Tersh talks with the crew over at Card Choice about how many laws he is breaking!
Have you ever been pulled over by a police officer for doing a U-turn?! I HAVE! Apparently, it is against the law to perform a U-turn in the ENTIRE city of Columbus, Ohio...and apparently, it's my responsibility to read the law book for Every. Single. City. that I drive through, prior to me driving there... There were no signs stating that I could not perform a U-turn, and I hadn't seen a "No U-turns" sign anywhere in the entire state! I have driven to Columbus 10 or 15 times prior to this since Columbus is where Julie (my beautiful wife) grew up and went to college (Go Bucs!!). Here's a little secret that I need you to keep between the two of us...I had even performed this maneuver on MANY occasions inside the city limits prior to this encounter!! Since this time, I've even watched for these signs throughout the city and have not seen any. I'm rambling and I know that you want me to get to the point, so here it is... Do you know what that friendly officer told me when I professed to him how confused I was for the citation and while repeatedly asking where the hidden camera was located because I just KNEW that I was being PUNKED, he said...and I quote... "Ignorance is no excuse...enjoy the rest of your visit to your mother-in-law's!" lol, thanks!
Well, this is what we are discussing in today's show with the team over at Card Choice. We often use the exact excuse that I gave the friendly officer from Columbus, Ohio when we are talking about breaking laws within our small business, but just as the officer told me, ignorance is no excuse for us breaking any kinds of laws within our business. Before Mary reached out to me about www.cardchoice.com, I was breaking all kinds of laws!! I'm proud to say that we have fixed the ones we talk about in today's episode. Card Choice is more than just some merchant service that spam calls your business.
In today's episode, Tersh, Ray, Steve, and Mary talk about the 6 MUST DO's for you to stay in compliance when it comes to adding a surcharge to your invoice.
Our Deep Dive~
- Register with Visa, Master Card, Discover Card, and American Express prior to taking payments.
- Inform the consumer, and you must be SPECIFIC.
- 4% Cap
- Charge everything at once
- Must be displayed in at least 2 places.
- ...you'll have to listen to the rest of the episode for these juicy details!
- Get your free resources by emailing Mary at MLent@cardchoice.com
- Learn more about the team and what they have to offer by visiting https://www.cardchoice.com
- Learn more about Tersh by visiting https://serviceemperor.com
- Connect with Tersh on social media @tershblissett
- Have you ever wondered HOW to target your perfect client?!? It's EMOTION...EMOTION is what sells, and this link is how you learn your client's emotion for free... visit https://admanity.com/SBM/ to get this free share that I (Tersh) stand behind 100%!
"If you know how people will emotionally react, you have an advantage more valuable than all of humanity's innovations."
Thank you for listening to another episode of the Service Business Mastery Podcast!
Learn more about Tersh at https://ServiceBusinessMastery.com
Episode 512 Surcharge Compliance w Card Choice
Steve Kleinberg: [00:00:00] I was having a conversation with a large medical practice, we're like, you know, how are you in terms of receivables? And they're like, oh, we're great, we're like ninety-eight percent receivable. And what's your days outstanding on your own? And they're like, oh, it's about two hundred and something. I'm like, you're horrible. I mean, that's so people think that they're doing well. Right. But it's critical when you're having that encounter with your client is to kind of arrange the payment process, like how you expect to be paid, upfront.
Tersh Blissett: [00:00:44] Hello, everyone, out there in the podcast world. Hope you have a great day. You're listening to or happened to be watching it live on Facebook, the Service Business Mastery Podcast. I'm your host, Tersh Blissett. I'm excited today because I get to learn about everything that I'm doing wrong when it comes to credit card processing or surcharges if that happens to be something that we implement or plant in here in the future. With that being said, I would really like to welcome, from Car Choice Mary, Ray, and Steve and really welcome to the show. I'm really excited to learn what I'm doing wrong. So with that being said, welcome to the show y'all.
Ray McGrogan: [00:01:25] Thank you, or doing right.
Tersh Blissett: [00:01:29] Maybe fingers crossed, I am doing it right.
Ray McGrogan: [00:01:35] The best thing you're doing is you're taking credit cards. That's the best thing to do. Yeah.
Tersh Blissett: [00:01:41] Yeah. So real fast, Round-Robin, let's do a quick introduction of who we are and a little bit about yourselves.
Ray McGrogan: [00:01:48] Ok, Ray McGrogan, co-founder of Card Choice International. We opened in two thousand four, 2000, the end of 2003. And I have to say we have an eight-plus better business bureau rating with zero complaints, multiple technologies that we can utilize. So we're not going to just pigeonhole anyone into anything. That is the model that Steve and I created. We're childhood friends. We played in a music band together, playing covers and originals forever. And that's what our bond has been since high school. So we're the owners, and we're here to support and I'm looking forward to this podcast and the questions you have.
Mary Lent: [00:02:27] And you're a licensed plumber...
