Breaking Down Merchant Services

Leo and Claudine welcome Deanna Stroup, relationship manager at Heartland Payment Systems, and the three discuss the ins and outs of merchant services. How do you know you're getting a good deal in merchant services? What are the pitfalls to avoid when dealing with these services? Deanna helps answer may other merchant services questions.
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Speaker 1 00:12 Good morning.
Speaker 2 00:15 Well that’s so you are listening to business and legal talk with Leo and Claudine here on may the fourth be with you. It is. Here it is here. I’ve last.
Speaker 0 00:24 Holy moly. Wow. We are ago. We’re almost halfway through. What’s up? Can you imagine you guess what? It’s going to be tax time before we know it. For those
Speaker 2 00:34 you filed an extension. You made, you made you stop for a second. I was just, I was hyperventilating. I already did. Then we just recovered from that. I think we did. What if you filed for an extension? You’re right around the corner. Hey, so gosh, this, we have a great show for you today. Um, and that this is a topic that we’re not always thinking about, but it’s so embedded in our businesses that is so critical. Uh, and that topic is merchant services
Speaker 0 01:02 and what are merchant services? The ability to take credit cards,
Speaker 2 01:06 debit, cash, cash, infusion into your business. So I’m going to let you, Claudia, take it away. I’m gonna start a guest today.
Speaker 0 01:13 Our guest is Deanna Stroup from Heartland P. um, excuse me. Heartland merchant services Heartland. Has the, um, the other arm that we had a really awesome guests a couple of weeks ago. Um, but now we are tapping on Deanna Stroop with merchant services. And this is a really, really important subject because every business now needs to take cards in some way, shape or form. You need to be able to do that. Um, clients want to pay by card. Rarely do clients. I know I hardly ever have a checkbook on me, let alone cash. I mean if you, if you have kids, teenagers or above in the house, you probably don’t have cash on you very often. Um, and certainly anytime you want to pay for anything that’s, you know, over 50 or $60, you want to swipe a card, I go to the hairdresser, I want to use a card. And there are so many different companies out there and then every single company has a different set of rules and regulations and charges.
Speaker 0 02:06 And most of them, I mean, and this is a really special topic to me because Deanna and I have worked together to your heart and we have actually read the entire rule book or the entire pamphlet, whatever you call it, and I’ll let you to talk more about it. But Deanna’s with Heartland. She’s been with Heartland for five years and Deanna really prides herself on explaining all of the caveats to the clients and this is what I love. I can refer her. And when they start working with her, they absolutely know what they’re going to get charged for and they, you can, you can get from Deanna, she’ll tell you what is a normal charge. This is a bologna charge. This is a manufactured charge. This is not standard. And it seems too good to be true. No, it’s really, it’s a, and it’s a dicey industry. It’s really a dicey industry. And Deanna has actually had two owners in Turlock, received $10,000 through the visa, cashless. And that is
Speaker 3 03:00 money that came back to businesses. So she also works with five Oh one C threes. And she’s able to get three, three contracts for no charge for up to three five Oh one. C3 no, excuse me. A five Oh one, three C can get up to three. So I’ll let her explain a little bit of more of that because I’m probably just gonna mash that subject. Good morning Deanna. Good morning. Thank you for having me today. How are you feeling? Are you excited? I’m so excited to be here. Put us on fire with all your knowledge. I am. I’m ready to educate everybody out there that wants to listen. Ignite as we’re merging services. I’m a big fan of another podcast in the first thing that he says is ignite us today. Oh, well I love talking about, yeah, I do. John Lee Dumas’s. Um, so DNA, can you just start us off with a little bit of a background on, on what we’re getting into when, when we want to put plug that little card swiper into our phone.
Speaker 3 03:55 Oh, you’re getting into a lot of stuff if you don’t know what you’re doing. There’s unfair leases and many predatory practices in this industry. But Heartland prides itself on being fair, transparent, and honest. You’re supposed to know what the fees are for each transaction. And that is what makes us a little bit happier with everybody that we get to educate is how much does each transaction charge. That’s what you should know. That’s what Harlan’s behind. So what makes, I mean there is this ocean of competitors out there. I mean I get bombarded with emails and calls, but there’s something about you guys that is different and the reason why you’re in a show. What makes you guys so unique out there in the marketplace? Well, we’re a wholesaler. A direct processor be some MasterCard won’t play with the end business users. So you have to use a provider, which Hartland is one of the few out there.
Speaker 3 04:46 Um, and we’re fair and honest and transparent. We don’t do any junk fees. We don’t do any predatory practices. Heartland is, um, one of the better companies because of the hiring process out there. They make sure that they weed out any bad guy. People who don’t have integrity, they put us through a background check. You know when you’re signing up for merchant processing, you’re giving them the gateway to your business. You’re giving them your driver’s license, your social security number, your tax ID, your voided check. That’s the gateway to your business. Crazy talk right there. Wow. I want to make sure they should give them the keys to the kingdom and you want to make sure that’s going to someone that’s secure. You want to trust them with everything because there could be identity theft. I mean there could be a lot of stuff and you do not want to open up any more liabilities than you already have.
