May 19, 2025 • 33 mins
Credit card processing fees can eat away at your brewery's profits, but expert Patrick MacLellan from Merchant Cost Consulting shows how you can save an average of 20% on these costs without changing your current processor or disrupting operations.
Summary
• 3 main fee components: interchange charges from card brands, processor markups, and miscellaneous fees
• Why most businesses are overpaying – processing statements are deliberately confusing and contracts often allow price changes without notice
• How processors typically adjust pricing three times per year, slowly increasing your costs
• The truth about POS systems that bundle processing with their software solutions
• How to identify bogus fees like non-PCI compliance charges that can be eliminated
• Pros and cons of customer surcharges and how to implement them legally
• Contract considerations including early termination fees and auto-renewals
Visit merchantcostconsulting.com to learn more or request a free statement analysis to see potential savings.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Today on the podcast, we dive into the wonderful
world of credit card processingfees with Patrick McClellan from
Merchant Cost Consulting.
Patrick's firm is able to saveclients, on average, about 20%
on their credit card fees and ifyou do the math on that, it can
be a significant sum.
We talk about the maincomponents of these fees, how to
identify hidden or unnecessarycharges, and we talk about how
(00:24):
Patrick can help you negotiatewith existing processors and get
better rates.
So for now, please enjoy thisconversation with Patrick
McClellan from Merchant CostConsulting.
Welcome to the Craft BreweryFinancial Training Podcast,
where we combine beer andnumbers to provide you with tips
, tactics and strategies so thatyou can improve financial
(00:45):
results in your brewery.
I'm your host, kerry Shumway, aCPA, cfo for a brewery and a
former CFO for a beerdistributor.
I've spent the last 20 yearsusing finance to improve
financial results in our beerbusiness.
Now I'm helping other craftbreweries to do the same.
Are you ready to take yourbrewery financial results to the
next level?
Okay, let's get started.
(01:07):
Just a quick note.
We'll be right back to thepodcast.
I want to let you know about anew network for beer industry
professionals.
It's called the Beer BusinessFinance Association.
It's an organization offinancial pros just like you,
looking to improve financialresults, increase profitability,
(01:28):
connect with your peers andshare best practices.
So I'd love to tell you alittle bit more about this.
If you are interested inlearning more, please email me,
kerry, at beerbusinessfinancecom.
That's K-A-R-Y atbeerbusinessfinancecom.
Or you can visitbbfassociationorg.
(01:48):
That's bbfassociationorg.
To learn more.
Hey, patrick, welcome to thepodcast.
It's good to see you thismorning.
You as well, cary, thanks forhaving me.
Absolutely so.
We're going to talk about thewonderful world of merchant card
processing, credit cardprocessing and dig into all the
(02:09):
details, but why don't you giveus a little background on you
and your company?
Speaker 2 (02:13):
Yeah, absolutely so.
Again, I'm Patrick McClellan.
I'm the Director of BusinessDevelopment here at Merchant
Cost Consulting and we are acost reduction and consulting
firm here out of Boston,massachusetts, and we help
businesses to reduce theircredit card processing fees
without actually having tochange from their current
vendors.
Me and my team we actually usedto work for a processing
(02:37):
company here in Boston and wekind of learned the ins and the
outs of the business and theindustry and fortunately we saw
that there's a lot of unethicalsales tactics and business
that's not in the industry.
So that's why we decided toflip the script to help
businesses get a betterunderstanding of merchant
(02:57):
services, what they're payingand why they're paying different
fees and hopefully save themsome money along the way.
Speaker 1 (03:04):
I love it.
That's great and that's one ofour missions here at Craft
Brewery Financial Training andBeer Business Finance trying to
save people money, particularlyin areas where it's not going to
impact the customer experienceor impact the business.
Negative, Because you alwaysthink about cutting costs, is
usually you have to givesomething up, right.
But in this way all you'redoing is identifying an existing
(03:25):
service and trimming thosecosts back a little bit.
So I love that.
Why don't you break down kindof the main components of those
fees and where you see merchantsoften overpay?
Speaker 2 (03:40):
Yeah, so typically with our process and how it
starts is we audit and we take alook at a recent merchant
statement from a business andthat way we can do an analysis.
We go through it line item byline item and we identify
there's a few different areaswhere we can save a business on
(04:02):
their money and we wouldcategorize it into three pillars
.
You have the interchangecharges or the charges from the
card brands, so Visa, mastercard, discover and American Express.
Depending on the type of cardthat's taken, they have
different fees associated withthat.
Some processors pad those orthere could be surcharges added
onto those.
So we want to make sure thatthose all align.
(04:26):
And then there are markups fromthe processor.
So there's usually a percentageand a per transaction fee where
the processor makes their money.
We want to make sure that thoseare in line with the industry
that they're in, that weessentially know what the fair
market value is and really whatthey should be paying and just
making sure it is somethingcompetitive.
And then there's all sorts ofother miscellaneous fees,
(04:51):
whether it be surcharging orjust add-on fees that the
processor can put on, and weessentially know which fees are
bogus, which are not, whichshould be on their account and
that's where we can come in andjust make sure that the business
isn't overpaying in differentareas, because when you take a
look at a merchant processingstatement, there's so many
different line items, it can bevery convoluted and it's almost
(05:15):
like it's done on purpose it'sto confuse the business, so it's
tough for them to figure outwhat exactly they are paying and
why.
Speaker 1 (05:22):
Yeah, I would think so.
You know, it's interesting, asyou were saying that I'm like is
that something that customersregularly get?
I mean, is this like what?
Does it come in the mail?
Is it emailed?
Is that like a routine I'm justtrying to think of when I've
actually seen a merchantprocessing statement, you know,
do they send it or do you haveto ask for it or go find it?
Speaker 2 (05:45):
Yeah, so I mean it is a back end expense, so it's
definitely something that's notlooked at all of the time and it
depends.
It depends on the processor.
Sometimes they do send it inthe mail.
I know that the businesses thatI deal with they typically just
like any sort of your cablebill, your insurance bill,
usually goes right in the trash.
Some processors they do giveyou the ability to obtain the
(06:05):
processing statements on anonline portal, but you'd be
surprised that a lot ofbusinesses don't even know that
they have that capability ofdoing that right.
Speaker 1 (06:14):
Exactly I would.
I would think that would be.
Step one is know that, you knowit's out there and then figure
out how to find it and then,yeah, get to the point of
untangling.
What the heck does this thingeven mean?
It's got all these line items.
Take us through, um, so we youknow our audience is is
primarily breweries, and youknow they'll have some sort of
point of sale system, um, andmaybe take us through this sort
(06:39):
of bundling or unbundling, likea lot of point of sale systems
have their own, like processingfees kind of baked in or or they
kind do it together.
Maybe take us through how thatworks.
Speaker 2 (06:49):
Exactly, yeah.
So a lot of the POS systems arekind of transitioning, where
they're doing the processingin-house, so they're the
one-stop shop, and they'reproviding the whole solution,
whether it be the POS system,the actual processing itself.
So they're providing theequipment, the software and the
processing, but with that therecan be some added or additional
(07:11):
costs.
It definitely does make thebusiness's life easier in terms
of just having to deal with onevendor as opposed to many
different other vendors andbringing them all in together.
So that way it definitely doesmake sense and it's becoming
more and more popular as thesesoftware and POS companies are
starting to do their ownprocessing.
Speaker 1 (07:31):
Gotcha.
And are you, are you able torun your same, your same process
whereby you do that audit andanalysis?
If someone has a processorthat's, or a point of sale
that's a one-stop shop, like howwould you, I guess?
