PEP Episode 048 — Selling Dreams Not Terminals: Tuzo Rewards Surprising Revolution in Payment Processing

Introduction

Jeff and Hersh Moskowitz  share how their payment processing journey led to the creation of Tuzo (https://www.tuzorewards.com/), a revolutionary rewards program that helps ISOs build stronger merchant relationships and increase portfolio value.

• Started in point-of-sale systems in 2009, primarily serving convenience, liquor, and tobacco stores
• Pioneered dual pricing/cash discount methodology around 2012-2013 following the Dodd-Frank Durbin Amendment
• Developed Tuzo as a solution to the “race to zero” pricing problem plaguing payment processors
• Created a rewards program where merchants earn points based on processing volume that can be redeemed for luxury items and experiences
• Merchants willingly accept higher processing rates to participate in rewards programs
• Merchants activate faster when earning rewards and are less likely to switch processors
• Sales process transforms from selling processing to “selling dreams” with rewards as the focus
• Positive touchpoints replace traditionally negative interactions between processors and merchants
• Book values increase with rewards implementation due to increased merchant stickiness
• Merchant relationships strengthen when processors help fulfill aspirational goals like vacations or luxury items

Imagine turning every payment transaction into a positive experience for both merchants and processors alike. That’s exactly what Tuzo Rewards has accomplished with their groundbreaking merchant rewards program.

Jeff and Hersh, the founders of Tuzo Rewards, take us on their journey from point-of-sale system developers to payment processing revolutionaries. After pioneering cash discount programs following the Dodd-Frank Durbin Amendment around 2012-2013, they recognized a fundamental flaw in the payment processing industry: the only time merchants contacted their processors was when something went wrong, creating an inherently negative relationship dynamic.

Their solution? Create a rewards program where merchants earn points based on their processing volume that can be redeemed for luxury watches, vacations, electronics, and more. The results have been nothing short of transformative. Rather than competing solely on price in the endless “race to zero,” processors can now offer something genuinely valuable that competitors can’t easily match.

Perhaps most surprising is how this program has reversed pricing trends. Merchants are willingly accepting higher rates (often moving from 3.5% back to 3.99%) just to participate in the rewards program. This creates a win-win scenario where merchants receive tangible benefits they truly value while processors maintain healthier margins. For ISOs and agents, the sales conversation shifts dramatically from “Let me save you money” to “What rewards would you like to earn?” – turning transaction processors into dream facilitators.

Ready to transform your payment processing business with a solution that creates positive touchpoints throughout the merchant relationship? Discover how Tuzo Rewards is changing the game by visiting tuzoRewards.com or reaching out to Jeff@tuzoRewards.com and Hersh@tuzoRewards.com.

Transcript

Jeff Moskowitz (00:00):

Explain it, show it to me. And me and Hirsch walked into his office, we showed it to him. We had a contract signed within 20 minutes, and he’s been totally, look, dude, he’s been pushing it day one. It’s crazy.

Christopher Dryden (00:10):

I tell people all the time, right? The law is a slow moving beast in many respects. And there are some areas of the law that they’ve got periodic changes to it. Employment law, right? I mean, there’s things that do change. They move a little bit here and there. Nothing moves like payments, like what I do on a daily basis. Next week I’m going to look, I’m going to ETA next week. I’m going to learn something that I didn’t otherwise know probably. And again, it’ll change. Look, I do these podcasts. We did a podcast this morning with Bryce from our office about something related to the match list that I learned that was new this week.

Jeremy Stock (00:51):

Welcome to the Payments Experts podcast, a podcast of global legal law firm. We hope you enjoy this episode.

Christopher Dryden (01:05):

That’s right. Tell us about yourselves. Tell us about Tuo.

