PEP Episode 001 – Surcharges!

Chris Dryden and James Huber launch our first podcast episode discussing credit card surcharges! How it evolved and affects profit margins. How both tie in with the two biggest card brands Mastercard and Visa. Surcharges not only affect the ISO, but merchants most of all (not to mention consumers). With nearly 30 years of payments specific knowledge and experience, Global Legal Law Firm provides their listeners insight in the electronic payments legal landscape.

 

Jeremy Stock (00:00):

Welcome to the Payments Experts Podcast, a podcast of global legal law firm ISOs, FinTech, pay fax, agents, merchants, processors, acquiring banks and card brands. If these terms mean something to you, this podcast is for you. If these terms aren’t so familiar, this podcast is even more for you. We hope you enjoy this episode of PEP, the Payments Experts Podcast. Welcome to the Payments Experts Podcast. Today, our kickoff episode we have Christopher Dryden, the founding and managing partner of Global Legal Law Firm, as well as James Huber, partner of Global Legal Law Firm. Gentlemen, welcome. Today we are talking about surcharges.

James Huber (00:56):

This is our first podcast. So we’ve been queued to say how excited we are to be here. <laugh> Woo <laugh>. So surcharging is all, all the rage right now. Well, and little literally actually has the

Chris Dryden (01:12):

Rage. It has been. It has been for a long time, but people

James Huber (01:15):

Are pissed. Yeah, I’m getting calls saying we’ll fund a class action against Visa and MasterCard.

Chris Dryden (01:21):

Yeah, well I think that that’s a pretty emotional reaction to the whole thing, but you know, I, I, I, I agree. It’s all the rage. Uh, I was at Northeastern Choirs Association conference in Boston a couple weeks ago, and this is all that anybody wanted to talk about because Visa was actually, uh, I think they were having meetings there, uh, with some of the larger players. Um, I think one of the important things that we can go, and I don’t care the order that we roll through this, but you know, historically, which I think you really wanted to start on, about surcharging and kind of like it’s genesis, how it evolved, you know, kind of some of the other things that came into the marketplace that are similar to surcharging, but those have also been curved over time. Um, you know, I think that, I think that’s important, but overall, yeah, people are really concerned cause this has been a really good source of profit margin for at least most of our clientele, which is ISOs.

James Huber (02:17):

Well, I know when it started we were, it was like 2010 and we were representing, you know, the company that started doing discounting and everybody hated it. You know, they’d sell it to a merchant and they’d end up getting, you know, 10 bad Yelp reviews. Cause I’d go, Hey, my two oh dollars 50 cents cup of coffee now costs 2.75. I’m pissed. It’s your fault ISO.

Chris Dryden (02:39):

Yeah, totally. Well, I mean, that’s the thing too. You know, we could sit and talk about, I mean we were, before we were even on this call, we were talking about, you know, interchange and who eats it and you know, where people operate. I mean, one of the problems is, you know, north American visa, MasterCard, interchange rates are extremely high in comparison to the other regions. You know, Europe, it’s what 1% for a lot of the, almost

James Huber (03:05):

Less like 0.7. And here it’s two point gets up to 2.7.

Chris Dryden (03:09):

Totally. And I think that’s part of one of the problems in this is because there’s, you know, you have this huge acquisition arm in the ISO world, but like their profit margin is being constantly condensed over and over. And sometimes it’s, you know, through market forces. Sometimes it’s through quasi regulatory forces being the card brands. You know, this is, I mean this is all card. The recently this visa which is gonna spread to the, you know, MasterCard, amex, anybody else. This is all, you know, oversight driven more than anything else.

James Huber (03:41):

Right. And so what we’re talking about right now, in case anybody doesn’t know, but you know, anybody listening to this podcast probably does know is Visa’s set, put a cap on what you can surcharge. Yeah. And it’s not gonna cover the fees. Well, it’s kind of, I mean, it would cover the fees if there was no margin for the ice

Chris Dryden (03:57):

Loan. Totally. And that’s really where the issue comes in is, you know, our firm represents, more recently we’ve, you know, started to represent a larger, you know, part of the, the user base in payments. But traditionally we’ve always represented the, the sales arm or the acquisition arm. And ISOs are constantly having to figure out how they can keep profit margins. I mean, when we first got into this business, you know, a lot of people used, uh, enhanced Billback or ERR  and there was a, you know, most people made money on downgrade surcharge where they sold a qualified rate but didn’t really explain the fact that there was a downgrade associated with rewards card.