Yeah, you can unbundle ityourself.
Speaker 2 (07:46):
Yeah, exactly.
So we don't want to impact therelationship between the, the
pos company, the, the processorwhatsoever.
So with our services it doesn'taffect those relationships
whatsoever.
It's just making sure that thebusiness is being priced fairly.
And that's where we come in andtry to find those
inefficiencies or just areas forimprovement.
(08:08):
But yeah, we don't want to havethem to change anything on
their end whatsoever.
So with our services, thebusiness would keep everything
the way that it is, so theirsystem remains unchanged.
Speaker 1 (08:21):
Got it.
And when you say priced fairly,how are these things usually
priced?
Is it based on volume, I wouldassume like the bigger volume or
are you able to negotiate kindof just on a basis of you see
kind of what other comparablecompanies are paying, or how
does that work?
Speaker 2 (08:37):
It's interesting because there are just there's
so many different variables thatcome into play and how a
business is priced.
It could depend on just thesales rep, whoever is setting
the account up and signing theaccount up, because essentially
it's the processor's job, orthese reps job to charge the
most amount, because that's whatputs the most amount in their
(08:59):
pocket, and just because of that.
That's where the unethicalsales tactics can come into play
and the hidden fees and all ofthe different pricing increases.
So that's where there could bea brewery you know A and you
have brewery B, right down thestreet from each other.
They're using the sameprocessor, but once they could
(09:20):
be on completely differentpricing structures.
One could be priced you knowwhere they're paying, all in 2%,
and the other one could bepaying 4%.
It just all depends.
There's really no rhyme orreason.
But that's where the businessesthat are overpaying we want to
make sure that they're gettingthat fair market value and
they're priced competitivelywith other businesses in the
(09:42):
industry.
Speaker 1 (09:43):
Gotcha and are you able to?
Do you guys have likebenchmarks or an actual
understanding of what marketrate should be Like in that
example?
I mean, if you were able to,how does that work?
How do you identify ifsomebody's out of spec and
paying too much?
Speaker 2 (09:57):
Yeah, exactly so.
We use our data and analyticsand that's where we essentially
know that, based on the businessand the industry, that they're
in their monthly volume, theirper ticket item, what types of
cards they're taking, whetherit's primarily consumer cards
versus business cards or versushigh-end rewards cards, and
(10:21):
that's essentially theinformation that we have on our
end that we can bring to theprocessor and that's where we
know that they should be pricedat.
And that's, yeah, exactly whatwe kind of use as the benchmark.
Speaker 1 (10:30):
Gotcha?
Do you help at all with or getinto like what cards if one of
your customers should accept ornot accept?
I know a lot of times it's like, oh, we don't take American
Express or whatever.
Do you get into that at all?
Speaker 2 (10:59):
We definitely have helped customers, or at least
giving them the knowledge saying, hey, if you have the ability
it's tough to tell a customersaying, hey, can you please use
your debit card versus the cardthat has all the rewards,
because people want to use thatso they can get their flyer
miles, their cash back, want touse that so they can get their
flyer miles, their cash back.
But for the business, if theytake a majority of debit cards,
the debit card is going to bethe least cost of processing.
It's the least riskytransaction because the money is
taken right out of theiraccount and especially if
(11:20):
there's with a debit card, youhave a four-digit PIN number.
So if you give them the abilityto enter in that four-digit
number Again, it's even lessrisky, which in turn is less
expensive, Whereas you have yourAmerican Express cards.
American Express is kind of adifferent beast in the payment
processing world, where theyhave all the rewards attached to
them.
Therefore their costs are a lothigher.
So it's the same with Visa andMasterCard.
(11:43):
You have the high-end endrewards cards and they're not
the ones that are paying forthose rewards.
That's where they pass along tothe merchant.
So that's why you may see thatsome businesses don't accept
american express at all becauseof their higher costs.
Um, but yeah, it can be toughfor a business to dictate which
card their customer is going tobe using.
But if we can at least give thebusiness the knowledge in terms
(12:05):
of the differentiations betweenthe types of cards and what
their charges are, then I'd beobviously want to give them that
leverage.
Speaker 1 (12:13):
Gotcha so do you have a sense I mean, I imagine you
have a data on this but onaverage, like how much you're
able to save customers, or doyou have any examples of clients
you've worked with that you goin and you've identified savings
, and what does that look like?
Speaker 2 (12:28):
Yeah, I would say.
In a hospitality industry, ouraverage savings is about 20% on
their all-in fees.
So that's where they're,whatever they're paying.
We call it their effective rate.
You can get your effective rateby taking the total fees you
pay and dividing that by thetotal sales, and that's what
we're usually able to reducethat by 20%.
All in Sounds pretty impressive.
(12:51):
I like that.
Yeah, there can just be thereAgain.
There's so many different areasfor improvement, whether it's
just renegotiating the contractitself and just areas for
optimization.
Got it.
Speaker 1 (13:03):
All right.
So step one is understand whatyour fees are.
Get that, got it All right.
So step one is you know,understand what your fees are,
get that statement, get all thedetails.
Step two is you know, send itto you guys.
You do the audit and analysis,identify, you know areas where
you can, you know, save somecosts.
And then what happens next?
You have to negotiate with who.
What do you guys do at thatpoint?
If, like, you get in and yousay, all right, we can save this
(13:24):
, this and this, how do youactually achieve those savings?
Speaker 2 (13:28):
Yes.
So the business is interestedin utilizing your services,
assuming we found that there aresavings to to be obtained with
their processor, they they wouldengage with our services, which
would then give us the abilityto contact the processor on
their behalf.
So it's very little legwork ontheir end.
We take care of all that doingthe renegotiating, having the
conversations directly with theprocessor and bringing our data
(13:52):
to them and saying, hey, we knowwhat they should be paying, we
can reduce these different areasor remove these fees from the
account completely.
So we're kind of working withthe processor directly.
So it's again it's notaffecting their businesses
day-to-day operations whatsoeverand it's not a, you know, time
consuming for them either.
Speaker 1 (14:13):
Gotcha, and do you find that there are times where
you have to recommend, likeswitching providers entirely, or
is that part of your process?
So if you're doing thenegotiation and let's just say
the merchant processor is notbudging, and how, how might, how
might you go about that?
Speaker 2 (14:34):
Yeah, I mean there could be the instance where, for
whatever reason, the processorjust does not want to adjust
their pricing.
They think that they are atthat fair market value.
When they take a look at theirmargins it's already summing up
so they can't make theadjustments.
If that is the case, we want totell the business saying, hey,
you're actually in a good spotand we initially, during the
(14:56):
initial audit, we'll tell themthat they are priced
competitively and our servicesmay or may not be a good fit.
Initial audit will tell themthat they are priced
competitively and our servicesmay or may not be a good fit.
But then at that time, if theywant to make the switch, we do
have relationships in place withprocessors or knowing the
industry, what other businesses,what they're using.
But again, just changingprocessors can be difficult.
It can be time consuming,there's a learning curve with
(15:19):
everybody trying to adjust tothe new POS system, entering in
all the menu items, and therecould be an upfront cost for new
equipment.
So it's not really a bread andbutter.
We don't encourage to make thechange just because of the time
and cost component of it.
So obviously that's why we wantto take that headache away from
them.
If they don't have to change it, we can still save them money.
(15:40):
Then that's where we want totry to help.
But if the business hasoutdated equipment or they're
just again their processor isn'twilling to make the changes and
they're still being overcharged, then we want to obviously make
the recommendation saying hey,if you were to switch processors
, this is what it would looklike from a savings standpoint,
(16:01):
so it may be worth it.
