I've had some merchants contact me recently. They said, oh, I've been processing on Square for like 2 years and now they told me I'm violating the terms of service. And I go look at their website, no product labels, no COAs, and I tell them that and they're like, wow, they didn't even tell us. And, you know, people need to understand, like, the, you know, compliance is important because you have that, you know, especially CBD, we've talked about it, almost every 3-letter agency in the United States is looking at that, you know, looking at that business. Yep. And that's, you know, that's what makes it crazy. But you want to make sure, like the guy in the video we were watching, he was talking about, oh, I was selling classes, PayPal didn't like it. I was selling digital downloads, PayPal didn't like it. I forget. And then he was, he was selling also some physical goods.

Well, he does— he was doing, um, reselling, right?

Yeah, used products. You know, um, but they didn't really mind that. It was more the other stuff from what he was talking about.

Yeah, he was doing some other consulting, I think he just said he did.

I don't know, he had a lot of businesses. And that's the other thing, you don't want to just have like one account and then have a whole bunch of different businesses and attached to that one, attached to that one account. You want to have an account for each business type that you have. And a lot of People don't understand that. And the other thing is, is you have to make sure, like, you can't tell PayPal or a merchant processor— because I've seen a numerous amount of people get in trouble for this— they get one merchant account, then they attach that merchant account onto multiple URLs, stores. Yeah, multiple websites.

You get away with that for a while, right?

But this—

but as soon as you start to get some chargebacks Yeah, or you start really making some money, right?

Then they're gonna go look and they're gonna say, hey, uh, we approved this guy for this domain abc.com, but now the guy's processing on xyz.com. It's a completely different product and we didn't approve that website.

Now they're taking your money. They're holding— well, not taking it, they're holding it.

Yeah, they hold your money for up to 180 days from the last action.

Yep.

So, you know, that's something you gotta— you've got to be aware of. You can't have— you also can't have multiple, you know, if you want to have— let's say you need to have multiple merchant accounts because maybe your product is a little risky and you need to have 2 or 3 merchant accounts for your website. So that's easy.

Well, what scenario would cause you to have 2 or 3 merchant accounts? A website?

Well, let's say you were doing something like fulfillment, using fulfillment houses, okay? And you're brand new in business, maybe you're a youngster, and you're not, you're not going to get— you're not organized enough to get approved for a couple hundred grand. And that's one thing that I talk to young people about all the time. I go, what do you mean you don't have QuickBooks or Xero or FreshBooks or something like that? You need to have You need to use some kind of— when you want to grow your business and scale it, you need to, you need to be ready.

There's got to be some sort of paper trail, right?

There's got to be a pay— you got to have organized financials and a bank account. The bank doesn't want to see you send over a bank statement with $50 and you're processing $50 grand. They want to see you have money that to run your business, and they want to see—

in that particular business he's talking about, they'll never be able to show that because there's never that much money.

Well, they have money, but they're just— it's not organized correctly. Yeah, but if it was organized correctly, they would be able to produce a financial statement, and it would show the cash flow and what the profit was. Even though the profit margin is like 20-25%, still a decent profit margin. So restaurants make— lucky if you clear in a restaurant 10 or 15%.

That's true.

So, you know, when you put it like that, it's not that bad.

I'm not— I guess I'm— that whole business model is just a force, man. It's just a lot to it, and I don't— good luck to those guys.

Yeah, well, you know, without get— no, but I'm just saying, let's say, let's say you have a mer— I have other clients. Let's say you have a merchant account, let's say for $250,000, but maybe it's a SaaS business. And the bank doesn't want to give you more, you have to go get a different— a second merchant account. So there are softwares you can do— use that do load balancing, and you send part of your traffic to one merchant account, part of your traffic to another merchant account.

That makes sense.

So, you know, and then those guys weren't using load balancing, and they were going in changing everything manually, you know, every couple of days, and That doesn't look good because you don't, you don't want to have uneven sales where, oh, there's 10 sales one day, no sales, 20 sales, no sales for a week, then there's 10 sales. You don't want to have that. You want to show even. That's why you need to use software that allows for load balancing. But you know, you have to understand, you have to know what's— you know, you're going to be under a microscope when you're, when you're not stocking the— when you don't own the product. You know, or you're not stocking the product and you're, you know, I saw like 2008, 2009 and then the growth of the internet back in those years. You know, we erased an entire system out of the commerce in America of, you know, distributors, you know, people that distributed a product. Okay. Like you used to be like the manufacturer sold to a distributor and then you distributor.

Oh yeah, that way. The—

yeah, sold to the stores or sold to the end users.

The warehouse guys, right?

The warehouse guys, the guys who were warehousing the product, and they were the ones, you know, for going out and delivering.

What happened to those guys?

