PEP Episode 044 — Banking on Innovation: The Evolution of Payments with Tom Lineen of WestTown Payments

Introduction

Tom Lineen brings 25 years of payments industry wisdom to the table as he unpacks how WestTown Payments (https://www.WestTownpayments.com/) is transforming merchant services through banking integration. Having started at AuthorizeNet in 2000 as the 29th employee, Tom has witnessed firsthand the evolution from clearly defined industry roles to today’s interconnected ecosystem.

The conversation explores how Tom recognized an opportunity to partner with community banks that possessed direct card brand memberships but lacked the expertise to maximize their potential. This vision materialized in March 2020 when, despite pandemic uncertainty, WestTown Bank and Trust embraced his joint venture proposal. Unlike traditional sponsor relationships where banks and ISOs operate at arm’s length, WestTown Payments became fully integrated with the bank, ensuring complete alignment on compliance and customer service priorities.

Tom reveals how this structure proved particularly valuable when WestTown Bank was acquired by DART Bank in 2023. Through careful planning, they achieved a seamless transition where merchants experienced zero disruption—continuing to receive deposits and process transactions without interruption. This customer-first approach exemplifies the community banking philosophy that distinguishes their service model from national banks.

The podcast delves into specialized verticals, particularly hemp and CBD processing, where WestTown’s integrated bank model provides compliant solutions that national institutions won’t touch. Looking forward, Tom shares his vision for DART 360, a comprehensive platform offering merchants access to checking accounts, loans, working capital, and other banking services alongside payment processing. This evolution represents the future for ISOs competing against Square and Toast—bundling financial services to transform thin-margin payment relationships into robust, multi-faceted partnerships.

Industry professionals will appreciate Tom’s insights on the upcoming Visa VAMP program changes scheduled for October 2023, which threaten to reshape the acquiring landscape, particularly for high-risk merchants. Connect with Tom on LinkedIn to learn more about how WestTown Payments can help payment professionals navigate today’s evolving marketplace.

Transcript

Tom Lineen (00:00):

There’s so many different names that I’ve seen out there. So there used to be called Cash Discounting, and then I think that’s now gone out of favor and now

Christopher Dryden (00:07):

Dual pricing. Totally. They don’t even want to say cash discount anymore.

Tom Lineen (00:12):

I know. Yeah, no. When you say, oh, no, no, it’s dual pricing. I’m like, what’s the difference

Christopher Dryden (00:17):

There isn’t there? But the accepted terminology at the In Vogue moment is dual pricing.

Tom Lineen (00:25):

Yeah. So dual pricing.

Jeremy Stock (00:28):

Welcome to the Payments Experts podcast, a podcast of global legal law firm. We hope you enjoy this episode. Very excited today in studio joining us founding and managing partner of the law firm, Christopher Dryden, who’s regularly with us, as well as our special guest who’s joining us remotely. Tom Lineen of Westtown Payments. Tom, we’re really excited to have you on the podcast. Welcome.

Tom Lineen (00:58):

Hey, thanks guys. Appreciate you having me on.

Christopher Dryden (01:01):

Alright, Tom, so Tom and I actually got to talk before the podcast, which is not my norm. It was more to catch up. I’ve known Tom for, it’s got to be coming on 15 years or close to when we got on the phone. It was interesting, I was trying to do a little bit of catch up. I haven’t talked to him recently. And the interesting thing about Tom, I was telling him, I did a training session for the staff yesterday and in the training session for the staff and trying to teach him payments and do it an encapsulated one hour session and give them some background. I tried to do it in a way where, or I usually try to do it in a way where I’m talking about the evolution of payments because when I got in it, the idea of independent sales organization, processor, sponsor bank, there were very distinct lines and very much fewer opportunities in the middle layer of what you could do.

Christopher Dryden (02:02):

And really technology and then human innovation in the space and what kind of pushing the boundary of what’s possible is what’s really moved payments to be kind of the center of the universe. And Tom is emblematic of that in his career because it’s somewhat been nomadic to those new opportunities where you see entrepreneurially something that’s in front of you and you’re like, oh, hold on. That door just opened and Tom’s been one of the people that sees the crack in the door and kicks the door open. And that’s actually kind of the evolution to Tom at Westtown Payments. But I actually thought it would be a really good opportunity to give a little bit of background to Westtown Payments to give a little bit of background to Tom Line and who he is because when you’re dealing with Westtown Payments, you’re dealing with Tom. So Tom, tell us a little bit about yourself.

Tom Lineen (02:56):

Sure, man, thank you. As you mentioned, I have had and worn many hats in the industry in my 25 years that I’ve been in the space. And to your point, I have looked at payments as this very entrepreneurial vehicle for some of the things that I have seen and attempted to achieve in my career. And started off, for example, I started off at authorized net in 2000. I was the 29th employee. Authorized Net was at that point, it was a little company in Provo, Utah, and now it’s owned by Visa and is driving really worldwide e-commerce using Visa as the vehicle. But back then the internet was the wild West, honestly. And when you looked at it, there was a lot of people making money in a lot of different ways, but a lot of ’em weren’t sustainable. And I looked at e-commerce and what AuthorizedNet was doing and said, boy, you could sit on your couch and buy something, it’ll show up on your doorstep in a couple of days.

Tom Lineen (04:11):

And that was exciting and that opened up so many different avenues that I said I got to be there, I got to do that. As you mentioned, Chris, the industry used to have very defined lines. There isn’t a gateway, which is technology provider. You have your processors like your Thesises, Worldpay of the world, and then you have your sponsor banks and of course the car brands. And now there is this melding occurring and as you look at the world we live in, I’ve just have continued to say, okay, I, somebody’s doing that. Somebody’s already dominating that space. What’s not being done? What’s not being done well, what’s not being done with a customer-centric view? And that’s where I find myself today is partnering with and now actually being part of a community bank that both has a bank charter and has direct membership with the card brands, but maybe didn’t have the internal resources to be able to spin up and support a direct acquiring model.