James Huber (04:37):

And no one looked.

Chris Dryden (04:38):

That’s right. And then, you know, over time as this, you know, people as merchants are being charged three and a half, 4% and they’re having to take that out of their own profit margin. There’s been a move to figure out how you can lessen that amount. One being cash discount, which came into the marketplace. And then another one was you started to get organizations out there that started to rail against the legislative prohibitions in certain states, like California. We, you know, we always said this cause we take credit cards for our law firm. You know, California for the longest time had a prohibition. We couldn’t actually add a surcharge to any of the credit card charges. And it was something that we had to take out and just sort of eat. So we understood it just as well as anybody else. So I think it’s kind of been like twofold and cash discounts also had barriers placed on it, you know, for entry into the marketplace.

Chris Dryden (05:30):

You know, I don’t know how you want to parse that out, but we can stay on surcharge for now. But you know, when surcharge became permitted, uh, you know, whether it was through court intervention or it was through lobbying and the states were, you know, the legislature had banned it. As surcharge came on and technologies rolled into this space, technologically, people have been able to offer alternative payment channels and truly surcharge, like now all those businesses that just focused on check and ACH can offer card solutions. And you’ve got ISOs coming in and it’s all technology based. And they’ve been banking on the fact, well hey, I can do a surcharge here, my interchange here. Now they’re looking at missing, you know, 50 basis points on millions of dollars of volume. And you know, everything that they’ve built is just with, you know, kind of an arbitrary, hey, we’re gonna cap it at 3% with not really any sort of reason why. Yeah.

James Huber (06:30):

<laugh>. Well I know the reason why, I mean, I think, I know the reason why is Visa doesn’t want everyone to know how much they’re charging. You know, this, it’s been shown, this can be done and still be ama like insanely lucrative, charging 1% for Visa and MasterCard. But if you’re charging 3, 4, 5, 6, you know, an online merchant, you know, you’re ultra high risk, you might be paying 14% and they don’t want anybody to know. I mean, I think that’s their whole problem with surcharging and discounting is it’s, Hey, guess what everybody, it costs 3% or 4% to do to process your cards. I I don’t want anyone to know that because it can be way lower.

Chris Dryden (07:15):

Well, and the question is, is then they have to like actually tell us what the 3% to 4% really goes to. Well I know.

James Huber (07:21):

Yeah,

Chris Dryden (07:21):

Well we know. Well we know. Yeah. But I like goes to a lot of profit margin for anybody out there who doesn’t really know. I mean this is an interesting part about the industry that we operate in. And most people sort of take it for granted cause these guys have been in the space since the inception of cards. I mean you go back to the knuckle busters, it’s always been Visa, MasterCard, I like as this industry has grown, there used to be a real purpose for the industry. But with technology, the cost related, let me restate that. There used to be additional cost for the purpose of Visa MasterCard.

James Huber (07:55):

Right.

Chris Dryden (07:56):

As technology’s grown, the ability to actually reduce the cost through technology, machine learning, figuring out how to reduce fraud, even though the fraudsters get smarter, the technology outsmarts the fraudsters and puts safety precautions in that cost doesn’t mean as much. We have an industry that we operate in, by the way, we’re thankful to operate in it, but we have an industry that we operate in that literally it’s for profit companies regulating all the card acceptance of every business practically in America. Right? Isn’t that just crazy? Like we’re not talking about the government doing that. We’re talking about the unspoken governmental delegation of an entire industry for for profit companies publicly traded that have inherent conflicts in how they operate. I

James Huber (08:48):

Mean it’s And amazing lobbying budgets too.

Chris Dryden (08:50):

Yeah. That wasn’t, so coming onto this, a very interesting thing. We were talking Visa, MasterCard in another context recently. We were talking about franchise law and, and whether or not they’re subject to franchise laws, which is a whole other conversation that we might be able to have sometime. But in certain states that have franchise laws that they’ve legislated, you know, over and above the federal standard. Yeah. These guys have already lobbied to have a carve out.