Disappeared because the, you know, e-commerce started to hit big and, uh, companies said, hey, why do we have to do that?

Because people realized that they were getting jerked around as well because they could buy the product direct.

Well, yeah, once e-commerce launched and companies started to sell direct, you didn't need these distributors anymore.

Hence the reason why there's not a JCPenney's, Boston Store, etc.

Look at Bed Bath Beyond, they're going out of business now. They tried to reorganize, they're going to close all their stores up. They own some, a couple of other brands, they're all closed, they're all going to close up, done, you know, because they said they made a big mistake when the internet started. They didn't get on the internet fast enough. They, they didn't think about— they, they didn't— and Amazon overtook them.

Yeah, because they, they thought that people wanted to always come in with the blue postcard, 20%. Yeah, they thought that, you know, people were going to go shopping, and then COVID came, and then they realized every— all those business— there's a bunch of businesses like Bed Bath Beyond that are done.

Yeah, you know, look at Toys R Us also.

They— that was before COVID but that's also the huge miss. Like, whoever was their CEO definitely was—

no, you just—

terrible job.

Yeah, you saw a lot of companies where they were so big and had all these locations and they basically, you know, missed the internet. They just like said, oh, we don't need that, we don't need to have a comprehensive website.

Well, Toys R Us is open back up, but yeah, but it's, it's like inside of, uh, Macy's and Boston Stores. They're making a relaunch this year though. I guess they're having a That, and what was the other big one? KB Toy Stores are coming back too. Yeah, well, you know, that's good because toys for me, like, because I'm a dad with, you know, I got grandkids now, so I'm a grandpa. But, you know, uh, me being an '80s baby, I want to— I'm still a product of the— I want to go touch this stuff. Like, for clothes, for instance, for me is really difficult.

Yeah, clothes blows my mind because I want it, like, I want soft material.

Yeah. And so before, I mean, it's easy to, you know, like after you put on an organic, 100% organic cotton t-shirt, I don't need to try it on again, right? But if it's a different brand, I don't know how the shirt fits. So like, it's crazy to me that, you know, shopping is so popular online. I mean, especially obvious for women, it's more popular.

But it's funny, when I go to like to Costco, you'll see they have like 20 times the amount of women's clothing to men's clothing.

Oh yeah, everywhere.

Yeah, it's crazy how much— how that is. So let's get back to the whole PayPal thing. So the other thing with PayPal is since they're the merchant, there's the other thing is your data, right? And I can't—

so I think you skipped— did we talk about the, the types of businesses that PayPal doesn't like?

Oh, so let's finish that. So Um, they don't like adult content, firearms, weapons, gambling, multi-level marketing. Although I would say that if somebody was big, they, they could, you know, doing millions of dollars a month, they're definitely using PayPal.

They have a partnership with those types of guys.

PayPal will definitely partner with them.

Yeah, because they wanted them to sell the stuff on eBay and they'll partner, and they want them to use PayPal for all their ClickFunnels pages and all that other happy horse shit.

But, but it has to be big enough, and they also want the kind— they like the ones where the actual company is fulfilling the product and not the individual salespeople fulfilling the product. So as long as you meet the guidelines, they'll do— but like digital downloads, digital products, streaming products, they don't like that. They don't like anything to do with tobacco, smoke shops, CBD, cigars, none of that. Nutraceuticals, pharmaceuticals, They don't like any of that stuff.

Yeah, so if you have any of those businesses, which pretty much eliminates almost like 70% of web e-commerce websites, I mean, what else do they got? Clothes and, you know, home goods, but rest of this, yeah, man. So you really need to think about getting a merchant account if you have one of those types of businesses.

Yeah, if you have those kind of businesses, that's where you need That's where merchant accounts come in. I mean, PayPal has a lot of good features, but other gateways offer the same thing. Virtual terminals, you know, send out payment links, send out invoices, text payments, email payments.

I mean, PayPal has been like the web design go-to, you know, digital marketing freelance, you know, payment platform. I ran my business on PayPal for ever, you know.

They've been very uneven with dealing with businesses also, like coaching businesses, any kind of like service businesses. They've been very uneven with those companies.

What do you mean by that?

Being that they, they'll like contact them and ask them to send in bank statements and stuff.

Oh yeah, they did that to me all the time.

Yeah, they want to make sure that people have money, they're not dealing with people that are broke.

Yeah, PayPal is definitely, uh a weird little company, man.

And the other thing is, I—

real quick, I, I hated it actually. Like, I just, you know, having my money going through PayPal was a disaster a lot of times because, like, we've had this conversation before, you know, you get a— one month you might make $20 grand as a web freelancer, next month $1,000, you know what I mean? And when you have a couple of those months, one of those months PayPal might be like, ah, we're not gonna give you this money yet. You're gonna have to wait.