Jeff Moskowitz (01:08):

So yeah, so we’ve been in the payment space for, I mean years, since probably about 2009. We started in point of sale systems. Back then, there weren’t that many options in terms of integrations. The ISV game hadn’t really started so much yet, and we kind of jumped into payments as an aside to what we were doing elsewhere. And in building that, we learned a lot about the industry. And fast forward to like 2012, 2013 ish, when the Dodd-Frank Durbin Amendment situation took place, we realized that there was an opportunity and we kind of went to a bunch of processors and were like, guys, we want to pass the fee to the customers. And they all essentially told us that, can’t do it. No one’s going to do it. It’s crazy. It’s never going to happen. And one processor, a company called Jet Pay at the time, said, oh, if you guys could figure out a way to assess the fee on the front end, we’ll take care of the backend. So we built a gateway in partnership with Jet Pay, and that was kind of the beginning of this massive movement of dual pricing, cash discount, whatever you want to call it today. So that’s kind of how we got into payments. Since then, we’ve grown of

Hersh Moskowitz (02:23):

Business at the time, Jack, things like that. At the time, sorry to cut you off, the terminals didn’t have a way to assess the fee. You couldn’t just take a PAX terminal or an Equinox or Verifone and just add a fee to run a card. So we had to come up with a methodology to pass a fee to the customer in a way that hadn’t been done before. That was the uniqueness of it at the time.

Christopher Dryden (02:52):

So when you guys were in POS, what were you doing in the POS space? Were you doing hardware, software, both because I understand being in payments, kind of the evolution of what you just described, but we try to do this podcast for people who may not have any clue about payments. And so understanding what that natural progression was that you saw in the marketplace, but what were you doing specifically with POS?

Jeff Moskowitz (03:23):

We started with a custom POS software that was being built specifically for convenience, liquor, tobacco stores. There wasn’t really anything for those markets at the time. This was back in 2009, 2010, there was a very limited offering for those specific merchants. So we built out and helped build out an entire point of sale system from the ground up. In doing that, payments was kind of like a aside. We built a system, we started putting it in and people were like, okay, how do I process my payments? And we were like, I don’t know, I no idea. And then all of a sudden we were looking around and there was one processor, who was it? Hershey, mercury. Mercury.

Hersh Moskowitz (04:07):

Mercury was the player in the game when it came to point of sale integrations, right?

Christopher Dryden (04:12):

Well, they’re a technology company, in my opinion, less Southern Payments. They seem more like a tech company.

Hersh Moskowitz (04:19):

They got acquired and then I think they got acquired by vantive, and then Vaniv got acquired,

Christopher Dryden (04:27):

But they never integrated with Vantive. That was the interesting thing. The culture of those two organizations were so different. And I think it’s because Banta was a payments company and Mercury was a tech company more, and they never, not even their legal departments, they never integrated. And the idea was to consolidate and integrate and they just couldn’t. So

Jeff Moskowitz (04:48):

Interesting. Yeah, I mean it’s a fascinating thing, but we basically, we didn’t know anything about processing. Merchants were like, okay, we got this point of sale system, we love it. How do we do payments? And we were like, I don’t know, call your payment processor. And they were like, no, we want it integrated. So we called Mercury, we worked out a system, we integrated it in, and then we were like, wait a second, we could get paid for their payment processing. That’s crazy. How does that work? And then we started learning about it. We were like, this whole residual game is crazy. How did we not know about this? And we spun up an entire side of that point of sale business, which was literally focused on bringing the processing. So we spun up an iso, and at the time I think we were a referral agent actually, and we grew from there. But it was a time where we literally knew nothing about payments when we came into it. It was totally a side gig.

Christopher Dryden (05:43):

So describe for our listeners what or viewers, I guess too, describe what integration is because I think there’s this technology that takes place with payments, and even though people operate in it almost on a daily, I mean, we’ve got a firm management software system that has an integrated payment. We can’t even build an API and choose our own partner to actually build in and integrate between our partner and the firm management software. So we’re stuck with whoever we get, but it’s an integrated solution. And there are people in our office that use it on a daily basis, but if I said integration to them, they would have no clue what I’m talking about whatsoever. So for them, if they happen to listen to this, tell ’em what an integration between a point of sale system is and payment processing.