Speaker 3 05:31 Oh girl. Oh girl. You’re talking my language. Wow. What girl? What made you get into this industry? Um, it was a kind of item. Not sure. I guess we could say God put me on that path. I used to manage the offices that day. We’ll send nursery for the wholesale department. I managed five sales reps and I did a really good job. I had a back surgery that, um, changed my path and it took me a quite a while to get back on my feet. Um, and then I just landed in several other industries and positions that weren’t good. I couldn’t sit for long. My leg would go numb anyways, that girlfriend told me, come to this industry, why don’t you to see Heartland? Her name was Linda and Modesto. I went and visited her with her two days. We went and saw existing customers and new customers and I was sold on the existing customers and what she did for him and the difference she made. And that’s when I realized, okay, there’s a spot for me out in the world and I can make a difference one customer at a time. Awesome. Okay. So I’m a business owner and I’m considering that I need, um, to be able to have the capacity to take cards. What’s my first step? Other than calling, calling you and calling Heartland, what do I need to consider? What do I need to know?
Speaker 3 06:44 Well, you need to know what kind of industry you’re going to be in because some of the very few industries can charge the customers for the end use of this card. Instead of you paying the fees yourself for processing. So if you’re in a municipality kind of industry, you may be able to surcharge back. But in California right now, it’s against this. Okay. It’s a lot. So when you say, um, the end use, so I’m a business owner, my customer swipes a card, I pay a service. You pay interchange rates, which is the wholesale cost plus service fees for Heartland to move the money. Okay. So I know, um, I had already had um, card services at my office prior to uni meeting a number of years ago and I, when I was getting into contract with my, my provider, um, they told me that, Oh, it’s 17 cents a swipe, no matter what the amount, it’s 17 census.
Speaker 3 07:40 Okay. And I thought, well, that sounds like a pretty good deal. What I didn’t realize is that there was another cost that was coming directly out of my bank account for several hundred dollars a month for charges that the customer’s credit card was charging me. So explain that because I know when I came to you and I said, what? You know what, what is, I didn’t even know when I saw my bank statement, I didn’t even know what this name of this business was that was eating up $300 a month plus. Yeah. And it’s based on how much you take in. So and, and Deanna was kind enough to explain it to me, but explain that process cause I have a feeling a lot of people don’t understand. Well there’s only three pieces you’re supposed to pay in the credit card industry. There’s interchange rates that go to the card issuing banks.
Speaker 3 08:26 Then there’s Jews in assessments and that goes to visa, MasterCard, and then there’s processing fees and that goes to move your money from your customer to your bank account. Those were the only three levels of fees. There’s a lot of junk fees we see charged out there. That should not be . So was I paying then the money to move it? And who, who has that third party that I had no idea who it was. They, it was a third party and it was a third party. So when you’re taking your customers money, your customers handing you the card and you want the customer’s money to go from their account to your bank to you, right? In your case, you had it signed up with another processor. So it was going from them. And then when hang handoff, no, excuse me, it would go from the customer, then it would hand off to the person that sold you, then it would hand up to the bank and then back to you.
Speaker 3 09:13 So you had two additional people touching your money that shouldn’t have been. Got it. How many, how many companies are out there doing this? Hmm. I think there’s six wholesalers right now. Um, probably a thousand plus resellers or ISS independent seller organizations that sell to you and then have to turn around and sell to us because if he, so MasterCard will not deal with the end user or the merchant. Okay. So visa and MasterCard will not deal with me, so I have to have the intermediary. Yup. But you should go to the direct wholesale processor. You shouldn’t go to one of those third parties that turns around and sells to that direct hold per cell price. Gotcha. So we have a thousand fish in the sea and only six are direct processors. Yes. And so all the other 900, let’s see if I get this number right.
Speaker 3 09:58 994 are all good. Just as a, as a way as Wiki at me. You got it, girl, you got this. Um, they’re all then turning to the wholesaler and, and then using the wholesaler on top of it. Exactly. And the cool thing that Hartland offers is there’s a something called the Durbin amendment and that’s the actual price you’re supposed to be paying out there for each card type. And that’s one of the things that Senator Durban and Heartland was behind. Okay. Okay. So when Heartland, the wholesaler or direct processor has that interchange rate, they have to pass that to the merchant. When there’s a third party involved, like your bank or a third party that’s selling di that’s sold to you and then selling to us, there’s a little loophole that says they can increase that cost. Oh. So what they do is they inflate it and they don’t tell you.
Speaker 3 10:50 So instead of it being interchanged plus pricing, it turns into interchange plus plus interchange plus optimization. They put other words within me so they can basically step on that money and they charge you the higher rate. Plus they turn around and charge you the money to move the fees. It’s called rate creep or inflation is what we call it. Okay. So if, let’s just say I’m working with Heartland, I go, I have the interchange fee. That is to move the money from my customer to me. Right? Interchanges the card type that’s out there. So if there’s a reward that goes with that card, okay. And you’re getting cash back from that come to cover discover. Yeah, chase or whoever it might be. That is a rewards card. You pay that. That’s the interchange rate. Then there’s the merchant processing fees to move that money on top of that rate. So I want to get the lingo right because lingo is always important. The merchant processing fee is what Heartland charges or the the Warehouser charges, wholesaler charges to move the money back and forth. But if I’m dealing with somebody
Speaker 2 11:54 who’s, we’ve got a third party involved, they take that fee and they up it and up it and up it. Is there any limit to what they can up until no, there’s no, no, it’s an unregulated industry. It’s beginning to be regulated. But the third party resellers out there, basically ISS is what we call them. They can do pretty much anything. They want you really wildly. Hey, so there is a lot more to come. We’re going to take a break right now. You are listening to business and legal talk with Leo and Claudia and stay tuned
Speaker 1 12:26
Speaker 4 12:38
Speaker 2 12:49 Hey, so power talk listeners. Here we are talking about something that is very near and dear to our hearts, Eritrea services. It’s a complicated subject. So listen up. It is really a common already confused. We haven’t even started. I know, I know, but I have to tell you that this money comes directly out of your pocket. If you’re not paying attention, this is money that you are watching. Walk right straight out of your door for no good reason. So I have this burning, this thought right now in my head. Demystify this for us, Deana. What I mean I hear of, you know, I come into companies that um, we started asking questions and they back us pulling money out of it. So the bank is the processor right there. They’re actually the credit card processor. They’re the third party. So how does that work? I mean, but then then decline doesn’t get any merchant statements.