Speaker 1 (16:04):
Gotcha.
You know we're all familiarwith the credit card brand names
.
You know Visa, mastercard,american Express, discover, on
and on.
Who are these processors?
I hate to say they hide in theshadows, but how many of them
are there?
What are they banks?
I'm not even sure I know what.
What are they banks like what?
I'm not even sure I know what,what role they play, where they
(16:24):
come from yeah, I mean there's,there's thousands.
Speaker 2 (16:28):
To be honest with you , it's they.
They really start at the, thebank level.
So you know, you have yourwells fargo and they're the, the
processing bank, and thenthere's different types of
companies.
You have global payments,heartlands, um, just to name a
couple, and then, yeah, thebanks do the actual processing
themselves.
And then you have independentsales offices, which are smaller
(16:52):
mom-and-pop shops.
There's so many different typesof processors out there, but
especially in the brewery andthe hospitality industry, you
have toast as a big player,which we see a lot of them.
So, yeah, there's a lot of themout there.
It's tough to distinguish whoare the good or the bad guys,
(17:14):
but, yeah, that's typicallywhere we just try to follow
different trends.
If we're seeing that there's,you have your processors or POS
providers that cater to specificindustries.
That's where we want to kind ofmake sure that they're set up
correctly and kind of aligningwith their industry as well.
Speaker 1 (17:33):
Gotcha.
One of the other issues I guesssurrounding this processing
business is like the time toactually get the funds.
Is that standard or how doesthat work?
So I come in, I buy a beer,swipe my credit card.
How long does it take toactually get that money in the
(17:54):
bank for the brewery?
Speaker 2 (17:57):
It should be 24 to 48 hours.
Better processors do have thecapability of setting you up
with next day funding.
It's of no charge to them butsometimes they do charge the
business for having that nextday funding as kind of a benefit
to them to get their moneyfaster.
But essentially there are a lotof processors out there that do
(18:22):
not charge anything.
But it should be next dayfunding, or the next business
day at least.
Speaker 1 (18:27):
Gotcha, and is that part of your audit or analysis?
Do you kind of go in and seehow fast the money is moving, or
is that outside of what youguys do?
Speaker 2 (18:35):
No, we absolutely help with that process.
So if that's a concern for thebusiness and saying, hey, the
turnaround time to get our moneyis taking much longer than we
anticipated, we'll help to getthem set up on that next day,
funding making sure that thereis no cost associated with it.
Speaker 1 (18:51):
Gotcha Okay.
Are there any processors thatyou can't, for whatever reason,
audit their statements, or arethere certain ones where you
typically would find moresavings?
In other words, are thereprocesses like oh yeah, I know
typically where these guys areovercharging, or this process,
they're usually very competitive.
Speaker 2 (19:11):
Square is probably their payment facilitator and in
order to have a conversationaround pricing with them, they
like to see a sales volumethreshold.
So a business typically has tobe doing over $100,000 in sales
volume per month for them toeven have a conversation around
(19:33):
the pricing.
So that's one that we haven'thad a ton of luck with, but
their pricing is relativelycompetitive.
Toast has been a little bitmore difficult lately in terms
of having conversations aroundtheir pricing as well.
That actually just startedwithin the past few months.
Could just be a pause on thatjust again to get their strength
(19:58):
in numbers back up.
But again, we've had plenty ofsuccess with Toast in the past
and hoping to regain and makingsure that businesses are price
appropriate with them.
Speaker 1 (20:11):
You mentioned earlier , we've got the three main fees.
I think if I get this right youcan just correct me if I say it
wrong but interchange charges,markups for your processor, and
then there's miscellaneous fees,add-ons, and you said there
could be some bogus charges inthere.
There's an ancillary charge.
Are you able to give examplesLike what sort of charges might
you find that you're like ohyeah, that shouldn't be there,
(20:33):
that shouldn't be there, a bigone is a non-PCI compliance fee.
Speaker 2 (20:40):
So, businesses, if you're accepting cards, you must
complete what's called a PCI orpayment card industry
compliance survey, and itinvolves basically completing a
survey making sure you'restoring your credit card
information legally and securelyand you're not just writing a
credit card number down on anotepad and a lot of businesses
(21:03):
just it, something that istime-consuming.
A lot of businesses don't dothe survey, don't even know they
have to complete the survey,don't know what PCI compliance
is, and because of that thereare a lot of add-on charges,
both monthly, quarterly andannual fees, especially if
you're being non-compliant.
So that's just one of thosefees that we want to be able to
(21:24):
call out and help a businessbecome compliant, to remove that
fee completely.
And then again, it does dependon the processor and who it is,
but some processors chargenon-EMV assessment fees or risk
assessment fees.
They almost call it differentprocessors.
Call it whatever they want itto really, but it's just a
(21:45):
surcharge at the end of the day,making themselves more
profitable.
Speaker 1 (21:50):
That's amazing.
There's like littleopportunities hidden everywhere.
Speaker 2 (21:54):
It really is.
And that's what makes thosestatements so difficult to read
is because it's tough to figureout saying, hey, this is an
actual fee, that is, you know,passed along from the car brands
, or this is just a line itemthat they they just made up
again to to make themselves moreprofitable.
Speaker 1 (22:13):
What are the responsibilities of the?
I'll use the example of, like atap room for a brewery.
You know you're taking creditcards presumably.
You know you take the card, youswipe it, you know, tap it,
whatever, what?
Where does that data live Like?
Who's?
Who's responsible for sort ofthe protection of that
(22:33):
customer's data?
Speaker 2 (22:36):
So it's.
It's both on the business andthe processor side.
So it's both on the businessand the processor side.
You know you want to make surethat you have a safe and secure
internet system.
You know your Wi-Fi, everythingis protected that you don't
have.
You know every single person inthe business has access to
different things or differentbackend systems.
You know, into the portal youwant to make sure everything is
(22:59):
password protected and same withthe portal.
You want to make sureeverything is password protected
and same with the processor.
It's their job to make surethat everything is running
smoothly through their owngateway, that everything is very
, very safe and secure.
So they can't be compromisedeither.
So you obviously want to makesure you're using a reputable
company.
Speaker 1 (23:20):
Okay, and is that something you might look at for
one of your customers to say allright, how are you actually
safeguarding?
I mean, you're not in charge ofthe processor, but if you're
working with a brewery, forexample and maybe that goes back
to the PCI compliance surveyMaybe there's specific steps,
checkboxes you have to follow.
What does that look like?
Speaker 2 (23:47):
Yeah, it's something we don't really have a lot of
insight into.
It's just not knowing how theirsystem is really set up, what
type of firewalls they have setup and kind of on that side of
the business.
But yeah, again, I think justmaking sure that the PCI
compliance is in placedefinitely does protect them,
just in case something iscompromised, that themselves as
a business, that they'reprotected.
But yeah again, and it'susually not something much of
concern either, so it can betough for us sometimes.
Speaker 1 (24:14):
Something to talk to the IT company about, I would
imagine.
Speaker 2 (24:17):
Exactly, yeah, you have an IT person on your staff,
or yeah, some some, just makesure everything is set up
properly.
Speaker 1 (24:27):
Do you how about contract terms or clauses,
things like early terminationfees, auto renewals?
Are there any of these that yousee that you can help your
clients navigate or renegotiate?
Speaker 2 (24:39):
Yeah, absolutely We've been able to.
Even if a business is in acurrent contract with their
processor, we still have theability to come in to adjust
their pricing again, making surethat they're paying that fair
market value.