James Huber (09:16):

Right. I mean I don’t see, I don’t see a lot of change happening here. So people are going, what can we do? You know, and <laugh> I’m going, it’s a lawsuit. I mean there was a lawsuit, a big one that knee capped these guys. I think it was one of the biggest settlements of all time. You know, my, it’s

Chris Dryden (09:34):

Still ongoing.

James Huber (09:35):

Still ongoing. Yeah. My, when you know, my brother-in-law’s brother works at that firm and they touted on their website of, you know, one of the biggest settlements of all time. All time. And it’s ongoing. And it touched on this. And so there’s a potential that this is violating their own settlement too. Cuz they’re saying no merchants have the right to surcharge in that settlement. That was part of the settlement. But what was that? Right now they’re, I feel like inching in, you know, so if we give ’em that inch, what, where’s this go next? That’s everybody’s concern. And they’re going, can you at least file an injunction? And a lot of it is because many of our clients have built very lucrative business models based on surcharging and discounting. And now that margin’s shrinking. You know, when you could walk into your merchant and say, you know, zero cost and it’s not zero cost, but you know, very low co cost processing that went away. And now once again, we’re in a race to zero.

Chris Dryden (10:39):

Well it’s the same thing with cash discount. I mean remember when it came into the marketplace, the question was well how does it work? Is there a surcharge and then the deduction? Yeah. You know, I mean and is that really surcharging or are you just offering And now it’s sad. There was a New York case like five or six years ago, I can’t tell you the name of it, um, actually learned about it from one of the attorneys of Venable a long time ago cause I think he litigated on it. And the interesting part was that New York came out and said, oh well yeah, you can do cash discount and this is at least the state versus the card brand. Mm-hmm <affirmative>, you can do cash discount, but you have to have dual pricing. You know, like, so if, you know, if you have dual pricing, you have to show, okay, what’s the actual cost and then what’s the cash discount costs? And then the question, the question I posed to him was, well what happens if I have a website and I’m just out in the ether and he says, well look, if people in New York can see your website, you gotta have dual pricing. You gotta

James Huber (11:35):

Have to, and Visa adopted that. They said the gas mate, the gas station model is the perfect model. And I’m going, well how does that work for inside the gas station? Totally. You know, the last time I bought a bag of Skittles, it was 50 cents. Granted that was 25 years ago, but I looked the other day and I lied, that’s not the last bag of Skittles I bought, but the last time I looked at the price of the bag of Skittles, it was like four bucks or something. Yeah. So these prices are moving, so what you’re having to run and do your stickers. And they’ve even said, so, you know, people got ahead of this, you know, our clients, they’re all, you know, very intelligent. And one of the reasons we like this industry is because they’re all have their head on a swivel and are figuring out ways to make more money and, you know, build bigger businesses. They put it on the POS system side by side. Okay, here’s your price, cash price. There you go. I’ve

Chris Dryden (12:26):

Got it. They’ve said no to that. They

James Huber (12:27):

Said no to that. And I’ve heard merchants getting fined.

Chris Dryden (12:30):

Oh yeah, it’s happening. No, I actually

James Huber (12:32):

$30,000

Chris Dryden (12:33):

I heard, I heard this recently, um, that Visa’s sending out a whole bunch of secret shoppers related to that. And, and I had asked, are they just doing it online through G2 or they doing it no store. No, they’re going phy into physical stores.

James Huber (12:46):

They’re snapping pictures. Totally. All that Skittles bag saying, where’s my discount price?

Chris Dryden (12:52):

Yeah. So now you on my surcharge

James Huber (12:53):

Price.

Chris Dryden (12:54):

Now you have zero clarity. You have people building technology around what they believe is an acceptable practice. And in addition to the surcharge cap visa has come out, I think it was Visa specifically and said it, you have for every single product that you sell, at the point of the, of the consumer seeing the product, right, the price that is the credit price has to be listed there.