Ray McGrogan: [00:02:29] And I'm a licensed plumber, that's for sure. My dad said you got to get your plumbing license. No college, he goes. And then when I told me I was getting a credit card processing here as a kid when that fails, you got your plumbing license to fall back on you.
Tersh Blissett: [00:02:43] And how long has it been?
Ray McGrogan: [00:02:46] I got into business in two thousand and one the SO and Steve and I opened up in two hours and like I said, the beginning of twenty-four.
Tersh Blissett: [00:02:54] I think it's pretty safe to say that you're okay.
Steve Kleinberg: [00:02:56] My name is Steve Kleinberg again co-founder with Ray, like you said, childhood friends. I do most of the operations Ray runs a lot of the sales channels in terms of operations. I mean I have more of a technical background. I have a degree in structural engineering, dabbled in engineering for a while, then went into the family business. And that's how Ray and I kind of jumped into the credit card business is, you know, we were both kind of struggling at that time, is, you know, how do we make more money? Like, you know, that's everyone's goal is is what are you doing, Ray? Or he'd say, What are you doing, Steve? We would just bounce ideas back and forth. He would hire more trucks. I would open more hours. So, you know, we understand what the service industry is all about. We really get it. And I think our passion is to work in the industry. You know, we're kind of we know the people. We understand the people I come from. A family business is also from the family business. So that combination, I think, really sets car choice apart from, say, like a national bank brand. You know, we are registered two, which is quite important to understand that we're registered directly to Visa, MasterCard. So we basically have to adhere to a much higher standard than just, you know, just someone offering a service on a website. Yeah. You don't really know their background. And we do partner with a lot of large associations. I mean, we work with the New York State Society CPAs. We've been doing that for almost ten years. Right Ray?
Ray McGrogan: [00:04:30] Closer to 14.
Mary Lent: [00:04:32] You've been endorsed for going on 14 years now.
Steve Kleinberg: [00:04:35] Yeah. I mean, so that I think that kind of tells, you know, gives us a little more credibility in terms of what we're doing. We believe in our hearts is correct. We're trying to advise we educate CPAs. We work in the medical space with the Medical Billing Association, practice management institutes, an osteopathic physicians, so we know what it's like working with a group of people and hard-working people, and so with that, I'll pass it to Mary.
Mary Lent: [00:05:03] I am Mary when some of you may already know me. Tersh and I kind of go back a couple of years. I worked for a larger CRM for a while and happened to meet Ray while I was working for that CRM. We just became friends and kind of continued our relationship and I kind of started to learn more about the credit card processing world, got more interested in it all, and really felt passionate about educating people and letting people know those things that they did not know. And I was guilty of it as well. I, I did not know that some of the things that we were doing were not compliant with Visa's guidelines. And that sounds kind of like not a big deal. You're not compliant. Big deal, but it is a big deal. And they can end up pulling your ability to process credit cards if somebody complains to Visa. So as I learned all of this, I just became excited to pass this information along and help people help them understand why it was important to work with an organization like Card Choice that is able to, number one, stay current. Not only know what's what the guidelines are, but stay current on them, so when new guidelines and rules come out, you already have a processor that you don't have to worry about in taking the step yourself. You know that they're doing it already, which was a big thing that I didn't know what needed to occur. I didn't know that the company needed to take care of a lot of these things.
Mary Lent: [00:06:54] You just assume your processors doing it or whoever's built into a CRM is taking care of it, but that's not the case. And it was very interesting to find that out. Yeah, I and I guess I didn't say I actually work for them doing executive new business development and partnership integrations.
Tersh Blissett: [00:07:16] So OK, so I can attest, whenever Mary found out about car choice and all of the compliance issues, she immediately calls me and then is like telling me all this stuff. And I'm like, you're speaking French to me. I don't know what you're talking about, but you're extremely excited about it. And she's like, we've got to talk more about this. And I'm like, this isn't very interesting to me. So, yeah, let me pencil you in here, and she calls me probably a week later and she's like, all right, I haven't heard back from you, let's talk. And I'm like, still penciling in here somewhere. And then finally she's like, all right, look, this is you got to listen to this. I'm like, OK, fine. And so I started was like, oh, dang, that's yeah, that's a big issue and I guess I should take notice of this.
Tersh Blissett: [00:08:08] So, whenever they first mentioned, you know, Ray and Steve and Mary coming on the show, I was like, yeah, that's a good idea because most people are in a very similar boat as me, because when we think about merchant services, we think about the spam calls that we get all day, every day about you and merchant service people. And it's so frickin annoying, annoying. Then, if you use a CRM that already has the merchant services available to it, most of the time, like most people out there, they're like, oh, it's fine, I could just do it. I don't have to worry about it. And like what Mary said, you just assume that. That CRM is taking care of everything and making sure everything's in compliance, but I'm learning now that, you know, you just got to do your due diligence and double-check that. So with that being said. We're going to talk about the six steps that you need to take in order to ensure that you're staying in compliance with that. So can someone get it started?