Yeah, they're famous for their 21-day hold.

Oh my god, that, that's what I'm talking about, the 21-day hold. There's pretty much anything over like 5 grand, I think it was, I don't know. For me anyway. Like, if there was a, you know, if I got a big web project or something, uh, I, that's— I, I ended up just stopping it and then using my bank. And I'll tell you, which was more expensive but easier to get my money in a sense, for some, for some transactions. I used them both, like, for maintenance, like, for retainment, like monthly retainers for clients. Yeah, because, you know, you can set kind of set up as set it and forget it with PayPal too. You know, you just put it organ— whatever. I had a process to where I would remember to send out the PayPal link every month, you know. But yeah, but for, you know, having a merchant account through your bank isn't always the best thing either.

Yeah, the bank is not necessarily your friend when it comes to merchant services. Services. No, they don't know about Merchant Services. They're good for a basic setup. You have a basic retail store or something like that. Beyond that, they might not be able to get you what you need.

Yeah, I didn't really, uh, the invoicing was an add-on through the bank, right? So that was more money, you know. So yeah, no, it was a lot of finagling.

Yeah, recently there's also been some issues with PayPal where people send each other money. Like, you know, like peer-to-peer friends and family. So one— some— a guy that I know, him and his friends went to go to the Final Four, and he paid for all the tickets and the hotel and all that. Yeah. And then when his friends paid him back, one guy sent the money through PayPal, and, and it was about $8,000, $9,000, and PayPal still hasn't given him the money. And he had his friend write a letter saying, yeah, I'm paying my friend back for, you know, tickets that he bought and the hotel and the plane ticket and the da da da da da. And they're going back and forth with, with all that, man.

Give PayPal— get that man his money, man.

But you know, that, you know, that comes with the scrutiny that's come down from the federal government.

So yeah, what— so let's, let's talk about that real quick.

What, the $600?

No, what the FedNow thing.

Just a FedNow, just a little.

So that's just a small glimpse of how the FedNow rules are going to take place. So every time you send money, doesn't matter what platform it is, it's going to go through FedNow first.

Well, that's not true.

So you don't know?

Well, I'm just telling you right now, the FedNow system that they're talking about First of all, they're looking for companies to integrate to it. Nobody's in a hurry to integrate to this system because at that point the federal government is going to know all your business. So a lot of people are not—

real quick, man. So like, listen, man, the FedNow, before you make a transaction, it's going to go through the FedNow network. That's how they want it to be, right?

That's what they want.

And then it'll go to for instance, Jay's Car Wash, right? Like, you got your car washed at my business. Well, if the feds, they're like, nah, I don't like Jay's Car Wash, man, you should have went to Allen's Car Wash. They could stop that payment.

It's not just that, they're going to see like, oh, this guy went into this, into Outdoor World. Did he buy ammo? Did he buy a gun? Did he buy— what did he buy?

Well, that's a good thing.

Well, I'm just saying that— I'm just saying overall it's too much Big Brother.

It's super Big Brother.

Do you want them knowing?

This is the New World Order.

You want them to know like they— you went and bought some Viagra or whatever it is?

Not that they don't already know that.

I'm just saying like, I'm just giving it for instance, like they're gonna know every purchase you made. I mean, they're talking about like, oh, there's people that are against electric cars now because electric car, they can shut it off from outside.

Well, what did you think they were—

come on, man.

You think that's new technology?

No, but I'm just saying, people, you guys gotta start—

wait, you gotta wake up and stop listening into all that Channel 4, 7, 12 news channel, man. Get your news from somewhere else, because geez, they've been able to shut down cars for about what, a couple of years now? At least 5 years.

I mean, you have a computer in your car. What stops you? Don't make your payment to Honda.

Oh yeah, the OnStar thing. How old is OnStar?

Oh, that's around for over a decade.

That's my point. So come on, ladies and gentlemen, it's crazy. The technology always been there, they just didn't turn it on.

Well, let's just put it this way: if the government's controlling it all, it's a problem. So now let's get into— let's just talk about one last thing, which is about data. One of the things is when you use a third-party company like PayPal, they own the data.

Explain that. What, what is the data that they own?

Okay, all your customers. They have all your customer data. They know what they bought from you, how much they spent, how often, how often.

They have the email address, they have their credit card number, they have their phone number.

You have no access. If they cut you off, boom, all your—

yeah, if you're not doing— I would do quarterly exports, and also if I was using there for my invoicing.

Yeah.

I would always download like all of my data, but like the credit card data is all encrypted so you can't see it anyway.

So I'll give you an example. I know a guy who was using Square and he was doing a— he had a SaaS company. Well, one day Square decided, oh, we don't like this SaaS company anymore. Boom, they pull— they shut him off. He can't bill anybody and he has no He has no— he can't even get in touch with the customers because he had limited information on them. He had email addresses, but that's it. No credit card data, can't run the credit cards. That's why, like, when companies are doing that, I talk to them and I go, listen, it's time, you know, you, you can't— you got to be— not be so cheap, right?