Christopher Dryden (05:24):

Yeah, I think that’s really important because as Tom and I were talking, we’re both talkers and I think it’s the sales side of me, but also the sales side of Tom. And we were talking about banks that have basically full on delegated their merchant acquiring program at times, and they’re the ones that are all responsible, which is craziness to me. I mean, I’ve seen situations where the bank didn’t even have a BSA policy in place or the bank was using a dual employee where the ISO that was really running the merchant acquiring program had a dual employee of the bank, but they really worked for the iso. And there’s been some really sketchy bank penetration into the acquiring space, but not knowing what they’re doing. I think the genesis of you going to Westtown, which I think you should tell us what Westtown does, but the genesis of westtown since you’ve been there I think is exactly what you’re talking about.

Tom Lineen (06:25):

Well, thanks. It is funny. So your point is so well taken. So as I looked at the landscape of the sponsor bank environment and then the ISOs and how they work, they weren’t really aligned as partners. It was like a vendor relationship sometimes it wasn’t a very good relationship. And there was a handful of banks that you could go to and work with. And so this is back in 2018 when I first looked at this and said, gosh, if I could get in front of a community bank that obviously is a chartered bank, either state or federally in the us, which those are the only entities that can be members of Visa, MasterCard in the US now, other countries, it’s a different deal, but let’s just talk about the us. And so I looked at it and said, okay, if I can find the right bank, we can bring the talent, the technology and bring them a whole new revenue stream.

Tom Lineen (07:24):

Especially today as you think about community banks, and this narrative has actually died down a little bit, but it’s still absolutely real is that community banks are dying and if they can’t grow and they can’t find new revenue streams, they’re going to be out or they sell and they’re done. And so to your point, so the Westtown bank, so after talking to, let’s call it a half dozen or a dozen banks and hearing a lot of nos or maybes or all kinds of things in between, I was introduced to the COO of Westtown Bank and Trust, and her name is Melissa Marcel,

Christopher Dryden (07:58):

Is she still working with you guys?

Tom Lineen (08:01):

So technically, and there’s a whole story there too, but Westtown Bank has been acquired by another bank. And so she went with the team and that happened in October of 2024. And she went with the team to the new bank, but she was the COO and actually ended up being the CEO of Westtown Bank and Trust Westtown was a one branch Illinois State Charter Bank that had their Bank Corp in Raleigh, North Carolina. And so when I met her, the first thing she mentioned was, Hey, we really are interested in this space, but we’ve talked to all the ISOs who have bank sponsorship programs and we didn’t like any of ’em. We don’t think that we’re concerned about sharing our customers with these groups. And so I said, okay, that’s interesting because I don’t want to be an iso. I don’t want to be a third party.

Tom Lineen (09:02):

I want to be part of the bank. And we ended up agreeing on a joint venture structure because that’s what they wanted. They wanted someone to come in, start it and run it as part of the team, not as a third party or a dual employee, which I don’t even know what that could be, especially in this environment. But the funny thing is, Chris, and I don’t know if I even mentioned this story to you, is that we had these conversations through Q1 February of 2020. So the pandemic hadn’t actually started my first pitch meeting with her, the CEO, chief legal Officer, all the C levels was on March 17th, 2024 days after the world shut down literally. And I thought, this is be the shortest meeting ever because all the uncertainty of just what was going on, there’s no way these folks are going to A, commit to this B, invest in it and then see it out when there’s really no chance we’re going to get together physically anytime soon. So we get on the call about 30 minutes in the CEO O stops the call and I’m like, all right, well that was fun. And he says, okay, let’s do this. He, excuse me, he’s like, this is what we want to do. You’re the guys, let’s go. I said, okay. Literally from that moment we took off, had to basically file some stuff with the bank, the state of Illinois, and we went live July 1st, 2020, and we had our bin actually for nothing, literally nothing to getting our bin live November 15th, 2020. So a little over four months.

Christopher Dryden (10:46):

Well, that’s the funny thing is I remember it really well because I don’t know if you recall, but I had met Melissa right around the same time that we’re talking about, and they were doing deposit accounts for cannabis based businesses, some being CBD only, others being actual where recreational cannabis had been approved. And so she had come to us for just opinions about the marketplace related to that and about the bank. And then she said, oh, we’ve got a payments branch too. And then up you popped and it was like, oh, Tom, I know Tom, it’s perfect. And we did a little bit of work for you guys back then, and it was interesting to watch what was going on. So it was actually kind of cool to watch you in the space. And the JV structure I thought was really interesting too because there was really an investment by the bank into the payments branch where there was a melting of, Hey, we’re aligned in what we’re trying to do here. And I think that that is a differentiator. And I think for especially the agents out there that are looking for people to partner with, explain the significance and importance of that, I think it’s really important.

Tom Lineen (12:01):

Well, it’s everything, no matter technology team, all that stuff, and which are all important, but if we didn’t have alignment with the bank, especially around a incredibly high compliance marketplace like the hemp and CBD space, which is where we focused because we knew the bank could play in that space from a depository lending perspective, but the merchant services for the marijuana space for the recreational or even medical is still federally illegal. So we couldn’t offer a Visa, MasterCard, amex, discover to those businesses, to the dispensaries or any plant touching business. But on the hemp side, which is still cannabis, but it’s 0.3% or lower THC, which is covered under the Farm Act, that first one came out in 2014, and then the 2018 updated Farm Act had much more guidelines. It is not a perfect document by any means, but it has much better guidance on what is and isn’t allowed.

