💳 Reduce Your Processing Fees and Stay Compliant w/ Mike Andes

Hey, everyone, it's Mike Andes, the founder and CEO here at Copilot CRM. And I'm excited today to talk to you about something that is not often discussed, I.e. credit card processing fees. And what we've done to make sure that there is compliance as well as optionality. And we're saving you as much as possible when it comes to credit card processing. So let's go ahead and jump into this. This is actually a feature that very few CRMs actually allow, and that is passing along the processing fee to customers. And Copilot's had this for quite some. I want to go over a little bit of background. That's how do CRMs make money? The reason I bring this up is because it's actually a huge reason as to why a lot of other CRMs do not have this feature. And so many CRMs either create their own payment portal and they get a big slice, like half a percent or a percentage point from Stripe, like another payment processor, or they just get bought out by credit card processing companies. And it's in their best interest, obviously, to increase those transaction fees. And I just want to be very clear, I'm not against that. I'm mostly just sharing this from an educational perspective so you understand how the industry actually is working. If someone is paying, let's just call it $500 a month for software, that's relatively small compared to $5,000 a month in credit card processing fees. If they're doing $150,000 in revenue, and that's all being go, all going through a payment processor, that's taking 3%. So our approach here at Copilot's slightly different. We pass through stripe fees exactly as they are from Stripe to you. So it's 2.9% plus 30% per transaction for credit cards. For ACH, which is bank accounts that are put on file, it's a 0.8%, so a lot less, as well as it's capped at $5. So if someone has a $50,000 job, if they pay through ACH, you're still just getting charged $5. This is what Stripe charges us. And our goal here at Copilot is to really focus on the software side of things and then try to figure out how to save you more money on processing fees in general. And this goes without saying, but if we can get more customers to sign up with ACH compared to credit card processing fees, we would save a lot of money. And even when I look at the future of Copilot, I would rather figure out how can I save if, you know, as prices increase, as costs go up, if we ever have to increase our pricing at Copilot, I would rather be able To SIF save $5 or $10 for every dollar that we have to increase our cost because we're focused on this which is saving you money at the processor level because as you scale and grow the business to 3% starts to really add up fast. So why this matters for CRMs and kind of again just showing full transparency behind the curtain is credit card payments cost five to ten times more in processing fees than ach. Now this is going to be a much higher number if you are doing smaller transactions and it's still going to be five, ten times more if you are doing larger transactions on a $10,000 installation project. A $5 ACH fee is a whole lot less than $300 in credit card processing fees. In that case that'd be a 60 times difference in terms of fees. So this is really why a lot of software systems and CRMs steer you towards using credit cards. You and it's just the flat is they make more money. And again, I am not opposed to that. I just believe that at Copilot our focus is how do we make the software better and save you so much on that side that if we need to need to charge more for the actual subscription, I'd rather do that but not have to take 1 to 3% extra on every single transaction. So why this matters for you in your business and if you're like myself, I've paid four, five, six thousand dollars a month at my locations just on credit card processing fees. Add a and so 3% credit processing on a million dollar business is $30,000. You're like well that's not so bad. I agree. But if you're running a 10% profit margin business, that's 30% of your profits are going out the door to credit card processing. So it is actually a very key fundamental part of being a profitable home service business. Now there are some legal considerations and that's actually why we're making this move right now. Passing credit card fees along to customers is actually illegal in eight different states. And I can, I kind of think this is going to continue in a few other states as we see legislation coming down. And so it's actually illegal to use this feature inside of COPPA in some states. In many others, you do need to offer some form of no fee transaction. So if you're going to charge for credit card processing, you need to be able to offer check or ACH completely free. And that is without any fees and without any extra processing fees passed along to the customer. So our response to this, to make sure that everyone is compliant and to ensure that we still allow this functionality and bring down processing fees as much as possible, is that this summer we're going to eliminate ACH fee pass through entirely. So what we're doing here is keeping