Speaker 2 13:37 So we don’t know that there’s settlements and all that mess. How does that work? Well when they don’t show you your statements because they’re trying to hide something, what you want to make sure you get those to tell you on internet access to your account, they charge extra fees for those. With Heartland, it’s included in your service fee. I can’t tell you how many times. So listeners, if you’re here, you gotta be asking and you should be getting your merchants. Dame is, we’ll have access to your merchant account because as an accountant I want to know when the dust settles, how much money and if I was charged fees, I need to know exactly how much fees against and we should get a statement. Right. You should get a statement every single month. Wow, that’s hilarious. I went years without getting a statement. Yeah, it’s cause they didn’t want you to know how bad it was or what they were doing.
Speaker 2 14:19 Because if you saw the fees listed and you said, okay, there’s a $99 PCI noncompliance for you, or a yearly fee, he’d be going, what is this? Why are you right? Dinging me on it. Right. Kind of like when you look at your phone bill and there’s this surcharge, a, B, C, D, all the way down to X, Y, Z. yeah. And, and then some. So tell us where, what as a, as a business owner, so what are the different avenues? Like you know, what, what, how do you guys work with the services? It would, what industries are the, are you, are you sensitive to some this over others? How does it, let me know. How do you get your customers
Speaker 3 14:52 in? What products or services do you guys offer? Um, okay, so how do I get my customers? I do a lot of door knocking. I do a lot of referral partner business because you know, the old fashioned way, the old fashioned way, it’s, it’s not a good, it’s, it’s a really hard industry and I’m trying to make a difference. Um, it’s similar to the dogs in the park. The good dogs, you can let them off the leash, the dog, bad dogs, you can’t, it’s similar to my industry. I try to make that that interesting. Interesting. Yeah. Interesting. So let me ask you, when, when you get into, um, let’s say our customers who are listening right now are going to run back to their office and you know, first thing Monday morning they’re going to call and they’re going to demand that they get a statement from their merchant card processor, their merchant services, and they get a statement and they go, Oh my God, I’ve literally been watching hundreds of dollars roll out the door.
Speaker 3 15:41 Actually I have been watching, it’s just been happening. Um, and now they want to address that and they want to get out of their lease. That’s where we would need to look at the lease info that they have. If it’s a piece of information that could, you know, get us out of the lease, we’ll use it. A lot of times leases are written in other States and they’re non cancelable. So you have to get an attorney in California and you have to get an attorney in the other state. Okay. Many times by the time you’re done with the attorneys, you might as well just pay the lease and be done. Give them the darn machine back. Got it. But don’t lease anything. Just do not lease a credit card machine. I see them least between 3000 and $10,000. You can buy him for literally 300 bucks.
Speaker 3 16:23 If you want a pin pad with it, it’s probably less than four 80. That’s the true cost. Really. So, and does Heartland just sell you the, the, we sell the machines and we don’t charge markup costs on them. Wow. And then terms them our costs. And then so do you, um, do you, um, pro, um, spread that cost over time or do you have to come up with four 80 upfront? No. Um, the, they can do it at one time payment, then it’s charged within 72 hours of the machine shipping or they can stretch it out over six months and there’s no interest or no finance to stretch that purchase up. So if it’s a small business starting and they only have a little capital capital to beginning their business with, they can say, okay, let’s stretch this $400 payment over six months time. It’ll come out the first payment within the 72 hours and then every month for six months it’ll come out.
Speaker 3 17:10 That’s, that’s the way to do it. That’s only $80 a month if the machine’s four 80 right? Yes. What makes her verify? Always gotta check in on that. What we see a lot of times is there’ll be saying, Oh, I just pay $55 and I’m like, okay, well how long have you been paying? $55 there’s a great, there’s a great lady in Modesto that I’m trying to deal with this on. She’s been paying since 2013 good. 20 1355 bucks a month. She could have taken her and her husband on a vacation. She could have bought a little delivery car for her business. I’m girl, it’s lunch. I ran over six years. Yeah. What a waste. Wow. And she could have bought that and her machine literally was like $250 that’s what her mean. Now, let me ask this, for a business owner, as far as pricing is concerned, do you mind just sharing with our listeners like what more or less as a percentage of, but you know what is a good deal, but you know, what should we expect to charge?
Speaker 3 18:09 What should we expect to be charged? You know? Well, under 3% if you’re three to 6% or if you’re over 6% you need to call me right now. Got it. So you should be paying less than 3% of the actual transactions. Yes. So if it is more than that, you’re definitely, there’s, there’s a problem, there’s a problem. You’re either accepting the cards wrong, you’re getting card, not present fees that are increasing your costs because visa and MasterCard and the cardia string banks have agreed if the card is not swiped, they consider it card not present and they charge a little bit more it. Yeah, it’s the same part of that same, it’s still secure. It’s the same person, but it’s because it’s a higher risk because the card’s not there. How are you guys different than we know the square claims, you know, this company’s square claims that they, this is a flat 2.75 rate across the board.