Tom Lineen (13:04):

And it gave us a pathway to be able to support it from a merchant services perspective, but there’s tremendous amount of compliance and it’s state by state that it’s regulated. So there’s some things that we had to do and build. And so you have to do all this stuff with the bank. I can’t do it in a vacuum, and I can’t say, well, I’ll figure it out and I’ll come back to you because it’s their charter. They have to sit in front of the regulator, in this case FDIC and the state of Illinois. And so we did it together. And so when they sat down for their exam, they could speak intelligently about what we’re doing. And then if I was ever interviewed, which I was, I could actually speak intelligently about how we’re managing our K-Y-C-K-Y-B underwriting compliance. It’s all there. And so I have a lot of people telling me, well, that’s illegal.

Tom Lineen (13:55):

You can’t do that. And I’m like, no, no, it’s not illegal. It’s just difficult. And that’s usually where I find opportunities, especially in payments. Payments is so saturated and so competitive, but in certain niches and certain areas, it takes more work. And so the BFAs, the Wells Fargos the world just go, ah, we don’t need to deal with that. And they don’t. But a community bank that’s looking for new revenues, new marketplaces, this is the kind of thing they need, but they don’t have maybe the resources internally to be able to grow it, manage it, and actually explain it.

Christopher Dryden (14:36):

Yeah, look, I think it’s super important for your bank partner to understand what it is that you’re out in the marketplace doing and probably know more than you do to educate the people that are out. I mean, I sat on a panel and like you said, the complexity of what you’re talking about. Sure, that’s great. We’ve got the farm bill 2018 gave us some clarity, but still state law controls even under that. So you got to be compliant with your state law. There’s a federal cap. But then it was interesting, we started, and I want to say it was the MAT conference that I did a talk, and this was like 20 21, 20 22, and it was about the state laws, which when I went and started researching, I was kind of blown away. A state like Hawaii, you can smoke it, you can’t eat it, right?

Christopher Dryden (15:23):

Mean Totally. And so there’s levels of, oh, okay, well, is it an ingestible product? Is it controlled by the FDA? I mean, you get into alphabet soup with what the oversight agencies really talk about. And everybody’s just thinking, oh, well, I’m going to go get a CBD product. Well, CBD products not all the same, and the places aren’t all the same. And I thought that that was really interesting. And I mean, this is a perfect example of when Elon opened up CBD slash, I don’t know if marijuana was ever going to be allowed at that point in time, but they opened up a whole channel and it was basically shut down within a month because they had no idea what they were doing. US Bank said, no way all this stuff’s coming through that shouldn’t be coming through. And they had done one charter, one test with, I want to say one ISO partner who will remain nameless on here, but they actually did it and said, oh, okay, well, we feel like we understand what’s going on. And they had absolutely no clue. And that is the thing about the complexity. And I say this because I’ve had a lot of situations, which I think is important what you’re talking about right now, and I think it would be good to get into the verticals that Westtown payments and am I allowed to say your banking partner?

Jeremy Stock (16:43):

Oh, absolutely.

Christopher Dryden (16:43):

Yeah. And DAR Bank and what they’re doing, because I’ve watched a lot where, and this happens with Stripe and PayPal, and I don’t know if it’s by design, but you’ve got people doing underwriting and risk on the front end, but I don’t know how well they do it. They onboard a merchant, they take three to four weeks of transactions, and then they’ve got some sort of re-underwriting process going on in the background as they’re actually looking at the transactions and nothing has changed. And all of a sudden, oh, well, you approved me here, but now you’re telling me I’m suspended and I can’t do anything. And then their money sits in limbo. Again, don’t know if it’s by design. I don’t know if it’s just left hand not talking to the right hand of a large organization, but this is a problem for merchants and agents and it’s nice to have a banking partner who can alleviate that problem for a problematic subject matter.

Tom Lineen (17:37):

It’s interesting, and you did ask me a question earlier, which I don’t think I answered fully, so I’ll swing back around because I think it actually is very germane to what you were just pointing out in that because we are part the bank, and I certainly and my whole team comes from the ISO world, and I intentionally hired folks who weren’t necessarily bankers, but new underwriting, risk management, client services, all the things that a full service ISO has to do. We do that as the bank. And so what we did in this program was to go out and talk to the agent ISOs that I knew, played in this space and said, Hey, no longer do you have to work through an ISO of an ISO of an ISO middleman to middleman to middleman and then kind of have to do some klugy things so that the true nature of that business wasn’t discovered or in any way talked about, we’re the opposite.

Tom Lineen (18:42):

We’re saying, Hey, no, let’s talk about all the things you’re doing. What are you selling your Delta H, your delta nines, all these things that are fairly controversial right now. They still in our minds, and the interpretation that we’ve received from legal and other compliance companies is that those are fully legal and compliant within the Farm Act. And so we support ’em, and then that’s our guide and that’s what we use. But we go to these ISOs and agents and say, you’re dealing with the bank. You’re not dealing with the third party. We act as if we’re an ISO because we think like ISOs because we come from that world, but we carry bank business cards. And so I’m an employee of the bank. They all are. And so with that, there is a tremendous clarity on what they can and cannot do. So they don’t waste their time running around trying to board stuff, whether it be dispensaries in some kind of scheme that tries to circumvent the legality of what they sell, which of course always ends up poorly.

Tom Lineen (19:49):

But we give these guys comfort so they can go out and market, invest in their business and know that we’re here and we’ve been at this. So we started in 2020, as I mentioned, we partnered with Westtown Bank and Trust, Westtown Bank and Trust ended up going through a sale process and the bank that was buying them, I knew from my previous endeavors, and I knew they were not aligned with a direct acquiring model, which is what Westtown Payments does. And so we actually were able to package that up and go through a process interview potential acquiring banks that wanted to buy us. And we met the folks from Dart, really enjoyed their focus on their focus on culture, on alignment, on commitment. So the moment they wrote that check, they were saying, Hey, we’re committed to you. We’re going to do what we need to get done to keep moving this forward, which I knew is what we needed.