That's the— that's key.

You need to be using a third-party gateway. That way all the stuff is on gateway, the processor. Even if the processor cuts you off, you still have access to the gateway. You could direct it to a new merchant account, direct it to a new service, or you use something like— there's companies like, one of them is called Chargebee, and there's a few other ones where it's a subscription type of software, and then they, they link into the gateway. And then that way also, you know, Let's say you have to— you need more than one merchant processor. They can facilitate that, you know. And you have a— when you have a big SaaS, this guy, he's went completely— they went out of business.

It's terrible. Done.

One day they're in business doing $2 million a month, and the next day they're done. Then they had to get a new merchant account. Then they're emailing all the people. People didn't re-enroll. Not everybody didn't get 100% like re-enrolled.

Oh, I'm sure.

You know, but they were, they were, you know, dead in the water for months to get back to, you know, even a decent amount.

So yeah, man. So excuse me. So does these companies like PayPal, Stripe, Square, whatever they own, it's their way or the highway, man.

Yeah, but it's their merchant account, not yours.

Right. It's theirs and not yours. You just have some small piece of access to it. So As a business owner myself, I would highly, you know, like, I want control over everything. I don't want, you know, you to be able to shut on or turn off anything in my business. So, um, it's important for you to have that control. It gives you peace of mind, you know what I mean? PayPal, it's just a, you know, they're big corporation. They don't care about your little small business, you know, your record shop where you're you know, whatever it is, your toy shop, your furniture repair store, they don't care, man. You know, they, they care about processing payments and that's it. Um, so when it comes to that type of peace of mind, this is where a merchant account comes in play.

So let's talk about, you know, the merchant account. So with a merchant account, you get a merchant, you get a merchant number, which is like a bank account number, right? And it is a bank account because it's FDIC insured. I mean, basically the money goes into that account.

So like a merchant— like when I think when I first started with Nationwide Payment Systems, um, of course I understood, you know, what a merchant account was and all this other stuff, but I didn't understand the difference between like— well, I guess I did understand the difference between PayPal and my bank, right? But I didn't know there was more. You know what I didn't know, like, there was all these tons of options for, you know, payment processing.

There's tons of options.

Yeah, yeah.

But you know, you get a merchant number, you have to be transparent about what you sell, what you are. Like, we have a guy, is like 10 URLs, has one merchant account, but the bank knows what all the 10 websites are, right? They'll sell the same thing. It's just 10 of them, right, for marketing purposes. And then—

smart.

And then we have, you know, unique way how to do billing for that so that each— so that everybody's billed with a unique descriptor based on the site they were on. And that's important, you know, you have to. And then when somebody needs something like that, not every bank one wants to do it or has the capability to —Or even the knowledge.

They don't even know what to do, probably. —Right.

Well, they don't even have it in their setup. So you have to know, like, oh, I'm like— we had a guy that needed that and he came to us and he's like, oh, you guys can do that? And we're like, yeah, we can do it. And then, you know, we went and did it, you know. So that's the whole thing is people don't know when they, you know, they, they know they need something and then they go, wow, if I would have had this, I could have been growing my business much at a much better clip.

I mean, I, I said that as as well when I, you know, building websites and, you know, doing— helping small businesses for the past decade. Um, yeah, I really wish I could have partnered with someone like Allen, um, for the residual income off of what that business was going to do by me referring a merchant account provider. Yeah, like Nationwide Payment Systems. So But it's funny, we talk— that's out there, ladies and gentlemen, you know, to make some commission or some side money on all the projects that you're, you know, you're helping these small businesses, you know, launch their business from the ground to, you know, opening their doors for, in some cases, literally. Um, so why not have a piece of, you know, that money? It's tough out here, you know, in the economy. So there's all these different ways that these small businesses can, uh, I mean, well, especially freelancers can add on to their list of services. And like I was— I had, you know, the merchant account services, adding that to your tool belt as an upsell. It's another one of those things.

Yeah. And you can help your merchants because a lot of times, like, businesses want to have a loyalty program. They want to have different things. And that's where we come in, where we can go talk to them and find out, oh, what do you need? How do you want to sell?

What are you going to do? Gift cards.

What are all the services that you, that you need in your business? And then we help them, you know, build a tech stack, and we look at what we have in our little bag of tricks, and we go— because there's always new software coming out. Like the other day, a guy in the office, and they're showing me all this new stuff that they did at their company, and I was like, wow, yeah, we got we got to start selling that because, you know, one of the things we see is like there's a lot of— a lot going on in the point— with point of sale right now, right? So like people like Clover but they don't like the price tag anymore because like Clover, it's all made in China. So it used to be a few years ago you could get a station for around $1,200. Now Clover station—

how come you can't make that? Why can't you make that same station in America? I don't know what—

they don't make it in America.

