Ryan Ellefsen On Payment Processing For Direct Response Marketers - I Love Marketing With Joe Polish And Dean Jackson - Episode #167

Everybody, it's Dean Jackson and Joe Polish.

And here we are.

For all of our I love marketing listeners, we're going to do a episode with a guy who knows a lot about something that every business owner that at least ever builds and grows a successful business uses, has to use and will be well served to learn what we're going to discover today.

His name is Only if they want to get paid.

Only if they want it. Yeah, of course, of course.

And our special guest, he's a genius.

Network member, smart guy, Ryan Ellison. And he. Ryan, for people that don't know who you are, let's just ask you to give the bio of what is Platinum Payment Systems and what do you do?

Sure. Thanks Dean. And thanks Joe. So the quick history is I started about 15 years ago managing merchant accounts for a marketing company and we had about 200 merchant accounts and I got pretty good at managing them. And that was back in the wild west of processing when you could have multiple merchant accounts all over the place and everyone was load balancing everywhere and running continuity offers on top of continuity offers. And so I started to get pretty good at it and my team and I started to attend merchant processing seminars in an attempt to find out how we as the merchants were being ripped off by merchant processors. So we started. We looked at it almost as spying on the competition, right? So we went and learned how to do it and realized that most of the people representing merchant services to us didn't know what they were talking about. We were both excited and frustrated at the fact that the very people who were selling us merchant processing were in these meetings raising their hands and asking questions that were very elementary. So we started our own processing company about 10 years ago. And that's what we do. That's what Platinum Payment Systems is. It is a card not present low risk, high risk merchant processing company for marketers, for direct response marketers and launch marketers, coaching companies and everybody that needs that's in the high risk or card not present world. So that's what we specialize in and that's what we're really, really good at.

Awesome.

What we had talked about prior to.

Start recording is that this is basically going to be like a consumer's guide to merchant processing and merchant services as you refer to it, ryan Merchant Services 101. And another term that you use which was discussed in one of our Genius network meetings was making evil easier. Meaning it's one of these unnecessary things, not unnecessary, one of these necessary things that people need to do in their business and most people would prefer not having to think about it. But if you're going to, and you obviously want to get paid, like Dean Jackson said, you want to figure out how to do this in the easiest way humanly possible. So everyone listening. I mean, you're familiar with how we talk about how do you do business with a particular company is you teach them what they don't know that they don't know. And there's no one better that I know than Ryan to take everyone through all of the stuff related to this so that you can make informed, intelligent decisions that has everything to do with how much money ends up you getting to keep. Because if you're going to wake up every day and do business and you're going to accept credit cards and processing from people, you want to do it in the most intelligent, lucrative way humanly possible with the least amount of angst. So let's just start with that. I'd like to just ask you about the biggest dangers, the mistakes overlooked when it comes to merchant accounts and processing payments, all that sort of stuff. And before we do that, Dean, is there anything you want to say to set the stage related to this very important subject to all business owners?

Well, I'm excited because it's kind of like what we were talking about before the call that this is going to be like consumer awareness guide for merchant processing. Because a lot of times people just don't even know the questions to what they don't know. They don't even know what they don't know. So this is really going to be a good education.

Yeah.

And it will also show how me.

And you, who have been in this world for many years, how dumb we are in many areas too, that Ryan is about to give us an education, which is fantastic. So every marketer out there, get ready to start taking some notes and you are going to learn some really useful stuff. And of course, Ryan has a lot of experience with direct response marketers, and a lot of our colleagues and a lot of our friends actually utilize his company. And so that's what he's the guy to talk to. So, Ryan, let's start with just going through it.

What are the biggest dangers, mistakes, things.

Like that, and just educate some people listening.

You bet. So I think one of the biggest. And we call it making evil easier.

Right.

Because it's a necessary evil. If you want to be a successful business, you've got to take credit cards and you've got to be able to accept all the different credit card types. And there is some frustration that comes with that. So if we can make it easier for you and help you understand it better, that is certainly our goal. When it comes to explaining this to people, a lot of times we find that it's similar to changing your car insurance or your health insurance. People think it's a fantastic idea, but they don't really move on it very quickly. It's one of those things. We'll get to that when we get to it. I like those ideas, but I'm busy trying to create top line revenue right now, so I'll worry about that later. And one of the things that we explain to people that they obviously understand intuitively or if they dig into it, is if you can save a percent or a percent and a half on your processing, it's the equivalent of doing 15% more top line revenue. Because once you take out all those costs, this is a hard cost that you lose every month. So we're talking bottom line revenue back into your pocket and, and say that again. This is really. Yeah, so if you look at it, if you look at a profit and loss statement, for example, you've got your gross sales, then you've got, let's say you're running an affiliate offer, so you've got a cost per acquisition model, you've got your refunds, you've got your product cost, your shipping cost, your customer service cost. By the time you put in all those costs, what you're left with is a net. And your net, if you're doing a great job and you're getting a double digit digit net, it might be 10%, 12%. If you are then paying processing costs out of that, for every percent that you save in merchant processing, it equates to roughly 10 to 15% of top line revenue. So saying, well, I'm going to go out and I'm going to create top line revenue today and hopefully I can increase my sales by 5 to 8%. Right? Or hopefully I can do this new strategy that's going to get me 15% more customers and then I'll worry about my credit, credit card processing later. Well, you're really accomplishing the same thing by saving 1% of your bottom line. Because since you've already removed all those expenses, it comes out to the same amount of money. Now go out and increase your top line revenue by 15% and you make that much more money. Right? Because now you're saving all that money that you would have spent when you're making 15% more revenue. So it really is something that people should worry about more often.

Right.

What are those product costs? What are my shipping costs, what is my processing cost and my customer service cost? Because if you're wasting money there, more top line revenue is just going to make you waste more money. Does that make sense? That makes total sense. Sorry to interrupt.

When I said if you could say it again, but I thought it was such an important point that I really wanted to emphasize it and reiterate it and not just have everyone like, oh.

I mean, that's a huge deal.

If everyone just got that and you translate that over the next five or ten years, for many people listening to.

Us, if they just fix that one.

Area, that will result in hundreds of thousands of dollars. For some of the people I know that are actually that listen to. I love marketing. So that's a pretty powerful statement because at the end of the day, if you're looking at it from a money standpoint, we're all in the arithmetic business, and the more that you can make the arithmetic work in your favor, the better. So awesome insight. That alone was worth just even us doing this interview. Now I guess the question becomes how.