Tom Lineen (20:49):

We were not yet a success story. We were still really a neophyte at that point. We didn’t have a great revenue story. We didn’t have a great, Hey, we’re boarding thousands of merchants at a time. We were still growing and they saw it and they said, let’s go. And so we’d literally though, and this is the important part, Chris, the day we moved, we moved literally we sold on June 30th, 2023, and we became employees of the bank on July 1st, 2023. Our merchants never missed a deposit, never missed an authorization, everything ran the same on the 30th as it did on the first. And so they didn’t even know we got acquired effectively. And that’s a testament to the team. They did an amazing job of just staying the course and of course the bank. And so literally we didn’t lose a customer, we didn’t lose a dollar, and we just kept moving. So we made that change and nobody knew. And why I say that is that we continue to board accounts the next day, support the industry where you mentioned other banks have middle of the night just shut it off and went out. And merchants are like, no, they’d never do this. Well, they did it. And we’re saying, Hey, we’ve been at this for five years straight, even though we did change sponsor banks and actually ownership,

Christopher Dryden (22:17):

I don’t think most people would understand what you’re talking about. We bank with a small bank here, and it’s actually been acquired by another kind of small bank. But when we joined it, it had maybe like five branches and then it grew to nine branches. The reason I went to the bank was because I happened to know the COO, and she would tell me kind of what happens when the bank acquisition happens and then the assimilation of the old bank into the new bank environment. And I mean the barriers to that, it’s not a simple process at all. I mean, you have to take people and flip a switch and onboard them, and the banking environment that they could have been in is entirely different. I think that is something that’s very important to show continuity. I also think it’s fairly emblematic of the fact that the bank was very intent on making sure that it was fluid and seamless, which I don’t necessarily know if that’s the case with acquiring banks because customer service doesn’t always seem to be the thing that’s at the forefront of what they’re looking for.

Tom Lineen (23:29):

That’s so true. And the good news is that I went from one community bank to another community bank, and community banks truly pride themselves on service customers because those are their neighbors. They see them a national bank or even a regional bank. There’s a disconnect and hey, look, we need ’em both. They both serve a purpose in our economy, our society. But to your point, I also knew if I didn’t have full buy-in from the CEO, the chairman of the board down, we would not be successful. And there are certain things we’re doing. So one of the things you mentioned, certainly we’re very active in the hemp and CBD space and we’re really proud of that, but we also support all their customers, so their main street businesses, the coffee shop, the deli, the country club, whatever.

Tom Lineen (24:24):

And that comes from the commercial bankers who some of ’em have been there 30, 40 years and they’re looking at us going, how do I trust my customers? And they think of it that way. These are their customers, these are their friends with you guys who we don’t know. So we had to step in and show that we think like them, that the customer comes first. It’s service, service, service. And everyone says that, but really it has to be because we knew if we don’t, one, they wouldn’t open up their collective community to us and we wouldn’t succeed at the level we know we need to. And two, I think we’d fail differently because we’d lose customers that we already had, that we brought over, and we’d lose that confidence from the executive team in our abilities. And by the way, the payment industry gutter is littered with failed acquisitions. You and I probably can go down a list of, Hey, they bought a perfectly good company and it wasn’t a good culture fit, and it turned into just a dumpster fire.

Christopher Dryden (25:32):

Oh yeah, look, I mean Van of Mercury, I thought that that was such a great acquisition by Van F and culturally, they were so different. They never combined the operations. That’s interesting. This is actually a good segue. I was looking at the Westtown website and you talk about the importance or on the website, it talks about the importance of combined solutions. What does that mean to Westtown payment? What is that combined solution?

Tom Lineen (26:01):

Sure. And again, for the folks who are listening who are in the payment industry, this will sound fairly redundant, but folks who aren’t, this will be a little bit surprising in that the ISO space is dominated by one product really, and it’s a merchant account and sometimes terminals and other things that they’ll make some revenue on, but they don’t offer any real banking services or actual banking services, I should say. And we looked at it and said, okay, if we’re part of a bank and they have a charter and they provide these services to the same customers that we provide merchant services to, why aren’t we offering deposit services? We call them savings or checking accounts, loans, working capital. I mean, I guess you can go down the line of mortgage small business owners because they own houses. And so we’re talking to the owners of these businesses, why aren’t we offering these services?

Tom Lineen (26:58):

And the reality is we do, but it’s a manual process. It’s not digital. And so our entire focus now is now that we’ve settled in, we’re a year into it, is to take all the products the bank offers and put them in, whether it be a hub and spoke model or really a daisy chain where we say, Hey, here’s all the products and services you can consume. Do you want to open a bank account? Great, let’s do that. Do you need a credit card? Great, let’s do that a loan. Again, merchant services is a given. And so what we’re doing that, but we want to now offer that and open that up to our agent base and our ISO base so that now they can go into that same small business that they sold a merchant account to and provide them a full suite of financial services.

Christopher Dryden (27:45):

Yeah, I mean that’s one of the things that I’ve seen repeatedly is people have asked me, why don’t ISO sell this? Why don’t ISO sell that? And I was like, ISOs are one trick ponies, man. It’s no bag on them. Selling merchant services is hard enough, but then you try to introduce another product into it and it’s something that you’re unfamiliar with just in general. I mean, cash Advance was the one that I saw equipment’s a little bit easier, like you said, and it’s an easier revenue stream, but then you start to get into actual finance products or deposit accounts I could see too, but that’s got its own layer of regulation and administration associated with most of the people are consumers. It’s not necessarily, or you kind of go from business to consumer and that transition adds a whole layer of oversight and regulation is maybe prohibitive at times, if you want to put it that way.

