How to Maximise Self Storage Profits With the Right Payment Processor

The one thing most people misunderstand is that the processing rate is not the true cost of payments. You know, you're the experts in storage, we're the experts in financial infrastructure and that's. That takes a lot of headaches away from storage businesses to focus on their units, their customers and the experience they want to create.

Hi everybody and welcome to the latest edition of the Self Storage Explained podcast where today I will be interviewing Jimmy. He's the former Irish rugby captain and now head of growth at Stripe. I'm going to be talking to him about payments, why we partner with Stripe, and a bit more about the benefits of the Stora and Stripe partnership to self storage operators. The way we think about self storage businesses is that they are a bit like Stora as a, as a software business. They're all recurring revenue businesses. So your customers don't just walk in and buy one thing and disappear and pay for it. Disappear. They walk into your business and they sign up for a recurring charge. Bit like Netflix, bit like your Disney subscription, whatever you're subscribing to the monthly basis or weekly basis. That's the sort of business self storage is. It's not enough to just take a card payment the day somebody moves in. You've got to think about, I've got to charge this person next month, the month after, the month after that. What system are you going to use to make sure that that is optimized? So really what you want to do is automate all of those future payments. So automate the raising of the invoice, automate the processing of the payment off the invoice. Also it's really worth thinking about what is the method of payment that you're going to let people use. And I'm not sure if this is determinate the industry's terminology, but I think about it as push or pull push payments. Or you're asking your customer to push the payment to you. So walk in and pay you cash, phone up and pay by card, send a bank transfer or standing order, you're asking them to take an action in order to pay you. A pull method allows you to pull the payment from a pre authorized payment method like a card or a direct debit. That is really key in my opinion, to running these sort of businesses, a recurring revenue business as efficiently as you possibly can. If you do run your business with price increases like you know, almost any recurring revenue business does, if you increase your price every year by inflation or whatever it might be, if you have a pool method in place and your Customer's price goes from pound one to pound 102. Your customer doesn't have to change what they're doing or go into their bank and change a standing order. It's automatically done. You obviously have to tell the customer they have to be given notice. But in terms of your invoice changing and the payment coming in, that is all fully automated. So really think about not just the first payment but all recurring payments after that point with the store of Stripe partnership. I'm going to talk with Jimmy about in a second. We gave you as a self storage operator access to the card updater system from Stripe that updates expired and lost cards in most cases, meaning that the card payment doesn't fail. You're not asking the customer to go and update their card details in your system. It does it for them. It also does the smart retries which I talked to Jamie about. But also like, it's just, it's fantastic that Stripe is using is processing so much of the industries of the Internet's payments. If it spots that card being successful with a different merchant, it will instantly retry it for you because it knows that there are funds in the bank. Another change that's often overlooked is updating subscriptions. So if a customer rings up and wants to change from 100 square foot unit to 150 square foot unit, they want to move that, they want to make that movement today. They're halfway through their billing period. Do you want to be going in and getting your calculator out and making all sorts of calculations about well what's how much do I charge an extra? You don't you want that to be fully automated. With the store Stripe connection in store, you update what the unit is and store will automatically calculate the additional fees and process that on your behalf and change invoices from now on. Final thing is about discounts. Like can you add the discounts you want? That's another thing that Stripe handles really really well and we facilitate that through the store platform. How do you handle discounts? Can you put the discounts you want in to make sure that you're being competitive with the sites, your competitors in your region? So whenever we think about payment processing and we encourage you to think about payment processing, I talked to Jamie about as well, there's divisible cost of payment processing, which is the fees, the fees are used to the percentage fee, maybe your fixed fee as well. And then there's all the invisible stuff which is all the time taken to chase up field payments, all the time taken to Manage subscriptions, make changes to systems and reconcile payments. We have a partnership with Stripe that because we're the largest payment processor in self storage software in Europe now we have access to by far the lowest rate. So if you are on a low rate today, contact us and we always can match like for like on your fees. So now over to the interview with Jamie. Hello Jamie, thanks very much for joining us for this interview. Great to have you. Great to have another chat after being at the store Summit a few weeks ago. So yeah, for those who weren't at the summit, can you introduce yourself please?