Steve Kleinberg: [00:09:07] Tersh absolutely so. So what Tersh is referring to is some regulations that occurred, you know, happened between like 2012, 2014, where there was a lawsuit between merchants in New York City against Visa. And the basis of the lawsuit was, you know, the merchants wanted to surcharge. They couldn't afford to pay these fees for credit cards and very high rent district, which is, you know, costs a lot to maintain a business in New York City as opposed to, you know, somewhere even like western Pennsylvania where I'm at now. And so this lawsuit, you know, occurred several years went past and there was never no one was ever found out for there was a settlement. And out of the settlement became some very, very key regulations that Visa put in place. So merchants were then allowed part of the settlement, as we said, yes, you can surcharge. So that was a good thing. So the merchants like, you know, we can surcharge.
Mary Lent: [00:10:11] And hold up one second Steve, explain what surcharging is, because not everybody knows they hear that word, but they don't really know what that means.
Steve Kleinberg: [00:10:18] So so, you know, typically when a merchant does to take credit cards for payment and here's a typical scenario. If you're roughly doing twenty-five thousand dollars a month in credit cards as an average, you're paying about 700 to seven hundred and fifty dollars in fees. I mean, that is straight out the window hemorrhaging. Right, right out of your business. And most people don't even look at that because credit cards are done in a deli, you know. And so when you sum up, you know, that that deli, you know, discount that they're taking out, you're talking on a typical twenty-five thousand dollar. And that's a like a pizzeria like that's retail. It's probably more when you're keeping transactions in a higher-risk environment. A lot of service industries are doing. Yeah. So what the surcharge allowed them to do was to kind of claw back some of that money that they were paying to the processor and pass that fee on to the consumer.
Steve Kleinberg: [00:11:13] That's what surcharging is, and Visa doesn't like that. You know, its brand name is very important to Visa. I mean, the Olympics were sponsored by Visa. You know, there's a lot of brand recognition on both the consumer side and the merchant side, right? Yeah. So that's kind of critical. So what happened is, you know, Visa said, OK, you could surcharge, but then what happened is in the states, the states were protecting their consumer base, and so the attorney generals in certain states were saying, no, no, you can't surcharge really. Now you had this. Yeah. And so people don't even realize this, that OK, can get a surcharge. But you're in a state where you can't surcharge.
Tersh Blissett: [00:11:57] How do we know what state we can and can't tell you right now?
Steve Kleinberg: [00:12:01] Great question, that's a great question. I knew you'd tee that ball right up! And so, right now forty-six states are allowed to surcharge and it's growing. I mean, we're going to get to 50 states, you know, and you can't surcharge in Colorado, Connecticut, Massachusetts, and Kansas. Right.
Tersh Blissett: [00:12:25] Really?
Steve Kleinberg: [00:12:26] Correct.
Tersh Blissett: [00:12:26] I could see two of them, maybe Colorado, but Kansas, that's kind of throwing the curveball there.
Steve Kleinberg: [00:12:32] You want to know why?
Ray McGrogan: [00:12:34] It's because Dorathy got involved, that was what happened.
Steve Kleinberg: [00:12:35] It's the attorney generals in those States just feel that surcharging is not good for their consumer. OK.
Tersh Blissett: [00:12:43] And I can see that because whenever I get a fuel surcharge on a ticket and I'm like, fuel prices aren't fluctuating. I remember when they were they shot up a while back and everybody kind of did a fuel charge. All right, I get it, but now fuel prices are low. Like, why am I getting it? So I could totally understand that.
Steve Kleinberg: [00:13:06] Yeah. Once you put a surcharge in, it's very hard to take that. Oh, yeah. it's very hard to take that away. I mean.
Mary Lent: [00:13:11] That's a lot of money you're getting out when you go back the other day.
Steve Kleinberg: [00:13:15] So right now it's forty-six. Right. So it was actually forty-five just up until like a year ago like Oklahoma was on that list and their attorney general said, OK, now you could surcharge. So, so Colorado, Connecticut, Massachusetts, Kansas.
Tersh Blissett: [00:13:30] Hey Steve, real quick, what happens if it goes in the opposite direction? What happens if that if in like six months, the state of Georgia says na, no more?
Steve Kleinberg: [00:13:40] Yes, because there's there are regulations, right. So there's the regulation on the books. Like if you go down to your capital and you could pull these regulations, I mean, it's and they're generally consumer-based regulations. It's that creditcard based. They're just basically saying you can't surcharge customers. Right. So Maine and New York are interesting, right? California actually, up until like two years ago, you couldn't start charging California either.
Tersh Blissett: [00:14:09] But I'm surprised they can even allow it now.
Mary Lent: [00:14:11] the United States of California, that's what I call it.
Steve Kleinberg: [00:14:16] You couldn't surcharge. And so, you know, the attorney general in New York, because of the lawsuits and everything, they said, yes, you can, but Maine in New York allows surcharging, but you can't do it as a percentage. Right. They still want to protect the merchant and they want to protect the consumer. I see Tersh. And this is why they if I want to charge three and a half percent as a surcharge, yeah. I have to do a mathematical computation in my head to figure out what the fee is. I get it. So the state of New York and the state of Maine said, you know what, to make a simplistic for the consumer, it's you got to tell them, here's a cash price and here's your credit card price. You have to listen to prices.