James Huber (13:20):

Well, think of the, I mean just the mechanics of having to put those up and you know, if you go into the beer aisle, you know, they have little sliding prices that they put in. So it’s gonna get too confusing. What I see is, you know, you kind of said it, there’s secret shoppers out there, they’re creating a ecosystem of fear. Don’t, don’t do it, basically. And I think they’re achieving their goal in large part. Even though I hear, you know, most people are saying, we’re just gonna keep doing this anyways. Um, well, it

Chris Dryden (13:53):

Becomes really arbitrary in the enforcement, right? I mean, like, who do they go to to enforce them? It’s not equal enforcement. It’s, you know, you, you’re just creating this moving standard that sometimes it’s enforced, sometimes it’s not. It’s sort of like driving on the freeway, right? It says 70 on the sign, I’m driving through the desert, 75, the cop’s right there. He doesn’t stop me. He sees me. Like,

Jeremy Stock (14:14):

Can you talk a little bit about potential solutions? Are there solutions? Which way do you see the industry going to answer this? You know, these new caps?

Chris Dryden (14:23):

Well, I, I, I personally believe that the solutions come from the marketplace and then there’s a correction. This is what we’ve seen the entire time that we’ve been in this. Like, uh, you know, ca cash discount we just described, people were doing it, it was attacked as, oh, what if you’re gonna do cash discount? You can’t actually raise the price and then do the cash discount. Right? Cuz you’re surcharging. Right? Right. There are people that have been trying to undo what the marketplace is providing as a solution to either maintain profit margin or at least keep it from shrinking as much as it it possibly will. And the same thing has happened with Surcharging. Cuz it was very interesting initially when surcharging like kind of when the, the floodgates opened with it, it was like, yeah, you can surcharge, you can surcharge up to 4%, but you couldn’t surcharge up to 4%.

Chris Dryden (15:17):

So because some states had a law that said that you were capped, right? Either at your surcharge like Colorado, even today, you can’t charge more than 2% on a transaction. And they, and, and, and when the lobbyists were trying to get the ban repealed, the middle ground was, hey, like thanks for the 2%, but why can’t we charge the actual cost? Right? And, and for credit transactions, there’s a backstop that allows, okay, if it exceeds 2% because the actual cost on credit, like we were talking about with interchange is greater than 2%, then you can charge up to that amount. The problem with that is, is that interchange is never the same for every transaction. It’s not, you know, I mean, and so how do you actually quantify that? But it seems like people are looking for solutions all the time. I mean, we have a client that built, they specifically went out and went to, um, insurance companies cause insurance companies have largely been checked forever.

Chris Dryden (16:19):

And some insurance companies want to offer the ability for another, you know, another payment channel like card acceptance, but they don’t debt collections the same way, but they don’t want to eat into the profit margins cause the profit margins are already small enough. But they want to offer flexibility for the customer. So when you look at the customer, you’re like, yeah, I have this alternative payment channel. There’s gonna be like a, you know, a nominal amount of money. They built technology simply to move the customer into their environment to do the transaction, right? In a secure and safe place. And they built based on interchange associated with those types of transactions, they built a pricing model, which wasn’t crazy. And now it just got gutted by 66% because now Visa wants to arbitrarily say that there needs to be a cap.

James Huber (17:10):

To put the cap on it. And I think that, I mean as far as what, what the solution is, I, it’s a difficult solution because during COVID I feel like the, you know, surcharging blew up and it’s under the guise of, you know, this is protecting the, the consumers, the regulation is right? And the consumers during Covid, they’re going, Hey, I’ve gotta support small business, you know, whatever it takes. And I’m sitting on my couch, oh my God, this is, this is amazing. I’m getting stuff delivered to my door. I’m getting all of this stuff. I’ll pay a premium for this. This makes sense. As we get further from that, everybody’s back out in the world, I think that the regulation can go back to that stance of, you know, we’re protecting the consumers from paying these exorbitant fees, but I don’t buy it. I don’t think that the consu consumers care as much as they maybe did before that you realize, oh, this actually costs them money to take the cards.

Chris Dryden (18:11):

Well, that’s the whole thing. The consumers will stop using the cards and then Visa, MasterCard make less money.

James Huber (18:15):

That’s the biggest problem. So, you know, the, the solution is peer-to-peer and cut Visa and MasterCard out of it. And now our podcast is canceled.

Chris Dryden (18:23):

Well, maybe <laugh> we’ll, we’ll, we’ll hopefully not everybody out there, but we’ll, we’ll see. Uh, I think that that’s the interesting part. And it’s not, it, it’s not an easy dance, right? There has to be a balance throughout. Like you can claim that you’re trying to do consumer protection through your card holders, but what about your merchants?

