PEP Episode 040 — Secrets and Solutions for Merchants Trying to Obtain Processing with David Goodale

Overview

Bryce Van De Moere (00:00):

That would be my cue to exit. I’m not sitting here saying that all merchants behave appropriately and the evil banks or the evil processors, they take advantage of them. There are bad processors, bad banks, bad merchants.

Jeremy Stock (00:17):

Welcome to the Payments Experts podcast, a podcast of global legal law firm. We hope you enjoy this episode. Welcome to the Payments Experts podcast, a podcast of global legal law firm. We’re very excited today. We’ve got a remote podcast in studio. Joining us is Senior Associate attorney Bryce Vander Moore, as well as our special guests. We got David with us from merchant accounts.ca. David, it’s a real pleasure. We’ve been looking forward to this for a while now, right? You remember, you and I were talking a few months ago, so I’m glad that we’re now finally doing this. Merchants have a difficult time getting processing in this day and age. There’s lots of reasons why, and we’re going to be talking about that today. Bryce, I want you to know David, he has a ton of experience working with a lot of merchants who have a lot of issues getting processings, oftentimes related to match list reserve funds, things we can talk about, but it’s a real pleasure having you. Why don’t you tell our audience a little bit about yourself?

David Goodale (01:21):

Absolutely, guys. Thanks for having me. So I have been working in payments for 24 years. I found I’m the founder of merchant accounts.ca. We provide mostly card not present credit card processing primarily in Canada. Back in the day, a long time ago, not to go way off on a tangent, but Google didn’t care about the location of your website, dot com, dot co uk. But because we have a Canadian domain, as people became more aware of where we’re based, we dealt with a lot more or we do deal with a lot more Canadian customers, but I also work with merchants in the us, Europe and UK basically. And I’m particularly tend to work with people when there’s complicated stuff where there’s some level of finesse needed for approval or things like that. I like a good challenge and that’s what I’ve been doing for a pretty long time now. Impressive.

Jeremy Stock (02:17):

The payment space is a unique animal, isn’t it, David?

David Goodale (02:21):

Yes. Just to call it out, honestly, it’s one of those industries where there’s a lot of really good players and there’s some folks that don’t treat businesses right, and that’s why I think that this discussion can be helpful to business owners because you don’t want to get stuck in a bad agreement with a bad partner and maybe we can help someone out today.

Jeremy Stock (02:42):

Awesome. Yeah, I hear that one of the first things that comes to mind, David, as we jump into this discussion, merchants are if they’re making a profit at all, it’s usually hairline margins. Can we talk maybe to start this conversation off when it comes to onboarding merchants, getting them processing, I’m sure their rates are a huge question. What is that conversation like? Where are you at with that? David,

David Goodale (03:13):

It’s so funny because I had some notes obviously to prepare for discussion and the literal, first, I’m going to read it verbatim. Everyone’s first concerns is rates. Rates are important. I’m not dismissive of that, but so the pricing is very important. I’m not dodging this question, but I just want to make the point. Awesome. Rates only matter if you get approved. Awesome rates only matter if the processor doesn’t hang onto a big piece of your cash. And I often tell people early in the conversation, I say the wrong time to shop for house insurance is after it got leveled by a hurricane. So a lot of when I have a potential client, we get into the rate discussion, but I always start by finding out what they’re doing. Because what they’re doing will literally impact the rates. It’s going to impact whether they get approved at all and otherwise you’re just wasting your time.

David Goodale (04:11):

When I say it, I don’t mean it in, I don’t want to waste my time. It’s more like for the client that I’m thinking of, don’t do paperwork and send in an application, all this stuff, but I want to try to address your question directly. Now, what are the things that impact rates? Because everybody’s, not every business is equal. So the very first thing that impacts rates are your trading volumes. Like Walmart, I think fairly, at least in the payments world, fairly famously negotiated custom lower interchange rates for themselves, which I didn’t even know that was possible. But then again, I’m not Walmart. So if you do enough volume, I guess the higher volume you do, the less margin the processor has to make in order to service the account and still make a decent profit. And something else that impacts your rate is the product risk. There’s some things that are speculative crypto investing thing is going to be higher risk than selling a computer mouse, and that will lead to chargebacks and stuff like that. So I’m curious to know, I actually did plan on talking about interchange today and pricing models. Is that where you want to dig into right away? I’m curious to know what you think would be most useful to your viewers.

Jeremy Stock (05:32):

What do you think, Bryce? I mean, interchange is not something that we’re necessarily interchange is interchange.

Bryce Van De Moere (05:39):

It is whatever the credit cards decide their cut’s going to be. And you’re right, I don’t think that’s something that can be negotiated because they’re just too huge. And so I mean from that standpoint, you’re probably not going to make a lot of progress trying to tackle interchange, but there are other things you can do to cushion, cushion the below. I don’t even think that you get notices of changes in their rates. They just slip something in. By the way, you’re going to come to understand that I have a way more cynical view of the way things are right now, but they probably just slide something in on a merchant statement saying if there’s a change in your rate and you don’t tell us that you’re disputing that change, you’ve adopted that change. And then they get three, four months down the road and they’re like, Hey, when did this happen? And it’s already gone.