Do we do it? But yeah, keep going though. That was great.

You bet.

Well, let me give you some important things, a few tidbits that I think will really help some people. Everybody should be getting merchant statements. Whether you get them in the mail or whether you get them online. Your merchant processor, whether it is a processor or it is PayPal or whomever you use, they should be providing you with monthly feedback on what your rates are, what you're paying them. And oftentimes those are very complicated and difficult to read. And they do that on purpose because that way it's easy to hide hidden, you know, it's easy to work hidden fees in there, and they don't want you to figure out exactly what you're paying. That's pretty common. So just some things to keep in mind when you sign up for a merchant account, usually you're going to sign up for a daily discount rate as opposed to a monthly discount rate. So just so everybody knows, by default you're going to pay that discount rate each day, unless you specifically request to move to a monthly rate. So one thing, that one is not better than the other. It just depends on how you want to do your accounting. So some advice to you would be, if you want to simplify your accounting and you want the money to stay in your account longer, I would recommend that when you sign up for a merchant account, you recommend a monthly discount rate as opposed to a daily discount Rate. All that means is they are going to bill you for your merchant fees at the end of the month instead of billing you every day, which makes it really hard to track. So for example, if you run a $100 transaction, you'll see $100 on your CRM, but you will only see say $98.82 in your bank account. That gets frustrating and hard to match up. So one thing you are going to want to request anytime you get a new merchant account is that it be put on a monthly rate. Another thing is check your terms and conditions. Make sure that you're not signed up with a company that holds you to a three year or a five year term and then charges you a huge cancellation fee. It's a pretty common practice in this industry is to entice you and lure you in with a low rate only to then reveal to you that you're paying higher rates. But by then you've signed a three year deal and your cancellation fee is $599. So when you call to complain, they say, sure, we'll let you out of that contract, it'll just be $599 and they've got you. So it's a really, really important thing is to make sure that you're just on a month to month contract. Don't ever sign a long term contract. There are plenty of companies that will do short contracts. Avs. If we want to talk about AVS really quickly, that's address verification service. Any marketer out there who's paid any attention to this should know that AVS or address verification is something that you have the ability to accept or not accept through your gateway or through your CRM. It's interesting guys, if you're running a subscription billing, you may not want to use AVS because AVS will decline credit cards for which the customer has changed their address. So if I'm purchasing your Nutra offer, for example, or I'm buying your skin cream and you're billing me every single month for that skin cream, but I move and I don't update my address with my bank, you're going to get an AVS mismatch and you won't be able to bill me and I'll drop out as one of your customers, even though you might try and rebill me, and try and rebill me, it'll continue to decline because you have AVS on. So if you're a subscription billing customer or a subscription billing merchant, I would recommend that you not use AVS even though your bank's going to tell you to use it. I wouldn't do it because you're going to end up. We've done all kinds of studies on that through our own merchant accounts and through all of our own Nutra stuff that we offer. And it makes sense in the long run not to use AVs. So that's an interesting thing. Another thing. Another. Go ahead. I'm just going to say these are.

So insightful, so counterintuitive. You wouldn't think about these things.

I think people should just send.

Not Dean, maybe Ryan, but. Well, definitely Ryan. Me and ryan. Just like $100 bills for each one of these tips. Because in the scheme of things like the AVS thing, just on the subscription based model. Think about some companies, how many freaking tens of thousands of dollars they probably. I'm sure you can tell horror stories, Ryan, of people that are not even aware of something like that. That's just crippling their business. Absolutely.

Because it makes sense. People think, well, I want to comply and AVS is an address verification. That makes sense. Of course I want. But not if you're a subscription merchant. You don't want to do that. All you're doing is reducing your own pool for billing. Obviously that's not something you want to do. Another important issue, here's a huge one that everyone should know. Think very carefully about what you want to appear on your customer's credit card statement. So when you have sold something to the customer, it is very common practice, just so you know, for the default to be the name of your dba. So if you have a company and it's your dba, you're doing business as Widgets Incorporated.

Okay?

You're selling Widgets Incorporated and you don't specifically tell your merchant processor what you want that descriptor to say. What your customer will get is Widgets Incorporated. Well, most of the people listening to this, you don't actually brand yourself or you don't sell your products under your DBA name. So Widgets Incorporated might make super widgets and discount widgets, or you might have a website that sells new happy widgets. What you want your customers to see is what they are purchasing, not your corporation name. So make sure that you let your, let your processor know what you want that to say and make sure there's a phone number and keep in mind everyone, that you only get 22 characters. Common mistake is that you put these nice big descriptors, but if it's over 22 characters, it's going to cut off your phone number. And that is, of course, merchant death. You're going to get chargebacks, you're going to have more refunds, you're going to have problems.

You have. Can you have multiple of those, Ryan.

Or can have multiple descriptors? Absolutely. And you can use smart descriptor. And you can. Sure. You can have different merchant accounts with different descriptors under the same entity. There's all kinds of things you can do. But those descriptors can't be over 22 characters. And that includes spaces and dashes and everything. If you do, it's not that it won't show up, it's that about. About 25% of banks, especially smaller credit unions, for example, and little local banks, the lowest they can go. Excuse me, the biggest they can go is 22 characters. So some of the bigger banks, you might be fine. But if you want to be safe and you want all your customers to get all of your credit card information, make sure that you're 22 characters, including the phone number and including spaces, and you'll be safe. So that, to me, is something really, really important that you should know and that everybody should do right away is check that descriptor. Make sure your descriptor says what you think it should say, and make it as intuitive as possible.

That's pretty good. That's great advice. Yeah.