It's all made over. I'm saying, why isn't it— why isn't a company— I don't know. None of it. Is it expensive? How is this expensive?

We don't make the chips here, so—

well, we know we can't make— we don't have the— what is it, cobalt?

Yeah, whatever it is, we don't have the stuff to make the chips.

Something like that.

Well, we have it, but they don't want to go dig it up because a lot of it is on—

we don't have enough of it. Right, we don't have enough of it, so it doesn't make sense to go digging for it. Good for America, that makes sense. You don't need to go digging for something that's not gonna get the raw material, bring it here and then make it here.

But for some—

yeah, I don't get that.

We don't have any of this electronic—

that's why, like, during COVID you couldn't get a TV.

Not just that, couldn't get a car. Like, I was looking at a car, I was looking at a chart the other day that showed new car new car manufacturing, right? So a few years ago, new car manufacturing was like between 7 and 10 million. During the years of COVID they only produced 3 to 4 million cars. That's like half.

That's a lot. That's a lot less.

Yeah, a lot less. And that included the electric cars, which was under a million cars.

All right, so with the merchant account, you get your merchant number similar to your checking or routing number, right?

Yeah, it's your account number.

It's your account number.

What else you get? Your, you know, and then you can— then you got to design what you want. What are you doing? Is it e-commerce? You need a virtual terminal? Do you need invoicing? What kinds of goods and services? You know, a lot of people now want to do this omnichannel, omnicommerce, full commerce, whatever you want. They need every— they want everything. They want to sell mobile, they want to sell online, they want to sell in their store, they want to create pop-up stores. So when someone tells us what they want to do, that's when we go into the, the bag and we go, okay, here's a product that will do all of that for you, right? And then that's, you know, and then, and then you do that. So, you know, there's— so like those products a few years ago weren't really around, but now there's more and more of them coming out. Like we just saw a new one the other day, and it's going to be— it's less than half the price of Clover. Plus there's no apps to buy, so on a monthly basis it's much less and it's more economical. And you know, because we had a merchant the other day, they broke the Clover. I told the guy today, man, I want to show you this new system because the guy's complaining about the price of the Clover. I said, I can't change the price of the Clover, but if you want to switch to something else, then we can get you this other, other product. Less expensive, also very reliable, from a good company, good customer service. Is it pretty? Is it pretty? Yeah, it looks pretty. It looks nice. I mean, it's got everything that— it's got everything that you need. It'll do— has a customer-facing, customer-facing screen where people can pay, and it's just not Clover.

Just not Clover. Slap a Clover sticker on it, we'll call it the anti-Clover.

I mean, you know, we're looking at another product where you can take a WordPress website, right, add a plugin to it, and then that sucks everything off into another program that you can put— basically you put an app on a tablet and then turns your whole website into your point of sale system.

Yeah, but you— the, the one thing that I have about this is you still need a cash register.

Well, no, you just need a screen. So you need a screen and a money drawer, a cash drawer, and a credit card machine. No, you don't need any— you don't need it. We're— I don't know if you need a printer or not. We're working on seeing whether or not we can eliminate the printer and print from the credit card machine to eliminate the printer, and then for a receipt, for a receipt, and then you need a scanner. And so something like that is going to be, I think, some game-changing type of software. Um, we're hoping to figure— we're working on the payment integration now. And hopefully we get that done in a couple of weeks. And then we got to put together the hardware package and test it out on a few clients, get a few clients to test it. But it's going to definitely be a unique thing because now you have your WordPress website with all your inventory linked into your point of sale, and then you could have it on a tablet with another device and take that out to a pop-up market or Let's say you go to a trade show and boom, you extended your whole website into your card-present point of sale and even mobile. It's nice. And then everything is going through— all your inventory is being tracked through your WooCommerce. So that's pretty interesting. You know, you have to, you know, with a merchant account, you have more control over all your data. You can see all your customer data, all your transactions. Yeah, you have control over that.

You can talk to customer service on the phone, you can email them, you can, you know, you can actually call somebody and 99% of the time, yeah, talk to someone like, hey, uh, you know, I sell CBD, um, I see Cyclobin is real big. What's your guys' thoughts on, you know, are you guys cool without me selling some of that?

Yeah, man, go ahead. Yeah, like anytime people add a new product to their site, we say, oh, send us the product information. We give it to underwriting, get the thumbs up. So, you know, you have somebody to work with. You don't just put something on your website, the next thing you know, oh, sorry, we got to shut you off, the entire website, and you close your merchant account.