David Goodale (06:36):

That would be the hallmark of a bad provider, which I referenced earlier on because not everybody does talk. Listen, it’s like people accept so much unethical treatment in the industry. I was talking to a client, this is a long time ago, but I’ll never forget this point. I was talking to someone quoting them, and he was talking about his current processor and he said, sorry if I’m speaking too quickly. He said, they raised my rates. And I mean, I know processors raise rates, it has to happen. And I just couldn’t believe how conditioned he was to accept rate increases. Give me, I can think of one scenario, two scenarios ever where rates should go up, one interchange goes up, interchange for any viewers that don’t know, it just means PayPal. I always use PayPal as an example because everybody knows PayPal. PayPal charges 2.9% per transaction.

David Goodale (07:25):

They don’t make 2.9% per transaction. They have a cost back to Visa, MasterCard. The industry term used to describe that cost is called interchange and the Kohl’s notes, all you really need to know at a high level, is it set at a country level, if so, if you’re an American merchant or a Canadian merchant or wherever, you’re going to be on the same footing as every other merchant in your country and whichever processor you choose makes no difference. The cost structure back from Visa, MasterCard is the same to all the payment processors. And so you know what? I went off on a tangent, where were we just a second ago? I was building to such an insightful point

Bryce Van De Moere (08:04):

That you have to take interchange, but you have to take it basically. You can’t,

David Goodale (08:10):

Oh no, it was repricing. That’s what it was. And so if pricing goes up in the payment processor, if a merchant is on a flat rate, that does not fluctuate. Back in the day a long time ago, merchants, you usually got a rate that it was what it was. You’re paying 2.7% per transaction period. And that was a really lovely pricing model because it was honest and it was easy to understand. The problem is if interchange went up above 2.7% on at least some card types, the processor could be at risk of loss. So I want to be super clear, this is very extraordinarily rare, especially in today’s world. So that is the one of two very unlikely circumstances where your costs should go up. And the other is if a merchant just blows up their account, they have a zillion chargebacks and they’re just kind of a bit of a problem customer and the processor’s just spending boatloads of time, then maybe your rate’s going to go up.

David Goodale (09:05):

But I actually didn’t have this in my notes today, but such a good point. Don’t ever for any reason ever, ever accept a rate increase from your processor. And if they try to pass one on to you, they should be able to explain very clearly why. And if they don’t, you should get out. And interestingly in Canada, I think Canada, you guys could actually tell me about this. I believe Canada has more protections for merchants than the US because in Canada we have the code of conduct for the credit card industry. One of the things built into it is if a processor jacks up your rate, you can exit your contract penalty free. And there’s nothing the processor can do. And I like that rule. I don’t know if they have anything like that in the US though.

Bryce Van De Moere (09:43):

Well, if they did, that’s probably been cut in the last, that’s just the way that it is now. I mean, anything that might actually protect anybody is gone for now, I guess. I don’t know how we’re going to deal with that one, but if I can weigh in here, so my experience over the years that I’ve been doing this is that it is borderline impossible to be successful as a merchant. Everybody has to get their cut. And you can just see the fee structure is like a mile long. It’ll be an entire page. I think we had one where there were like 82 different fees. I’m out of the frame right now. Sorry about that.

Bryce Van De Moere (10:34):

The merchants basically just get the scraps after everybody else takes their cut. And hopefully those scraps are enough to keep them afloat and get them successful. But I mean, they always used to say back in the day, or they say now that 98% of businesses go out of business within the first year. I think it is. And I used to think it was like, oh, well, because really hard. Well, yeah, it is hard, but it’s also hard because everybody has a hook into you and everybody needs to get their cut and they’re not going to budge on it. So if you even want to have a chance at success, and this goes to all merchants, young and old, but predominantly younger, the negotiation of the merchant agreement is probably the most important point in the entire relationship. And it is an I see every day that it gets the least amount of attention. They’re in a hurry, they got margins, they’re going to make their millions. We don’t have time to read all this stuff. I’ve have time to read these terms and conditions. Sure, whatever you say, I agree, I’ll sign it, boom, get me processing. And then it all falls apart in three to four months.

David Goodale (11:47):

And if you caught something, finding a processor that’s going to be receptive and willing to listen or make a change, that’s all. Especially if you’re talking about literally A TNC in the contract. If you have a processor that has a three year contract term and you catch it like, guys, I’m not cool with this. Some processor would totally adjust it, but some of the, that’s the point. I did want to make a comment, Bryce, you made me, this is just more of an interesting thought that popped in my mind because I actually want to take issue with one thing. You said that the merchant’s helpless. And I wonder if, because you guys are payments lawyers, right? And I wonder if, well, I believe this statement makes sense. You tend to hear from people when they’re upset, people who things are going really smoothly don’t reach out to you.

David Goodale (12:32):

And I think one of the, I just want to delineate because there are, let me make a ten second story that’ll illustrate my point perfectly. In Canada we have Kijiji. It was, it’s like the Canadian version of Craigslist. And back in the day there was somebody advertising for a job. It said, can you read, can you write, then you can sell. And the S was a dollar sign and it was to hire people to sell merchant accounts that says everything. The processor that ultimately they would’ve been working with is not going to treat the merchant. But I think if somebody wants clear to give yourself a leg up, these are the things that a merchant, I believe has to do. And it’s probably like it is some work, it is some effort. I don’t want to put a timeframe on it, but I don’t think it’s an enormous project.