So let me explain something. When you talk about the biggest dangers, I think the biggest dangers for people are understanding that credit card processing is a loan, Right. It's interesting because it's actually called credit card, which means they're extending you credit. But when you try and explain this, it's interesting because people don't think of it that way. Right. They think of it more as a service you're offering, but they don't understand. Most people, without thinking through it, haven't thought, oh, yeah, they are extending me credit. When you get a merchant account, the expectation then is that the bank is going to cover that and give you, the merchant, your money, and you're hoping that the merchant does supply the product that they're supposed to supply and that the customer is going to pay their credit card payment every month. And if one of those two things don't happen, the bank loses money. So what's interesting is that the bank is taking a big risk. And we get people all the time who come and say, well, I've been doing this for years and years, and I'm really big, I'm really good at this. And so you should just get me everything I need right away. And we're pretty good at that. We really are. And we want to work with everyone and get them everything they need. But it's important to understand you are asking for a loan. Essentially you are asking for a bank to cover your credit. So there are categories and direct response coaching companies. Anything you do, subscription billing that's online is constituted as high risk. It's a high risk processing endeavor. And most people, when they hear they're high risk, kind of balk at that. They say, no, I'm not high risk. So Joe Polish, your account is a high risk merchant account. And it doesn't mean that that high risk doesn't mean that you're selling anything you shouldn't. All of our accounts are high risk accounts. It just means that for example, if you provide something to a customer that has a future deliverable, you pay me X and I will deliver Y and Z over a period of time. That's a future deliverable and that's high risk. So all your coaching companies are high risk. All your subscription based companies are high risk. Doesn't mean that they're fantastic products offered by fantastic people. But you need a high risk processor. Because if you go out and ask First Data, for example, who is a fantastic processing company, especially if you are a retail merchant, if you are selling widgets out of your brick and mortar business, First Data is a great place, you can go there. But if you are trying to sell something online or you are trying to provide something to a customer with a future deliverable, you want to stay away from a processor like that. You want to go with somebody that gets what you are doing. So that's really one of the big ones. Choose your processor carefully. Make sure your processor understands what you are doing. So that when you run your offer, I think Dean said it, when you go out and you run your launch or you run your offer, you don't get your money frozen. Because that's the big horror story, right? Frank Kern. We have a video from Frank Kern on our pages. It's Frank Kern telling everyone how awesome we are. And I mean, who doesn't want a video of Frank Kern telling everyone how awesome they are? That is true.

I mean, he sent me videos almost daily of how awesome I am for him. And now his life would be completely incomplete if he didn't know me. Which is true on so many levels.

But see, Frank Kern had some terrible experiences with merchant processing, right? And so had his money held, had all kinds of problems. And then what we've been able to do is take good care of Him. And so we do. And so we tell everybody we know that that's the case, and they can go check that out. So having the right processor means a lot. That's really true, isn't it?

That's especially true if you're doing a launch model where you have intermittent stuff where there's nothing, nothing, nothing for month after month and then all of a sudden, millions of dollars coming through, three days it is.

It's especially difficult. And it's because we all expect the banks to use common sense, right? The expectation is, you know, everybody comes out and says, we understand high risk. You know, you'll get hit up with guys who will say, hey, come process here. We get high risk, we get the launch model. Well, they don't. They really don't. Because then what happens is they underwrite you. For easy math, let's say you run a launch model and you're underwritten for 1.2 million. The bank looks at that 1.2 million annually and says you get $100,000 a month. And if you're a launch model, you don't do 100,000amonth. Right. You might do 400,000 one month, 200,000 the next month, and then nothing for two months. You might just have refunds for the two months after that while you're getting ready for your next launch. And what they will do is they will immediately freak out, slap a huge reserve on you and or freeze your account and say, whoa, whoa, whoa, this isn't what we signed up for. You just did 400,000 in one month, which is way over your approved hundred grand. And at this rate, you're going to be at like 4.8 million for the year. And this is not what we signed up for, when in reality it's exactly what they signed up for. They just didn't do their homework the right way and didn't understand what the launch model was. So having a bank that gets launch models, super important. So we run our own launch models, for example, we use the launch model so we get it, we know what it's about, and it's a really important thing to understand.

Let me go back to even the term at the beginning and reiterate this for our listeners. The people that have been in business for a long time totally are hearing you talk and relating to all the horror stories that many have gone through with the things that you don't know.

You don't know until you get into.

It with merchant processing and you lose money or money is frozen or all kinds of stuff. Even people that are just totally legit and have never done anything that would even breach unethical or sketchy. And of course, there's lots of people out there that are idiots and they're selling crap and that sort of thing. Those people should get shut down. The thing about making evil easier, if you're a starter startup, listening to this and you have not gone through this, hearing this now, can save you so much anxiety and stress and save you money, make you money, that I can't even reiterate how important it is. But it's also one of these subjects.

That most people don't like talking about.

They don't want to hear about it, that sort of thing. But it's great that you're bringing all of this up because this even takes me back to my early days in my business when I first started selling programs to carpet upholstery cleaners. The merchant service we had, they literally held the first $10,000 that I had ever sold for a year because of some. I don't even know, I can't even remember what it was, but it was some nonsense about. Because of the guarantee that I had, they came with a one year guarantee. So they not only held the money, I mean, it was product that I already delivered my money. And we did not see that money. I mean, we immediately switched to a different merchant service once we found out that they were doing it. It was completely unethical, but basically they held the money for a year. Had I not had the ability to market and stuff and make more money, I had provided services and ten grand worth of stuff I sold that was never given to me.

People can imagine that.

Imagine whatever business you're in, you sell $10,000 worth of stuff. Your merchant service, that is your money, it's your stuff, but they're holding your money. And I didn't see it for a year. It was a trip. And had I met a guy like you in the beginning, it would have completely been a total game changer.

Yeah, and I'm sure they had that buried down in their fine print on page 14 of the contract. Yeah, no, totally hold your money whenever they want. Yeah, everyone needs to know that. And it's interesting that you talked about startups. One of the things that I think is really important for listeners to understand is that the sexy products out there right now are stripe and Square and PayPal. And these products are good products. They really are. They're good products for people whose businesses are in a state of infancy. And they're marketed really really well. And their whole selling point is, look, you don't pay any monthly fees. Well, that's true, you don't, but you pay a terrible price. Their discount rate is extremely high. So they lure people in by saying, and again, they lure people in is maybe a bad way to put it. They are good products if you're doing under $3,000 a month. So we sometimes have people who will call us up and say, hey Ryan, I want to get a, I want to get a mobile account. I want to use my phone and I want to plug in the swiper on top and I want to use your app and everything. I say, great, we've got all that, we can certainly help you. How much business do you do? And again, we help big businesses, small businesses, it doesn't matter. But obviously we want to try and do what's best for our customer. So if the customer comes to me and says, I'm just starting up, I've been in business for about six months now, I've been using PayPal or something, but I want to go to a mobile solution and I do about $1,000 a month. If you're doing $1,000 a month and you're face to face, you're seeing your customer and you're swiping their card square is a great, it's a great solution for you. It really is. If you're doing $2,000 a month, PayPal is a great solution for you. Stripe. These solutions are built for people that are really, really small. And shtick is based around ease of setup and ease of use and quickly getting to market. Well. And that's all basically true, except for a couple things. One is that merchant accounts aren't hard to set up either. And two is that what you're signing up FOR is a 2.9% and 30 cent a transaction rate. Well, that's terrible. So if your business grows and you become successful, you're simply throwing away money by using these. If you are a startup and maybe you are just dabbling in the market, you are testing something, you don't know if it is going to work or not, they are perfectly viable solutions. One of the things I just wanted to address was that know what your business is doing and where it is heading and if you are doing over $3,000 a month, then you're over the threshold for those solutions and you ought to get a merchant account. And any merchant account that's worth anything at all can price you at least a half a percent to a full percent cheaper than all of those options. So they're fine for startups, but they don't really work. If you're serious about your business and if your business is growing, does that make sense?