Speaker 3 18:53 I mean, how, how good or bad is it up? Is that, do they have a niche or, or it’s, it’s not ever 2.75 there’s always additional little fees that come out, but then you’re not there. That’s whether they advertise, right? It’s two 75 right. But what the problem is is when you’re taking a debit card in it’s 0.05% and 22 cents a swipe. So figure on $100 transaction, the difference between a debit card with that in the square would probably be like 38 cents versus $3 same hundred dollar transaction because they, they’re doing one price for all card types. So store and everything in the store is one inflated price. Oh, got it. We do interchange, um, optimization, which is when you swipe a card, it goes through all the interchange tables to hit the right price for that card type. So what does it constantly interchange? Plus it’s called interchange plus.
Speaker 3 19:45 That’s a true wholesale rates out there. And you can look it up on a website. Is that what business owners should be looking at? Yes. Or what is it about this whole thing about tier pricing? Tiered? No, no, no, no, no, no, no. Don’t do it here. No, don’t eat here people. That’s fair enough. I’m not doing tier no, but people do that. Okay. Tier press while you’re here to help us. All right. Yes. So there’s so many levels of card types out there in uh, some, I use my debit card that’s 0.05 and 22 cents a swipe. My mom has a card she uses, there’s no rewards with it. It’s just 1.51% and 10 cents a swipe. The worst credit card out there is 3.26 and 10 cents a swipe. That’s the highest Alaska airline. Somebody going somewhere for free funeral in a church plus. Right. That’s entertained plus. So I’m, the tiered pricing would be taking all those prices and then they decide which tier those prices are going to go in. So their lowest price is probably like 1.8900000000000001 and then it probably goes up from there. You don’t want to do tiered pricing. It would be like going to the grocery store and everything is three prices all inflated. because, and because they have
Speaker 0 20:48 to adjust to cut to compensate for the other products. So your Manet’s maybe $5 and you know, or your pack of meat, maybe $5 and that’s a really good price. But for your, your pack of gum is also $5. And so you’ve had to compensate in order to get things clustered. No doubt about it. They’re making money. You’re not.
Speaker 2 21:06 So how do you know, I mean, what is, uh, what is it that you do when you walk into a business? What do you ask for?
Speaker 3 21:14 First thing I do is I, first thing I do is look for the visa, MasterCard, discover, American express, legal logos. They should be taken. All card types, discover and American express are more competitive than they’ve ever been. And a lot of people think American express, um, are really old school expensive, which they used to be, but they now have the OptBlue program and Heartland is one of the few processors out there available to how for that to the customer, which means all that money runs together. So visa, MasterCard, American express, discover pin, debit, it all funds the same time it goes in the same batch goes on the same statement. It’s not separate is what we want. So that’s the first thing I look at. And then I go in and I talked to the customer and say, how are you processing? Can we look at a statement? Can we see if they’re charging each young fees and can we do your processes better? Is there something you’re doing? You don’t realize that you’re paying a higher fee on
Speaker 0 22:02 immediate assessment? I love it. Let’s get down to brass tacks immediately. I love it. If I’m wasting money, please tell me quickly.
Speaker 2 22:11 Yeah. How often are your, uh, when you do discovery, you, when you’re talking to a potential customer, how often are they overpaying? 50% of the time. 60% of the time. 94% everybody’s over pain. Well, it’s theirs. There’s the buy. I have 248 customers. I probably met
Speaker 3 22:28 3000 people in my career so far. If I had to gate take a guess and I bet you
Speaker 5 22:34
Speaker 2 22:36 maybe five customers, I have not been able to help or better their price because they had a really good product. Wow, that’s amazing. Hey, listen up if you are important. This is important. I mean this, so it’s too much of a line item. I mean maybe it can become a a line item and your profit and loss. If you’re not paying attention, why pay more than you should? So, Hey, so this is what we do here. A business and legal talk with Lear and Claudine, we’re helping you make money and save money and make it so you can be profitable and sustainable with business and legal talk. When the and Claudia, we’ll be right back.
Speaker 1 23:12
Speaker 2 23:23 hi, how are you listening? Sorry, we’re having too much fun on the very welcome back. You’re listening to business and legal talk with Leah and Claudine. I say, isn’t this exciting? Don’t you just love saving money
Speaker 0 23:34 when you know, when she, when, um, just to kind of recap from the last segment, when Deanna says that 94% of the people she comes in contact with are overpaying. It’s not surprising when there’s only
Speaker 3 23:46 wholesalers and there’s thousands of third parties out there. So there’s, I mean, what’s the percentage of more versus the six wholesalers? So there’s like, what, 10 times more, more than that, a hundred times more, whatever. You give me the number now, but it’s like way more, there’s way more third parties out there throwing on those extra fees and charging all of these kinds of hidden things and bumping it up and tearing and like every creative thing that they could ever think of and providing no service whatsoever. I can’t tell how many people will want to get there first. And they go, Oh yeah, we’re happy with our provider, but we’ve never talked to them. And when we call, we have to call the service center and we’re on hold forever. And I’m like, okay, so wouldn’t it be nice to text your local rep or get her on the phone and say, can you figure this out?
Speaker 3 24:33 I’ve got to get back to doing number, right? Yeah. Hey, give us an, you don’t have to, you don’t have to name names, but like to hear some juicy stories. Some bad things have happened out there. And I think I want our listeners to learn from what things go wrong. Give us some dirt girl, come on with the juice. So my favorite one is a auto dealership, uh, locally. I gotta stay PCI compliant here. Um, they didn’t know and they leased these machines to the tune of like $9,800 each and they had 12 of them and it was a five year lease. It was non cancelable written in another state and it was more expensive. It was like $3,000 more for us to return the stuff early and buy out the leases then to, to ride out the till the last payment. So we wrote it out to the last payment.