James Huber (18:40):

What about your merchants?

Chris Dryden (18:41):

And this is where I say that there’s these inherent conflicts of interest where you have the card brand sitting and there’s two sides to the industry. And

James Huber (18:49):

The big merchants, the huge box stores, I mean, I, I give the example when we’re giving training, you know, nobody processes direct to Visa and MasterCard except for humongous organizations like the Olympics. Um, but Walmart,

Chris Dryden (19:05):

They’re not direct buy though. Yeah, they are. They direct, I think they are now. Yeah.

James Huber (19:09):

Even if they’re not the huge stores, they have a much lower interchange rate, almost zero. Not interchange rate, but you know, markup on interchange rate almost zero. So they’re, you know, it’s the small merchants that really take the hit here.

Chris Dryden (19:28):

Oh, without a doubt.

James Huber (19:29):

Small to mid-size

Chris Dryden (19:30):

Without a doubt. That’s why you see states like Massachusetts, I don’t know if there’s another one, but Massachusetts has an interesting law where their consumer protection statute actually encapsulates small business. Well they don’t really define small business, but basically like you kind of got co-opted in. Yeah,

James Huber (19:45):

No, well, I mean, most even I think federally consumer includes business now as you go back to Hobby Lobby, you know, corporations are people. So, um, that, I mean, and that’s our clients bread and butter. Most of our clients aren’t out there trying to get Walmart’s business.

Chris Dryden (20:01):

No. Yeah, no, no. I mean this is this, well I would say our clients are getting more sophisticated with technology, but even then this, excuse me, this, this does affect technology as well. I mean, it, it, I guess, I guess the cap by Visa to me is shortsighted in the sense that it doesn’t really try to balance the hardships of everyone. It just makes a decision based on Visa’s bottom line.

James Huber (20:28):

I think it’s making a decision based on creating an atmosphere of fear of stop surcharging. This is blowing up. Everybody’s doing this. It’s only a matter of time until someone other than, you know, Mr. Durbin comes and starts asking some questions to us.

Chris Dryden (20:42):

Yeah. Which I think those are really important questions too. I mean, I think that this is one of those situations where if there was another game in town, it would make a difference. But Right. <laugh> it, it doesn’t, I mean, it’s very difficult for us to find electronic payment processing outside of the card brands because they’re the, that’s, that’s what’s used.

James Huber (21:01):

Even if I’m outside of it. I just got off a call with an offshore bank saying, you know, we’re coming into the space. I’m going Yeah, but everybody still, every wallet still either says Visa or MasterCard or Discover. I mean, I’m, I’m, I don’t know if I’ve ever seen a Discover card, but I know they exist.

Chris Dryden (21:19):

They exist. I’ve seen them. Yeah, totally. Or Amex, but they sit on their own.

James Huber (21:23):

They sit on their own. So the, the only real way out is issue everybody cards that don’t say Visa and MasterCard on them.

Chris Dryden (21:30):

Yeah. And I’m not really sure how that would, how would fly.

James Huber (21:33):

What would your distribution channel be? I mean, you’d have to go to all the banks.

Chris Dryden (21:37):

Well, the distribution channel is still the, the rails, right? I mean, like how do you

James Huber (21:44):

Well, you get off the rails, you go to a peer-to-peer.

Chris Dryden (21:47):

Yeah. If you, if you can afford to build, it’s, and how

Jeremy Stock (21:49):

Do you build trust in that?

James Huber (21:51):

Right. How do you build trust in that? Exactly. So, you know, let’s say I went to Chase Bank or Wells Fargo or something and said, Hey,

Chris Dryden (21:58):

Chase has been, chase has been talking about doing this. Well they’re talking about having the close loop. And that was supposed to have come out already.

James Huber (22:04):

I think they partnered with Ripple, didn’t they? Is that true? Yeah, I think I, I think they did. Well I have a, I’m doing a panel next week with Ripple and maybe he will tell me. Um, but that’s

Chris Dryden (22:15):

A podcast in the future there people. Mm-hmm <affirmative>,

James Huber (22:17):

No it’s not a podcast. It’s a presentation at the American Banker’s Forum and which will be interesting to talk about crypto in an American Banker’s forum because it’ll probably be nobody in there. They’ll be scared their bank will get shut down if they attend that.