Christopher Dryden (28:37):

Absolutely. But I think that having those services not only as something that’s an add-on after the fact, I know in some spaces because tell you, we are with this bank, it’s the commercial bank of California, and I will tell everybody on this podcast and anybody that can hear this, do you want really good customer service? These people are awesome. And then when the government was offering really favorable loans through, that’s who we used. We went to them, they had outreach, the customer service of the community bank. I would never bank at B of A or Wells Fargo or any major bank. And no offense to them, but they don’t value the customer. I mean, just look at Wells Fargo and all of the government settlements that they’ve entered into for bulking their customers, and that should tell you what they think about customer service. Now, they may be more advanced in technology and this and that, and it may be an easier process for a customer, but go ahead and call them and see how good the customer service is. Whereas if I need to open an account at our bank, they drive to our office so that they can get wet signatures to open our bank accounts and they do whatever they can to make it easy for us.

Tom Lineen (30:01):

It’s a difference. And I am not today, but I have been through my career, a small business owner, and as you’re trying to run your business, these administrative tasks which are very valuable and important, you may not have time for, but if they can make that time or make it easier meet you where you are, whether that be physically or digitally, it’s hugely important. And that’s the other thing too. I mean, one of the things that’s key to this is that this whole thing that we’re building, and we’re calling it DART 360, and it’s built, I shouldn’t say building, it’s built and we’re launching it is digital. So from one application, we’ll be able to do all the K-Y-C-K-Y-B work, which is super important, especially in this day and age. And then we’ll also be able to do the underwriting. And based on that approval now we open up a greenfield of products and services that they can consume.

Tom Lineen (30:53):

Now, the other thing too, and your point is the iso, what we’re saying is, Hey, look, you don’t have to know these products. You don’t have to learn ’em. You just have to basically lead these customers to us. We will start the process, we’ll get ‘EM approved for a relationship, and then the services are right there and they can decide what they want to consume and when. And for example, a great point you just made was on the dda, a side merchant banking. Well, a lot of businesses come to us, I don’t say every, but almost all of ’em with a bank account and especially the hemp and CBD space, but a lot of ’em come with us with bank account from B of A Wells, and Chase and I keep picking on these big guys. All three of them have a absolutely no hemp CBD policy. But somehow or another, these guys get bank accounts and we’ll pick that out and say, Hey guys, I know you have a bank account. You might have a really long-term relationship, but I can tell you that you run a prohibited business in their eyes. And if their compliance team team is able to pick up on that, they’ll just close your account and send you a cashier’s check.

Christopher Dryden (31:56):

Oh no, they’ll hold your money. No, no, no. They’ll hold your money and maybe not give it back. No, we’re dealing with multiple lawsuits.

Tom Lineen (32:04):

That’s true, actually. Great point. I’ve seen that too. And they’re like, can you help me? I’m like, I know a good lawyer and I’m talking to ’em. But no, we can’t help with anyone else’s bank account, but we can certainly facilitate one for them, and we’ve definitely saved some folks a lot of pain when they say, Hey, I got my bank account shut down. We’re like, well, you got a DDA here, go ahead and use it.

Christopher Dryden (32:27):

So as far as Westtown payments on the processing side right now and the merchant acquisition, what are you seeing as, and this is more of a general industry question, but what are you seeing firsthand in your environment as far as challenges and opportunities? I mean, you can take ’em in whatever order that you want, but in today’s environment, 2025, how are you seeing opportunities and challenges that you’re experiencing on the operational level?

Tom Lineen (32:55):

Okay, sure. I’ll tell you, it’s interesting, and I was joking with someone the other day. I said, the man that sits in that chair in that big white house in DC really does affect our industry. And I think everyone has their opinions on the current administration and the previous administration. From my perspective, things have become easier on one level, they’re opening up new markets, and you can look at just some of the things that they’ve become much more friendly to in the past two months than the previous four years. One being digital assets, for example. And so that’s a positive, especially for a bank like ours who’s willing to take the time to invest in a market like that, invest in compliance resources, which is incredibly expensive. You wouldn’t even believe how much money we’ve invested just to get to the point where we can actually support industries like digital assets, hemp and CBD.

Tom Lineen (33:59):

Now, on the flip side, I’ll tell you this, and you’ve seen it too. There’s a new Visa program on the chargeback side called Vamp, and it’s a new name for a program they already had. They’ve cleaned it up, they’ve made some improvements, but they’ve also made a couple of announcements over the past two weeks bulletin updates, which have made a lot of people nervous. Now, luckily, we’re not too deep into that. Well, we’re not deep into the high risk side of the industry, high chargebacks and things of that nature. And there’s some products that the car brands supported that it looks like they’re not going to support in this next turn. Now, by the way, it was supposed to come out April 1st. I’ve got an official word that they’ve now punted that down to October 1st because a series of folks like myself and others have said, Hey, we’re not ready for this.

Tom Lineen (34:50):

There’s a lot of changes we have to make. This is a big rule change, this one rule change, and I’ll bet you a dollar. It is going to change the entire landscape of acquiring, especially for small community banks that are in the acquiring space. And there are a pretty good number of us because the way it’s set up, the ratios that we have to hit as a bank for fraud, chargeback ratios, which is super important because obviously we want to limit it as much fraud, friendly fraud and merchant fraud as possible. But that one thing, Chris, is going to change a lot of businesses, and I think they’ve all kind of taken a breath of relief because it’s not coming in a couple days, but it’s still coming. And we’re all looking at that going, okay, we got to make some analytical decisions on what we do and don’t want to support because there will be a reckoning come October 1st, and it may not be immediate and swift, but the wheels will start turning at that point.

Christopher Dryden (36:01):

Yeah, I mean, I see people, this has been happening for a long time, and it’s less related to what you just said, more related, I don’t know where the ratios are going, but the existing thresholds, people buying low risk books to manage and offset high risk, and now I’m watching people buying organizations and not just books where there’s an actual acquiring apparatus for low risk where people have been primarily focused on high risk. And I agree with you. I think that’s something I don’t know, it’s interesting. It’s sort of like when legislatures make laws sometimes I think the card brands make rules, but they don’t necessarily see the unintended consequences that they could potentially have in the marketplace. I think that the rules are based on a good intent, but with a lack of foreseeability of its overall impact. That’s something that I think it’s always going to be there when you have such a large, I mean, this is what I tried to explain to everybody when I was doing my training session is that you all participate in this credit system every day.