Tersh Blissett: [00:14:57] But so but they can it can be a percentage, but it has to be you have to list it out. It has to be listed out.
Ray McGrogan: [00:15:05] A hundred dollars cash. One hundred and three fifty credit.
Tersh Blissett: [00:15:09] Ok, so I thought you were saying like no matter what had to be a ten-dollar surcharge across the board. OK, I'll say give it to the client in layman's terms, I get that and I understand completely why they would do that because whenever I'm trying to figure out a tip for somebody, they're getting 20 percent because I can do 20 percent easier than I can do. Fifteen percent.
Steve Kleinberg: [00:15:34] So but these are those of small little regulations that, you know, people need to understand. They're just, you know, surcharges in a way. And, you know, if you don't understand, you know, in ignorance, they don't care about ignorance. You know, that's why we do a lot of education. We speak a lot with the New York State Society, a lot in the health care space. We want people to be educated because education is powerful, knowledge is power. And so let me go quickly through what came out of that, that those that settlement. So the first thing. Right, number one thing that Visa said, in order for a business to a surcharge, you have to register. Now, right off the bat, that one regulation registered with who pretty much disqualifies every CRM that's doing any kind of surcharging, any merchant has put in a little fee on their on their invoice because they didn't register with Visa.
Tersh Blissett: [00:16:27] So. So since I asked that, obviously I haven't done it myself. So right now, do you have to register with Visa, MasterCard, Discovery, and American Express?
Mary Lent: [00:16:37] Every card you take, you need to be registered as a surcharging business if you are surcharging.
Steve Kleinberg: [00:16:43] And great question Tersh because everyone generally lumps Visa, MasterCard, Discover, and American Express as kind of get-together. They are four separate, publicly traded companies. So you have separate regulations, you have different card pricing between all four of those brands. When we speak, though, we talk, we try to speak as a whole. We just try to say, like, you know, I'll use Visa as an example. Right, because they're the leaders in the industry. So so that's one. So if you're not registered and you are surcharging, you are not compliant. Right. Number two, most people get this one right is you need to inform the consumer that there will be a surcharge. So the consumer needs to know ahead of time that there is going to be a good.
Tersh Blissett: [00:17:30] Can I ask a question about that? All right, so traditionally, and I'm pretty sure there are large corporations that do it this way, so I assume that this is not a problem. Say we take a year's worth of data and we figure out that, OK, we have 20 percent of our revenue for the entire year was paid to us via credit card. And so when we create our budget and our pricing for next year, we add that three and a half percent to 20 percent of our total revenue to figure out our total price in our price book. And so we just add that three and a half percent into the price book at that point, is that OK?
Steve Kleinberg: [00:18:17] Yeah, I mean, so because you're basically listing the cash price, right. So just upped it you up to buy that budget, that 20 percent that you've carved out and figured out what you paid it fee. You spread that across and you and you kind of up your prices. So the problem that for some businesses is, well, by upping my price puts me out of a competitive edge. So that's that could be one disadvantage to doing that.
Tersh Blissett: [00:18:40] You've got to increase your value.
Steve Kleinberg: [00:18:42] That's right. Absolutely. But, you know, there's a lot of businesses, you know, I get it. And I understand I'm all about value, but there's a lot of businesses that just that are they're better at doing the service than they are at the business. And so that's why we have these discussions. It helps, you know, empowers businesses that want to do that to do this. The other thing is, too, is what you don't realize is you just up your prices and now you're paying a credit card, know higher your price.
Mary Lent: [00:19:08] You're paying more for that credit, you're every year, you're costing yourself more money than that formula.
Ray McGrogan: [00:19:13] It's kind of like a dog chasing its tail?
Steve Kleinberg: [00:19:16] So that formula doesn't necessarily work 100 percent in that respect? Right. So so that's kind of the answer, but I don't see a problem raising prices for that. So what is one is registered to is inform and the inform has to be specifically what it is that you're doing. We are charging a three and a half percent surcharge for credit cards. Wow. That will not be a surcharge for debit cards. That's the other thing that a lot of businesses don't understand is a debit card is not a credit card.
Tersh Blissett: [00:19:54] So even if they don't add their PIN number, it's still considered debit card. Now a debit card. Correct. So but you still get charged the credit card fee if they don't enter the PIN number, correct.
Steve Kleinberg: [00:20:06] You should be getting a lower fee. OK, people are not you know, especially if you're going through like a like a certain bank. I don't want to use I don't want to be specific because I don't know if you use your personal bank.
Mary Lent: [00:20:21] Those are more called issuing banks. So those are banks that are pushing credit cards to the consumer to use. Just saying, hey, put money on this, where on the other side of the fence you have the acquiring bank. That is the bank that is saying, I'm here for you, merchant. I want to teach you everything you need to know. I'm going to make sure you're in compliance. And that is where card choice, since we are an independent sales organization of an acquiring bank. So we, as he had just mentioned, we are watching that. That's where we see oh, that was the debit card that went through. They shouldn't have been charged that. Right. We correct it and get you your money.