David Goodale (13:27):

Pull up the interchange table or go to a blog on the web and read a little bit about interchange so you know what the cost is. First of all, are you doing retail transactions or card not present? Those are the two main ways you’re going to, most merchants will either process a card, then find out what interchange is on a regular visa, on a regular MasterCard, on a rewards visa, rewards, MasterCard, corporate key, just write eight numbers down and those are the processor’s costs. Okay? The first thing that does is it lets you know what a reasonable expectation is. I often tell people, if I plunked a five pound rare blue diamond in front of you and I said $2 million, am I overcharging you by a million or undercharging you by 99 million? If you have no point of reference, you can’t negotiate effectively. It’s impossible. So you have to educate yourself a little bit, and then you have to demand interchange plus pricing. There is no other pricing model that should be acceptable other than if you’re a very small merchant and you are okay with flat pricing and your payment processor is willing to still do flat pricing. Many payment processors won’t do flat pricing anymore.

David Goodale (14:38):

And it is a very, even though they’re big companies, if you find a good partner, it’s still relationship driven. So if you ensure that it’s a month to month agreement and you ensure that it’s on plus pricing and you make sure everything makes sense, you can at least give yourself some advantages. But the problem is if somebody’s out to, if you have a convenience store, you can literally put on security bars. But if somebody brings a tank, they’re getting through the wall. If somebody’s setting out to take advantage of you, it is hard. And I think the only way to protect yourself is to try and research the processor, maybe get a reference from somebody that’s happy with their payment processor. Because if business owners should be able to find someone, maybe ask for a reference. It’s funny, I have very few people that ask for references, but that’s one way to, you have to be careful with references for obvious reasons because they could just give you somebody that you don’t know. But I’ve been going on for a long point. You’ve been very kind to listen for me going on so long. I’d love to know your thoughts on that.

Bryce Van De Moere (15:47):

Well, first off, and the saying is that what a rising tide lifts lifts all boats. So you got to figure if the interchange fee goes up, everybody else’s cut goes down. So they’re all going to find a way,

David Goodale (16:03):

But not on interchange plus pricing. I’m sorry for interrupting Bryce,

Bryce Van De Moere (16:07):

And I understand that, but I’m also realizing that these processors probably take in what, a thousand conservatively applications a month and they just don’t have the time when you’re getting that kind of action. I think that there is an aspect, I wouldn’t call it laziness, but they just don’t have the time to focus on the needs or the wants of one merchant when you got a thousand in your back room. So I mean,

Jeremy Stock (16:44):

Certainly that speaks to the big ones, right? The ones we deal with all the time.

Bryce Van De Moere (16:47):

But I

Jeremy Stock (16:48):

Mean, Stripe and Worldpay, all those major players,

Bryce Van De Moere (16:52):

Stripe, Stripe is take or leave it Square is taken to leave it, although people probably don’t know this, but Square has no actual banks. So it’s your own bank that’s going to be dictating the way things go with Square. But I mean, there’s a lot of ticket leave, but at the same time, there are a lot of options and merchants have to be prepared to shop. And if they’re not getting the reaction that they want, and I know, and I’m going to jump around here a little bit, we also discussed this in an earlier podcast with Chris Dryden. You got to try to negotiate, even if you know there’s absolutely no way they’re going to go for it, I need to get it in writing. Because if you say, I want this price, and they’re like, no, I can’t do that. And you’re like, okay, well, you’ve tried to negotiate. Now it’s a contract of adhesion. The courts hate that, and you’re going to have some ammunition later on down the road if something happens. And also I think that merchants really need to take the time to understand their pricing. I had a case in litigation where this guy was processing, and he thought the pricing on his merchant application was like 1.95% qualified, 1.95%.

Bryce Van De Moere (18:11):

And he thought, oh, I know

David Goodale (18:14):

What he thought.

Bryce Van De Moere (18:15):

He went through the entirety of the processing relationship thinking that he was being charged 1.95 flat when in reality he was getting hit at 3.9%. But he didn’t understand his merchant statements. He didn’t take the time to ask the questions in the application process. And he got all handed a bag of shit, and he didn’t find out until he blew through his volume or he decided to take some action without informing his processor, which is another thing I’m going to get to that merchants really need to do. And I’ll say right now, don’t make a move outside of the confines of your original agreement without running it by the processor. If you take, you pivot somewhere and they don’t know why you’re doing it, they’re going to terminate you, they’re going to terminate you, they’re going to match you. A lot of what I’m saying applies to smaller merchants, but I think it always helps if your volume is increasing exponentially over the course, couple months, just tell the processor, yes, of course, and they’ll change the volume. But a lot of these guys and gals, they just do it and then they don know surfing or something.

Jeremy Stock (19:37):

I don’t think they genuinely don’t know Bryce. They don’t know they’re supposed to tell because they’re not reading the fine path like you said.

Bryce Van De Moere (19:45):

And that’s the problem is I just don’t think that people appreciate the seriousness of the relationship and how bad it can go.