Tom Lineen (37:13):

Oh, totally.

Christopher Dryden (37:14):

Right. And you’re unaware of everything that goes on it. And you’re definitely unaware of the card brand’s role, right? I mean, we don’t even touch issuing, I mean, you probably have way more knowledge about issuing than I do, just being in the space as long as you have and working at a bank level. But I don’t, because most banks do issuing on some level, and it’s a totally different animal. I’ve dipped my toe into it and seen it. It’s very, very different. But you’ve got these rule makers, and look, the card brands are basically are oversight. I mean, they are the ones that are running this regime and they’ve come up with it and the government has said, look, you guys seem to be doing an acceptable job here, and we’re going to let you kind of run. There’s no direct statutory framework on a federal level.

Christopher Dryden (38:01):

At least we bump into some things. But overall, I see what you are talking about. And I know that somehow in the marketplace, the participants will do something to address a correction, whether it’s through acquisition or something else. But I also see that it has really unintended consequences. I mean, one, this is totally off brand and off subject for what our conversation is, but the thing that we get called most about is surcharging today. I mean, I had somebody from a large entity contact us about surcharging. They found me through app, formerly Mac. And when I was emailing with ’em, I said, yeah, we get a lot of people on this. And there isn’t a federal standardization of that. There is the card brand rules, but then there’s all these state laws that obviously are going to impact that. But for the merchant, if they don’t have a partner that’s selling a merchant processing that’s giving them the education that they need, and somehow somebody complains because a consumer can complain to Visa or complain to their issuing bank, it’s a thousand dollars for the first fine, and then you have to show compliance.

Christopher Dryden (39:13):

And that isn’t really that difficult. The thousand dollars even for the small merchant can be a lot, but if you miss the compliance date, it’s immediately a $25,000 fine. And for a small business Oh yeah, totally. And for a small business, and there’s no forgiveness. What I’m seeing with the card brand finds at least, and I understand why they’re doing it, but again, when you start to meld all merchants as one merchant to create kind of like a standard, most merchants are small, low risk merchant that really is the world. And those people, they’re on tight margins and having to shoulder something like that. And I don’t think it’s the card brand’s intent to put people out of business. I think it’s their intent to create a safe credit and debit regime that people can trust and that it’s being accurate and fair to both sides. But I see the way that the card brands are administering and then enforcing these rules violations, and it’s not always, it doesn’t seem equal to me. So I don’t know if you guys see any of that on your level, but that’s one of those things where I feel like it’s the hotbed right now.

Tom Lineen (40:26):

Listen, I think that is definitely one of the bigger ones. And mind you, it has come in. There’s so many different names that I’ve seen out there. So there used to be called cash discounting, and then I think that’s now gone out of favor and now

Christopher Dryden (40:39):

Dual pricing. Totally. They don’t even want to say cash discount anymore.

Tom Lineen (40:45):

I know. Yeah, no, when you say, oh, no, no, it’s dual pricing. I’m like, what’s the difference

Christopher Dryden (40:50):

There, isn’t there? But the accepted terminology at the in Vogue moment is dual pricing.

Tom Lineen (40:58):

Yeah, dual pricing. And you see all these, and you’re right. And so there are some, it’s funny, I used to be very, very active as I sat on a board of a company that did this for government and schools. And that was one of the mandates for most governments in their bylaws is that it can’t take less than a hundred percent of the amount of feed they’re collecting. Property taxes, parking tickets, all that stuff. So to take a credit card, they’d say, Hey, Mr. Consumer, you want to pay me with your amex? You got to pay three or three and a half percent more because that’s your preference. And it’s a hundred dollars fine. You can pay me with cash or that. Okay, you know what, cool.

Christopher Dryden (41:40):

But they’re exempted. Those state actors were exempted.

Tom Lineen (41:44):

Totally.

Christopher Dryden (41:44):

Yeah. That was news until, because I know who you’re talking about, and until I saw that, that was news to me that the state actors, they don’t have the same rules.

Tom Lineen (41:55):

No, and they’re totally exempt. And then even some schools, depending on how they’re set up, some schools are created differently, but some schools were exempt too. But I think, again, one of the things about our industry, which I know you know all too well, and I say you why I think you have such a thriving practice is because the folks in our industry are very creative. They’re entrepreneurial. They literally will find ways. I joke like the ISOs are going to them and the cockroaches will survive on a nuclear war because they just are so amazing at just finding new. And then I hear all these, I’m sure you do too, all these models. And I’m like, is that even legal? Yeah, of course they do. Oh, totally.

Christopher Dryden (42:40):

No, no, no. Look, dude, trust me, man. I mean, there’s all sorts of stuff where they’re pushing the envelope and is this money transmission? Trust me, we see it all the time. And I hate to be a naysayer to people that are trying to be entrepreneurial and find an opportunity. And look, I just think that’s the iso. I agree with you. I said this and I, I’ve met him a couple of times and he probably wouldn’t know me if he saw me, but Jared Eman, Hass been in this business for a really long time, and Jared, I’ve had more interaction with his general counsel, but he was actually really a nice guy too. Jared to me, has always seemed like a really nice guy. When I’ve encountered him, it just comes out of a space. And in my training, I explained to everybody, I’m all, look, there used to be just this thing called the retail iso.