It makes total sense. Yes, maybe to me. Dean, does that make sense to you? Do we need hand puppets here? Can you draw?

What's that?

Can you point to the puppet where it hurts?

Yeah, we try to take this making evil easier. Try to throw a little bit of humor in it. But no, Dean, it's a really important point. The whole thing about learning this from the very beginning.

I've often told people that one of.

The things that I've discovered of being more successful in business has as much to do with the strategies that you implement and how clever you are in your ability to manage and deliver great products and services to people and do the good marketing. Right. All those are important elements. Another important element of business success is tolerance for nonsense. I mean, the amount of stuff that you unfortunately have to learn through the school of hard knocks, even with the most preventative measures you can, things are.

Going to hit you.

Of things that I have to deal with running a multimillion dollar business on a daily basis, if I had to deal with some of those things from incompetencies when I first started out, I would have wanted to shoot myself basically. And some days probably people feel like they do now. The reason I bring that up is.

That this is one area that if.

You get this handled, there's all kinds of things that you will avoid down the road and you'll have a much deeper strategic understanding of how to run a business. Your who Business is about money.

A lot of people get caught up.

On the, oh well, I want to do this or I want to do that and they treat it like some sort of little game. And the truth is you can be the greatest person in the world. There's no relationship between being good and getting paid. You have to set certain things up in order to get the best conditions that you can. And so what we're talking about here, many people, myself included, looking at P&LS, my eyes feel like they want to bleed. However, I have people that help me. I have a part time cfo. We go over numbers and things like that. If you're not willing to do that stuff, you will pay the price. Everything that you're talking about, Ryan, everyone in business that's going to grow any sort of substantial size business, you are going to be dealing with this. And to take everything. I've taken a tremendous amount of notes Here, and I've been doing. I've had my company for 20 years. I thought I really knew merchant services. Plus, you're in 25k and I've listened to you and already today I've gone, God, I don't know if we're looking at that.

I love it. I love it.

And I'm rambling too, but hopefully it's a decent ramble and will be encouraged by some people.

It is.

Well, let me tell you one thing. Merchant process. It's all about the numbers, like you said. But it's also like any other business. It's a relationship business. It's about understanding your numbers and having a good relationship with the people with whom you process. If you're calling into an 800 number and you're getting transferred to an 800 number and they do risk in one state and they do underwriting in another state, that's a tough place as a customer to call in and feel like you're being taken care of. And maybe someday we're so big we can't do it this way, but we give out our cell numbers, we give out my personal line. And so we help people with. And one of the things that we often spend time on is people will call in and ask me, I want to get a new merchant account because I'm frustrated with company XYZ that I'm working with. And the biggest question that I'm asked all the time is, why did I sign up for a rate of 2.5? But when I do the math on my statement, I'm paying 3.5, they always want to know, why is that? Why did I sign up for one rate and I'm being billed another rate? And there's a really great, simple answer for that. And it's going to be frustrating for a lot of people. But what you call that rate that you're actually paying is what we call the effective rate, meaning regardless of what you were quoted, there is an effective rate, which is the real rate that you're paying. And the difference between the two is where a lot of credit card processors make their money, point number one is don't ever fall for the bait and switch. Super sexy rates online. If you go online and say, type in credit card processing and you'll find 50 companies that want to offer you a 2.1 rate for your online business. And that is a fantastic rate because blended interchange, not to start speaking nerdy words to you, but blended interchange is around 2%. So 2.1 is a fantastic price. But guess What? Nobody's going to pay 2.1%. That is a bait and switch deal. They're going to sign you up at 2.1%. But forget to explain to you how pricing works. And they won't explain to you that that's your qualified rate, but everyone's going to pay a non qualified rate. So let me really quickly explain pricing because I think this is going to help a ton of people. There are two ways to do pricing, and both ways are based on what's called interchange. Visa and MasterCard dictate interchange. And there are over 600 different interchange rates. So every single card that you use has a different interchange rate. Every type of business has different interchange rates. So an online subscription business has a different interchange rate for every single card type than a restaurant. So that's why there are hundreds of interchange rates. There are interchange rates for using your basic credit card. If a customer is coming to you with a credit card from their local credit union, there's one interchange rate. If you've got a Southwest Airlines Miles card, that's a different interchange rate. If you're using your business card, that's a different interchange rate. So all of these different cards come in at different rates. Understanding that is really important because when you go online and you're charged that 2.1 rate, you have to understand some of your charges are going to come in at 1.5, some are going to come in at 3. So how are they pricing you? So there are two ways to price it. One is called a discount rate and one is called cost plus. Most people listening probably have a discount rate. That's where you're given a really low rate and that's your qualified rate. Meaning if someone goes to their bank, gets a basic credit card that charges them 17% interest or 12% interest through their credit union or their bank, and they purchase your product, you're going to pay that low qualified rate on that card. But if somebody later that day comes in and uses their Southwest Airlines card or their Marriott rewards card or whatever it is, you, the merchant are going to pay what's called the downgrade on that, meaning your interchange rate will downgrade. And Instead of paying 2.1, you're going to pay 3.5 on that card. And merchant processors don't tell people that. They just lure you in with the sexy upfront price. And it's so funny because people will call me all the time and they'll say, hey, what's your pricing? What do you guys charge? And I tell them, you don't want me to do that. Honestly, I can give you a low rate, but that's not how honest people work in this business. Because for me to give you a price without even seeing what it is you or understanding your business, I guarantee you I would just be ripping you off. Because there's no other way for me to do that than to make sure that the pricing is so high I'm covered regardless of what you do. Right? I mean, nobody is going to give you an automatic merchant account over the phone or online and post it unless they know they're covered. If you think about that, no one would offer a product with thin margins online. So people fall for this every day and they come in and they go, I have this 2.5 rate, but I'm paying in reality this ridiculous rate. Why is that? Well, it's because your processor failed to mention that you have a non qualified rate along with that qualified rate. So while you might have a qualified rate of 2.5, guess what? Most of your customers aren't using basic cards. They are using rewards cards because they want to get the miles or they want to get the, the extra night stays in the hotel or the nice gifts for their wife. You, the merchant pay for that. You pay for that through downgraded charges. And that's why you end up paying more. So if you want to avoid paying more, you need to work with a processor who's honest with you and up front about here's what your qualified rate is and here's your non qualified rate. And so let's work towards an effective cost that's cheaper than what you're currently paying. So that's one way to do it. And that's called, that's the discount rate model. The other way is cost plus. Cost plus means you just take whatever discount rate comes in and you add a small markup to it. It's transparent, it's easy. You can see everything that you build. You can see exactly what your bank is making. People like it. However, you've got to be careful with this, everybody, because it's one of the ways people can rip you off as well. Because, because everybody assumes that if it's transparent and easy. Just like a minute ago when I was talking About Stripe and PayPal, if it's transparent and easy, it must be better, right? But you can still be transparently ripped off if you don't know what you're looking at.