Yeah, sure. Look, it's great to be here again talking to you. I love talking with our kind of vertical SaaS partners like yourself. So my name is Jamie Heaslip, I look after strategic growth in the UK and Ireland for Stripe. Been here now nearly five years. Previous that I was, I worked in Google and previous I was professional rugby player for 15 years or so. But yeah, I am now in the in the weeds with customers of all shapes and sizes from startups all the way through to large enterprises. But all generally have, you know, the same consistent problems when it comes to, you know, moving and managing money. And that's what's, you know, Stripe is a financial infrastructure platform. The easiest way to probably think about it is moving money from A to B and everything in between and what's part of that. And last year, you know, we processed $1.4 trillion around the globe and that's you know, just over 1% of the global GDP. So you know, we are fascinated, curious, obsessed with helping our users really empower themselves through a stable trusted partner or financial infrastructure platform like Stripe.

One of the things that like for, for me that's interesting is like Stora as a business that we're a recurring revenue business and we charge our customers monthly, but our customers run self storage businesses and they are also recurring revenue businesses. You know, they, you know, the average customer might stay for six or 12 months, they might pay monthly or every four weeks or whatever it might be. And so the same things that we, I focus on for my business which is, you know, recurring billing, recurring invoicing and all the, all everything that has to happen around that as well as the payment processing. Our customers who lost them listening and people who run self storage businesses, they have the same issues to think about. If you're a self storage operator listening to this and thinking about, well like I don't care what store you use to process my payments, why should, should they care that we have decided to Work with Stripe and not somebody else?

It's a good question, but let me think about it differently. Right. So what makes Stora and Stripe such a good partnership? Right. And I think it lies in combining kind of your deep industry specialization, right, in storage management with a best in class financial infrastructure to power that. Bringing the expertise from two fields together in one kind of seamless workflow for your end user essentially. And that allows them to keep doing what they're really good at, which is managing their storage units and making sure the experience is everything around managing that business per se. Because we're kind of experts in the money movement part. You're experts in that vertical and let them be experts in terms of selling their product.

We, as a software platform, we, when it comes to anything that's a really critical part of delivering our platform like payments or email delivery, anything that, anything like that that we're going to be doing at scale, like we're never going to be the experts in building those products. So you know, we, we always look to partner with the best in the industry because then we were able to, to provide that best in class to our end users. Some of the things that I think are almost like magical about Stripe is this the spark retry stuff. And we talked about that at the store summit and I hadn't appreciated exactly how that worked. But you know, with Stripe and it's incredible, it processes 1% Latin is last year, probably more than that now. 1% of the Internet's like payments. Yeah. So you're processing a huge amount of payments. And the way you described to me last a few weeks ago was if a card payment is filled from one of our customers. Customers.

Yeah.

Stripe will watch for that card to be successfully used across this network and will, will instantly retry it once it sees it's been successful. Is that, is that the right, is that how that retries system works?

Yeah. Like so let's just like zoom back for a second and kind of go, okay. You know, you're in this SaaS world essentially, right. This reoccurring payment model world. Okay. And a lot of companies sometimes build at the start, build their own in house version of this. Okay. Which takes up a lot of dev resources and times and you got to maintain that going forward. And like I always kind of, I use the analogy of like it's like building your own power plant just to run your facilities. Lights. Okay. You know, it's an enormous diversion of time, resources and risk to what your core business is. You know, if I use a rugby Analogy like I was in back row number eight, I wasn't a 10. Right. I'm not going to double down on my kicking skills or any of that sort of stuff or play management. I kind of stay in my lane as such. Now with the sum of all the parts, you get the the best of each person in their role and then the sum of the old parts, the team is in a much better place. Get the best in class for each kind of role. And so when you look at kind of the reoccurring subscription piece of the puzzle, there's a lot of complexity and compliance around that. Even like PCI handling card data yourself, that means taking on PCI compliance, that's a constant kind of costly, complex security burden as such. And Stripe essentially handles all that sensitive data and the vast majority of compliance around it, allowing you again to stay focused on renting out your units. Then in terms of these churn reduction tools that we're touching on, these tools are trained on billions of of global transactions. I'm responsible for covering significant amount of revenue from failed payments and that's revenue that's like, that's really simple that a lot of in house systems can't pick up and you would simply lose that revenue as such or you'd spend a bunch of time trying to chase all that. So the Smart recharges is the card version of it as well. But you know, it could be automating invoices and invoice collection or automating a reconciliation of the direct debits or the bank transfers coming in. Okay. And then there's also something you have to consider which is like the innovation cost, I suppose. So you know, the payments world, broadly speaking is constantly changing. There's always new fraud vectors. You got to consider new regulations, new types of wallets or payment methods that are always coming up. And our entire mission is going to keep the platform a cutting edge and staying on top of what payment method is relevant to the market, how we serve that up constantly without having to think, the end user having to think about that. And also given the flexibility we have flexibility from no code, low code all the way up to API first and making sure we can cater for all. So you can take a no code, low code solution and drop it in or just build all yourself VR APIs. And we were very API friendly, as you know, our developer friendly. That's probably where we started out, where our founders started out and live. But again, coming back to that thing of like what's your competitive edge, you know, and what Are you as such, like, are you a dev house, are you a storage company? You know, what is your competitive advantage? Focus on that and, and try and get the best in class on everything else so you can keep the main thing, the main thing.