Speaker 3 25:22 We calendared it. It was like a year and a half after we met and I switched him to our company. We put it on the books. I went and helped him. We wrapped those terminals up. We ups them back. We put a note in each and every box, same note saying, here’s our mid, we want to cancel. You know, here’s your machine backstop our lease immediately. That was probably the worst one I’ve seen and they end up savings that you produce with this client. This client was about $38,000 between the lease and the unfair interchange rates that they were being inflated on per year or a year. 38,000 that’s a full time person. Can you imagine? It was also 12 locations. That was a combined home, but it’s cash, right? It’s 38 months of savings a year. Yeah, but you, when you say 12 locations, you’re talking about just 12 places within that business? Yes. That you could swipe a card. So it wasn’t like 12 dealerships. No. It’s one dealership with 12 little points of sell. Right, right. Wow. 38 give us more, give us more dirt. There’s just a lot of ugliness out there. I see there’s um, a couple competitors that have been known to employ people that have been actually, um, I guess busted is what we wanna say for identity theft. Really when you’re handing your whole life story over, you do not want to have a breach of your personal information can go out and
Speaker 2 26:44 do some major damage and you’re in town do you and your business thinking you’re just, you know, making tacos or doing hair and somebody out there absolutely ruining your credit. So it’s a pretty ugly industry. Heartland makes sure that they employ people that have been background checked. We do not do any unfair, we just don’t play with bad stuff. We don’t, Hey, it goes without saying. If you’re a business owner, if you’re an, if you have made, I think everybody should take a no credit cars as a way to accept payment issued. Prominently displayed that in your story if you retail, but you also holding onto there’s comp. I mean I always worried as a CFO risk and cash risk and cash are the two things that I worry about in the risk that you’re holding all this private information. You have credit card numbers and swipe numbers, all this private information. What do you guys do or how do you advise your business owners on this compliance issue, which is a, it’s a prevelant, you know, you, you, you keep hearing the stories of cyber attacks and old, this information would be wiped out and hackers coming into your business and we’re in a, we’re not fear mongering. This is real stuff.
Speaker 0 27:47 It’s real stuff. And I know you and I’ve talked about this before and, and business owners have no idea of what they’re saying
Speaker 2 27:54 post to be doing. So what are we supposed to do? Make sure you’re PCI compliant. What does that mean? That is payment card industry standards. That is visa, MasterCard, American express, discover. You don’t want to break these standards means you don’t want to be writing credit card numbers down and keeping them on your desk. So your janitor comes in at night and steals that card and breaches it. You don’t want to be storing these credit cards in an Excel spreadsheet on your computer or on a Rolodex card where you have, what do you do first? You used my wallet? No, you cannot. You do not my friends. You make sure that you use a company like Heartland that has the most secure network out there were preferred by the Washington Pentagon and the local Stanislaus County tax assessment. You say Pentagon? Yes sir. Unless you just dropped the name.
Speaker 2 28:34 I’m sorry, I had to give it back to you. Okay, nice. Wow. We have the most secure system out there and that’s what you want to process on the old encryption as a sale, whatever. Triple encryption, triple encryption use us. So if you imagine, we don’t know anything apparently hardly has. We have a Portico virtual terminal where you can store people’s credit cards and information online in our secure server. You don’t have to worry about it. You can do recurring payments and bills out of that. It’s a really great system in most of them health offices and the auto industry is in that platform because they know they can safely store, you know, mr X is card and they don’t have to worry about it.
Speaker 0 29:14 Yeah. Recurring payments. That’s a whole nother ball of, of compliance issues. And I can imagine old school, we did have an Excel sheet with everybody’s information and you know, right now it’s a hypothetical. It just makes me just feel, yeah. Nauseous. Just seeing it. But I know old school, and I can tell you a lot of businesses still run things old school. So does Heartland charge extra, be able
Speaker 3 29:42 to use that? No. That’s part of your service. Heartland has the most awesome service out there because everything is included in our $33 and 50 cent monthly fee. Um, it’s got our info central, which is your reporting agency. It’s got our local service reps. It’s got your statements that get mailed to you or emailed to you. It’s got a, your PCI compliance coverage, breach warranty. If you’re ever breached and you’re using our systems and the stuff that we’ve given you, we’re gonna cover all the $250,000 fines for each breach. Um, many of our competitors only cover about a hundred to $110,000 of a breach. Really? Wow. Okay. So talk to me about breaches. Oh gosh, we don’t want to do that. We’re you going to have to, okay, dive deep. So if you’re, if you are a small to medium business and you are breached and you have someone that’s stolen a card from you, you will probably be out of business within six months because of the fines that are gonna come down and visa and MasterCard discover and American express will find you so quick and so fast.
Speaker 3 30:39 When you put a checking account on with your merchant ID, you give them authorization to take in or put it take out or put in anything. They need you, including fines and assessments. So it’s something you want to be very careful of. If you are doing payments online, I strongly suggest you get a cyber liability policy. It is a discount compared to a $250,000 breach. Oh, the QuickBooks. This is the gate you just parked debt because I know one of the reasons why you like QuickBooks and a lot of businesses do is because you get your invoice and you can click right there and pay well no, but but that’s not what really got Mike. My going is the fact that this, you know, we remember I would always say about insurance as a way to mitigate risk. Yes. Yes. I guarantee you, and you can back me up on this, Deana, that most business owners have no way to protect against a is either going to be writing a check out of your checking account or you’re going to have insurance for it.