Jeff Moskowitz (06:34):

So there’s the terminal, that’s that little box that sits on the side of the register in most cases that has two ways of working. You could communicate directly over the internet to a payment source or the point of sale system. The firm software, when I put in a number that needs to be paid or an invoice that needs to be paid, it can then send that request to a payment terminal or to an invoice software and then shoot it out for the customer to pay. An integrated solution essentially means that there’s no second step. I use my point of sale system or my software or my tech or whatever I’m using. And when I go ahead and request payment through that, it automatically turns on that terminal or shoots out that invoice or whatever it is that’s happening in order to get that payment brought in. But the thing is, whoever created that software is running that processing. So today, the ISV world is full of these. Toast is a prime example of it. There’s a lot of people who love it, hate it, whatever it is, but they can’t get away from it because once you get in there, your entire menu’s loaded in and now you’re stuck trying to figure it out.

Hersh Moskowitz (07:44):

Competitors that are agnostic, you have a lot of competitors to that that are agnostic. And you probably have legal management softwares that don’t require you to use a specific credit card. No,

Christopher Dryden (07:55):

No, because we’re not as prevalent as a restaurant. Got it. I think people have seen agnostic solutions as a way to get in to say, look, this gives you flexibility. We can do an integration. I have not seen that because we’ve gone, we’re testing multiple ones all the time just to see if we want to switch off where we are. And we ask the same question every single time. It’s like, look, we’re payments lawyers. We don’t want to be stuck with your solution. And it’s one size fit all. I mean, it took us a long time for the, because here’s the thing. Stax bought our firm management software, and it was the first time I’d seen a payments company buy a software company. And it was like that reverse in. And only when they knew who we were and what we did did they let us negotiate the rates. But only then, and now we’re with another one, and they’re far more sophisticated and malleable on the software side, but on the payment side, they wouldn’t let us do anything we asked. It’s interesting, but you were saying before that kind of your lead in related to coming up with Twoo was seeing an opportunity where you could pass the fee off to the consumer.

Christopher Dryden (09:19):

Urban was kind of like an entry.

Hersh Moskowitz (09:21):

That wasn’t Tuesday. That was Tuesday, that was cash discount, dual

Christopher Dryden (09:24):

Pricing, I’m sorry, excuse me. But on the idea of being able to push off, this is a really big subject matter on what we talk about, on the opportunity to see that you could actually take the fee and push it along, go back to that. I think that’s important too. So

Hersh Moskowitz (09:44):

It’s really interesting because at the time, people weren’t really doing it. The law had changed, but people weren’t taking advantage the way we created to do it. I haven’t even seen it done again this way since then. We had a tiered pricing schedule where what would happen is we integrated to terminal where the terminal before the transaction would complete, it would go up to the gateway. It would assess a fee on the total of the transaction, but we are doing it in a tiered way where it was from zero to $5, you pay this fee, five to $10, you pay this fee, and the customer would have a pricing schedule that he would put on there. We really wanted to hold by the cash price and the credit price and do it in a way that at the time, there wasn’t really anyone doing it.

Hersh Moskowitz (10:32):

So we did it in the way that we saw fit. But what was really interesting about cash discount in the beginning is people thought we were crazy. They’re like, nobody’s, nobody wants to pass the fee to their customer. Nobody’s going to do that. It’s not possible. Even the processors, we’re in an industry that’s kind of adverse to change in many cases, and only from Covid did cash discount, dual pricing really boom to the moon. Everything was getting hit with fees during that time. So then businesses were like, okay, well we’ve been closed, we need to open, we have a very good reason to pass this. But what they didn’t realize is it wasn’t going to change their business before and only their mindset changed that gave them the ability to start doing it now, where they’re like, okay, this will work.

Christopher Dryden (11:22):

Well, I mean, it was a rent. The interesting thing was kind of watching the evolution of Cardex and Jonathan Razzie, if you guys know Jonathan, because that was my introduction, was meeting Jonathan. He spoke at one of the acquirer shows, and this is 2016, maybe they were

Hersh Moskowitz (11:39):

Street surcharge, right?