Right?

That's a great term too. You can be transparently ripped off. Yeah.

There's many companies that Specialize in that.

Misdirection. Look over here.

Exactly. Look how awesome this is. I just showed you every single fee. So there's no way I'm ripping you off.

But.

You can price a Cost plus account at five times, at 10 times what you could do a discount rate for. It all just depends on your relationship with who you're working. If you understand, if you've got a good relationship with your processor, you understand what your charges are, and you understand what that plus is, then CostPlus is more transparent, it is better, and it can save you money, but it's not necessarily the solution to all of your processing problems like some people would lead you to believe. So those are the two ways you can be billed. Costplus and the discount rate model. Understanding that that's how you're being billed can help you understand your merchant statements. Now you can look at them and you can read them and you can see, okay, here's where they're charging me for this. Just so everybody knows, Blended interchange is about 2% for qualified, and it's around 3% for non qualified. So anything above that is profit. And we all know it's okay. I think we all understand that the bank's got to make some profit. But you understanding how much profit your bank is making and understanding the model will help you as you negotiate with, with merchant processors and try and save money for yourself. So if you're paying 2.25 to 2.5 for a qualified rate and somewhere between 3 and 3.5 for non qualified, those are pretty good rates.

Those are pretty good rates.

And that's the range that you want to be in. And for some people, you can be lower than that. For others you might be a little higher. But it would depend very much on your type of delivery, your product, your customer service, your prior processing, how many refunds and chargebacks do you have? And all kinds of other things, but hopefully that clears up some pricing issues and gives people some ammunition with which they can go and renegotiate some of those processing contracts that you have.

Totally.

You know, it's funny, I like had a whole list of questions here for you, but you just kind of went on a whole roll and sort of covered the.

Yeah.

I mean, it is so amazing that when, I mean, I understand what you were saying about how for stripe or for businesses that are just getting started, that some of those services are a good place to start. But I remember back in 1998 when I got my first digital online merchant account for our Stop your Divorce book. You know, the options were very limited back then. We were using a service that was charging like seven and a half percent of the, of the total cost. Oh yeah, yeah, Pretty interesting. And they just, they'd send you a check, you know, twice a month or whatever, but it was seven and a half. That was, that was the negotiated good rate at the time. I think it was normally 10 or something. But things have changed. Life's getting better, isn't it? I mean, we certainly have more.

Well, that actually brings up a really good point. Let me give kind of a golden tidbit to everyone out there. If you accept a lot of debit cards, so hopefully you understand who your customer is. If you take a lot of debit cards, you should absolutely switch your pricing model to Cost Plus. If you're listening to this call, this is worth the price of admission. If you, if you have a lot of debit cards, and I will tell you right now, if your product is under $200, you've got a lot of debit cards. If it's under $100, it's as high as 50%. Debit card use. How would they know? You can look on your merchant statement and it will say it on your merchant statements because you have to separate out debit card from credit card use. If you have any questions about it, feel free to send it to me. This is probably a good time for me just to say I'm happy to do free consultation with anyone and we can tell you how to reach me. And I'm happy to look at your statements and just tell you what you're paying and why. If you know what you're paying and why, then you can decide what to do from there. But understanding if you're getting a lot of debit cards is really important. And I can tell you if you're under $100 industry wide, the numbers say you've got about 50% of your sales are being made on a debit card. Debit cards have a much, much lower interchange rate than credit card sales because of the Dodd Frank bill. Right. And to hold the Durbin agreement, most of your, or I should say many of your debit cards come in at an interchange rate of.05%. Now if you remember from before we were talking about 2% or 3%. So 05 is a very low interchange rate. So here's the quick explanation. If you are on a discount rate model, meaning you're paying 2.5% and let's just say 3.5% for easy math and Somebody uses a debit card with an interchange rate of.05, you're still going to pay 2.5% on that debit card. Whereas if you were on a cost plus, let's say cost plus 30 basis points, your cost comes in at.05, you are going to add in your 30 basis points and you are going to pay 35 basis points for that same sale. So you can either pay 2.5% or 1/3 of 1% for that sale if you are on Cost Plus. So Cost plus can save you a lot of money if you have a lot of debit cards. So everyone listening. Great way to save money is take advantage of that. If you have a lot of debit cards, call your current processor, tell them you want to switch to Cost plus, or better yet, call me and I will switch you to Cost Plus. But that's a great way to save money. Also, just so you know, on Cost plus pricing, you don't pay. Some banks charge you interchange on refunds. On Cost plus, you don't, you don't pay any interchange on refunds. So again, it's a great way to maximize your money. Just make sure you understand what it is you're paying for on Cost plus and what your charges are coming in for. Make sure you're educated and you have a good response. Relationship with your processor. Tons of money to be saved right there.

Love it.

Let me go over some of the.