Yeah, and they're holding your— maybe might be holding your, you know, your money, your money. Then you can end up on the match list. Don't even want to go there.

Merchant account for 6 years. But when you have a merchant account and you're doing e-commerce, okay, you need a gateway. So it's two— it's always two pieces when— right, like PayPal, Stripe, Square, where it's sort of one piece.

So like with WordPress is WooCommerce, right? And that's the payment gateway. Well, no, that's the shopping— that's the shop. Well, there's really three Depending on how you're going about it, there's 3 of them, 3 steps.

But yeah, yeah, you have your shopping cart, your payment gateway, your merchant account. But once it's all set up, it's all completely seamless.

Very— yeah, it works well together.

Yeah, it's all seamless, and then you're all done. So people get scared. They go, oh well, if I use PayPal, it's one piece. No, it ain't. Well, they think it is, but it ain't because they actually have a gateway too. So, but it looks like it's one piece because it's the one, one company. So it looks like it's one piece. But also, you know, other things, you know, with Gateways, you know, invoicing, text-to-pay, email-to-pay, mobile— you can add on mobile processing, ACH, eChecks, recurring transactions. You just have to be— yet when you— when we get someone with a merchant account, we go through the whole process. How do you want to sell? How are you going to sell? Sell. And then we give up— we design something that's gonna work for them. You know, there's also a lot of talk about alternative payments like FedNow. How's that gonna work? Zelle— people— are people gonna use Zelle on their website? Venmo, Cash App— I don't really see people using Zelle on their website because it's not aggregated. So someone's gonna— the bank's gonna get mad. You get 50 Zelles, you're gonna get 50 deposits into your bank account.

Yeah, I don't see that happening.

And, um, you know, there's a new Zelle thing, a competition to Zelle coming out, but I read about it and it's not really a competitor to Zelle. What it is is it's a competitor to Apple Pay, and then some people are confused about it. I think it's called Pays, P-A-Z-E.

I haven't heard of it.

Well, it's something new that's coming out, so it's a bunch of— oh, It's a bunch of the banks that don't work with Apple Pay are going to launch that app, launch that. But it's good at first, it's only going to be for e-commerce, and basically it's your credit card in the, in that app. So you have the app and then you have your credit card from that bank in that app, and then when you're making a payment online, it's going to send you like a code and do it two-factor authentication.

It's cool though.

I like it, but you know, people are getting a little confused about it, saying, oh, it's Zelle, but it's not Zelle, it's your credit card.

Like a real credit card?

Yeah, it's your credit card. Let's say you have a Chase card, they don't participate in Apple Pay. So I think Chase is one of the compete— the banks participating. So you would get that app, you'd load your Chase card in there, then when you pay online, if the merchant has that app on their Okay, I get it. Then you hit that button and then it sends you a little message to the app, and then you have the two-factor authentication.

What's your— okay, never mind. But so for me, I'm sorry to cut you off, man. I'm— the people who are using their phones to pay, yeah, it's starting to— it bugs me a little bit.

Yeah, I saw an article in the paper the other day where somebody said, oh, I was— I had my phone in my pocket and I walked by a machine and it charged my phone. No, I didn't. There's no way that happened. Or somebody said, oh, my card was in my wallet and then the machine charged it. There's no way, because the new credit card machines are not equipped like that. They're equipped with what's called near-field communication, right?

NFC, man. Right, NFC. What all I was saying is it's not faster than me pulling out my card and tapping. No, it's not fast, because the one lady I was at Whole Foods, she's like, oh my It's not loading. My, my bank app's not loading. We were sitting there for 5 minutes waiting for— I literally told the lady, I said, listen, turn your Wi-Fi off. And she did that. Yeah. I said, now close it, refresh, ding, and she was able to do it. Well, like, I, I got stuck, but in the amount of time we were standing there, she could have literally pulled her card out, but she didn't have that.

Yeah, well, I got stuck one day. I left the office, no wallet, but that's—

so that's the gift and the curse of it, right? I had no—

I had no wallet and I needed gas. I pulled into the gas station. Oh, no wallet. Oh, I had my phone, boop, and I did an Apple Pay. Thank God they had Apple Pay outside at the gas station.

Oh, on the pump, actually? Yeah, that's—

I was pretty happy with that. So, I mean, yeah, Costco has like the Tap and Pay, you don't even have to stick your card in, just tap your card on it. Oh man, there's no way anybody's card got charged out of their wallet, especially without the RFID.

What are they, RFID wallets?