If there is some sort of earlytermination fee or liquidated
damages or canceling thatcontract early, we have had the
(24:59):
ability to lower that fee ormaking sure that we can shorten
the length as well.
So, yeah, we've definitely hadsuccess in helping them with
their terms or just at leastgetting them on a month-to-month
agreement, which you should bewith your processor.
It's tough being locked into acontract with your processing
company.
Speaker 1 (25:20):
Gotcha.
So that's part of your process.
As you say, send me thecontract, send me your merchant
statements, and then you kind ofgo through and know what you're
looking at there Exactly.
Speaker 2 (25:30):
Yeah, it's not necessary, but it is very
helpful if we're able to see thecontracts, because you'd be
surprised.
You sign a contract at oneprice and you look at the
statement and it's completelydifferent.
It's 2x of what you signed upfor.
It's because in their fineprint and the terms and
conditions, the processor saysthat they have the ability to
(25:52):
adjust their pricing at any time, with or without notice.
So, yeah, we want to take alook at that to see where those
discrepancies lie and if theyare locked into a contract,
which is typically in the fineprints as well.
Speaker 1 (26:06):
Contract compliance is tough because, just being
human nature, we don't readthose contracts very well, do we
?
We just sort of sign, sign,sign and you're off and running.
Speaker 2 (26:15):
Exactly, it's like the Apple terms and conditions,
where you scroll, click agreeand you move along.
Speaker 1 (26:25):
So it's very similar.
How about ongoing monitoring?
Right, so you guys come in, youidentify savings, you
renegotiate To your point.
The contract might say they canchange it at any time without.
What does that ongoingmonitoring look like, or what do
you guys do in that regard tomake sure that the rates are
staying competitive long term?
Speaker 2 (26:44):
Yeah.
So that's probably where we canmake the most impact in helping
a business is because we'remonitoring their statement
monthly to ensure that theirrates stay at that bottom line,
just because, again, theseprocessors they have the ability
to change their pricing at anytime.
So we typically notice a trendwhere most processors will
(27:06):
adjust their pricing towards thebeginning of the year, the
middle and the end of the year.
So we essentially know,especially with the processor,
when that is coming up.
So we try to prevent that, getahead of it for our clients.
But let's just say if we didn'tknow ourselves, after we
monitor, audit a statement,we'll catch that increase or an
(27:28):
added fee and then we'll contactthe processor to get it removed
as well as refunded.
So always making sure thebusiness is paying the least
amount per month.
Speaker 1 (27:40):
Gotcha, one of the hot topics that comes up pretty
frequently these days is passingthe surcharges on to the
customer and as a consumermyself, you know you see it
pretty regularly out there whereit's a gas station or a
restaurant or you know you nameit.
So I wouldn't say it'spervasive, but it's pretty darn
close to that.
(28:00):
What is your take on that?
I know you guys have kind oflike some resources and I can
share that with folks as likepros and cons considerations.
Um, how would you, if somebodyasks you that question like,
should I do this?
Speaker 2 (28:16):
how would you help them make that decision?
Yeah, exactly, carrie.
So it does have a lot of prosand cons to it and it is
something that's becoming a lotmore popular because these
processors are pushing it,because it makes them more
profitable.
But, yeah, it depends on theindustry that you're in.
If you do have a surcharge, ifsomeone wants to use a credit
(28:40):
card, first you want to makesure that you have the in
writing somewhere, whether it'son the receipt, whether it's at
the front counter, just makingsure that you have a display
saying hey, if you use a creditcard, there's going to be a 3%
surcharge on top of that.
But then it gets into.
Are you going to upset anycustomers?
Are they going to come back?
So you have to weigh thoseoptions out.
(29:03):
But if you're looking tocompletely cut costs and reduce
your merchant fees andseamlessly and just passing
those fees along to the customerbut just again making sure,
because there are a lot of grayareas you just want to make sure
that everything is set up, itis compliant, because I know
there are a lot of reps outthere from the car brands that
(29:25):
if you are to get caught and youdon't have the proper terms in
place, you can be subject to alot of fines and then being even
put on lists where you can'taccept cards at all in the
future.
So that's the most importantpart is this if you're going to
do it, making sure you're doingit correctly, working with your
processor to making sureeverything is is just set up
(29:50):
legally, um, and depending onthe state you're in, they have,
you know, different terms andwhat you can and cannot do.
So, yeah, again, it's just,it's weighing out those options
gotcha, gotcha, okay, um, andthen so for your.
Speaker 1 (30:07):
How does your firm get compensated?
Like, what are your?
What's the fee structure?
Because you're coming in,you're doing a lot of work,
right.
You're analyzing statements,you're looking at the contracts,
you're negotiating with thepayment processors.
How do you, if you're guiding aclient, maybe take me through
that process?
I'm a brewery.
I give Patrick a call because Iwant to check this out, what
happens next and how do the feeswork?
Speaker 2 (30:29):
Patrick a call because I want to check this out
.
What happens next and how dothe fees work?
Yeah, so if a business is toutilize our services, we're able
to obtain them savings.
We're strictly acontingency-based firm, so the
only way we're compensated is bysharing in the savings that
we're able to obtain for abusiness.
So we don't have any upfrontfees.
There's no monthly consultingfees.
It's strictly based on thesavings month over month and
(30:50):
that's where we'll put togethera savings breakdown to showcase
exactly where the savings tookplace.
So we would show them thebusiness, the old fees they were
paying before our services andthen the new fees they were
paying after because of ourservices, and then we would list
each and every line item out,showcase exactly where we were
able to achieve those savingsand then, yeah, we just ask for
(31:12):
a certain percentage of that fora certain time.
Length.
Speaker 1 (31:16):
Gotcha Okay.
So I imagine most everybodylistening to this takes credit
cards, has these fees and wejust sort of pay them and maybe
grumble about them or wonder ifwe can.
So if somebody is listening tothis and they're like all right,
well, this sounds interesting.
I'd like to talk to Patrick.
How should they get in touchwith you?
What's the best way to do thatand learn more?
Speaker 2 (31:39):
Yeah, I think just even going to our website,
merchantcostconsultingcom, justto learn a little bit more about
our services, the differentindustries that we cater to.
But it really starts with ustaking a look at a recent
statement and we can puttogether the analysis.
There's no commitment for thatand there's no cost, but just to
see what the potential savingslook like and we can report back
(32:01):
, just to see if our servicesare a good fit or not, there is
the chance that we can come backand say, hey, you're priced
appropriately, you're doing whatyou should be doing and just.
Speaker 1 (32:13):
There's no need to utilize a service like us.
Yeah, sounds like a no-brainerto me.
Speaker 2 (32:23):
Any questions?
I didn't ask, but should anytopics that you feel are
important for us to cover?
No, kerry, I think you coveredall the main ones.
Yeah, the surcharging isdefinitely something that's been
more prominent and somethingwe're seeing more and more of.
But even if any listeners havequestions just around credit
card processing, merchantservices in general, I'd be more
(32:45):
than happy to just have aconversation around anything,
just because it can be a complexindustry with a lot of moving
parts.
Speaker 1 (32:52):
Absolutely Well, Patrick, this has been great,
great information.
It's funny.
You dig it.
You take what is what is arelatively, I think,
straightforward and simple fee,and then you break it down.
You're like that's notstraightforward, nor is it
simple, and there's lots of waysto maybe save some money.
Speaker 2 (33:09):
So I appreciate you sharing your time and knowledge
with us today Absolutely.
Thank you so much for having me, Kerry.
I really appreciate it.
Speaker 1 (33:13):
Thank you for listening to the Craft Brewery
Financial Training Podcast,where we combine beer and
numbers so that you can improvefinancial results in your
brewery.