Christopher Dryden (43:29):

And I think one of the guys that really championed wholesale ISO and really found stickiness, I mean, remember the Harbor Touch POS system? I mean, he created it and basically gave it away, but then once you give something free to somebody, even though you might have to charge ’em a little bit more for the processing, he just created the stickiness. And that was one of those entrepreneurial moves that I watched him do that created the ability to ramp to what Shift four has now become as it rebranded. And I think that iso, like you said, they’re going to find the space where money can be made. And that’s actually helped my education in this business immensely because I’m watching people do things in the granular, which we weren’t really exposed to early on. And as I’ve had to understand our clients and what they’re trying to do to give them good advice, to give them some boundaries where it’s required or just say, look, here’s where bright lines are.

Christopher Dryden (44:27):

The rest of this is all gray, and here’s the potential associated with it. It’s been beneficial for us to actually learn payments in a way that I didn’t initially learn when we came into the space. But to me, that raises another question. I don’t sit inside your organization or any of our clients’ organizations. I have at times, I’ve audited, I’ve seen what they look like. I know enough to be dangerous, but I don’t know if I could be kind of an oracle to see where things are going. I am a great emulator as an attorney. I’ve always said, look, I don’t have to be the one that comes up with the great legal theory. I just have to identify it and then reuse it. Where do you see the industry evolving? What is the next thing that may be visible up on the horizon? Or maybe it’s right here right now?

Christopher Dryden (45:25):

I don’t know. I always went to NEA last week and somebody asked me how it was, and I’m all, it’s an acquiring conference. They’re kind of very similar to one another. And they’re, well, what did you get out of it? I said, I get an opportunity to talk to people that I either represent or I may represent and find out in a space where I’m not in my office doing work with the demands of my business to talk to them about their business. And I don’t get that opportunity a lot. I like these podcasts for that reason, because this is a time period that I’ve allotted to just say, Hey, tell me what’s going on. What do you see as the thing that’s on the horizon that you feel like there’s either going to be a challenge or an opportunity out of it?

Tom Lineen (46:06):

Okay, I’ll go back to this vamp program. So if this goes the way that it appears to be going, a lot of high risk merchants, high chargeback merchants, the kind of easy come easy sale, I’ll use your Facebook sale. You’re like, oh, those sneakers look cool, and you buy ’em and they show up on your door. You may not want ’em. You bought ’em at midnight, you don’t remember buying ’em. Who knows, right? So the idea that, okay, I can buy it easily and I can return it or frankly charge it back easily, that will fuel the next iteration of the ISO industry because they can’t live off of high risk merchants and load balancing their book with low risk business. High risk isn’t going to net ’em out the 60 basis points they’re trying to get to or whatever the number is. And so that’s one of the reasons why we created what we did with DART 360 is to say to them, Hey, look, go out and get the main street business that you look at as not very profitable, not very interesting, and then offer them 2, 3, 4, 5 services.

Tom Lineen (47:17):

So you went from making, let’s call it 10 basis points on the merchant account to making 50, 60, maybe a hundred basis points on all these products that they are consuming somewhere else. And that’s it. It’s bundling, it’s hearing embedded finance. I’d like to even take it a step further and call it embedded banking and say to them, Hey, look, they’re in that dashboard every day checking on their merchant deposit. Talk to them about a line of credit, an actual loan, not a cash advances. Those are very challenging to pay back. Do you need a credit card? Do you just need your money faster? And these are products that they’re out there, but they’re disparate. And so you got to put it in one place. So the consumer, the business, and as I said to you before, meet ’em where they are, they’re there in that dashboard looking at their business saying, gosh, how am I going to make payroll next week or next month, or I want to expand my business.

Tom Lineen (48:13):

I’m doing well, and the place next door just went up for lease. I need money. This is what I think is happening and going to happen. And by the way, Chris, other people are doing it. So I wouldn’t say like, oh, I’ve created an entire market. I did what you just said. I saw what was happening. And I said, okay, how can I do this in the world I live in with the tools and the resources we have as a bank? And that story really flushed itself out pretty quickly to say, well, we’re the bank and we still are a community bank is still the respected financial institution that we as kids, we used to go in with our little passbook and put our newspaper money deposited in, and it still is that way, but it’s now online, it’s now digital. And so that’s what we’re trying to do.

Tom Lineen (49:07):

And again, as a bank, so they get a DDA, which is FDIC insured, unlike what happened with snaps where they thought they had a bank account, bank account, but it wasn’t a bank account. And now that money is somewhere in the ether because the FDIC is saying, Hey, that’s not us. The sponsor bank is saying, Hey, we did our job and Snaps is bankrupt and they shut the doors and turn the power off, and there’s a hundred million dollars of people’s money still floating out there that they can’t exactly say whose is what. And that’s not fair. That’s a

Christopher Dryden (49:44):

Awful, you triggered something in my mind too. It’s interesting today because one of the things that I’ve heard is at the processor level, because it changes the dynamic of the architecture of what you’re talking about by almost being bank direct and having an opportunity to work directly with the bank, even if you’re doing it through Westtown payments, ultimately a processor’s always going to be needed. But the fact is is that the processor has been the competitor of the ISO for a long time. They just weren’t the competitor in the processing portion. And now what you are talking about, people can’t even get contracts with Fiserv or Ts I or Worldpay, and it’s much more difficult to be a registered ISO today than in any different time because I think the processors are now seeing them as competition. And so the terms have become somewhat onerous in those agreements because they want to lock you down and kind of control you for a long period of time, whereas that way you can’t go take care of the or, you can’t take advantage of the opportunities that are coming into the marketplace like this because that’s not something that they’re going to offer you.

Christopher Dryden (50:57):

They’re actually going to shield you away and you’re not going to be able to dip your toe into ancillary services that are bundled up that your end merchant might need. In fact, whatever opportunity may be there, they’re probably going to try to cut you out. And so I didn’t even think about it from that perspective until I heard you talking, but I think that that’s actually one of those things that might be a disruptor or differentiator for kind of the DART 360 platform that you’re talking about as a loss leader maybe of acquiring agents and building an agent base where they would’ve traditionally gone maybe and tried to register. It might be a lot easier with Westtown payment and you might have a much more kind of commutative less, the relationship will be less adversarial. It does feel adversarial with the way that the terms get dictated down. A lot of times they’re not usually in favor of the iso.