Steve Kleinberg: [00:21:02] Because typically what's happening now, a lot of clients are looking for like a flat fee, like a flat. I want to be charged two point nine, 30 cents. Just make it easy for me not to make it easy for them and that world. Right. If you're doing that, you're being charged, you know, two point nine percent. But debit cards cost a lot less. So you shouldn't be paying two point nine percent for a debit card.
Ray McGrogan: [00:21:27] Let me jump in on that, guys.
Steve Kleinberg: [00:21:28] First, before you do, I want to finish these six regulations before we got to get the six. We need three hours, so go get the other one is you have to be capped at four percent. You can't charge any more than four percent and you can't charge any more than the actual cost of you accepting credit cards. So if you're cost to accept credit cards is two percent and you're charging three and a half percent is your surcharge, you're making a profit. These are deemed that to be totally out of compliance. Shut you down. OK, so there's several reasons that you're going to get shut down. One is registering to you might be charging debit cards and you shouldn't be charging debit cards. And the problem is, as a merchant, you don't know what a debit card is. If you take a card over the phone, you don't know whether that was a debit card or was a rewards card or a corporate, you know, a corporate infinity card. And so we have technologies that actually are able to even before we go out. And authorization, our technology will actually look at the bin on the card, which is the bank ID number, and it will know already whether it's a debit card or a credit card, if it's a credit card. It's going to charge the consumer three and a half percent. OK, if it's a debit card, it's not going to charge the consumer because they can't how fast this has happened because I'm like this.
Tersh Blissett: [00:22:55] Ok, so you'll let me know that fast, too?
Mary Lent: [00:22:57] So OK to be able to see what that price is, because that's one of the rules, too, is you have to let them know at point of sale.
Tersh Blissett: [00:23:05] Right? That's what I was wondering because this seems kind of difficult. If a yes is let's just keep going because I got I'm writing questions down.
Steve Kleinberg: [00:23:15] Yes. The reason why it is difficult is because Visa was just basically trying to deter people from surcharging. OK, that's and they're making you jump over hurdles. And that's why since 2014 to about twenty eighteen, nobody surcharge because, you know, like the banks, we didn't have the technology to do all this. This, you know, this, this computation and everything that Visa was looking to do, the processors, they were like, we're not changing, we're not investing millions of dollars to change our software because Visa was you know, merchants want a surcharge. So they just didn't until recently. So so that's one thing. The other thing is, is that the cost of the sale plus the fee has to be charged at one time. So if it's one hundred dollars and it's a three and a half percent surcharge, when the credit card device charges the credit card, it has to go out a hundred and three dollars and fifty cents.
Tersh Blissett: [00:24:17] That's number four.
Steve Kleinberg: [00:24:19] That's number four.
Tersh Blissett: [00:24:20] I'm just trying to keep track as I'm writing I'm writing my questions to send it to you.
Steve Kleinberg: [00:24:25] We'll send you again. It's so, so, so that being said, so you have to charge everything once, but on the receipt, it has to show it to places. So you have to see hour sale and then the surcharge is three dollars and 50 cents. So there's a lot of moving levers going on here. That people just say, I'm going to just charge three and a half percent and then be done with it. You know, you can see that it's totally. It's totally irrelevant, so that pretty much as the six yeah, we kind of combined it a little bit, you know, we talk we can't find the you have to charge at the time of sale and you have to actually inform the client.
Tersh Blissett: [00:25:04] Alright, so one, I've got: register. Two I got: informed consumer. Three, I have: capped at four percent. Four, I have: charge everything at once and I guess five is: show it in two places.
Steve Kleinberg: [00:25:18] Yes. I mean the three and six is no debit card.
Ray McGrogan: [00:25:23] And I'll throw one more. The merchant cannot profit on the sale.
Mary Lent: [00:25:27] Correct, which is the purchase cap.
Ray McGrogan: [00:25:29] So, if the credit card processing is written at three percent and they're charging four percent, they can't keep that one percent profit. That's against it.
Steve Kleinberg: [00:25:37] And so so this is a great product for those in the service industry that never took credit cards. And they were just like, you know, I can't afford it. I don't want to take them. Well, now you could start to advertise that as a form of payment. You take credit cards and now it's not costing you the credit card fee because you're able to surcharge that through to the consumer.
Mary Lent: [00:25:58] Compliantly, you're able to do that. We take care of all of the compliance. So you're not doing those six things. We're doing it for you.
Tersh Blissett: [00:26:07] So in there the OK, so this is the first question and I try and make it quick. The first question I kind of have there is you mentioned it needs to be labeled at what percentage you're doing, and I'm thinking in like a CRM, if I'm going to label it, it's going to have to have a line item that says this dollar amount or this percentage is the charge.
Tersh Blissett: [00:26:34] That's going to have to be changed on the fly. So, that's going to be changed on the fly or something.