For more resources, tools,guides and online courses, visit
craftbreweryfinancialtrainingcomand don't forget to sign up for
the world-famousCraftbreweryfinancialtrainingcom
.
And don't forget to sign up forthe world-famous Craft Brewery
Financial Training Newsletter.
Until next time, get out thereand improve financial results in
(33:37):
your brewery today.
Today on the podcast, we dive into the wonderful
world of credit card processingfees with Patrick McClellan from
Merchant Cost Consulting.
Patrick's firm is able to saveclients, on average, about 20%
on their credit card fees and ifyou do the math on that, it can
be a significant sum.
We talk about the maincomponents of these fees, how to
identify hidden or unnecessarycharges, and we talk about how
(00:24):
Patrick can help you negotiatewith existing processors and get
better rates.
So for now, please enjoy thisconversation with Patrick
McClellan from Merchant CostConsulting.
Welcome to the Craft BreweryFinancial Training Podcast,
where we combine beer andnumbers to provide you with tips
, tactics and strategies so thatyou can improve financial
(00:45):
results in your brewery.
I'm your host, kerry Shumway, aCPA, cfo for a brewery and a
former CFO for a beerdistributor.
I've spent the last 20 yearsusing finance to improve
financial results in our beerbusiness.
Now I'm helping other craftbreweries to do the same.
Are you ready to take yourbrewery financial results to the
next level?
Okay, let's get started.
(01:07):
Just a quick note.
We'll be right back to thepodcast.
I want to let you know about anew network for beer industry
professionals.
It's called the Beer BusinessFinance Association.
It's an organization offinancial pros just like you,
looking to improve financialresults, increase profitability,
(01:28):
connect with your peers andshare best practices.
So I'd love to tell you alittle bit more about this.
If you are interested inlearning more, please email me,
kerry, at beerbusinessfinancecom.
That's K-A-R-Y atbeerbusinessfinancecom.
Or you can visitbbfassociationorg.
(01:48):
That's bbfassociationorg.
To learn more.
Hey, patrick, welcome to thepodcast.
It's good to see you thismorning.
You as well, cary, thanks forhaving me.
Absolutely so.
We're going to talk about thewonderful world of merchant card
processing, credit cardprocessing and dig into all the
(02:09):
details, but why don't you giveus a little background on you
and your company?
Speaker 2 (02:13):
Yeah, absolutely so.
Again, I'm Patrick McClellan.
I'm the Director of BusinessDevelopment here at Merchant
Cost Consulting and we are acost reduction and consulting
firm here out of Boston,massachusetts, and we help
businesses to reduce theircredit card processing fees
without actually having tochange from their current
vendors.
Me and my team we actually usedto work for a processing
(02:37):
company here in Boston and wekind of learned the ins and the
outs of the business and theindustry and fortunately we saw
that there's a lot of unethicalsales tactics and business
that's not in the industry.
So that's why we decided toflip the script to help
businesses get a betterunderstanding of merchant
(02:57):
services, what they're payingand why they're paying different
fees and hopefully save themsome money along the way.
Speaker 1 (03:04):
I love it.
That's great and that's one ofour missions here at Craft
Brewery Financial Training andBeer Business Finance trying to
save people money, particularlyin areas where it's not going to
impact the customer experienceor impact the business.
Negative, Because you alwaysthink about cutting costs, is
usually you have to givesomething up, right.
But in this way all you'redoing is identifying an existing
(03:25):
service and trimming thosecosts back a little bit.
So I love that.
Why don't you break down kindof the main components of those
fees and where you see merchantsoften overpay?
Speaker 2 (03:40):
Yeah, so typically with our process and how it
starts is we audit and we take alook at a recent merchant
statement from a business andthat way we can do an analysis.
We go through it line item byline item and we identify
there's a few different areaswhere we can save a business on
(04:02):
their money and we wouldcategorize it into three pillars
.
You have the interchangecharges or the charges from the
card brands, so Visa, mastercard, discover and American Express.
Depending on the type of cardthat's taken, they have
different fees associated withthat.
Some processors pad those orthere could be surcharges added
onto those.
So we want to make sure thatthose all align.
(04:26):
And then there are markups fromthe processor.
So there's usually a percentageand a per transaction fee where
the processor makes their money.
We want to make sure that thoseare in line with the industry
that they're in, that weessentially know what the fair
market value is and really whatthey should be paying and just
making sure it is somethingcompetitive.
And then there's all sorts ofother miscellaneous fees,
(04:51):
whether it be surcharging orjust add-on fees that the
processor can put on, and weessentially know which fees are
bogus, which are not, whichshould be on their account and
that's where we can come in andjust make sure that the business
isn't overpaying in differentareas, because when you take a
look at a merchant processingstatement, there's so many
different line items, it can bevery convoluted and it's almost
(05:15):
like it's done on purpose it'sto confuse the business, so it's
tough for them to figure outwhat exactly they are paying and
why.
Speaker 1 (05:22):
Yeah, I would think so.
You know, it's interesting, asyou were saying that I'm like is
that something that customersregularly get?
I mean, is this like what?
Does it come in the mail?
Is it emailed?
Is that like a routine I'm justtrying to think of when I've
actually seen a merchantprocessing statement, you know,
do they send it or do you haveto ask for it or go find it?
Speaker 2 (05:45):
Yeah, so I mean it is a back end expense, so it's
definitely something that's notlooked at all of the time and it
depends.
It depends on the processor.
Sometimes they do send it inthe mail.
I know that the businesses thatI deal with they typically just
like any sort of your cablebill, your insurance bill,
usually goes right in the trash.
Some processors they do giveyou the ability to obtain the
(06:05):
processing statements on anonline portal, but you'd be
surprised that a lot ofbusinesses don't even know that
they have that capability ofdoing that right.
Speaker 1 (06:14):
Exactly I would.
I would think that would be.
Step one is know that, you knowit's out there and then figure
out how to find it and then,yeah, get to the point of
untangling.
What the heck does this thingeven mean?
It's got all these line items.
Take us through, um, so we youknow our audience is is
primarily breweries, and youknow they'll have some sort of
point of sale system, um, andmaybe take us through this sort
(06:39):
of bundling or unbundling, likea lot of point of sale systems
have their own, like processingfees kind of baked in or or they
kind do it together.
Maybe take us through how thatworks.
Speaker 2 (06:49):
Exactly, yeah.
So a lot of the POS systems arekind of transitioning, where
they're doing the processingin-house, so they're the
one-stop shop, and they'reproviding the whole solution,
whether it be the POS system,the actual processing itself.
So they're providing theequipment, the software and the
processing, but with that therecan be some added or additional
(07:11):
costs.
It definitely does make thebusiness's life easier in terms
of just having to deal with onevendor as opposed to many
different other vendors andbringing them all in together.
So that way it definitely doesmake sense and it's becoming
more and more popular as thesesoftware and POS companies are
starting to do their ownprocessing.
Speaker 1 (07:31):
Gotcha.
And are you, are you able torun your same, your same process
whereby you do that audit andanalysis?
If someone has a processorthat's, or a point of sale
that's a one-stop shop, like howwould you, I guess?
Yeah, you can unbundle ityourself.
Speaker 2 (07:46):
Yeah, exactly.
So we don't want to impact therelationship between the, the
pos company, the, the processorwhatsoever.
So with our services it doesn'taffect those relationships
whatsoever.
It's just making sure that thebusiness is being priced fairly.
And that's where we come in andtry to find those
inefficiencies or just areas forimprovement.