Tom Lineen (51:57):

It’s the entire industry is, and it has always been changing. You talk to the old garden, I guess I’m part of that now, they always say, oh, the good old days, the good old days, we used to. And I’m like, well, I don’t know. I think it’s all relative. Every stage of my career, I’ve noticed some change. Some things are taken away, some opportunities are presented. One of the other things that you didn’t even talk about, but I know you’re aware of, is that even the card brands are now competing with the processors

Christopher Dryden (52:29):

Who

Tom Lineen (52:29):

Are competing with the ISOs.

Christopher Dryden (52:30):

Totally.

Tom Lineen (52:30):

So now you’re like,

Christopher Dryden (52:31):

You can go to Visa Direct now.

Tom Lineen (52:33):

You totally can. Absolutely.

Christopher Dryden (52:35):

And

Tom Lineen (52:36):

By the way, and I’ve looked at that platform, I’m like, that is compelling. And frankly, one of the other things we didn’t talk about is when you go to become a direct iso, have your own bin and do all the things, it is really expensive. Really expensive now.

Christopher Dryden (52:50):

Totally. But I feel like it’s less prohibitive than it used to be in the past because technology is, there are a lot of smart people that have come into this space to allow for things to be purchased that might, I mean, think about if you wanted to do underwriting and risk on transactions 15 years ago, right? I mean, not only did you need a qualified person, but you needed a qualified infrastructure that could handle all that. And that was not something that was widely distributed. And if you were going to invest in it, it was cost prohibitive. The idea to transition to wholesale ISO or FSP, it was so difficult. And today I feel like there is more opportunity for you to get your foot into that space by leveraging other people. I mean, Stripe still calls itself a technology company. It doesn’t call itself a payments company. So it’s like technology interceded and now they’re saying, Hey, here’s something for you to have an opportunity, have an opportunity, have an opportunity where it may not have been available before, and they’re creating this. I used to always hear ISO in a Box business, in a Box, in a box, but maybe that it actually exists a little bit more today. Alright, so I’m going to give you the last word as we take this away. What’s the biggest takeaway that you want to leave us with about Westtown Payments?

Tom Lineen (54:12):

Boy, I would say specifically for the audience, and I’d call it the ISO agent audience, is that Westtown Payments is not only ISO folks who come from ISOs who now are looking at the world from the bank’s view and now bringing products and services to the ISOs so they can now compete with the likes of the squares and the toasts who are, back when they came out, we all looked at them and said, oh, that’s not competition. They are unequivocally competition to the ISO and agent today. And we’re helping these folks go in and win back the business that they lost or are losing or couldn’t even compete for in the current market. And that’s really where we sit and what we’re trying to do. And now that we’re really settled with a partner, a bank that is here for the long haul, we literally just celebrated our hundredth year anniversary and we’re looking to create the next hundred years for this bank through the payment ecosystem. They should definitely take a look, reach out, love to show you what we’re doing, and hopefully we can help them grow their business and turn ours.

Christopher Dryden (55:41):

Alright, well look, thanks for sharing my coffee with me this morning, Jeremy. Jeremy loves to get himself here on the podcast any way he can. He doesn’t want to be behind the scenes. He wants to be over here, so always I got

Jeremy Stock (55:53):

A camera right off. He usually has

Christopher Dryden (55:56):

A question going, but do you want to ask anything, Jared?

Jeremy Stock (55:59):

No. Tom, is there a way you want people to reach out? To find you? I want to say just I feel like a listener here. I learned a lot on this podcast today and I think it was a great conversation, so I really, really appreciate it. And Tom, maybe sometime down the road, we’d love to have you back as well.

Tom Lineen (56:15):

Hey, listen, I love it. Certainly my relationship with Chris has spanned a couple decades now and we’ve watched not only our hair turned gray, but also this industry evolve. And so yeah, man, happy to, especially as we look down the road of at the end of this summer, like I said, this visa rules going to come into play, it’s going to change the landscape. There’s a bunch of other things, AI we didn’t even touch on.

Christopher Dryden (56:42):

Yeah, maybe that’s the next podcast. I’d be interested to, to hear of a bank-centric discussion about AI and the tools that are available and how it may be leveraging that. By the way, everybody, Tom lives in Park City, if anybody wants a snow report, you can always hit him up too.

Tom Lineen (57:01):

There you go. Well, you can also go to Facebook and follow the powder buoy who’s a buddy here in town. And I’ve never seen a more accurate predictor of when the powder’s coming. And if you follow the powder buoy, you can also follow my calendar and know when I’ll be out of the office and when I’ll be in the office. But no, I’m happy to love to talk to you guys. I’d say the easiest way to get in touch with me without any barriers is just find me on LinkedIn. I’m very active on LinkedIn. I joked to someone the other day that there’s only two, maybe three Tom Lineen on LinkedIn. The other guy is a rugby coach in Australia, and the third one owns a construction company in Ireland. I’m neither of those. I’m the Tom Lineen that’s in payments.

Christopher Dryden (57:48):

That’s great. I’m the Tom Lineen with the best hair.

Jeremy Stock (57:53):

Sounds like the best winner schedule. Tom, it was a real pleasure. Thank you, Tom. Absolutely. Gentlemen, thank you both. This was an excellent conversation and thank you for listening to the Payments experts. Podcast. A podcast of global legal law firm. We’ll see you on the next one. Alright, thanks Tom. Gentlemen, take care. Thank you for listening to this episode of The Payments Experts Podcast, a podcast of global legal law firm. Visit us online today at global legal law firm.com.