David Goodale (19:58):

Totally. Bryce, I wrote a note down while you were talking because you made such a good point, which is that if they won’t negotiate, so just personally, I don’t deal well with bureaucracy, which is funny because I work in payments for 24 years. There’s some sort of cosmic joke, but here’s my math, big equals useless. Unless you’re a huge merchant. Sony’s going to get red carpet wherever Sony goes, okay, because it’s Sony. But if you’re a small merchant and you’re trying to negotiate and they won’t listen to you, listen to someone when they’re telling you who they are, why would you think the relationship’s going to get better from there when they’re trying to win your business? That’s the honeymoon. So I think for businesses that are trying to negotiate and can’t work with that processor, there are lots of options.

Bryce Van De Moere (20:55):

Yeah. But again, most of the time these guys are coming to the processors. They’ve probably just been terminated by their last bank and they got orders to fill and they got to move and they got overhead and they got lost revenue, and they’re just not going to take time. I guess the only realistic option is to apply to several different processes simultaneously and try to work out the best deal.

David Goodale (21:25):

Yeah. But that’ll hurt too because they’ll do credit checks and they’ll look desperate. I would never encourage someone to do that.

Bryce Van De Moere (21:31):

I know, I know, I know. But it’s trying to deal with the reality of the situation and the situation won’t, what we’re looking for, they won’t allow it. It just gets created a landscape where you’re, if you do or you, Dan,

Jeremy Stock (21:49):

As a merchant, if I can say, I think it’s one reason why we love doing podcasts like this, because hopefully people will be educated over time since Covid, the number of people that are now doing electronic payments, who knows? I dunno, quadrupled, I don’t know the actual stats, but it’s grown exponentially, so people are going to have to find education over time. So maybe because David, I’d loved what you were saying, right? You were talking about even finding a referral, asking about it. Our experience is, as you’re hearing from Bryce, our experience is a lot, especially mom and pop merchants, but even some fairly sophisticated business owners, they don’t know they have the options. They’ve never done it before. So they go to, they’re just going to Elon immediately. They don’t know any other options. And I think that these kinds of conversations hopefully can help educate that merchant base out there to, hey, even ask a friend, ask someone who’s in the liquor store business, ask someone who’s in the e-commerce business, who are you processing with? What’s your relationship been like? And right there, you’re already doing more than, I think probably 75% emergents out there when it comes to searching for their processing.

Bryce Van De Moere (23:01):

Well, and if you’re a small merchant, you also run the risk of the fact that if you run afoul of whatever rule they think ran afoul of, they just terminate you, your revenue’s gone and you have no options because you’re a small business. Like I said, your margins are already tight. You probably don’t have a lot of disposable income, so you can’t fight. You have to take it. Now, the Sonys and the Walmarts of the world, they got buildings full of lawyers to handle that stuff, but with the mom and pops, they really have to do their due diligence. And would it kill you to break off a couple hundred dollars and have a payments attorney who deals with these agreements all the time? And I’m not even talking about myself or this office, I’m just in general or even just regular contract attorney. I mean, these terms in these agreements, I mean, up until two years ago, I didn’t even know what non-qualified and qualified meant. If it took me all that much time dealing with this industry the way I do. I mean, what is somebody running a bodega in New York? I mean, who’s middle age or something? They’re not going to understand. It’s not this. It’s a whole new world now, especially since Covid, when everything moved online and everybody’s now trying to navigate online shopping, and then on top of that payment processing and their bank relationship, it’s not feasible to go loan. It’s absolutely not. You have to find some kind of leg up, be it a reference or an attorney.

David Goodale (24:43):

What’s interesting to me is this whole discussion, every facet of this discussion could be summarized by this sentence, don’t try to solve the problem after it happened. Of course, the problem is, like you said, we’re here in a circle because they didn’t know it would be a problem. So it’s almost more likely somebody would come across this content after they had a problem. And if that’s the viewer watching this, I would say, okay, so you made the point. Orders have to come in the door. We got terminated. We don’t know what’s going on. We have to ship. And I listen, I talk to people, not all the time in that situation, but sometimes, and I say, it’s my job to give you my best advice, not the advice you want to hear. You can run to the wrong solution or walk to the right one.

David Goodale (25:28):

And they’re like, well, I need to process today. And it’s like, okay, well, there’s PayPal, there’s strike, there’s aggregators. But see, they adjudicate their risk reactively. That doesn’t make them a bad company, but you’ve already had your account shut down. So I think what if you’re in a bad situation? Well, actually the best advice that I could give you is find someone that you can have a human conversation with, which probably is not going to be a call center type. I’m not going to pick on any particular, but pick one of the three biggest processors in North America. That’s the wrong choice for you. Find a company like merchant accounts.ca or any small company with good reviews or something like that, reach out to guys like you and say, Hey, do you have any ideas where I could apply? Networking is a good idea in this situation.

Bryce Van De Moere (26:15):

We refer people, unfortunately, it’s usually in the context of a match, and we’re like, can you take a look at this guy and beat him? But yeah, I agree with you. Bigger is not better. You’re going to get a much, you’re just going to have more leverage I guess, with a smaller processor or a bank, and they’re going to be willing to work with you. The big guys, they don’t have to. They just don’t have to. I’m frozen.