Questions I had and some you've already answered. And if there's anything else you want to add to them, just say, pass, we've already covered it. And if not, if there's anything else you want to say to it. One of the questions I had for you is you say there are three major components to selecting a good merchant process for your business. What are the three components? Is there anything you'd like to add to that?

Yeah, I could quickly summarize it. We've kind of gone over it, but it's really, it's relationship, it's pricing, right?

So you've got.

Relationship is really important. Your pricing is really important. And technology, right, Technology. Pretty much everybody has the same technology guys, and if they don't, they'll have it tomorrow, right? As soon as somebody comes out with something, everybody has it the next day. So technology is important, but it's not the most important in our business. It's relationship, relationship, relationship. Pricing is a big deal. Again, Frank Kern's video is funny because he comes on and he says, hey, I love these guys. I've used them for a Long time. I recently found out I'm getting pretty good rates from them too. But he said, but I didn't. For me it wasn't a big deal, right? He goes, I was taken care of. All my money gets in on time, they update me, they let me know what's going on in the industry, they make sure I'm taken care of, they communicate to me, blah, blah, blah. So he goes on and on, but he says, but the rates were good too. It's because he understands relationship is even more important than rates. It's even more important than technology. Everybody wants to make money and save money and we get that. But a relationship is the most important of those three legs on that three legged stool. So I guess that would summarize that question.

Yeah.

Awesome. The next one is what are the most effective ways people can stop chargebacks before they have.

That's a fantastic one. And we haven't really covered that at all. So the ways to do that, first of all, make sure there's the obvious ones. Make sure that your customer service is good. You wouldn't believe how many times we have guys that process with us or gals that process with us and they've got a chat, you can't talk to a person, or they put a website on there and then they occasionally check that queue to see if their customers are being taken care of. We see chargebacks all the time where a customer doesn't recognize the charge, gets online, says, hey, I need a refund for this. Gets off, and the wife says, or husband goes, so did you get the refund? And they say, I don't know, I put it in a queue. We'll see if they answer. Well, guess what? Those people go right to the phone and charge it back right after that. We see it all the time. Put an 800 number on there, put a person on there that answers the phone. That's one of the best ways. Other than that. There's a fantastic service and I won't pretend it's not offered by us, because it is. But there's a service called Merchant Lifeline. And Merchant Lifeline is a really fantastic service, especially for clients, merchants who do subscription billing. And it basically stops chargebacks before they happen. For the sake of time. You can certainly call me or contact me and I can tell you more about it. But essentially it's a contract we have with banks so that when a customer purchases Joe Polish's product, for example, they purchase Joe's product, they decide that.

I.

Didn'T get, for whatever reason, I Didn't get it. Or maybe we see fraud all the time. So they use Joe's product. They make $100,000 on Joe's product, and then they decide that they now want to redo their basement. So they call their bank up and say, hey, I don't know what this is. I don't know this Joe guy. Even though they just made 100 grand off of you, now they are charging it back so they can get some more money back. Unfortunately, there are dishonest people out there that do this. Well, we have deals with the bank so that the bank, instead of issuing a charge back, will call you. They will call up Joe or send Joe an email that says, hey, this customer is attempting to do a chargeback. You have 48 hours to fix this situation. And if you do, it won't count as a chargeback. So now you can call up the customer and either refund him, or you can talk him out of it, or you can offer him additional goods or services to make him happy. The point is, you can fix the problem. A lot of guys just refund the customer. And when that happens, it doesn't actually become a chargeback. So it doesn't count against you. You don't pay chargeback fees. You don't have that black mark on your record. And so it's a really neat way of kind of circumventing that whole chargeback process. And it literally saves you chargebacks. We found that for most people, it's between 15 and 25% of their chargebacks end up never becoming chargebacks. And we have fantastic stories where it's just saved people thousands and thousands and thousands of dollars. We have one client that was actually on a chargeback watch list and received 123 chargebacks the next month. And he would have been shut down, but we were able to block 26 of those. So he only ended up with 97 chargebacks because of the fines he would have incurred. We saved him about $26,000 just by having this feature set up. So you can go online and look up merchantlifeline.com or you can get in touch with me and I can tell you more about it. But it's a fantastic way to avoid those chargebacks.

Okay, we'll actually give out your contact info here in just a few minutes as we wrap up. So, I mean, you've already covered a lot of these, but is there anything else if you had to discuss?

Well, no, let me back up before.

I answer that question and say something about chargebacks, because some People hear chargebacks like, how is someone going to get that many chargebacks? Now, clearly there are some companies that are totally unethical and are selling crap and people are doing chargebacks. And that as far as I'm concerned, I will always reiterate, if you're not, if your front stage delivery is not as good or better than what you're even promising people, you need to fix that issue. Because operating with integrity should be your prime directive if you want to have a long sustainable business and obviously a good reputation. So I got to just say that that's a given. Now, there are some people that are selling so many things, things that are doing the right things, but they will get a lot of chargebacks. And there are people that I think just exist to try to take advantage and screw entrepreneurs too. So, like, why would someone get that level of chargebacks? I just wanted to bring that out there, not for myself. I already know. It's more like a question for people listening.

Yeah. And they do subscription trial offers. There are a lot of really good products being offered on trial offers out there. So try our skin cream. Try it for seven days. If you don't like it, just call us and we'll cancel you out. If you do like it, continue to use the product and you'll be billed X number of dollars every month until you call us and cancel. You can have a great product, it is reasonable, and you can have a fantastic product and you can disclose it 10 different ways and you can make them check five different boxes saying that they agree.

And you know what?

You'll still have people that just check it all. They'll say they agree and then 20 days later they'll call in for a refund or 35 days. And you've already sent out their next shipment of skin cream, for example, and now they want to charge it back. And that's really frustrating as a merchant. Right, because you're going, not only did I send you your first batch, I already sent you your second batch of skin cream. And you've liked it, you've used it, and you're actually charging this back now because you didn't bother to read the stuff that you said you did. So that's a case where we see a lot of chargebacks. And so if you can block those or you can figure out a way to keep those dummies from ruining your business, I'd highly recommend it, obviously.

Yeah, totally.

So the other question is, how does.

Someone make sure their money isn't held captive by the processor or bank any other things related to that?