Chris Dryden (22:34):

It’s interesting at Neaa, Scott Talbot spoke and I always like to see Scott cause he gives a really fresh perspective on kind of macro stuff and he, he said that crypto is like two years out from having like real legislation around it.

James Huber (22:47):

That’s not that far.

Chris Dryden (22:47):

No, it’s not. But he said that there’s other things on the horizon. Yeah. Yeah. There was another one that was interesting to me, which will be another podcast at some point, but, and it kind of dovetails in with what we’re talking about. You know, there’s also interchange being made on sales tax.

James Huber (23:03):

Right.

Chris Dryden (23:04):

Which I think is just unbelievable because hey, you guys are making interchange on money that isn’t even part of the transaction except for the fact that there’s sales tax that has to be appended to the, to the transaction amount. The fact that Visa MasterCard can make money off that seems, you know, and, and I understand their logic behind it, but at the same time, like the sales tech component of it could be, you know, addressed differently. There’s a company called DAVO Technologies that does that and they like integrate with a bunch of POS systems and I’ve never really looked into the technology, but I think that that’s interesting that there is being money being made on interchange four amounts that are government amounts.

James Huber (23:44):

Before we wrap up, I’ve got a question cause I’m not totally clear on this. Does the surcharge cap apply to the cash discount? Debit discount?

Chris Dryden (23:57):

Well, the surcharge cap, no.

James Huber (24:05):

Technically it does not. No, but I, I I can almost guarantee they’ll bleed it over.

Chris Dryden (24:11):

They’ll try. But I, but I I agree. Like there’s

James Huber (24:15):

Not to debit, but to cr to credit card discounting Yeah, it would apply. Yes. So if I’m cash discounting, I need to be running it as a debit using my pin.

Chris Dryden (24:27):

Yeah. But even then there’s a cost of the transaction.

James Huber (24:29):

There’s a cost of the transaction. But do I I I could do it pinless debit and still discount it and have it not apply to the credit card transaction.

Chris Dryden (24:40):

Again, you’re gonna need to have a very sophisticated piece of technology that’s gonna be able to decipher.

James Huber (24:46):

Well, that already exists. You split it off, you know, the original

Chris Dryden (24:50):

Yeah. If I’m consumer now I’ve made it even more complex for me to figure out like where I kept my bargain.

James Huber (24:56):

Yeah, exactly.

Chris Dryden (24:57):

<laugh> Like, you know mm-hmm. <affirmative>, because I’m not sure how much a normal consumer would be listening to this conversation and have any clue what we’re talking about. No. Yeah.

Jeremy Stock (25:05):

I wonder, Dar we move forward. I’ve got two questions for you gentlemen before we move on out here. The first one is, I don’t think we’ve really touched on this yet. I’ve heard it sounds like you guys are kind of talking around the idea that there may be some lawsuits out there related to this. Are they happening? Where are they coming from? Where do you guys see them coming from soon?

James Huber (25:22):

It would be, I mean the, the states that did this, they went at a free speech and Visa is not a governmental organization, so it’s gonna be a different standard. Um, it’s a private organization, uh, but those lawsuits, you know, baking the cake and stuff have all come down. Um, I won’t say on the right side, but on the side of that, um, visa would probably lose.

Chris Dryden (25:54):

Yeah. I I think it’s just gonna take somebody to un understand the mouse trap and kind of start to deconstruct where there’s just unfair business practices taking place. The problem is, is that when you have to monitor and try to create equitable behavior among all the participants and what you are, what you’ve built and operate, there’s just an, like I said, there’s inherent conflicts here between the issuing side and the acquiring side. And if there’s not a harmony that makes sense for everybody, which when you just come out with a cap without a lot of like reasoning or, you know, or findings associated with it, I think it’s a lot harder for it not to be susceptible to attack. But you’re gonna need people that can really understand the infrastructure that’s at in play here to know exactly where there’s, uh, potential harm where there doesn’t need to be. Right. I mean, that would really rise to the level of an unfair trade practice. You know, it’s gonna have to come under some sort of, uh, probably like anti-competitive or, you know, antitrust type statutes where

James Huber (27:03):

They’ve already beat those though. I mean, they already have a humongous monopoly on the entire processing industry. So my, I haven’t looked at these, but I imagine they’ve already beat those lawsuits, but as far as pushing regulations on people, I mean, they’ve always been doing that.