David Goodale (26:44):

They care more because they’re more important. Listen, I

Bryce Van De Moere (26:48):

Think also,

David Goodale (26:49):

To be

Bryce Van De Moere (26:49):

Perfectly honest, they’re closer to the mom and pop than they are the giant conglomerate. So they can bend the rules, they can make accommodations. They have that kind of flexibility. The big guys, the first data is the Elon. We don’t recommend anybody ever go to Elon ever. And maybe you need to strike that out, I don’t know. But yeah, they just don’t, don’t care. They don’t have to care. And then you’re also living within the context of the car brands which oversee everything. And everybody is in absolute terror of getting on their bad side. And so if they feel like there’s even a scintilla of evidence that you’re doing something wrong, there’s going to kill you. And so I guess my other point suggestion would be make absolutely sure. So when you are approved of processing, you’re going to get assigned what’s called an MCC, which is a merchant category code, and that defines exactly what kind of products or services you can sell.

Bryce Van De Moere (27:56):

You’ve got to make sure that you understand the parameters of what that MCC code is because there’s literally thousands of ’em. And they all, I’m sure they all price differently and they’re all handled differently, but man, 98% of our cases that come to us is somebody did something, processed something or just change something and didn’t notify anybody and didn’t find out if it was okay. And then it’s just like, boom, you’re gone. You’re out. I can choose to do business with you. I can terminate your contract. Anytime that’s standard in any agreement, that’s fine. You can’t force anybody to business, anybody. But

Bryce Van De Moere (28:36):

The next step is not only am I going to terminate you, I have to ruin, destroy your business for the next five years, take away your credit card processing because I’m so afraid of some non-compliance assessment being ended down from one of the card brands or worse. And again, that’s something else that when I talk to people about match, especially in my social circle and stuff, they have no idea that any of this is going on. They have no idea that any of this is going on. And if you’re not a merchant, why would you? And if you’re not a merchant who’s gotten sideways with this processor is bank, why would you? And so your statement that don’t try to deal with a problem after it’s already happened, that is the best case scenario. But until I guess the education of the merchants matches what the sales agents or the processors are telling them is level, it’s going to continue to be this way. But then there’s people like you and me who are trying to get the word out because we recognize the injustice of the entire situation.

David Goodale (29:41):

I just love the viewers to know that it’s not a loss. So many good processors, and I’m talking about my competitors, but there’s so many people that are relationship focused, and it’s so obvious when you’re in the wrong place. With the benefit of hindsight a little bit, I mean, it’s almost like hiring a contractor. I can think of one renovation I did, I won’t even tell you about it, but with the benefit of hindsight, it’s like if I could just talk to the 30-year-old me for five minutes, so don’t be distraught if you’re listening to this. There’s a lot of hope out there

Bryce Van De Moere (30:19):

Is, but there is. But then they also have to be wary of the fact that they’ve signed up for 36 months. So even if they are uncomfortable or object to what is being done to them, if they terminate, they’re probably going to get all their funds wiped out on an early termination fee. So I mean, there’s that too. So again, I guess I’m just beating the drum here. You got to go in eyes wide open. You have to take the time to learn, and if something doesn’t make sense to you, you ask them to explain it or ask somebody to explain it until you’re comfortable, and that that’s just absolutely, absolutely necessary if you’re going to be merchant these days.

David Goodale (30:57):

Yeah, that’s right. And I would say, sorry, Jeremy, I just want to say just literally don’t accept the contract term period. That’s the whole end of that story. That’s one of the things if they work with you, it’d be like, here are the things that we will never agree to. I’m just going to random. I haven’t even heard of qualified and nonqualified pricing in 10 years in Canada. That is the least ethical pricing model I’ve ever heard of, by the way, 24 years. Just a little pat on my own back here. Never done that quote to anybody ever.

Bryce Van De Moere (31:29):

We shoot all the time. We see it all the time.

David Goodale (31:30):

Don’t accept that. Don’t accept contract terms. Also, you should be able to speak to the underwriter that’s reviewing your account. That one’s pushing the envelope because some processors keep an iron wall, but how can you get things done? These are all reasonable. They’re all reasonable requests. If you ask me.

Bryce Van De Moere (31:51):

Go ahead, Bryce. They’re eminently reasonable, and I don’t want you to even think that I’m laughing at you at all. That’s an eminently reasonable request and it’s just not happening.

Jeremy Stock (32:02):

Well, it’s one reason, David, it’s why we’re talking to you today. We do, we work with a lot of processors that we do respect, and they’re great people and they fight hard for their merchants. And we refer to them quite, I mean really every day

Bryce Van De Moere (32:15):

We have people on several different levels

Jeremy Stock (32:18):

On a regular basis

Bryce Van De Moere (32:19):

That we refer to depending on their needs.

Jeremy Stock (32:23):

And so David, you’re clearly one of those and I’d love to meet you and I can talk more. We don’t often get Canadian clients, but from time to time they do. I want to ask you, do you service merchants in the US as well around the world or where’s your base primarily located?

David Goodale (32:42):

Yeah, Canada, USA, UK and Europe.

Jeremy Stock (32:45):

Great. Okay. Wow, excellent. We’ve talked a lot about rates and that’s important. And I think this conversation we’ve had so far is very important. These are obviously you’re seeing, we see it from the back end, right? We’re seeing it when problems have happened. Now, David, obviously you with your merchants, these problems are not happening, certainly not on a regular basis. One of the things you mentioned is that needs to be considered when a merchants looking at processing is support.