Speaker 3 31:33 What kind of insurance is that? Cyber cyber liability. How many business owners do you think have that? Just just the, the ones that you do. Any of them have it less, less than 2% now this, unless they’ve had a breach or they’ve had a neighbor that’s had a breach, so this is a real problem. This is a serious problem when we are processing online. Yeah. It’s a problem and so many people, and there’s so many crooks there, so many crooks out there that just want to get that info and they want to sit home in their jammies on their laptop, hacking us while we’re out working our tails off making this money. So if you’re having an online store, you have a ton of exposure. Right? And what is it, the MODOT like what a male or male motto is mail order, telephone order. So that’s anybody calling their payment in over the phone or the telephone order. Isn’t that like more that riskier type? Yes, it is. Right. So they charge a little more because it’s riskier, right? Yep. Uh, roughly about a third of a percent more is what it equals out to. How often does that happen that people are cyber breached, breached a lot more than, you know, it’s ha, um, they’re want to hear the stories about the eBays, you know, the Amazons. Nope. There’s a lot of them. I could a number for you and report
Speaker 0 32:40 back. Um, but it’s huge. It’s huge. Okay. So I need to back up a minute because I know so many people who use QuickBooks and I’m sorry I’m not, don’t mean to beat up on QuickBooks cause it’s a fantastic product and it it, it’s fabulous. It’s a great product but people, and I get them, I get invoices from vendors that I use and it’s a quick way and you just says click pay. And I think, Oh this is great. I just click and pay. And what you’re saying is that is equal to having like an online store? Yes. Because that is exposed to a cyber breach. Yes. And the, it could be my card information that gets breached, but that vendor who sent me that invoice could be facing a $250,000 fine.
Speaker 2 33:28 So have a great point. So how many, there’s aL isn’t that one of your biggest competitors? Yes it is. It’s a really good competitor and we also integrate with it through Heartland. We have several avenues that we can integrate in the background. But the invoicing option is not available yet because we don’t have it security. It is in beta testing now. It will be released probably one the next it’s there. It’s a convenience thing. I know every account cause I, I work QuickBooks and zero. Those are the two GoTo. Right? And QuickBooks is just, you know, the purchase these sheets last two years ago for 300 million, they’re just gobbling up, they are becoming bigger and better. Right? They actually do in a way with this whole odd desktop product. Eventually it’s going to be all online, but the problem remains, right? It’s very convenient to integrate that.
Speaker 2 34:14 They basically approve you as a merchant ID right. On this. You know, if they, they, they want you to be in their ecosystem. They want you to create, send the invoices, have your car, your customers pay through their platform. What exposure, if any, does a business owner have? So if something happens with that credit card, does it, does QuickBooks have any liability on that or into it or how does that work? Now it’s the merchant. So they, the lie buys their hands. Well we have our systems covered. Okay. And it’s the end merchant that is the one that needs to be careful.
Speaker 0 34:46 I don’t mean to interrupt because this is just making me crazy. So if I am doing business with ABC, um, service and they send me an online invoice, it’s whoever they use as a merchant service, their credit card processor. Yes. It’s not, it has nothing to do with QuickBooks. No. and quick, quick just
Speaker 2 35:06 is the product of being able to get your accounting and make it easier. And then there’s a third party that comes through and processes the payment. I don’t know who that person is. So the merchant processor is not into it? No. Well, Intuit is on most of the QuickBooks that it comes packaged. They play together. But this is the same company, right? It’s probably owned by the same company, but Intuit is its own. I’ve been guilty of, you know, I, I don’t hardly ever have, you know, I actually customers P EFT and ACH or a check, uh, my industry, the accounting industry is not, I don’t know if maybe run into a lot of accounting firms that actually take credit card payments. Some do, but it’s very rare. I, you do actually, you take more credit card payments, Claudine than I do you think so? I think so. Probably it’s just, you know, people that want to use you in a, you know, I want to, I know I want to use you and they swipe their card.
Speaker 0 36:00 It seems like people, um, I know that I, I know a lot of attorneys that, um, that run two parallel systems, they run QuickBooks so that they can invoice electronically. Um, and then they run their, um, firm management software. And so, um, I just, I guess I just kind of presumed that people in the financial industry would automatically be leaning towards that type of, um, um, invoicing where it’s all electronic, everything’s electronic, you just invoice and then they just click and pay. And
Speaker 2 36:32 I, I, yeah, I mean, some of this stuff I’m learning, I thought I knew a lot about the merchant industry and there’s this whole Stripe, what’s the deal and the Stripe. I mean, are you running into Stripe for, it’s huge in the online business world. I mean, no, it is, but it’s, it’s not Heartland. Yeah, but, okay. But some people, I have known people that cause you know, I, I, they have this partnership and I have no choice but to go with Stripe and, and how does that work?
Speaker 0 36:56 Yeah. It’s kinda like, um,
Speaker 2 36:58 privately held by the way. So this is going to be the next unicorn. They wouldn’t be surprised to get, they get acquired. Um, Stripe if they do with some of the inflation of the industry. And I’ve had the Deloitte the rate creep on the interchange pricing. They do that. They do, they, they inflate their prices a little bit. Um, I’ve had a couple customers that used to use them and have switched to me in this last year because of our fairness, our rates and our service. Our service is what is taken the accounts left and right from the competitors because there is no service with my competitors. There’s no service that square or Stripe or Venmo or PayPal. You don’t get somebody on the phone like you, Deanna street, when you call her number or the 800 number Heartland, we have an award winning call center. I mean, you’re the only company that, that’s why you’re here as a guest on the show because you do bring something unique to the table. And this whole thing about, you know, I, I worked with Heartland on the payroll side as well and is just, there’s no better. There’s no, there’s no top in having access to somebody, a call or texts. I mean that, that’s just a whole nother level of service for that. I’m grateful for that model that you guys have. So kudos to you. So right now we’re talking about merchant services here in business and legal talk with Leon Claudine, and just stay, there’s more juicy stuff to come say. Gonna stick around. We’ll be right back.