Mary Lent: [00:26:40] So the technicians would need to do that at the point of sale.
Steve Kleinberg: [00:26:43] Yeah, a lot of these can be, you know, operationally changed in your business. Absolutely right. But some of the things that you can't do in your business are distinguished quickly, whether it's a debit card or a credit card. Mm-hmm. You need to physically register. So, you know, people are forgetting that. So those two things are kind of like, you know, very important. You know, I could program my CRM to push, you know, a sum fee and then push it out. But what happens is the CRM doesn't know whether the credit card is a credit card or was a debit card.
Tersh Blissett: [00:27:21] So it while making it safer for the merchant or the business, the company that's taking the credit cards, it creates more work for them currently. Is there a solution to this, you think, or do we need to get with the CRM and say, hey, there needs to be a way for us to make sure that we're...
Mary Lent: [00:27:48] You know, I can answer that for you? So, currently, we actually have had some conversations with some CRM in the home service industry about taking us on as a secondary payment option so that we can integrate with their system. And this, if they want to do surcharging, they can go ahead and use our program within their software. So we are having those conversations. But if that is there, the CRM doesn't want to go that direction, isn't interested in that, then the other option would be to go ahead and do it outside of your CRM. I know people think about that and they're like, I don't want to do that. I don't want to touch what's not broken. However, think about how many times companies are changing crops, how many times companies jump from one CRM to another. Tersh is the exception here?
Tersh Blissett: [00:28:47] Well, yeah. I mean, there's they're starting to develop some like. Long-term CRMs that they're starting to allow small companies to come in and then grow with the CRM and that's kind of what I'm thinking about because like, wow, like there could be a lot of big issues here.
Mary Lent: [00:29:12] We recommend you holding your credit card processing outside your CRM, number one, for the accountability side of things. You're not an account. You're not expecting a CRM who is not an expert in credit card processing to be doing that. Just like how you when you go and have surgery, who do you want to see? Do you want to see a doctor who's done ten thousand surgeries or do you want to see one that's just out of school?
Tersh Blissett: [00:29:38] I mean, they can practice on me. I don't mind.
Mary Lent: [00:29:43] Most people care, so you look at it that way. But then you're also looking at it from the aspect that if you change the programs, if something happens, if the company goes bankrupt if all of these unknowns happen, your credit card processing is still in one place.
Ray McGrogan: [00:30:00] I'm sorry, Tersh. The other thing that potentially happens with a lot of these integrations is think about this. I mean, because we do a lot of integration. So I know what integrators are looking for, that integrators are looking for the fastest, cheapest solution that they could put in, that they don't have to take a bandwidth of production time. Right. And OK, now we take credit cards. And so generally what they'll do is they'll go with a company called Stripe, which is more like an e-commerce type of a solution around e-commerce. What did it do? It allowed us a simple integration for an e-commerce solution. It's a simple pricing structure, two point nine five percent and thirty cents. Everything was perfect about that. That is great, though, for like a startup type of a business. OK, what happens is as your business starts to grow, two point nine five 30 cents is going to start to really dig into someone's revenue. Once you get over three thousand dollars a month and continual credit card payments. And the problem is to is because they're looking for easy peasy, stick it together, let it launch. There's no customer service. There's also what tends to happen to users is usually what we call an easier onboarding process.
Steve Kleinberg: [00:31:22] And what happens is because it's easier, that means they're not underwriting the merchant as well. And then what happens is once the merchant starts processing and you can look this up, I mean, it's it is all over the place about Stripe, and I get it, I don't like picking on people, but I'm about helping small businesses and mid-sized businesses grow. And this will happen. They will put a stop on your funds. They hold it.
Tersh Blissett: [00:31:49] Why would they do that?
Steve Kleinberg: [00:31:51] Because what happens is think about it when we do it. We're actually underwriting a merchant prior to accepting credit cards. OK, so solvency of a business. We look at the strength of the business. We look at the type of the business. Right. We look at the principles in the business. So we do actually underwriting before. You can take a credit card, really? I don't remember going through that process. It's quick. It's always you don't, you know, but we are on the run. And so what happens is we're basically giving you an unsecured loan for six months, right. Because the consumer has up to six months to claw that money back. And what happens is that.
Tersh Blissett: [00:32:30] Wait, wait, wait, wait, wait. Let me stop you there, OK? What did you just say?
Steve Kleinberg: [00:32:34] So basically a credit card merchant account, if you think about it in a simple term, is a six-month unsecured loan. That's the way I look at it and that's the way the bank looks at it. And that's what the risk is all about. And that's why companies like Stripe, Square, and PayPal. Right. They will they're going to hold that money. So they're going to claw that money back. If they feel that you're going out of their scope of underwriting and you have no judge and jury to help you, you know, when people use a regular credit card merchant account without going to a traditional bank. We actually have chargeback protection for our clients, so when the consumer is not happy with the install of the furnace, you know, it's crooked, you know, people will do a chargeback for the strangest things, right.
Tersh Blissett: [00:33:26] So how long do they have the ability to do that charge?