David Goodale (33:13):

Can

Jeremy Stock (33:14):

You talk to us about why is that so important? Why can’t it just be, Hey, find the best rate and move on with life

David Goodale (33:21):

Because there’s other problems that’ll come up. So this is going to tie so much into what we’re saying. One of the questions that I would tell anybody to ask is, Hey, so the sales person you’re dealing with, I already use the phrase it’s the honeymoon period because it is three months in, six months in, I have a problem, can I still talk to you? Right? Ask upfront, how is support handled? And it’s like you don’t want an answer, ideally, well, you send it to inquiries@blackhole.com, right? You want, oh yeah, you’ll have an account. You should have a dedicated account rep. That’s also a reasonable ask a lot of processors, even for small and mid-size merchants, that’s possible. And it doesn’t cost anything extra.

Bryce Van De Moere (34:08):

Get in writing. Sorry to interrupt, get in writing. Yeah,

David Goodale (34:13):

Totally

Jeremy Stock (34:14):

That by contrast, and I’m going to make this very quick, so I want to get back to what you were saying, David, but what our merchants experience, our clients experience a lot is they can’t even reach somebody if they’re trying to get ahold of Stripe. They’re down some endless rabbit hole, this customer service agent to this customer service agent who is not able to help them. And they sometimes spend hours and hours, if not days, trying to get somewhere and they usually get nowhere.

David Goodale (34:41):

I’m not here to attack Stripe. Stripe has probably the easiest onboarding in the entire world, and if you sell paperclips and it’s $10,000 a month, there’s nothing complicated about your business, you’ll probably never have a real speed bump. But if you hit one, good luck, right? That’s the problem. I’m so much more of a hassle to deal with upfront. I have to ask you things like how much are you going to process? But you’re much less likely to have a problem later on, and if you do to come and complain to me, right? Well put David, well put.

David Goodale (35:13):

We were also just talking to about, you asked about support. It’s not just support because I know some people who might want to obtain a merchant account are going to be looking at this, and I want to mention a couple things that I think are really, really important. You should work on a cover letter that describes your business and people think, oh, homework or no, I you to bang it out in 90 seconds. I don’t care about punctuation, I don’t care about spelling. I want to know who you are and how you got into this business. I want to know how long you’ve been running this business, exactly what you sell and who your customers are and how you reach them. I want to know how much you process per month and how much you process per transaction. And what you’re doing is you’re explaining all of the things that are not obvious on an application.

David Goodale (36:07):

I’m going to give you a really stupid example. Okay? So there is a new, you guys know, the viewers might not know, but airlines are the atomic bomb of credit card risk to payment processors and travel companies as well. So let’s say there’s a travel company in the UK and it’s a startup run by a 25-year-old, and the volumes are going to be 15 million a month. But what’s not obvious on the application is uncle is Richard Branson, right? There’s all these background stories that all come in to point the picture. That was a silly example, but my point is there’s a lot that people don’t know. You might look like a startup on paper, but it’s because you had sold out two years ago and you had a two year window or you weren’t allowed to compete and now you’re starting another company. The application never lets you tell your story.

David Goodale (36:58):

That cover letter is your opportunity to paint who you are in the most positive light possible. It’s very important. And then when you write that out, it will help you be prepared for your negotiation when you end up talking to a salesperson. So you spoke earlier, one of the very first things we spoke about was rates. And I didn’t give an answer and I want to give an answer. What is a reasonable rate? So all of my new clients, I put on a month to month contract term, I am able to do a fixed contract term. What I always say to people is, I’ve simply refuse to put you on a fixed contract term other than something extraordinary. If it was an airline and they know what they’re doing and it’s like a massive situation, but for a typical smaller mid-size business, it’s going to be a month to month term.

David Goodale (37:44):

And let’s say that they’re doing $25,000 a month in sales, I would say, okay, well, I use interchange plus pricing. I explain what Interchange plus is and I say, I’m going to start you at 45 basis points. Every time you process a card, I don’t care what type of card it is, we’re going to take whatever the cost is from Visa, we’re going to transparently pass it on to you, and then we’re going to add 45 basis points on top in the future. Fin interchange goes up, it’ll go up. If it comes down, it’ll automatically be reduced. At some point, you’re going to decide whether you like me or you can’t stand me. I believe you’ll like working with us once you’ve tried us out for a period of time, and I don’t care, it fits a month, six months or never. But the door is always open to you to come back.

David Goodale (38:25):

Hey Dave, it’s been six months. You’re pretty cool. If we did a contract term, can I beat you up on the rate a bit? Sure. Okay. Maybe I drop them to 30 basis points, something like that. This is how business should actually work. And it just logically makes sense when you go through the process properly. If you were a really large merchant or a complicated merchant, you can also tear out your pricing in advance. This is one where you guys would be more in your area. You’d have to be involved to review the contract, but where a merchant is at least midsize, but they’re really on this big growth curve and they don’t want to have to renegotiate their pricing, you should be able to get a commitment. It’s like, okay, so you’re doing a million of dollars a month right now, start of next year. If you’re doing $2 million a month, I’ll cut it down 10 basis points for you, but your chargebacks have to be under, well, they have to be under 1%, but whatever amount the processor comes up with. And it makes a lot of sense because why do you want have to revisit this? Everybody? We can see where you want to go. So ask for what you want to ask for. It’s up to the processor. The worst thing they can do is say No. That’s something that I think is really important.