Speaker 4 38:13
Speaker 1 38:28
Speaker 6 38:38 all right. Hey, are we having fun yet? We are a call me boring, but I love this stuff. And, uh, and I think
Speaker 2 38:46 you as a business owner, you should love this stuff. You should understand every moving part on a business and merchant services is clear, uh, as one of those that you have to pay attention to. You know, you can lose a lot of money. Uh, if you’re not doing it right. So I want to bring it back to this one topic that we wanted to talk about. Uh, which is liquidated damages. Yup.
Speaker 3 39:09 Liquidated damages. Explain to us how, how that functions. Like normally when you sign a contract, they either have like an early termination fee unless you sign a month, a month contract, but you, they do like a three year or five year contract. And in some of our competitors, they do something called a liquidated damages and you want to stay away from that. If you see that in your contract, you not sign it, do not get any ink on that paper. Liquidy. Yeah. Excuse me. Liquidated damages are what they expect to make. So say you signed up for three year contract and you see in 60 days that they just have gotten really bad rates on you and you need to leave because you’re going to be out of business because they’re charging you 8% or just something gross and you want to get out. Well, you’ve already signed that liquidated damage contract, so they’re gonna take what they expected to make on that three year time from you and it’s going to be thousands of dollars.
Speaker 3 40:00 The least I’ve seen is 1500 the most I’ve seen is 6,000 wow. And they take that the minute you say I’m leaving, they take it from your checking account. The money’s gone. So let and in, which is really interesting to me because the essence of liquidated damages from a legal perspective is it, it’s when we are entering into a contract, we have agreed that should we breach this contract, the damages are going to be so difficult for us to assess that we are just going to assign a number to it. It’s something that it’s, it’s going to be so, so complicated to even try to figure out the damages. We’re just going to put a number on it and they’re actually using this quite the opposite because they’re saying, we know what the damage is going to be if you terminate this contract and and now we’re going to take it from you, which is really the antecedent to antithesis of what liquidated damages should actually be.
Speaker 3 40:55 Right. So normally liquidated damages I’d say under $350 totally fine. I don’t mind anybody signing a contract with that. You know, you have the company, they’re 300 bucks to get out because they did try to help you or they have an expectation of profit. Exactly. And liquidated damages is just disgusting. You guys should not play with that at all. It’s, it’s, it is so bad and so predatory. It’s like them giving themselves for different outs to the contract and you have none. Okay, so I want to, yes, that’s absolutely correct. And I, and I want to, I want to touch on another subject because I think this is something that confuses people. And I know you and I have talked about this because I’ve run it people, merchants, ladies and gentlemen out there listening, merchants charging people to use their card. So if I go into a business, a shoe store, and it says 75 cent charge to use a card or so, or purchases under $35 75 cent charge surcharge yet, what’s up?
Speaker 3 41:55 Talk to me about that. It is against the law in the state of California. Wait, wait, wait, wait, wait. Okay. If I go to a gas station, well except there’ve yet. Okay, hang on. There’s some, there’s some that were grandfathered in before the 1985 vote that we, the Californians did saying we don’t want to be surcharging. California at the business is going to eat this fee. So there’s AFPM, there’s quick stop, there’s seven 11 and there’s municipalities, so anybody like Oh ID or T, D P, G, ni, they can get away with that because they’re supplying a municipal or utility service. So you’re saying it is against the law in California, if you go to a liquor store or convenience store and they say 59 cents, 75 cents, 59 99 whatever the fee is, that is against the law in California. Okay. But our gas station, it’s exempt from that.
Speaker 3 42:41 Only the ones that are grandfathered in, seven 11 quick stop and PM there’s one of the room, I’m drawing a blank right now, but there’s, there’s a few, just a few, like a small for that or a handful that does sound legal to legal. You know how often often I see it. Do you actually call them on, Hey, we’re doing a merchant in Turlock. I told him you can’t do that. And he, I said, that’s against the law. And he goes, I don’t care. I don’t make enough money. I don’t have enough profit margin. And I said, so you’re gonna, you’re gonna put the profit margin on me by breaking the law. You’re just gonna push it off onto your customers. And he said, yeah. And I said, well, I won’t be back. Well, what you should’ve done is when to the visa website and turn them in because you, there’s a complaint that you can file on visa and say, I use my card on this date, and you just put the, either the beginning four digits or the last four digits of your card in your name and you enter it and they’re going to do a search and they’re going to find that info and they’re going to go investigate.