Steve Kleinberg: [00:33:29] About six months to do a chargeback period.
Tersh Blissett: [00:33:32] That's good. It has to be justified. Chargeback, correct.
Mary Lent: [00:33:35] They'll take your money first? And then the justification happens in the end. So your money gets pulled right away.
Steve Kleinberg: [00:33:42] Right. So Tersh, that's the way a chargeback works is a consumer's unhappy with your work. Well, try to contact you and you're like, no, the work was great, you're crazy. And the merchant like, OK. And they'll call the 800 number on the back of the credit card and say, listen, Tersh just installed this, you know, this furnace. I wasn't happy. He said he was gonna come out and fix it. You know, whatever the consumer is now, it's the consumer's word against the merchants' word.
Tersh Blissett: [00:34:06] How do we protect ourselves from that?
Mary Lent: [00:34:09] By using Card Choice.
Steve Kleinberg: [00:34:12] But you need to understand this. So part of part of growing your business is, you know, what is my chargeback protection? You know, if I'm using a company like Stripe, which is generally integrated into a lot of these CRM Suay because the CRM selected a low cost solution to bolt that on. That doesn't require much bandwidth. It's a low cost.
Ray McGrogan: [00:34:32] Let me be clear there, Steve, to CRM. It's a high cost to the end user being the merchant.
Steve Kleinberg: [00:34:37] You're absolutely right Ray. Yeah. So you can see I mean, we can have our discussions on just these little I to kind of get like a taste of really what's going on. I mean, we have these discussions, you know, Mary and I will get on the phone call. We'll talk in one thing in an hour and a half later. I go, oh, my God, that's how involved the industry is. And there are so many rules. You have Visa, MasterCard, you have states involved, you have software involved.
Tersh Blissett: [00:35:05] So how about this? So you mentioned that some of them or the processing companies will charge a flat fee like stripe like a two point nine percent flat across the board. If they did that, could you would you technically be in compliance if you put two point nine percent surcharge at the bottom of your invoice.
Steve Kleinberg: [00:35:28] So if you registered. Right. Right. If you were able to distinguish whether it was a debit card or credit card, a stripe can't do that. So you'd be out of compliance. Hmm.
Ray McGrogan: [00:35:38] But we had the first one you said was right. If you tell them it's two nine zero and that's you're not paying any more than I'm paying. Right. But you need to follow the other ones as well.
Tersh Blissett: [00:35:48] Yeah. So that one, you're good. So that solves that issue because that's the one that's rattling around in my brain right now.
Tersh Blissett: [00:35:55] But then the debit card issue. So assuming that it's not stripe, it's a different processor that they can tell. Yeah.
Mary Lent: [00:36:04] Yeah. So mostly I can make sure that they're compliant with all of these rules and regulations doing them for you or you need to do them on your own.
Steve Kleinberg: [00:36:12] And I'll tell you, Tersh, as we deal with the major top processors in the United States, not one of them can compliantly do it just OK.
Tersh Blissett: [00:36:24] So to me, it sounds like after this conversation that it's going to be in the best interest to build your pricing so where you can absorb this price versus using a surcharge?
Steve Kleinberg: [00:36:39] Or contact us because we have the technology, so the technology actually had to be developed by a third, you know, like a third party company, not the processors. So what happens is this technology is able to disseminate debit or credit and it will push or push it to the proper rails. We call them rails, which would be a debit rail or the credit rail. It knows, you know, but the processors themselves, first data is global. All these large processors, they themselves have nothing to gain other than expense. But to offer this solution, they're not game, they're not game, it's a visa regulation. So, you know, Visa made it difficult. They knew the banks wouldn't go on board. It took. A third, third party type of company to develop the software to do all this for, it's like a CRM, it's really like a CRM or surcharging correctly. It's you know, it's doing it absolutely correctly.
Tersh Blissett: [00:37:39] And so I could totally see us doing being able to handle this. My concern is whenever you have one hundred service experts or you have two hundred trucks in the field, like, wow, that's a lot of work.
Steve Kleinberg: [00:37:53] It's something that you are out.
Mary Lent: [00:37:56] So you're able to take it in the field just like you would with service Titan.
Mary Lent: [00:38:00] It's just a different you would just process it through whatever it is that you're using. It would be the same concept as them accepting it through the CRM. It would just be they would accept it in the field through the other technology.
Steve Kleinberg: [00:38:17] It's simple when when you have someone who's built it, it's simple.
[00:38:21] So it's that stupid, simple that can.
Tersh Blissett: [00:38:25] Do you still have the ability to be does it have to be swiped or can you take a picture of it? Is there a fee for taking pictures of the card versus swiping in the field or calling or typing it in?
Steve Kleinberg: [00:38:35] So right now. Right. So right now it's it's three and a half percent that gets charged to the consumer. That's whether you swipe the credit card, whether you keep the credit card or some. Some clients of ours have a payment page where, you know, on their website, they say, oh, yeah, we have that, too.
Tersh Blissett: [00:38:52] Yeah.