Christopher Dryden (11:41):

And he’s just a nice dude. So it got into talking to him and how Cardex was actually pushing the change to surcharge, right? Because the surcharge cash discount to me, they roll hand in hand. You can do cash discount without surcharging, but it makes a lot more sense to actually build in the fee and kind of how New York’s legislation now works, which is list price is usually inclusive of any and all fees other than tax and freight charges or whatever, and then you do a cash discount from there. You guys could kind of looking at it from the other end, but my first interest was less that because the fact was because you had so much prohibition, legally it made sense as a lawyer. Oh, okay, well there’s a problem with the marketplace here and it’s a problem In the way that Cardex approached, it was multifaceted. They did lobbying and they got some laws changed through the lobby process. They did litigation related to challenging it on First Amendment rights. So it was really interesting to kind of watch how they were trying to influence the subject matter in and of itself. But I think that what you just said about there’s this idea, and I think the card brands, the adversity to the change is that they didn’t want anybody to fucking know this, right? They didn’t want people to know that there was ultimately this much charge going into their use where businesses were suffering, but also stuck in that quandary of if I pass it off, am I going to essentially lose customers because now they’re paying more? And is my service really that good? I mean,

Jeff Moskowitz (13:28):

It

Jeff Moskowitz (13:30):

Was actually multifaceted because there were two issues. Number one, you have the merchant side of this, but then you have all these people selling, processing, all these ISOs and sales agents who are on the street and they’re struggling because they didn’t have anything to sell. You’re talking about a commoditized product. Everyone’s effectively selling the exact same thing. I’m selling this terminal, you’re selling this terminal. My pricing is this, your pricing is that the only place to have any space to move is really on the pricing side. And the problem was for sure, before cash discount was this massive race to zero. That’s number one. Everyone was undercutting everyone in order to get business. It happens to be, we’re seeing that issue today, even in dual pricing and cash discount. Because back in 20 15, 16, 18, dual pricing was at 3 99 across the boards. That’s what everyone was charging.

Jeff Moskowitz (14:20):

And now you see people who are at 3, 7, 5, 3, 5, 3 and a quarter three, and it’s always this constant race to zero. So that’s an issue that we’re seeing from the merchant side and the acquirer side. At the same time, merchants want a better deal and the processors are trying to make more money. So you have this weird balance that’s trying to happen at the same exact time, and that’s where tzo rolls into it. But there’s a million challenges in the space itself besides just that race to zero. I mean, when we had our iso, the biggest issue we had was every single time we talked to our merchant, it was because they were upset about something. You have so many merchants, the only time you’re talking to ’em is they call up and they’re like, Hey, I didn’t get my batch. You suck. I’m like, well, that’s not even me. That’s the bank. I didn’t even do that. I’m going to try and help you as much as I can. But the problem is there’s only so much we can do as whether you’re a referral agent or a full blown iso. There’s limitations to our ability to help. So the inability to talk to your merchants on positive things, like most businesses revolve around positive touch points, but in processing all the touch points are negative. That’s ridiculous.

Hersh Moskowitz (15:36):

All the touch points, not all of them. Okay, we’re looking at a balance here. What happens in the prospecting process, you sell a customer, you get ’em live, you’re moving on to sell the next customer, and the likelihood is he’s not calling you to tell you that he’s really happy that he got his money this morning. So ultimately, you have this situation where we are providing value, even if it’s commodity, there’s a value to your insurance broker. There’s a value to your ISO partner. And if they do a good job and serve you well, that’s the key. And

Christopher Dryden (16:12):

You pick up the phone. I mean, I know Jeff pay race to the bottom, I know the race to the bottom, and I get that. But at the same time, I do think that what differentiates many ISOs from another is how you service the customer and trying to make that negative touch point into a positive experience.

Hersh Moskowitz (16:34):

How do you do that?