(08:08):
But yeah, we don't want to havethem to change anything on
their end whatsoever.
So with our services, thebusiness would keep everything
the way that it is, so theirsystem remains unchanged.
Speaker 1 (08:21):
Got it.
And when you say priced fairly,how are these things usually
priced?
Is it based on volume, I wouldassume like the bigger volume or
are you able to negotiate kindof just on a basis of you see
kind of what other comparablecompanies are paying, or how
does that work?
Speaker 2 (08:37):
It's interesting because there are just there's
so many different variables thatcome into play and how a
business is priced.
It could depend on just thesales rep, whoever is setting
the account up and signing theaccount up, because essentially
it's the processor's job, orthese reps job to charge the
most amount, because that's whatputs the most amount in their
(08:59):
pocket, and just because of that.
That's where the unethicalsales tactics can come into play
and the hidden fees and all ofthe different pricing increases.
So that's where there could bea brewery you know A and you
have brewery B, right down thestreet from each other.
They're using the sameprocessor, but once they could
(09:20):
be on completely differentpricing structures.
One could be priced you knowwhere they're paying, all in 2%,
and the other one could bepaying 4%.
It just all depends.
There's really no rhyme orreason.
But that's where the businessesthat are overpaying we want to
make sure that they're gettingthat fair market value and
they're priced competitivelywith other businesses in the
(09:42):
industry.
Speaker 1 (09:43):
Gotcha and are you able to?
Do you guys have likebenchmarks or an actual
understanding of what marketrate should be Like in that
example?
I mean, if you were able to,how does that work?
How do you identify ifsomebody's out of spec and
paying too much?
Speaker 2 (09:57):
Yeah, exactly so.
We use our data and analyticsand that's where we essentially
know that, based on the businessand the industry, that they're
in their monthly volume, theirper ticket item, what types of
cards they're taking, whetherit's primarily consumer cards
versus business cards or versushigh-end rewards cards, and
(10:21):
that's essentially theinformation that we have on our
end that we can bring to theprocessor and that's where we
know that they should be pricedat.
And that's, yeah, exactly whatwe kind of use as the benchmark.
Speaker 1 (10:30):
Gotcha?
Do you help at all with or getinto like what cards if one of
your customers should accept ornot accept?
I know a lot of times it's like, oh, we don't take American
Express or whatever.
Do you get into that at all?
Speaker 2 (10:59):
We definitely have helped customers, or at least
giving them the knowledge saying, hey, if you have the ability
it's tough to tell a customersaying, hey, can you please use
your debit card versus the cardthat has all the rewards,
because people want to use thatso they can get their flyer
miles, their cash back, want touse that so they can get their
flyer miles, their cash back.
But for the business, if theytake a majority of debit cards,
the debit card is going to bethe least cost of processing.
It's the least riskytransaction because the money is
taken right out of theiraccount and especially if
(11:20):
there's with a debit card, youhave a four-digit PIN number.
So if you give them the abilityto enter in that four-digit
number Again, it's even lessrisky, which in turn is less
expensive, Whereas you have yourAmerican Express cards.
American Express is kind of adifferent beast in the payment
processing world, where theyhave all the rewards attached to
them.
Therefore their costs are a lothigher.
So it's the same with Visa andMasterCard.
(11:43):
You have the high-end endrewards cards and they're not
the ones that are paying forthose rewards.
That's where they pass along tothe merchant.
So that's why you may see thatsome businesses don't accept
american express at all becauseof their higher costs.
Um, but yeah, it can be toughfor a business to dictate which
card their customer is going tobe using.
But if we can at least give thebusiness the knowledge in terms
(12:05):
of the differentiations betweenthe types of cards and what
their charges are, then I'd beobviously want to give them that
leverage.
Speaker 1 (12:13):
Gotcha so do you have a sense I mean, I imagine you
have a data on this but onaverage, like how much you're
able to save customers, or doyou have any examples of clients
you've worked with that you goin and you've identified savings
, and what does that look like?
Speaker 2 (12:28):
Yeah, I would say.
In a hospitality industry, ouraverage savings is about 20% on
their all-in fees.
So that's where they're,whatever they're paying.
We call it their effective rate.
You can get your effective rateby taking the total fees you
pay and dividing that by thetotal sales, and that's what
we're usually able to reducethat by 20%.
All in Sounds pretty impressive.
(12:51):
I like that.
Yeah, there can just be thereAgain.
There's so many different areasfor improvement, whether it's
just renegotiating the contractitself and just areas for
optimization.
Got it.
Speaker 1 (13:03):
All right.
So step one is understand whatyour fees are.
Get that, got it All right.
So step one is you know,understand what your fees are,
get that statement, get all thedetails.
Step two is you know, send itto you guys.
You do the audit and analysis,identify, you know areas where
you can, you know, save somecosts.
And then what happens next?
You have to negotiate with who.
What do you guys do at thatpoint?
If, like, you get in and yousay, all right, we can save this
(13:24):
, this and this, how do youactually achieve those savings?
Speaker 2 (13:28):
Yes.
So the business is interestedin utilizing your services,
assuming we found that there aresavings to to be obtained with
their processor, they they wouldengage with our services, which
would then give us the abilityto contact the processor on
their behalf.
So it's very little legwork ontheir end.
We take care of all that doingthe renegotiating, having the
conversations directly with theprocessor and bringing our data
(13:52):
to them and saying, hey, we knowwhat they should be paying, we
can reduce these different areasor remove these fees from the
account completely.
So we're kind of working withthe processor directly.
So it's again it's notaffecting their businesses
day-to-day operations whatsoeverand it's not a, you know, time
consuming for them either.
Speaker 1 (14:13):
Gotcha, and do you find that there are times where
you have to recommend, likeswitching providers entirely, or
is that part of your process?
So if you're doing thenegotiation and let's just say
the merchant processor is notbudging, and how, how might, how
might you go about that?
Speaker 2 (14:34):
Yeah, I mean there could be the instance where, for
whatever reason, the processorjust does not want to adjust
their pricing.
They think that they are atthat fair market value.
When they take a look at theirmargins it's already summing up
so they can't make theadjustments.
If that is the case, we want totell the business saying, hey,
you're actually in a good spotand we initially, during the
(14:56):
initial audit, we'll tell themthat they are priced
competitively and our servicesmay or may not be a good fit.
Initial audit will tell themthat they are priced
competitively and our servicesmay or may not be a good fit.
But then at that time, if theywant to make the switch, we do
have relationships in place withprocessors or knowing the
industry, what other businesses,what they're using.
But again, just changingprocessors can be difficult.
It can be time consuming,there's a learning curve with
(15:19):
everybody trying to adjust tothe new POS system, entering in
all the menu items, and therecould be an upfront cost for new
equipment.
So it's not really a bread andbutter.
We don't encourage to make thechange just because of the time
and cost component of it.
So obviously that's why we wantto take that headache away from
them.
If they don't have to change it, we can still save them money.
(15:40):
Then that's where we want totry to help.
But if the business hasoutdated equipment or they're
just again their processor isn'twilling to make the changes and
they're still being overcharged, then we want to obviously make
the recommendation saying hey,if you were to switch processors
, this is what it would looklike from a savings standpoint,
(16:01):
so it may be worth it.
Speaker 1 (16:04):
Gotcha.
You know we're all familiarwith the credit card brand names
.
You know Visa, mastercard,american Express, discover, on
and on.
Who are these processors?
I hate to say they hide in theshadows, but how many of them
are there?
What are they banks?
I'm not even sure I know what.
What are they banks like what?
I'm not even sure I know what,what role they play, where they
(16:24):
come from yeah, I mean there's,there's thousands.