Bryce Van De Moere (39:36):

Well, David, I got to commend you because it sounds like your business model is one that you’re really in for the long haul with these guys.

David Goodale (39:48):

Definitely want to work, want

Bryce Van De Moere (39:50):

It to work, not a one size fits all. And that’s frankly refreshing because again, yeah, you’re right. We only see that people are in a hole, and it usually involves someone who thinks on this side, thinks that they’re playing by the rules, but they’re not. There is no negotiation. But I like what you’re saying, and that makes me, that gives me hope.

David Goodale (40:18):

Here’s how to blow it up. Here’s the worst way to do it. And I get these calls rarely, thankfully, but I’ll be trying to explain interchange. Look, I don’t want to hear it. What’s your best rate? I’m calling five places. Give me your best rate. And it’s like, listen, I respectfully totally get that you’re in a hurry and you don’t want to hear my song and dance. But if you do not educate yourself at the bare minimum, you are making yourself vulnerable. And either people become receptive. Well, okay, what am I worried about? Or What is your best rate? Give it to me. I got to go.

David Goodale (40:51):

Excuse me. Be careful with how you go about the process. I actually have a full blog post written out. It’s one of my longer blog posts, and it’s about, it’s the person, it’s the employee in an organization who gets the task, put on the desk, find us a new credit card processor, and whoever gave them that task, probably thought that that’s like 15, 20 minutes of work. And it’s like, no, you just gave somebody a project, especially if it’s a bigger company. And then you end up, see, in my role, I have to explain all this stuff. I have to explain interchange and all this stuff. And then they have to go back and explain it to the people that they report into. So what I always say is, so once I get them educated, I’m like, we both know this is complicated. Just set up a call so that the whole team can just hammer me with whatever questions they have because it’s not fair for you. You’re never going to be able to answer these questions. It will be impossible for you.

Bryce Van De Moere (41:45):

See, and I would say my reaction to your story about I want your best rate, that’s it. Don’t tell me anything else. That would be my cue to exit. I’m not sitting here saying that all merchants behave appropriately and the evil banks or the evil processors, they take advantage of them. There are bad processors, bad banks, bad merchants. And that scenario is just a giant red flag that if somebody is approaching this as just the facts, it’s just like, dude, you’re going to be gone in six months. You’re not going to be able to sustain yourself being willfully blind and have this huge ego. You’re going to be the one who processes something that they shouldn’t have, and you’re going to get nailed for transaction laundering and you’re out on your ass and then you on the other have dedicated all these resources to this dude for what? Right? I mean, so like I said, if somebody’s coming at me like that, even in my line of work, I’m just like, you’re going to be a problem no matter what. And so I think I will try. I’m not going to give up on anybody. You’re just not receptive and we’re not working

David Goodale (43:08):

Well. Exactly. There’s some things the wisdom of experience teaches you, right? You can spot those things.

Bryce Van De Moere (43:15):

I learned all my lessons the hard way.

David Goodale (43:18):

We all though. That’s it. I also wanted to talk, I had a note here that I wanted to talk about just scanning for, oh, it was about product risk and how it affects pricing. I want people to understand the reason why product risk matters for pricing is if chargebacks happen, like the card holder has to get a money back, a iss, not a refund, it’s a dispute. The cardholder calls their bank, this guy screwed me, or I didn’t get what I wanted, or whatever it is. From the payment processor’s perspective, if a business was to fail and stop operating and people didn’t get what they paid for, the cardholder has to get their money back. They’re obligated to. That is card brand rules. But if the merchant doesn’t have the money, the cardholder still has to get their money back. It comes from the credit card processor.

David Goodale (44:11):

So if you have a riskier product or service, another thing that can impact your rate, it’s the cover letter you’re doing travel, for example, let me give a five second example. Maybe you have a bunch of Airbnb or VRBO rentals in Mexico or something. You own 10 properties. That’s very high risk because people book today, they go in the future, but maybe they own all 10 of them. There’s no debt. And if any one of those properties was ever unavailable, all the properties are very similar in designs. They’re all three bedrooms. We could just accommodate a guest to another property. There’s all these little things that you can explain and it starts ratcheting down the risk which, and the less likely the processor is to have a headache, the more receptive they should be in terms of giving you a lower rate.

Jeremy Stock (45:01):

Totally agree. Yeah, well said. I want to quickly say, we’ve mentioned match a couple times. Match list is a major issue that our law firm deals with on a regular basis. Bryce is really the spearhead of our firm who handles those cases. And David, we’re going to be on your podcast soon to discuss match lists. So please, if you’re at all interested and you’re hearing this podcast right now, go over to David’s podcast. And David, I’ll let you of course give your advertisement there at the end when I give you the last word. But we are going to be on there as well discussing match list, match list removal and that whole process and what leads to that, et cetera. So we’re looking forward to that a lot. David, it’s been a great conversation with you so far today.

David Goodale (45:46):

Yeah, I’ve really enjoyed it and I just have to tell for any merchant that feels overwhelmed, I’ve done this for 24 years, I can guarantee I’m going to learn so much talking to you guys about match. So don’t feel bad when you don’t know everything. Nobody knows even close to everything in this industry. It’s just too complicated.