Steve Kleinberg: [00:38:53] So it's got it's got which we call Hosta payment page technology. So it's got all the technology used to take credit card, whether it's face to face retail. We call over the phone type of technology or e-commerce. It works in all three environments. And even if you had a cell phone. Right, service techs have cell phones. Yeah, they could they could call up the host of payment page right on their cell phone and to the credit card information, right into the cell like an Amazon transaction.
Tersh Blissett: [00:39:25] Yeah. So when I say take picture, I mean I mean, you know how whenever you hold your phone over and scans it and it recognizes all the information and pulls it all.
Steve Kleinberg: [00:39:34] Yeah. So that technology is actually in the works to do. But the technology doesn't necessarily care how the credit card is being placed to the processor. The technology is really designed to do one thing and one thing perfectly. Actually two things. The first one is to distinguish a debit card or credit card that hits that hurdle right out. So that's the hardest thing to do. That's what the technology is doing. And then secondly is, is printing a receipt that has your cost of services and then the cost of the surcharge as a separate line item. Those are the two most complicated things that you're not going to get around. And that's why you're saying, oh, it's going to be difficult for my service to know. It's not when you use the technology, the technology is doing it automatically.
Mary Lent: [00:40:24] You can email the invoice still. You can do all of that.
Tersh Blissett: [00:40:28] So anybody that's watching or listening to this, what's the best way for them to get in touch with you?
Mary Lent: [00:40:34] Yeah, so they can go ahead and they can reach out to me directly. And you can email me at M as in Mary Lent like Easter Lente. So MLenT@ Card Choice dot com. You can look us up on the web at w w w dot card choice dot com. Keep in mind we're switching our website over, so you might be able to use every link on our website right now. Or you can just give me a call. Text me. My number is five, six, three, five, one, three, eight, one, seven, seven.
Mary Lent: [00:41:15] And if you're watching or listening to this and you are interested in having Steve Ray myself do any kind of education, webinars, trainings, we are actually I'm actually starting to look into that avenue and see what we can do about just educating people and helping them get the correct information. An hour is sometimes not enough. So we're we're open to doing that as well. If you want us to chat with you separately.
Ray McGrogan: [00:41:46] Yeah, Tersh. We didn't touch upon this at all, but there's a whole nother avenue of our business and it's traditional credit card processing, which is a complete normalcy to where credit cards used to be done. OK, surcharging was a majority of our conversation today. Right. Or if surcharging isn't for you, we have a host of other products that are going to be beneficial. OK, OK. But I wanted to touch and I know we have to go. This is the last piece. If the average ticket is five hundred dollars and you're using a flat rate of, say, three percent, for argument's sake, if you can enter that transaction, that's going to run you around seventeen, eighteen, nineteen dollars. OK, that's your flat rate because in your space you have a higher average ticket. If you dip that credit card or swiped it in the field, you're going to take off almost one percent. So you may save five to ten dollars every single time you swipe a credit card. And that's in traditional credit card processing. If you're in flat rate, you will never get that lower pricing period. So do that twenty-five times a day at a seven dollar loss every single time using an average ticket of five hundred bucks. That's a lot of money.
Mary Lent: [00:43:05] But that's also not to say that we can't do flat rate pricing. I mean, we do flat rate pricing for people all the time. Our rates are just lower.
Steve Kleinberg: [00:43:13] Typically, I don't recommend it if we can avoid it, because that's our expertise. Again, these CRMs went into a relationship with flat rate pricing because they're not credit card processors. So they needed to make it easy. Like you said, Tersh just make it easy for me. It's right for you financially. It's easy. That's where we come in to try and convey when you're dealing with someone that could break out the layers of pricing and presented a different way. Now it's beneficial to you and you still get paid, it just costs you less.
Mary Lent: [00:43:48] It's the same process, and anybody that's listening to Tersh, they can get us a there last couple merchant statements, we will analyze them for free for them, let them know what their savings would be with us, with whatever model they wanted to go with. And if we can't find them savings, we will pay them two hundred and fifty dollars for just giving us the opportunity to earn their business and the fact that we took some of their time and weren't able to find them savings. And that's just strictly for people that are listening to your podcast.
Tersh Blissett: [00:44:24] Perfect. Perfect. Perfect. Awesome. Thank you, Steve and Mary. Thank you all for your time. Thank you. Thank you for educating me. Probably going to give me some heart palpitations, but, you know,
Mary Lent: [00:44:37] At least your wife's a nurse. Julie's got you covered.
Tersh Blissett: [00:44:41] That she does. Cool Deal. Thank you, guys. And thank you anybody that's listening or watching this episode. But anyways, thank you all for chiming in on the live chat and watching on Facebook and then listening to this episode of the Service Business Mastery Podcast it's the podcast, focus on service business owners, managers, and technicians who may be considering starting their own business for themselves. I hope today's episode really brought some value and answered maybe some questions that you have about or maybe you didn't even know you had these questions. With that being said, I hope you have a wonderful day and we'll talk again soon.
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