the optionality to for you to pass your credit card fees along to your customer for credit cards. But for ACH we're taking away the ability to do that. Now you say, well, why are you taking that away? Because then we can be compliant if you in most states by knowing without a shadow of a doubt that there is one form of payment ACH that is allowed to be paid without any fees. So it's going to really help us with compliance instead of completely ripping out this feature. So we know this feature is important, we don't want to take it away and we want to make sure you're compliant to do this. You also going to want to make sure you're compliant with your local laws. Because if you're one of those seven states or eight states that right now don't allow any sort of fee pass along, you want to make sure you are compliant with your local laws. So what's coming this summer we're going to, like I said, to stay compliant and protect members. The credit card fee pass along will only be available if ACH is enabled. So if you're an enterprise level subscription inside of Copilot, you can have ACH that is going to no longer have any fee attached to it. ACH customers will be able to process there for free. By doing that, we'll be able to then charge for credit card fees in most states and again, you want to check compliance in your local area. So in other words, if there's no ACH payment option, you can, you will have no option to pass along credit card fees to customers. And this, by doing this, it's going to actually encourage customers to choose ACH because they will no longer have a fee. If you've been charging fees in the past now you might be saying, well, I don't charge fees right now, like this doesn't really mean a lot to me. But we're still exploring a lot of different ways to be able to nudge customers throughout their process of getting an estimate set up through throughout the process of getting card information on file and our ACH on file, we're trying to nudge customers in the direction of Putting an ACH on to save you a lot of money. Because again, if I can bring down my processing fees by 80, 90% by getting my customers more on ACH, that's a huge win. And so we're going to be exploring how can we do this throughout the summer and throughout the end of this year at Copilot to be able to from a software in app to push our customers. Push your customers to use ACH more instead of credit card. Now, again, if you are charging processing fees and it's gone super smoothly, awesome. I know a lot of people have said, hey, like no one bats an eye. Fantastic. You're adding 3% straight revenue to your bottom line. That's fantastic. Now you might be hearing this and maybe like, I didn't even know we could do that inside Copilot. Well, I would actually. This would be my 2 cents. My 2 cents is that you just bake your processing fees into your pricing. All right, I do believe this is the best strategy. And then as we begin to roll this out, offer ACH incentives. So down the road we'll be able to potentially have a dollar discount or percentage discount if customers do use ach, incentivizing them to use or at least put an ACH on file that you can charge it down the road for recurring services. Now, the reason I have this stance is that by having a 3% processing fee added to the customer on each transaction, you are effectively charging 3% more. It is my belief that if you went out right now, like, I'm going to go and tell my customers they got charged processing fees, great. I don't think you'd actually have a whole lot of push pushback. I also don't think that if you raise prices by 9% or three times as much, you'd have a lot of pushback either. And so in my opinion, I would just raise prices by at least 10%. Like, I actually really like to raise price by at least 15%, but that's when I hit capacity when I'm trying to go into profit mode. But if you're just like, I just want to make, make more money, great, go ahead and raise your prices by 6%. That's twice as much you would be collecting if you were passing 100% of your fees to the customer, the 3% approximately of credit card processing. I guarantee you you'll have about the same amount of kickback if you raise prices by 6% on every single customer versus starting to charge them processing fees. And the admin time related with having to answer questions of customers confused as to why that's tacked on. So that's my two cents. Just know that we are always looking at how to save you more on processing, and as we've revamped the Estimate portal, the Customer portal, and throughout 2025, we'll be looking at how do we nudge customers more and more towards ACH and potentially give them incentives to do so that you're able to customize. I appreciate you all. We want to make sure that you're compliant and so please bear with us as we make sure that this happens throughout the summer. We'll do it in a slow fashion. If you are in the solo version or in the pro version of copa, you will need to get into the enterprise level to offer ACH if you also want to pass credit card processing fees in the future. Love you all and hope you have a fantastic day.