Speaker 2 (16:28):
To be honest with you , it's they.
They really start at the, thebank level.
So you know, you have yourwells fargo and they're the, the
processing bank, and thenthere's different types of
companies.
You have global payments,heartlands, um, just to name a
couple, and then, yeah, thebanks do the actual processing
themselves.
And then you have independentsales offices, which are smaller
(16:52):
mom-and-pop shops.
There's so many different typesof processors out there, but
especially in the brewery andthe hospitality industry, you
have toast as a big player,which we see a lot of them.
So, yeah, there's a lot of themout there.
It's tough to distinguish whoare the good or the bad guys,
(17:14):
but, yeah, that's typicallywhere we just try to follow
different trends.
If we're seeing that there's,you have your processors or POS
providers that cater to specificindustries.
That's where we want to kind ofmake sure that they're set up
correctly and kind of aligningwith their industry as well.
Speaker 1 (17:33):
Gotcha.
One of the other issues I guesssurrounding this processing
business is like the time toactually get the funds.
Is that standard or how doesthat work?
So I come in, I buy a beer,swipe my credit card.
How long does it take toactually get that money in the
(17:54):
bank for the brewery?
Speaker 2 (17:57):
It should be 24 to 48 hours.
Better processors do have thecapability of setting you up
with next day funding.
It's of no charge to them butsometimes they do charge the
business for having that nextday funding as kind of a benefit
to them to get their moneyfaster.
But essentially there are a lotof processors out there that do
(18:22):
not charge anything.
But it should be next dayfunding, or the next business
day at least.
Speaker 1 (18:27):
Gotcha, and is that part of your audit or analysis?
Do you kind of go in and seehow fast the money is moving, or
is that outside of what youguys do?
Speaker 2 (18:35):
No, we absolutely help with that process.
So if that's a concern for thebusiness and saying, hey, the
turnaround time to get our moneyis taking much longer than we
anticipated, we'll help to getthem set up on that next day,
funding making sure that thereis no cost associated with it.
Speaker 1 (18:51):
Gotcha Okay.
Are there any processors thatyou can't, for whatever reason,
audit their statements, or arethere certain ones where you
typically would find moresavings?
In other words, are thereprocesses like oh yeah, I know
typically where these guys areovercharging, or this process,
they're usually very competitive.
Speaker 2 (19:11):
Square is probably their payment facilitator and in
order to have a conversationaround pricing with them, they
like to see a sales volumethreshold.
So a business typically has tobe doing over $100,000 in sales
volume per month for them toeven have a conversation around
(19:33):
the pricing.
So that's one that we haven'thad a ton of luck with, but
their pricing is relativelycompetitive.
Toast has been a little bitmore difficult lately in terms
of having conversations aroundtheir pricing as well.
That actually just startedwithin the past few months.
Could just be a pause on thatjust again to get their strength
(19:58):
in numbers back up.
But again, we've had plenty ofsuccess with Toast in the past
and hoping to regain and makingsure that businesses are price
appropriate with them.
Speaker 1 (20:11):
You mentioned earlier , we've got the three main fees.
I think if I get this right youcan just correct me if I say it
wrong but interchange charges,markups for your processor, and
then there's miscellaneous fees,add-ons, and you said there
could be some bogus charges inthere.
There's an ancillary charge.
Are you able to give examplesLike what sort of charges might
you find that you're like ohyeah, that shouldn't be there,
(20:33):
that shouldn't be there, a bigone is a non-PCI compliance fee.
Speaker 2 (20:40):
So, businesses, if you're accepting cards, you must
complete what's called a PCI orpayment card industry
compliance survey, and itinvolves basically completing a
survey making sure you'restoring your credit card
information legally and securelyand you're not just writing a
credit card number down on anotepad and a lot of businesses
(21:03):
just it, something that istime-consuming.
A lot of businesses don't dothe survey, don't even know they
have to complete the survey,don't know what PCI compliance
is, and because of that thereare a lot of add-on charges,
both monthly, quarterly andannual fees, especially if
you're being non-compliant.
So that's just one of thosefees that we want to be able to
(21:24):
call out and help a businessbecome compliant, to remove that
fee completely.
And then again, it does dependon the processor and who it is,
but some processors chargenon-EMV assessment fees or risk
assessment fees.
They almost call it differentprocessors.
Call it whatever they want itto really, but it's just a
(21:45):
surcharge at the end of the day,making themselves more
profitable.
Speaker 1 (21:50):
That's amazing.
There's like littleopportunities hidden everywhere.
Speaker 2 (21:54):
It really is.
And that's what makes thosestatements so difficult to read
is because it's tough to figureout saying, hey, this is an
actual fee, that is, you know,passed along from the car brands
, or this is just a line itemthat they they just made up
again to to make themselves moreprofitable.
Speaker 1 (22:13):
What are the responsibilities of the?
I'll use the example of, like atap room for a brewery.
You know you're taking creditcards presumably.
You know you take the card, youswipe it, you know, tap it,
whatever, what?
Where does that data live Like?
Who's?
Who's responsible for sort ofthe protection of that
(22:33):
customer's data?
Speaker 2 (22:36):
So it's.
It's both on the business andthe processor side.
So it's both on the businessand the processor side.
You know you want to make surethat you have a safe and secure
internet system.
You know your Wi-Fi, everythingis protected that you don't
have.
You know every single person inthe business has access to
different things or differentbackend systems.
You know, into the portal youwant to make sure everything is
(22:59):
password protected and same withthe portal.
You want to make sureeverything is password protected
and same with the processor.
It's their job to make surethat everything is running
smoothly through their owngateway, that everything is very
, very safe and secure.
So they can't be compromisedeither.
So you obviously want to makesure you're using a reputable
company.
Speaker 1 (23:20):
Okay, and is that something you might look at for
one of your customers to say allright, how are you actually
safeguarding?
I mean, you're not in charge ofthe processor, but if you're
working with a brewery, forexample and maybe that goes back
to the PCI compliance surveyMaybe there's specific steps,
checkboxes you have to follow.
What does that look like?
Speaker 2 (23:47):
Yeah, it's something we don't really have a lot of
insight into.
It's just not knowing how theirsystem is really set up, what
type of firewalls they have setup and kind of on that side of
the business.
But yeah, again, I think justmaking sure that the PCI
compliance is in placedefinitely does protect them,
just in case something iscompromised, that themselves as
a business, that they'reprotected.
But yeah again, and it'susually not something much of
concern either, so it can betough for us sometimes.
Speaker 1 (24:14):
Something to talk to the IT company about, I would
imagine.
Speaker 2 (24:17):
Exactly, yeah, you have an IT person on your staff,
or yeah, some some, just makesure everything is set up
properly.
Speaker 1 (24:27):
Do you how about contract terms or clauses,
things like early terminationfees, auto renewals?
Are there any of these that yousee that you can help your
clients navigate or renegotiate?
Speaker 2 (24:39):
Yeah, absolutely We've been able to.
Even if a business is in acurrent contract with their
processor, we still have theability to come in to adjust
their pricing again, making surethat they're paying that fair
market value.
If there is some sort of earlytermination fee or liquidated
damages or canceling thatcontract early, we have had the
(24:59):
ability to lower that fee ormaking sure that we can shorten
the length as well.
So, yeah, we've definitely hadsuccess in helping them with
their terms or just at leastgetting them on a month-to-month
agreement, which you should bewith your processor.
It's tough being locked into acontract with your processing
company.
Speaker 1 (25:20):
Gotcha.
So that's part of your process.