Chris Dryden (27:23):

Yeah. But the purpose of the interchange is to combat fraud, to create an environment where people can operate and use card acceptance and have this electronic ledgering system and have the opportunity to buy things on sort of a short term credit. And the purpose of it is to really create stability to that environment. I don’t know where the cap on surcharging, like let the market figure out who they want to buy things from and who they don’t or what cards they want to use. This is a little bit of an overreach. Yeah,

James Huber (27:55):

I think it’s an overreach. So yeah, I mean the, the co the exact causes of action, I don’t have ’em listed out, but they exist and I think you could really give these guys a run for our money and that’s why our phone is ringing of people saying, we’ll fund it. We’ll fund it, but this is not, uh, you know, your, your everyday lawsuit.

Chris Dryden (28:13):

No. And I don’t think it’s right. And I think anybody who’s gonna bring this is not gonna be willy-nilly. They’re gonna have to really think it out.

Jeremy Stock (28:20):

To that point, gentlemen, as we close this up, I want to get your closing thoughts, but to that point, how can global legal law firm assist people who’ve heard this podcast today, they feel like they’re being affected by this. How could calling us help help them out? Well,

James Huber (28:34):

What I do, what I’m doing right now, and I’ve been doing for a while is get a, uh, like a one sheet disclaimer that says, you know, hey, merchant surcharging is in flux. I’m all over it. I, I’ll make sure our technology is up to date with what the rules say, what our, you know, attorneys say, but it passes a liability onto the merchant and it says, you know, you’ve gotta be running this also in compliance and checking it out and communicating with me and staying in touch and it’s just a one sheet, you know, pass that on to your merchants because if they go get that $30,000 fine, they’re, you know, they’re the lucky one in, you know, 700 million or whatever merchants, you don’t want to have to pay that fee, that $30,000 fine.

Chris Dryden (29:24):

Yeah. I look at this point in time, it’s kind of early. I, I just think, and, and again, just what James said is rife with problems. Yeah. Is that gonna help our clientele? Sure. But once again, we’re pushing liability down to the merchants for something that they entirely do not control,

James Huber (29:43):

Which they don’t control

Chris Dryden (29:44):

And they don’t get, you know, publications related to it. Nobody’s really, you know, telling them where the rubber meets the road. They’re just getting up every day trying to make a, make a living. Right. I mean, right. And, and you know, I, I find it again, the idea that these organizations can find participants for their use of them screams of like quasi, you know, quasi governmental, you know, how do you, how do you do this? Or blackball people from card acceptance without some sort of, uh, good faith negotiation. What I would analogize to due process. I, I think ultimately what’s gonna happen is it, it’s gonna have to have a grave impact on the merchants to the point where you get, you know, an uprising associated with it and they, they start to come outta the woodwork. Cause I think they’re really the class representatives in this whole thing.

James Huber (30:37):

I think they are too. Even though, you know, I think the ISOs are the ones being the most negatively affected right now. Um, but the other play, it’s clearly a technology play. You know, the technology to split the, you know, debit from the credit. Um, some form of looping, you know, Chris and I were talking about this before of, you know, adding on some fees later, things like that. But yeah, I mean, there, there, it’s a software play to get around it.

Chris Dryden (31:06):

I agree.

Jeremy Stock (31:08):

All right. This has been a fantastic episode. Excellent information. Thank you so much. Uh, Chris Dryden and James Huber and those of you out there, thank you for listening.

Chris Dryden (31:17):

Here we go. Thanks everyone.

Jeremy Stock (31:19):

Thank you for listening to this episode of The Payments Experts podcast. New episodes first and third Thursdays. If you’re interested in learning more about PEP and how Global Legal Law firm may be able to assist you, please visit us at global legal law firm.com. To schedule a free consultation, give us a call at (888) 846-8901 or email us pep@attorneygl.com. And once again, thank you for listening. 1, 2, 3, come on.