Bryce Van De Moere (46:04):

Oh, I learned something new in every case, unfortunately. It’s usually like, oh, I cannot believe they did that. I can’t believe they did that. But it’s like, this is crazy. But yeah, I mean this is still new. I say all the time when Covid came along, we had the lockdown cash and checks were gone. Total. It’s an online economy now. I mean it is card not presence and the landscape is constantly shifting and the rules are constantly changing because everybody’s so afraid that they’re going to get ripped off. And so yeah, it’s hard work keeping apprised of what’s going on. So why would you put yourself automatically in a deficit just by closing your ears to it? You got to do your due diligence and you also have to stay in regular contact with your processor. You’re right, this is what I’m doing. This is what I’m processing. I would actually like to expand to you process this. What do you think about that? I mean, just quit making moves and think and just hoping for the best or, I mean, you have to really police yourself. You have to police yourself and you have to ask the questions. You cannot be timid about this. This is your livelihood.

David Goodale (47:26):

It’s totally true. And I think almost everything in life is who I mean that almost literally. And so if you know your vendor, if you know your provider of services and you have a problem and you’ve built a rapport, when a problem happens, there’s a big difference between, Hey, Bob Bliss and I’ve got to talk to you. And you just end up in a call center, right? So again, circling around this again, but don’t try and solve your problems after it happens. Put the work in so that you’re ready.

Jeremy Stock (47:56):

Hundred percent. David, would you mind, you want to give us our audience a little bit of some contact information? Where do you want them to find you? Clearly you’ve got a lot going on with merchant accounts.ca, everything we’ve heard today, as Bryce was mentioning as well, you’re approaching this from a merchant centered perspective, which I think is fantastic. So where can our clients, merchants, our audience today find you and maybe what sectors are you most primarily focused on?

David Goodale (48:28):

Great, thank you. So the easiest place to get us is always our website merchant accounts.ca, M-E-R-C-H-A-N-T. And then the word accounts A-C-C-O-U-N-T-S. So it’s plural.ca for Canada. But don’t be misled. We don’t just work with Canadian merchants. We deal with Canadian, us, European, and UK based merchants. Our real expertise is multicurrency processing, more complicated stuff, point of sale machines. Like if you need a POS machine on the counter of your subs shop or something, that’s not our thing, but anything that’s card not present. So e-commerce over the phone, online invoice payments, recurring billing, multicurrency, cross border and international e-commerce. And we work with small and large businesses. A lot of people think, actually a lot of people in the industry think also they always want to win those big accounts. But those big accounts, you’re fighting for a couple basis points with zero loyalty and there’s no relationship there.

David Goodale (49:26):

So I love working with small merchants. I can honestly say I’m pretty much friends with most of my clients. I have hundreds of clients. But I am, like you said, I’m in it for a long haul. I to, I always tell people I have an absolutely broken memory, so I can’t lie because I can’t remember what I said. So you just tell people the truth, do the best you can. Mistakes and problems are going to happen no matter which processor you choose. I will mess up at some point. Mistakes happen in life, but try and have something that can help you out when that happens. I think that’s the best advice I can give.

Jeremy Stock (50:01):

Maybe we should have you back on at some point, David. I’m curious. The multicurrency focus, I think that could be an interesting conversation.

Bryce Van De Moere (50:08):

Absolutely. I mean, at this point with all these online businesses, it really doesn’t matter where you’re located anymore. I mean, I know that there are certain, what’s what I’m looking for, borders in regards to where you can process. But yeah, I mean, just because you’re in Canada doesn’t include you from crossing payments in the United States. It just doesn’t even matter where you’re located

David Goodale (50:29):

Anymore. No, there’s nothing that stops you from collecting a sale. But as an example, visa, MasterCard, assess cross border fees, and if you’re a Canadian merchant selling to a US cardholder in US dollars, the cross-border fee from the card networks is 1%. So there’s all kinds of, which, if you’re a small business, do you have any idea how much money I’d have to be saving before I want to volunteer myself to introduce the IRS into my life on top of the CRA? It better be a lot, but there gets to be a point where it’s a lot, right? So there’s a lot that you can do. And then do you want to be paid in the currency that you process the payment? And by the way, the answer to that is always yes, every time. But anyways, I don’t want to go down that rabbit hole. I would love to come back and maybe we can have a conversation about

Bryce Van De Moere (51:17):

That. I think we can spend all day just jumping down rabbit holes. So there’s just always a lot to talk about when it comes to payment processing.

David Goodale (51:25):

Yes, definitely

Jeremy Stock (51:26):

100%. So thank you so much for listening this long to the Payments Experts podcast. We’ve had in studio again with us Senior Associate Attorney, Bryce Vander Moore, as well as our special guest, David Goodal with merchant accounts.ca. And again, if you’re interested in more information about the match list and match list removal, we’re about to do a podcast with David. So go check that out as well. Thank you. Bye-bye, David. It’s a pleasure.

David Goodale (51:53):

Thanks for having me, guys.

Jeremy Stock (51:54):

Thank you for listening to this episode of the Payments Experts Podcast, a podcast of global legal law firm. Visit us online today at globallegallawfirm.com.