Yeah, communication. And I honestly don't mean to keep referring back to Frank, but Frank says on that video that he did for us, these guys are the silent processors, right? I never even know they're there. They just take care of everything. Well, that's true, but actually Frank's being, if you can believe it, a little humble there. Frank actually does let us know whenever he's going to do a launch. He calls us up or he shoots me an email that just says, hey, Ry, I'm changing this offer. Same thing, but I'm going to charge $49.95 instead of 297. Or I'm going to. I expect this and I'm going to do a launch tomorrow, you know, and that's all it takes. And I email him back and say, great, I'm going to note it in your account, we'll take care of it and you're good to go. And he is right. So communication is the best way not to have your money held. Communicate. Communicate. And remember, these guys that are risk guys, hopefully there is none on the phone now. These risk guys are $10 an hour guys that get hired to sit in an office. They don't understand your product, they don't understand what you do. They don't get, if you're a coach, for example, they don't get that you're trying to help people, that you believe in your product, that you're trying to make people better, that you're trying to improve the lives of see A. They're risk people. So they're trained to see negativity. They're trained to be pessimistic. They're trained to not understand. So the more you communicate with them, the better. And that really is the key. Communication.

Yeah, I hear you totally. Okay, let's see what else here. I want to bring this one up. With bitcoin and other new currencies and exponential technologies, basically, what are things that people should be aware of, alert for what's kind of going on out there. That's going to be, in your opinion, that's going to change the game and the way that people accept money and payments.

Yeah, great question. And the answer may disappoint some people and that's that all the experts disagree on this. You can read 50 different articles on Bitcoin and have 25 different views. And the problem is, and my personal opinion is that you're going to see bitcoin be replaced by something else. Bitcoin will be the precursor to Something that works better. And you see that all the time in business. And that's why all the big merchant processing companies are actually sitting on the sidelines, waiting. It's not that they don't think bitcoin might work. It's that they're not going to invest the RD into creating it. They're going to let other people get ripped off. They are going to let other people lose 144,000 bitcoins and get prosecuted. They are going to let other people figure out all the problems. And then if it works, they are going to jump into this game. It is really interesting. You look at bitcoin and you see statistics like 45% of all Bitcoin mining results in fraud and people losing their money. That was a study just done. I didn't do the study, so I am not going to put my life on those numbers. But that is what the study said. You look at some of these studies, you see, okay, 10% of Bitcoin was used for drug sales online, drug sales and other nefarious issues online. It's a little sketchy. But is it growing?

Absolutely.

It seems there are large companies investing in bitcoin and I think it's going to get out there and be adopted by a bunch of people and then it's probably going to fizzle somewhat as it's replaced by a bigger and better digital currency. That's my personal opinion. But it's very hard for individuals to invest in bitcoin right now. Bitcoin's trading right now anywhere between about 300 and 600 US dollars. The problem is it fluctuates really high. It could go from 300 to 700 and back to 200. It's a very dangerous currency right now to be involved with. And until the small business, the mom and pop stores actually start to believe in bitcoin and accept bitcoin, you're not going to see it go mainstream, right? You're going to see these big online retailers that like overstock.com takes Bitcoin and that's great. But there's a limited amount of Bitcoin, right? 21 million. That's all the bitcoin they have plans to do is 21 million Bitcoin and they think they're going to take the next 150 years to actually distribute that 21 million Bitcoin. So when you look at the plan for pushing this out into the greater business community, I don't see it taking hold anytime soon. Especially if your plan is for over the next 150 years to release 21 million Bitcoin. It's a slow developing plan, right? It's a slow developing plan.

What happens, Ryan, if we go back to chickens and goats?

Yeah.

Well, then I would lose a lot of business because I'd like you to trade. I need you to do chickens and goats online. Well, you could have, you could have.

A different division called Platinum Chicken and Goat System or.

Okay.

I'll say something about the bitcoin thing too. And I am like, you know, I don't understand this. I mean, I have such a embryonic understanding of it and I'm trying to, to just kind of look at the way money moves and how people acquire stuff. And it's so fascinating. I sat through a documentary that Jeff Hays was doing that was dreamed up about the wealth gap in a 25k meeting. And Jeff, he took me to overstock.com with Patrick, I don't know, about two and a half months ago from the time we're doing this recording, who's the founder and CEO of Overstock. And he had told me me that at that point in time when we were there, he'd done about a million dollars in products that they had sold through bitcoin. Because he's one of the first merchant in the US big online merchant to take bitcoin. He was just of the mindset. Yeah, I'm just kind of exploring this and seeing where it goes and it's very interesting and stuff. But it's one of those things that I think looking on the sidelines and paying attention to, it's just another part of business and commerce. So I appreciated getting your insight on it and how you think about it. And yeah, I don't think we're going to, to chicken and goat soon, but you never know. You never know where the world is going to go.

Just remember really quickly when new forms of payment are introduced, it doesn't replace the old ones. People still write checks, people still use cash. They're still ach didn't replace everything else. So if bitcoin does become mainstream, it doesn't replace credit cards, it doesn't replace checks or cash. It's just a new way to pay.

Right, right. So any other important lessons or strategies for merchants that you've discovered that we haven't talked talked about here?

You know, there's a ton of them, but I think we've covered plenty. I don't want to overload people. I've got all kinds of little things that we could get into. Always make sure you Have a backup account. Always make sure your credit card brand logos are on your website. When should you accept CVV codes and when should you not accept CVV codes? You know, how. How do you do subscription rebilling? If somebody declines, how many times should you rebill them and for how many days? There's all kinds of things that would make you better at what you do, but I don't know that I know which ones I'd want to share now and how much info to share. And we could go on for hours. I guess I'd really just say it's not that I don't want to give you a bunch more info, but probably the best thing to do is. Is just if you've got questions or you've got concerns or you want to know more, give me a call and I can. I'm happy to help. Email me. I'm happy to help.

Well, that was a good setup then for obviously giving out your contact.

No, but it also shows that there's.

A lot of little things that there are to this, which is why it makes sense to actually work with someone that can help you with all of those things.

Dean, you were going to speak?

I was just going to say. Okay, so I think I've just been fascinated with what we're listening to. And like you said, Joe, you and I are sort of a couple of layers removed from the logistics and the day to day of our merchant processing and stuff. I can't remember the last time I saw my merchant processing statement or whatever. But let's. I think this is so valuable that let's really work on, you know, let's articulate an offer for people here because, you know, Ryan very generously said, you know, I'm happy to help. Go ahead and give me a call. Which is, as we know, the equivalent of saying, there's lots of stuff in the fridge. You know, go ahead and help yourself. But let's offer people a cookie here. Like, what would be an easy thing? It seems like, Ryan, you can tell a lot, lot from just looking at somebody's merchant statement.