Christopher Dryden (16:35):

No, no. Agreed. And look, I try to be a customer service guy and what we do at the same time, that’s a tough balancing act of, yeah, but I charge for my services at the same time, and I do want to listen to what you have to say, but you’re also complaining because you’re not paying me. And so now you’re creating this adversarial relationship with me, which doesn’t need to be there. Just look, tell me you’re not going to pay me and we’ll just move forward. But I get that point of it. But at the same time, I mean, what other things are there out there for the ISO that you experienced? Because obviously this led you to tzo, but there are other things that could have made the relationship a little bit more positive. And I think getting your feedback on this, Hirsh is important. A lot of guys that find themselves now in the same position that you felt you were in then.

Hersh Moskowitz (17:37):

So here’s the thing. I feel like I’ve, in my career, served my customers well, and I’ve done a good job of trying to communicate with them, give them benefit, provide them value, make sure they’re heard when they have a problem or an issue. But ultimately what it comes down to is they don’t really truly have that connection or that reason to stay. The relationship is not as strong as it should be because ultimately they’re constantly getting pitched. And all it takes is one person to have that moment where they’re like, okay, I’ll try something different. But the uniqueness that I bring may not shine always through. And yeah, I provide value and I provide, you could provide them a consistent payments, but then they have a chargeback and they’re upset about it. And yeah, you might have a good relationship. They like you, they think you’re a nice guy, but if their money’s at risk or they had a problem and they feel like it’s partially your fault, even if it’s not you’re, you’re dancing and in troubled waters, right?

Hersh Moskowitz (18:45):

And it’s not what you want to be doing with your customers. And I, I don’t know if I’m jumping ahead, but everybody is talking about retention in my mind, I’ve heard it a lot at the show, stickiness, stickiness, retention, and everybody’s talking about, we have ways to identify when our customers are at risk. We have ways to look at like, oh, we could tell that this customer’s volume’s off or we’re using AI to predict when our customers are at risk of attrition. So retention is at discussion, but the question is what do we do? What do we do that throughout the entire lifecycle of this business, we could change the way that we engage our customer and build that relationship. And I really think that’s what tzo does, is it changes the lifecycle. It doesn’t just change the acquisition, and it doesn’t just change the relationship throughout or the retention side of it. It changes the way your customer looks at you. And I think that’s priceless.

Christopher Dryden (19:51):

So that’s a great lead in. Tell us what two Zero does. So people out there know, I personally believe when I listened to what little I knew about it, when you guys described it to me in Chicago, it was really kind of different. I mean, it wasn’t, but you guys have a spin on it, which I appreciated. So tell everyone,

Jeff Moskowitz (20:12):

So everyone knows what rewards programs are. You fly Delta, you fly American, you fly united, you’re going to earn miles for flying with that airline, right? The same thing’s true about using your Chase card or your Amex card or whatever that card is. What we’ve done is we’ve spun that and flipped it back onto the merchants with the ISO relationship. ISOs using Twoo can issue reward points to their merchants for their processing volume. So just to give you a simple example, I’m a merchant, I process with Chris’s processing, right? Chris, you have this processing program and you offer rewards. You could offer your merchant 10 basis points of rewards, 20 basis points, 30 basis points, whatever you want. You have complete control over how you offer the earn of rewards. And then me as a merchant, all that’s happening is I’m constantly earning on every transaction.

Jeff Moskowitz (21:07):

So every time someone comes in my store, I’m earning points. And then what we’ve done is we’ve built an entire platform that allows those merchants to a see how many points they’re earning on a daily, weekly, monthly basis. And they can log in and see that all the time. And because it’s agnostic, we’ll work with any processor. I don’t care what their backend is, I don’t care who they’re processing with. It’s all the same to us. And as those merchants earn those points, they can log in and redeem them for literally thousands of items. I mean, the whole thing started with this insane story where, I mean, Hirsch and me, we had an iso. We were trying to sell processing, and we came across this merchant who he was processing like $750,000 a month. He had a restaurant or actually a group of restaurants and Hirsch pitched the guy on dual pricing.