As you say, send me thecontract, send me your merchant
statements, and then you kind ofgo through and know what you're
looking at there Exactly.
Speaker 2 (25:30):
Yeah, it's not necessary, but it is very
helpful if we're able to see thecontracts, because you'd be
surprised.
You sign a contract at oneprice and you look at the
statement and it's completelydifferent.
It's 2x of what you signed upfor.
It's because in their fineprint and the terms and
conditions, the processor saysthat they have the ability to
(25:52):
adjust their pricing at any time, with or without notice.
So, yeah, we want to take alook at that to see where those
discrepancies lie and if theyare locked into a contract,
which is typically in the fineprints as well.
Speaker 1 (26:06):
Contract compliance is tough because, just being
human nature, we don't readthose contracts very well, do we
?
We just sort of sign, sign,sign and you're off and running.
Speaker 2 (26:15):
Exactly, it's like the Apple terms and conditions,
where you scroll, click agreeand you move along.
Speaker 1 (26:25):
So it's very similar.
How about ongoing monitoring?
Right, so you guys come in, youidentify savings, you
renegotiate To your point.
The contract might say they canchange it at any time without.
What does that ongoingmonitoring look like, or what do
you guys do in that regard tomake sure that the rates are
staying competitive long term?
Speaker 2 (26:44):
Yeah.
So that's probably where we canmake the most impact in helping
a business is because we'remonitoring their statement
monthly to ensure that theirrates stay at that bottom line,
just because, again, theseprocessors they have the ability
to change their pricing at anytime.
So we typically notice a trendwhere most processors will
(27:06):
adjust their pricing towards thebeginning of the year, the
middle and the end of the year.
So we essentially know,especially with the processor,
when that is coming up.
So we try to prevent that, getahead of it for our clients.
But let's just say if we didn'tknow ourselves, after we
monitor, audit a statement,we'll catch that increase or an
(27:28):
added fee and then we'll contactthe processor to get it removed
as well as refunded.
So always making sure thebusiness is paying the least
amount per month.
Speaker 1 (27:40):
Gotcha, one of the hot topics that comes up pretty
frequently these days is passingthe surcharges on to the
customer and as a consumermyself, you know you see it
pretty regularly out there whereit's a gas station or a
restaurant or you know you nameit.
So I wouldn't say it'spervasive, but it's pretty darn
close to that.
(28:00):
What is your take on that?
I know you guys have kind oflike some resources and I can
share that with folks as likepros and cons considerations.
Um, how would you, if somebodyasks you that question like,
should I do this?
Speaker 2 (28:16):
how would you help them make that decision?
Yeah, exactly, carrie.
So it does have a lot of prosand cons to it and it is
something that's becoming a lotmore popular because these
processors are pushing it,because it makes them more
profitable.
But, yeah, it depends on theindustry that you're in.
If you do have a surcharge, ifsomeone wants to use a credit
(28:40):
card, first you want to makesure that you have the in
writing somewhere, whether it'son the receipt, whether it's at
the front counter, just makingsure that you have a display
saying hey, if you use a creditcard, there's going to be a 3%
surcharge on top of that.
But then it gets into.
Are you going to upset anycustomers?
Are they going to come back?
So you have to weigh thoseoptions out.
(29:03):
But if you're looking tocompletely cut costs and reduce
your merchant fees andseamlessly and just passing
those fees along to the customerbut just again making sure,
because there are a lot of grayareas you just want to make sure
that everything is set up, itis compliant, because I know
there are a lot of reps outthere from the car brands that
(29:25):
if you are to get caught and youdon't have the proper terms in
place, you can be subject to alot of fines and then being even
put on lists where you can'taccept cards at all in the
future.
So that's the most importantpart is this if you're going to
do it, making sure you're doingit correctly, working with your
processor to making sureeverything is is just set up
(29:50):
legally, um, and depending onthe state you're in, they have,
you know, different terms andwhat you can and cannot do.
So, yeah, again, it's just,it's weighing out those options
gotcha, gotcha, okay, um, andthen so for your.
Speaker 1 (30:07):
How does your firm get compensated?
Like, what are your?
What's the fee structure?
Because you're coming in,you're doing a lot of work,
right.
You're analyzing statements,you're looking at the contracts,
you're negotiating with thepayment processors.
How do you, if you're guiding aclient, maybe take me through
that process?
I'm a brewery.
I give Patrick a call because Iwant to check this out, what
happens next and how do the feeswork?
Speaker 2 (30:29):
Patrick a call because I want to check this out
.
What happens next and how dothe fees work?
Yeah, so if a business is toutilize our services, we're able
to obtain them savings.
We're strictly acontingency-based firm, so the
only way we're compensated is bysharing in the savings that
we're able to obtain for abusiness.
So we don't have any upfrontfees.
There's no monthly consultingfees.
It's strictly based on thesavings month over month and
(30:50):
that's where we'll put togethera savings breakdown to showcase
exactly where the savings tookplace.
So we would show them thebusiness, the old fees they were
paying before our services andthen the new fees they were
paying after because of ourservices, and then we would list
each and every line item out,showcase exactly where we were
able to achieve those savingsand then, yeah, we just ask for
(31:12):
a certain percentage of that fora certain time.
Length.
Speaker 1 (31:16):
Gotcha Okay.
So I imagine most everybodylistening to this takes credit
cards, has these fees and wejust sort of pay them and maybe
grumble about them or wonder ifwe can.
So if somebody is listening tothis and they're like all right,
well, this sounds interesting.
I'd like to talk to Patrick.
How should they get in touchwith you?
What's the best way to do thatand learn more?
Speaker 2 (31:39):
Yeah, I think just even going to our website,
merchantcostconsultingcom, justto learn a little bit more about
our services, the differentindustries that we cater to.
But it really starts with ustaking a look at a recent
statement and we can puttogether the analysis.
There's no commitment for thatand there's no cost, but just to
see what the potential savingslook like and we can report back
(32:01):
, just to see if our servicesare a good fit or not, there is
the chance that we can come backand say, hey, you're priced
appropriately, you're doing whatyou should be doing and just.
Speaker 1 (32:13):
There's no need to utilize a service like us.
Yeah, sounds like a no-brainerto me.
Speaker 2 (32:23):
Any questions?
I didn't ask, but should anytopics that you feel are
important for us to cover?
No, kerry, I think you coveredall the main ones.
Yeah, the surcharging isdefinitely something that's been
more prominent and somethingwe're seeing more and more of.
But even if any listeners havequestions just around credit
card processing, merchantservices in general, I'd be more
(32:45):
than happy to just have aconversation around anything,
just because it can be a complexindustry with a lot of moving
parts.
Speaker 1 (32:52):
Absolutely Well, Patrick, this has been great,
great information.
It's funny.
You dig it.
You take what is what is arelatively, I think,
straightforward and simple fee,and then you break it down.
You're like that's notstraightforward, nor is it
simple, and there's lots of waysto maybe save some money.
Speaker 2 (33:09):
So I appreciate you sharing your time and knowledge
with us today Absolutely.
Thank you so much for having me, Kerry.
I really appreciate it.
Speaker 1 (33:13):
Thank you for listening to the Craft Brewery
Financial Training Podcast,where we combine beer and
numbers so that you can improvefinancial results in your
brewery.
For more resources, tools,guides and online courses, visit
craftbreweryfinancialtrainingcomand don't forget to sign up for
the world-famousCraftbreweryfinancialtrainingcom
.
And don't forget to sign up forthe world-famous Craft Brewery
Financial Training Newsletter.
Until next time, get out thereand improve financial results in
(33:37):
your brewery today.
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