First of all, they don't even make RFID chip cards anymore, right? So I'm pressing the bullshit button. Now I did see something that was kind of crazy, and I saw the video where the guy proved it. Now here's something that you need to be careful about. When you go to the ATM machine, right, or you're at the gas pump— so when you're at the gas pump, I've seen it on the gas pump where it says, oh, do you want a receipt, yes or no, right? Or— and they— some of the gas pumps say, oh, do you want to do another transaction? You need to make sure you hit no or yes on that receipt thing and end it. ATM machine, there was a scam going on where these guys were standing by near ATMs. They would wait for someone to go to the ATM, then when you're done at the ATM, you take your money. The ATM always asks, do you want to do another transaction? Boom. And then these scammers run up to the ATM, hit yes, and then take more money out of your bank account. And then some guy said his bank told him no way that people can do that. So he put a camera over there and he had his— and, and he, he put a camera and he walked and he filmed it all going down. Oh, it's definitely possible. Yeah. So when you go to the ATM, hit no and end the transaction. Do not drop it off if that prompt comes up. Well, the banks need to fix that. Yeah, that's ridiculous. Transaction, if you walk away So, you know, and then the other thing with merchant accounts is chargebacks, right? Oh, so let me just get to this. With merchant account and PayPal, things and services like that, once you're doing $10,000, $20,000 a month, that's when you need to start thinking about, hey, I probably need to get a merchant account, right? Because maybe you're a small business or it's a side hustle and, you know, you want to get with one of those services and we have a service like that. Too, where you can, you know, get started as a small business with a, you know, the PayFac type of service. But then once you get to that $10,000, $20,000, then you got to start thinking about, oh, I need to grow my business. That's when I need to get a merchant account so I can scale my business and grow it.

Because I'm gonna tell you something right now, as a business owner, I use PayPal for a really long time. Yes. And when I went to my bank, well, I don't know what it was I was trying to do. It might have been getting a car. Was it my— well, anyway, they did not want to see my PayPal, uh, activity. No, they wanted to see my bank statement, right? Luckily, I had the, the most of the money going directly to the business banking account. But PayPal still was a big chunk of my income, right? So I almost didn't get the car because they were going off of— yeah, well, you don't make enough money, right?

Exactly. That's why you need to have good record keeping and set up, you know, QuickBooks, set up Xero, set up FreshBooks, something like that.

So then that's when I started transferring my bank my PayPal funds into my business checking account. Yeah, but I was losing too much money.

And the other, the other thing let's talk about is chargebacks. So when you get a chargeback, those suck, and you're using PayPal, Stripe, Square, etc., they're the merchant, so they can also decide, oh well, we agree with this cardholder, and that's it. Then, then you don't get to fight. Nope. Right. And that's a problem. So like if you have a merchant account, you see that there's a chargeback, you can fight the chargeback or you could call me on the phone if you're my client and say, hey, I got this chargeback, how do I fight it? And then we'll help you fight it. I talked to a guy today.

Allen gets these every day. There's a lot of adult entertainment in South Florida.

No, even we get a guy with auto repair.

Well, there you go. Even Jeff Morton. So someone said, well, that I could see that. I'm just saying this is a, this is a, well, I was explaining. So for the adult side of it, right? So at the strip club, a guy will go into the strip club, get a lap dance, and then say he didn't get the amount of time that he was supposed to get.

Or his wife finds the charge.

And so he's charged.

Justin, did you go here to this place?

Yeah, I did. It's all good.

Would have went with me. No, I didn't go there. Yeah, right.

And your wife does a chargeback, and then your wife does a chargeback, says, oh, my husband said he was never there, never there. So that's when Allen steps in and he's like, yeah, we're pressing the bullshit button, uh, we can get video cameras for it, we got a signature on the, uh, the check, blah blah blah, etc., etc. Driver's license, driver's license, cuz they got to scan it at the door, whatever. All the new technology, you're kind of a poop creek without a paddle, buddy.

No, but you have— we had a guy today and someone tried to do a chargeback in an auto repair for like $4,500. So I was explaining to the guy, the guy came and picked the car up, he ran the transaction. You know, you got to take your receipt with the terms and conditions, you got to blow it up big because it's probably like small letters. When you fax it over, they're just going to see a big blob of black, you know. There, you got to type it all up, say, hey, this is what's on here, the guy signed this. There's a third— there's a, you know, 1-year warranty. The guy just needs to bring his car back, right? Right. He never called us, you know. We don't know the car broke down until we got this chargeback. So the thing is, when you're using these services, they can decide, oh well, we agree with that person, whatever, and you have a chargeback.

Those services, they're not looking, they don't care. They're going to agree 90% of the time with the cardholder every time, and they're going to say, oh, you're doing doing crappy business, we're not— you can't— you're kicked off our platform. But here's some good questions to ask.