So many people in self storage still will invoice, use an invoicing system, but process the payment outside of that system. So it might be kind of taking it into typing in details into a card machine or using a third party payment solution that's not connected to the invoice. And then there's so much time spent checking a payment, updating the status of the invoice, which, you know, like the reconciling that set of things, the manual time spent actually trying to take the payment or even letting people, letting lots of people pay by standing order, which is a, you're asking the customer to push the money in your direction and then you're watching your bank statement every day and trying to, you know, take that and update, update the invoice status again. There's so much in there that is manual that might not be direct cost, but it's just a huge amount of time. And when you mentioned stripe billing, and it's one of the reasons that we're sort of all in on stripe billing and all of our customers get access to it as part of our pricing, it's just such a brilliant, brilliant solution for self storage because of this. It's a recurring, you're invoicing people on a recurring basis. You want to make sure the payment is successful, you want to cut out the admin time and you want to update the expired cards, you want to chase the field payments all just automatically. And Stripe does such a brilliant, brilliant job of that, I have to say.

You're talking yourself into a job here in Stripe, by the way you're going on. But some traditional businesses would have started out building, kind of starting out themselves and using a Google sheet or an Excel file that track things. And it was scrappy, it was very startupy and the systems didn't work and they just kept going and going because it was growing or whatever. Right? And that's fine. But I think at some stage, you know, you have to look at the business and go, okay, just because we did it this way the whole time doesn't mean we need to do that going forward. Customers expectation of experience is changing and they expect, you know, Covid had played a big role in this, but the winds of change were already happening, which is like how people interact online or even in person. And Seamlessly, like buying things and the experience they expect, they expect a seamless kind of automated payment experience on this. But also like having things like Apple pay, Google pay. These are like, and these are as, you know, simple as just toggling it in the dashboard to offer it up. It's not a separate integration or anything like that and not something that you have to maintain. So this kind of meets that customer demand of kind of like instant 24 hour type service. And then with the intelligent kind of reoccurring billing piece, once that payment method is stored, we kind of run that entire process automatically. Then in terms of, even with invoicing, like how you might be able to, you know, how you're able to kind of invoice for that payment and pull the payment straight away, or how you can give a unique V band to that customer so they pay into a unique V band so we can automatically reconcile it so you're not chasing up the whole time. We can do the smart retry, smart reminders around that, automate that whole workflow, which is time and that's someone you got to employ and that's, you can, you can put an ROI against that. But business, sometimes they just don't have the time to step back and think what can they automate? Or what do we need to change? Do we need to change it? This is the way we've always done it. Is that fit for purpose going forward? And they're all different things that you have to think about and that Stripe obsessively think about in terms of how we can help our customers automate a lot of those processes to provide the seamless experience on the front end, but also the seamless experience on the back end in terms of reconciling all these payments. Know where they stand at any given moment with their revenues, what they have to chase or not chase or how to automate the chasing part of it like we touched on before. So they're the kind of two main things I think businesses have to start thinking about, which is the front end customer experience piece, but also how do they automate a lot of the features in the back end.