Jeff Moskowitz (21:53):

And the guy was like, yeah, this is amazing. I’m going to save a fortune. This is fantastic. I need a point of sale system. So we spent hours and weeks getting him demos of different systems and all this crazy stuff, and the guy’s like, okay, I’m done. I’m excited. Let’s move forward. I just need to talk to my wife and my partner. Let’s close this up next week or the week after. Fantastic. We reach out to him a week later, two weeks later, whatever it was, and the guy’s like, you’ll never guess what happened after we spoke, some guy walked in, he told me that he has the same point of sale system and he would offer me the exact same 3.99% to my customer. I don’t have to pay any fees. So I signed up with him. Isn’t that great? And Hersch was like, what? That was like 120 grand in residuals a year. It was right there. It was like

Hersh Moskowitz (22:38):

Death. It was a real hit.

Jeff Moskowitz (22:42):

So being that he’s really smart and fast on his feet, he said to the merchant, he said, let me ask you something. You told me you’re looking for this Rolex watch that you really want. I’ll make you a deal. Tell that guy to jump in the lake, come back to me and in six months I’m going to hand you that Rolex for free. And you know what the merchant said, what? Are you serious for free? And her’s like, yeah, for free. He’s like, done. And that’s what tuo offers. Imagine being able to walk into a merchant as a sales agent and say, Hey, I see you’re accepting payments. That’s really cool. Are you happy with your rewards? A merchant says What rewards? What rewards? What the hell are you talking about? No,

Christopher Dryden (23:20):

No, no. This is a great thing. And I don’t know if you guys were aware, but I don’t know if I could cite it, but you can’t kick back as an ISO to your merchants. And so this is a really good way to actually invest in things that create loyalty with you and your merchant in a way that’s redeemable without you having to the rules or kick back money to them on our app just

Hersh Moskowitz (23:48):

From a present at the end of the day. And they could choose. And here’s the really crazy thing, Jeff mentioned prospecting. So you could walk into a business and yeah, you’re going to win that conversation, selling them something that the 50 other people walking in their door that month are not selling them. You’re selling them somebody totally different. Once you have them signed up with rewards, they’re earning towards something, they’re not leaving. If they’re earning towards a trip to Cancun, they’re not going anywhere. Meaning if I have 18 more months to go on my dream vacation and I’ve already earned for 18 months straight, I’m working to get that goal. Or if I wanted a specific watch or a specific thing that I’m going to earn and I know I’m going to earn it, I’m working towards that with my partner. And if they call with a problem, you know what?

Hersh Moskowitz (24:45):

You want to give him a couple bonus points to make him feel better. You could do that, but he’s working towards his outcome with you, and once you’ve given that to him, he’s your customer forever. So you have him hooked while he’s earning, but once you’ve sent them on that trip, you mentioned this earlier, pick up the phone and call your customer. But what do you have to talk to them about now? You could be like, how was the trip with your wife? Oh man, it was amazing. She had the best time. We finally got a chance to relax. It’s been two years since I’ve been on vacation. It really was amazing. Thank you so much. Appreciate you facilitating that for me. And when that next person comes in to sell them, where are they going?

Christopher Dryden (25:24):

So as an agent or an ISO that I can give to my in-house people or even sub-agents that I deal with, what are the bells and whistles of twoo that is being able to be offered? So I’m going in and I understand that there’s a rewards program. I’m not much of a salesperson, but at the same time I’m thinking, okay, well what is the hook, right? I mean, not just that you have rewards, but you have particular types of rewards. When you’re working with selling to ISOs about here’s all the benefits to dozo, are you also assisting them in the benefits to Twoo that you see that are really important? And what are those so people will know?

Jeff Moskowitz (26:02):

Yeah, totally. There’s a few things. Number one, it’s not just about giving rewards to a merchant. That’s a really great thing, and merchants are really excited about that. And we do have a ton of categories from luxury watches and trips all the way down to big screen TVs and gift cards. There’s a huge array of products, but more than that, it’s about engaging the merchant in positive touchpoints, right? That is one of the key functions of what twoo is offering those positive touchpoint. Every single time that merchant logs in and sees ding, ding, ding, ding, I’m earning more points, earning more points. I’m earning and earning and earning out every single transaction that happens in my business. I’m excited. But not that the merchant can choose to use those points for a lot of different things. We’ve had scenarios where merchants asked us, Hey, can I use my points to give bonuses to my managers?