We should put this in the podcast notes, right? So when you're gonna get it, when you're deciding what to do, you want to make sure— you want to make sure, like, first of all, how much volume are you going to need? Then you want to make sure the company you're dealing with deals with your type of business, they're familiar with your business, no matter what it is. Oh, do you do, you know, oh, I do car repair, occasionally we key enter. Oh, you know, so you want to get good advice from whatever it is that you sell. Oh, I sell, I'm opening a strip club. Do you deal with strip clubs? Some guys say, oh no, I've gotten strip club apps from people and they'll say, oh, some guy signed me up and he put down it was a hamburger restaurant. And then of course they get shut off, you know, a a week later, right? So, you know, you don't want to— you want to make sure people can write on the application what you do, for what your business does. You do not want to lie to the bank about what you do. Oh, I sell CBD. Oh, I sell, I sell bongs, right? Wholesale bongs, and people buy bongs from here. They sell rolling papers, whatever it is you sell. Oh, I have a doctor's office and we give out marijuana prescriptions. Subscriptions. There's a— there's a— we have 15 banks. There's a bank for everything, for sure. Oh, I have digital— I'm doing a creator website and I have, uh, you know, content on there, live content. Oh, do you deal with that? Yes, we do. We have a bank that will deal with that. You know, you have to know— you have to ask the right questions to know. Oh, if I want support, how do I get support? Is there, you know, do I get support through you? Is there a 24-hour support line? Is there a help desk? How do I get help? The other thing you want to ask is when you're dealing with e-commerce, you want to make sure, you know, about, you know, what gateway they're giving you, what gateway features that you need. You want to make sure you set up your velocity controls so that you don't get hit with a, with a, with a card by a card tester. We've had 2 or 3 people in the last couple of years get hit with card testers. Somebody has a big list of cards. They robot somebody's website because you don't have a CAPTCHA, you don't have security.

Donezo.

And then boom, you all of a sudden you see 5 gazillion emails coming through your thing. If you're a merchant and you start seeing emails coming through Authorize.net, Authorize.net or whatever the gateway is, dude, you need to hop on the phone to Authorize.net, say, shut down my gateway. ASAP. ASAP. You know, you wake up in the middle of the night, you see that, no, you hop on the phone and you get that taken care of. You see that during the day, you call your merchant processor. We had somebody the other day, they called me up at 11 o'clock at night. I was like, I freaking emailed somebody at the processor, called the guy's cell phone. I said, bro, turn this guy's account off. We called up AuthNet, turned it off, and averted a nightmare. Good for you. It was already a few hundred transact. They were coming through like a waterfall.

Terrible, man.

So, but the guy was on— Johnny on the spot called me and we took care of it. You know, uh, your checkout process on your, on your website, have somebody review that. Do you need checkboxes? You know, does your website have all the things on it that you need to have on it? Terms and conditions, policies, disclaimers. You know, when you're even in a retail store, do you want to have all sales are final? You know, refunds, no refunds, exchange only, whatever it is, you need to have it on there. You want to make sure you can grow your business. You know, do you— are you doing recurring transactions? Are you— you know, what are you doing? So you want to make sure whoever is helping you that, that they're helping, that you're— they're answering all your questions and they, and they're familiar with your business type and they can give you good advice.

Absolutely. And there's one thing we skipped over on there. At the end of the day, when you're— when your business is, you know, doing $10,000, $20,000 a month, it's going to be way cheaper than PayPal. That's for sure. Definitely going to be cheaper. Yeah, I mean, way cheaper. Maybe not way cheaper, but you're going to be saving some money on those fees from the processing fees from PayPal, that's for sure.

Yeah, you're going to say, you know, you're going to save money. Plus, like I said, there's more flexibility, right?

So yeah, man, check us out on, uh, Facebook, Instagram, TikTok, uh, LinkedIn, and YouTube. Don't forget to subscribe to the YouTube channel B2B Vault Podcast. Turn on the subscribe button, post notifications so that you know when we're posting on there.

Find us on all the podcast apps that we're on. We'll give a shout out— GoodPods, we're on that one too now. Oh yeah, they tagged me the other day.

All right, well, shout out GoodPods. Yeah, man, we're on every DSP you can imagine. If we're not there and there's somewhere that you think we should be, give us a, you know, let us know. I fixed the form. There was a CAPTCHA problem on the, uh, the, the guest form. Oh, okay. So it was telling everyone that they weren't human. Sorry, I'm sorry, I fixed it. Um, I put in a, the, the basic, you know, math problem for now. Okay. Um, which is crazy because the bots are able to work around that too.

Yeah, it's nuts. It's nuts because now we have AI to deal deal with. And AI—

AI is paying humans to go to the reCAPTCHA. Think about that one.

That's messed up. AI is causing fraud right now. I mean, you got to be very careful. Yeah, with your— with your website, your personal data. Do not click links you don't know. Don't open up attachments if you don't know who it's from. Be careful. So check us out. Thank you for listening to the podcast. Carpe diem. Peace out. Rocky's taking a nap, but everybody have a great day.