I think one way I think about it is the reason that we partner with Stripe is we know that Stripe is at the cutting edge. And so, you know, we know that a partnership with Stripe for us as a business has an upside in that, you know, we get to sort of come along on your journey of we get the upside of your investment in innovation and pushing the envelope. So just like Apple, like I really get frustrated now if I can't use Apple Pay when I'm checking out or, or on my desktop it logs me into link and it's just so quick and you know, like typing in a card now on a form that kind of just annoys me. It's like here's 10 seconds, I don't need to be spending doing this, they should have Apple Pay or whatever. But then it's, it's not just for us, it's also for our customers. You know, our customers get that access too. And one good example which is relevant not to our UK customers but to our Spanish and French German customers now is the E invoicing which is coming out at the start of next year in different countries, starting to get rolled out across the eu. So you have to, when you raise an invoice it has to be connected into like a government, some sort of a government tax system so that it's installed there. So the benefit for our customer is we're using Stripe billing, the invoices are in Stripe as well as Stora and we can, and Stripe has some third party tools that we're integrating with that you could just kind of, that, that takes care of that. And the benefit to them is they get a world class solution with that kind of E invoicing. But the other benefit is we're investing ourselves millions every year in our dev team and in our product and improving that and we don't have to spend time and effort of our team worrying about that. We can just say Stripe's taking care of that. We don't need to worry about building any of that sort of stuff. So it's, it's kind of like this innovation that you're pushing and your focus on that innovation, it gives our customers access that which I think is ultimately the biggest, probably the biggest long term benefit. If there's one thing a self storage owner might misunderstand or just better business owners in general misunderstand about payments.

Yeah.

That you wish they didn't. What would it be? What would you wish people knew?

Yeah. The one thing most people misunderstand is that the processing rate is not the true cost of payments. And the misconception is that people will focus solely on the percentage rate quoted by a processor and believing that's a fraction of a percent difference in the key to profitability. But the reality I think is the biggest strain of profitability is not the rate, it's the lost revenue to embody return and operational efficiency. And like if a cheaper processor loses you like an extra 3,5% of monthly recurring revenue from like failed payments because they lack smart retries. You know, that's something that you should consider, I think. You know what I mean? So I think you have to look across the total value across your business that it impacts on, rather than one key piece of it. I think you're missing actually the true value that is delivered. The true cost of payments is the rate plus the hidden cost of lost revenue or manual reconciliation or administrative overhead. And by automating and optimizing payment success, you can significantly lower the true cost of running your business. For me, that's the biggest, it's a bit high level, but I think that's, that's the biggest misconception that, that I wish people understood a bit more.

That's, that's a great thing to, kind of a great point to finish on because, you know, I think that's, that's a really interesting message. We, I just been thinking about it recently because we have a customer who actually, he left store about a year and a half ago for cheaper processing fees. And he came back, I was chatting two weeks ago and he was saying that what they actually found was the headline rate was a lot lower than we were able to offer at the time. Although actually we could not meet that headline rate. So that's a different, different story. We can, we can more or less match any processing fee now. But he left for the lower rates. But what, but then there, there are the visible, there's the visible change, difference in the fees and then there's the invisible and the invisible stuff he just didn't, didn't know about. So for example, he was getting charged for every attempted payment, which with store that we don't charge for. But then also what they also found was that the percentage of the bookings that they were getting on the website went from 70% down to 2%. So what that meant was suddenly 68% of bookings that had to be taken over the phone. So that was a member of staff speaking to the customer, taking payment details over the phone, entering it all in the computer, a half an hour per call. Like there's a huge, huge, huge cost plus and all the other stuff you've already talked about, but reconciliation of payments. Yeah, I think that's this invisible side that, you know, you need to look at as well.

It's like that iceberg thing, you know, you just see the tip of it, you know, and, but you don't realize everything that's underneath the surface. That's, that's involved in money movement.

Yeah. Jimmy, thank you very much. That was really, really interesting. Really appreciate your time and good to catch up.

Yeah, no, it's always good to chat.

Great, thank you, Jamie.

No worries. Thank you.

Welcome back. A massive thank you to Jamie for joining us for the interview and to talk to us about some of the benefits that Stripe brings to you, your customers, the self storage industry as a whole. Our partnership with Stripe is designed to really bring the benefits of a global leader to you, our customers, to the software industry. And not just that, but because we've scaled to such a size, we also can bring the lowest fees in industry as well despite all of the benefits that we bring around field payment chasing and you know, massive decreases in your bad debt payments. So yeah, great. Thank you for listening. Thanks to Jamie for joining us. If you want to talk about payments and what Stora can bring you with regards to a partnership with Stripe, get in touch. We'd love to hear from you, but thanks for listening.