Speaker 3 43:38 And they’re going to give this sky letter that says, Hey, you’ve got 30 you got somebody turned you in and you’re there a you’re compliant and you’re good. Or B, you’re totally guilty and you’re going to stop and immediately comply. And if you don’t, in 30 days, they’re going to give you another letter. And then they’re going to send a rep to come visit you. Some be a little disguised rep. and if you’re still charging that fee, they’re going to start with the fines. And the fines go up from $2,000. So this is the equivalent to a of a citizens arrest. It alert. It is. But you know, uh, we, I’m sorry, we just, we pay enough. If you, you wanted to be a real stinker. Say you’re paying a big dollar item. Like you’re renting a forklift and the local company is charging you 4% to, to rent that forklift. You can take them to court and you can win. What is it, 30 times the email? I would look at him for the numbers. There’s, okay. So there’s a number in small claims that you can get that service charge
Speaker 2 44:32 that they charged you back on this. Honestly, I don’t know what that exact percentage or multiple, we’re talking about a multiple of the actual overcharge, right? Yes. And the state attorney’s office, if you go to, if you look this up online, you can go to the state attorney’s website. They’ve got a whole section on merchant processing. Hey, great. You’ve got three and a half minutes left. Okay. Let’s bring it home that we’ve talked about a whole lot of the last hour. Um, what are the biggest takeaways? Why is Harland, I strongly suggest if you’re a listener, get a, get hard on a chance here. So why should our listeners come to you? Kind of cough it up again, faster funding, local business, the most secure network out there, breach, warranty, triple encryption and we move all money except cash. But do you forgot something differently? Customer service that you actually get somebody on the phone.
Speaker 2 45:25 You have an assigned person who vouches for you and this are your call as you need as you need it. You can even text you if they’d be, not that you want that at 11 o’clock at night, but I have some, I have a couple of restaurant buyers sales does that. Not many not make. That’s what makes me the difference out there and my my teammates because we truly honestly care. We want the small businesses and the medium businesses just thrive and that’s why we’re here. How do we find you? Where w where does anyone go to learn more about what you will have to offer? You can call me at on my cell phone, (209) 648-6362. You can reach out to [email protected] or you can attend, uh, one of the local networking groups that I’m at. Great. You can reach out to us. We will always help you get in touch with, I’m Deanna
Speaker 2 46:27 You are so good at this. Hey listen, don’t leave me behind. Come on HQ. Come on HQ. So anything that has to do with the growing and the accounting of your business is go to Greenland, or call our office (559) 207-3148. So this has been a great topic and this is what we’re all about, demystifying everything that business owners lead. All the myths on the industry, like all the things that we are basically uncovering what the, what everybody else is doing that you should and shouldn’t happen. So you’d be, you’d be a better, well-informed business owner. That’s what we do. And we’re grateful that we have guests like you and you’re invited back. By the way. Thank you so much. I would love to come back. I’ve got so much info to share. Awesome. So any part in wisdom, anything that it’s in the , any type of legislation that business owner should know about? Anything that we do you think coming down pipe? What is the future of the industry look like?
Speaker 3 47:31 Um, well we got the California restaurant association watching out for our local restaurants, the lawmakers. We’re trying to have the restaurants be responsible for the mobile drivers, like, you know, Uber and grub hub and their liability, their employee liability. And luckily the CRA, um, went to bat for us and the restaurants are now excluded from that. So that’s, what does that mean? Like, uh, it, it protects the local restaurant tours that is using one of these apps for deliveries to not have to cover that person’s liability as their employee. They are, they’re independent. And that was really huge. So we’ve all just got bought it. That’s great. The CRA watching out for us. So we’ve got some other legislation too that they, there was, um, about four or five local business people that have sued and they want a surcharge in California. They’ve been granted access to, to do this, but the others aren’t yet.
Speaker 3 48:23 So I think this is going to create maybe by the end of the year, a little loophole around the surcharges because it’s offered through a cash discount rather than a credit card surcharge. So it’d be like the gas station. How you can get away with it in California is when you roll up to a gas station, you see a cash price or a credit price. You gotta have that list is, so if you’re a little burrito shop, you’ve got a burrito price of cash and you got a burrito price at credit. That’s how you can get away with charging more for credit cards. Really. Do you ever see a cashless society? I know we’ve been talking about a cap in that way.
Speaker 2 48:53 You think so? I do. Do you think at some point people would just not carry currency anymore? Cash? It would be the,
Speaker 3 48:59 you know, just grow. I mean, there’s so many benefits that are out there now that you used to get a check when you’re unemployed. When I was a kid, now it’s on an EQ card. It, we’re moving more towards that. I know Visa’s wanted it. They’ve had a cashless challenge about two years ago with casual together. They would love to do away with cash. Wow. And they offered, you know, $500,000 to a bunch of local restaurants if they submitted a video. My boss and I won six, $10,000 pops of money for local businesses. So, uh, do you carry cash ever? I have kids.
Speaker 2 49:36 So do I. Although my youngest son, just, my youngest is crossed over into adulthood and so it’s better. I actually do have a couple of dollars on me today. But yeah,
Speaker 3 49:43 typically, no, I don’t
Speaker 2 49:45 where we’re, I gonna get it. I have to go to the bank and then usually I’m trying to deposit money. I have bank every other day. I get one of my kids come into me and say, dad didn’t any cash. And I always open my wallet and I don’t have it. It is like, it is becoming that way. With that we are inevitably moving towards becoming a cashless society. Now. Some people will have, there’s fear associated with that, right? Some people like just do you know, it’s just like the old regime and the new regime. Just there’s always change. Make some people uncomfortable. I think change is good. As a business owner, you gotta be ahead of the curb and change. You got to learn what is the like to be a business owner at the forefront, every tool at your disposal. And this is what we’re here to do. A here a business. Talk with Leah. Claudine, thank you so much for tuning in today. We had a ball. Thank you Deanna. You’re invited back any time. Thank you so much. Thanks everybody. Have a great weekend. Great weekend
Speaker 4 50:37 .

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