That's exactly right.

How many merchant statements would you need to look at to get a good sense? I mean, could you do it from one or do people need their last three or.

Yeah, you can do it from one in some cases, but three is really the best, you know, and if I can get. If I can get three merchant statements, I can tell their card types, I can tell their pitfalls, I can tell what they're being, what they're paying yeah.

So what will you be able to tell from that? Like let's say somebody, this is their actions. Get your last three merchant account statements and then with that information, what kind of information can you give them? What would you be able to identify that's potentially going to save them money?

You bet. When I get those, what I usually do is when I can see their statements, I can see exactly what they're paying for and why. And then my first thing I go in is say, okay, how do I save you money? Because I want to put you one, in a better relationship. Two, I want to give you better tools. But again, first and fore, I want to save you money too. I want to save you money and that's usually gravy, Right. If I can put you in a better position where you're not having money held, you're not worried about, about it, great. But if I can save you money while we're at it, even better. And I can tell from your merchant statements, how many debit cards do you have? What are your monthly fees? What's funny, I see all the time, here's another big one. I'll see people paying a PCI compliance fee and a PCI non compliance fee on the same statement because they know no one's looking at it. Right. So they'll charge you $10 to be compliant and $20 to not be compliant, which makes no sense.

So, you know, let's get to like your GEICO offer in a way that, you know, where it's the equivalent of 15 minutes could save you 10% or more on your, on your car. Absolutely. You know it's the same kind of thing, right?

Yep. Exactly. The time it takes you to pull three credit card statements, which usually could take you five, 10 minutes.

Yeah.

Can save you a whole ton of money. I can tell what gateway you're using, I can tell what shopping carts you're using. In many cases we can tell whether those which rates are being passed on to you. Are you paying too much for international charges? Are you paying too many surcharges, Are they giving you a great low rate but then ripping you off on your monthly fees? And then we always provide a statement of savings that says here's what you're paying and why. And if you had processed with us over the last three months, here's what you would have paid a simulator in a. Yeah. And if you're interested in paying this amount going forward, let us know.

That sounds like a no brainer. So where do people email their statements?

You bet. So they can email me directly. And unfortunately, I have one of those names that's a little difficult. It's Ryan Ellefson. And so my email is R E L L E F as in Frank s as in sam en plattpay.com p L-A-T-P-A-Y.com so r ellefsonlattpay.com and that will come straight to me and I'm happy to help you there. You can also go to platpay.com and just fill out an application there. Just go to platpay.com and ask to speak to me. People can call me and I can tell you. My number is 816-812. That's my cell phone. Happy to talk to you. You can call me at my office at 816-903-6174. And as a lot of the 25K members know, as a lot of people know in this industry, I'm happy to help. Happy to go over this and just give you the feedback that you need. And if you come back and say, hey, thanks, I used this to go renegotiate at this other place. Okay, I'm happy for you. I'm glad you saved money. I'm glad you're doing well. If you decide you want to go with us, then even better, right? So just happy to help you out. That's awesome.

Now, other countries, people out of the U.S. i mean, is there any limitations?

No, no. We process all over the world.

Okay. Wow, that's awesome.

So I want to point some out too.

This is. I'm going to share with everyone listening, a little bit of front stage and backstage of even what's going on and what you just heard. So we started out talking about defining an area where most people are, I would say, oblivious to all of the inner workings and a couple of Merchant Services 101, which I certainly think we fulfilled on that, making evil easier and talking about how we're going to do a consumer's guide to merchant payments and merchant processing here, which I absolutely believe we did. Then Ryan went through and just educated everybody on the business, which was incredibly useful. This was a great episode. And then Dean at the very end saying, well, what's the offer? And here we are. We're all skilled marketers and we all run successful businesses and even all of us have to always think about, well, what's going to make it easier for the person on the other line to understand. So Dean actually identified something here that would take in all of Ryan's knowledge, all of this stuff he knows that would be incredibly helpful to everyone listening and saying, okay, now how do we present it in such a way? So it's like we did a whole episode on I love marketing, which people would be well served to listen to about how to create a mafia offer, but in the good sense of the word, not where you're basically meaning something that's so good you can't refuse it. Not you're forcing someone to have to do something there. So this is a great way to, to just even look at your business. So everyone out there listening, how are you educating your own clients and how are you using direct response to first off identify the ideal single target market and then educating people and setting the stage for them to want to do business with you so that you can go through the before, during and after stages of your business as profitably and as successfully as possible. Ryan, I think, I mean this was like a fantastic episode and you gave such really awesome advice. So I'd love to have the comments from all of our listeners. Go to ilovemarketing.com if you know any entrepreneurs, if you know any entrepreneurs, I can guarantee you probably 99% of them do not know the things that Ryan talked about on this episode and share this with them because you will be saving them money and you will be helping them to prevent some future angst that most people, people aren't prepared for and doesn't even know it's going to happen until it does happen. So that's a really good thing to do. So Ryan or Dean, anything else you'd like to say before we wrap up? Any famous last words or any final comments?

I think that's great.

I'm very excited. It's nice to see it all unfold. I think it's been very valuable. I think you're going to save a lot of our listeners a lot of money.

Yeah, I appreciate the time guys and just encourage people, don't find out the hard work way and don't call me when you've had problems. It's harder to fix. Harder to fix. Then it's best to take care of this now and understand what you're doing and not have to think about it so you can concentrate on what you do best, which is marketing. Get out there and create products and trust that you're with a company that understands and takes care of you. Okay? And so one last time, Ryan, give.

Out your phone number. And then if anyone wants to just look at platform and check out what they do, I'm sorry, why did I just say that? Platpay.com platplus it made me think of my Platinum plus group, the platpay.com and check that out and give you your phone number one more time.

You bet. It's 816-812-8989. That's my mobile and my office is 816-903-6174. And you can also just go to, if you go to platpay.com, you can fill out, it'll ask you three or four questions and you can sign up for a free consultation there and it will just go to me and I'll be happy to give you a call at whatever time you specify on there.

So you can just say I'd love.

You to give me a call on Thursday at 2 o' clock and we'll make it happen.

Awesome. Awesome. Well, great.

Thank you so much, Ryan.

We really appreciate it everyone. We'll talk to you on the next episode of I Love Marketing.

Have a great day. Sam.