Jeff Moskowitz (26:52):

We were like, wow, that’s a really good idea. Another guy’s like, Hey, can I use my points to do giveaways for my customers? I’m going to give away an iPad once a month. I’m earning all these points and I have these iPads coming in. So you’d shop at my pizza store and I’m going to enter you in a drawing to get an iPad. Think about what that does to the consumer, to the merchant’s ability to engage their clientele. So it’s really more than just offering reward points. It’s offering a mechanism to enable that merchant to gain something that they really, really want to need across their entire sales spectrum as part of the deal. And then tie that into the fact that the reason they’re getting those points is because my processors the best and he loves sending me stuff and sending me on vacation and taking care of me. I’m not going to go anywhere. Even if someone comes in with better pricing, that’s not a sale anymore, right? It’s totally

Christopher Dryden (27:48):

Different. So you just said something really interesting to me. I apologize for getting you out, but I don’t want to lose this thought. Yeah,

Jeff Moskowitz (27:52):

Go for it.

Christopher Dryden (27:54):

One of the things that I see in payments these days is people trying to get a deposit account relationship with people and maybe marry that with payment processing, but especially in the cannabis industry, trying to find a deposit account. Not always easy. The big banks stay away from marijuana related businesses. And one of the things when you have somebody in the banking environment is for all of those MRBs, you can set up a debit card program and that debit card program, you can actually load people’s wages onto that and pay them so that you’re not giving them a physical check or doing an aach H to their bank account. You’re just dumping it into a debit card which is tied to them and the bank account that they might have at the bank because there’s a banking relationship there. So the thing that just based as that as a model, the thought that I just had was is there a functionality for the merchant to the customer within the TSO environment to actually almost bootstrap in their own rewards program down to their merchants so that they’re now not only receiving rewards based on their volume, but running their own rewards program that’s somewhat easy to manage based on the tzo software that they’re already accessing and interacting with.

Jeff Moskowitz (29:08):

So we are releasing updates over the next couple months. We have a very large one coming out this summer, and in there there’s going to be a whole slew of new tools that are going to be available both to the ISOs and the merchants at the same time, there are conversations that are happening about expanding the ability for TUO to offer all kinds of cool things to a merchant, and then the merchant’s customers subsequently, the biggest ones right now are the things we mentioned before, things like bonusing your employees, but from a merchant to the consumer relationship right now it’s really focused on the rewards themselves, but who knows what the future’s going to bring? I wouldn’t belittle it.

Hersh Moskowitz (29:49):

We have a lot of ways that this product can grow. Really getting the core of what the ISO needs to get their merchant engaged is our primary focus because we were just talking about retention and everybody’s highlighting this idea of we need to determine where we are at risk, where are our customers that are falling off, and how do we step in before something happens? But at the end of the day, retention is a symptom. It’s not the cause, right? Retention happens, retention issues happen, attrition happens. It’s not the cause of the problem. The problem is festering from before then, and you’re trying to catch it here at the end and say, we are identifying customers that are at risk and we’re going to try to resolve it, but you need to have a way to do that. And further than that, don’t wait till that point to try to save your customer.

Hersh Moskowitz (30:50):

What really needs to happen in the cause is engagement. And I think a lot of this comes down to building that stickiness, building that loyalty because you have, if you go out into the world outside of payments, and you look at any retail business, you look at any provider, they all have loyalty integrated into their platforms. They have loyalty systems, whether it’s getting a gift card to my business or some loyalty platform that engages their customer and drives that continuation of ROI from that customer. It doesn’t exist in the payment space. Well, it does now, but it didn’t exist in the payment space in a way that ISOs could capitalize on utilizing it. Think about it like frequent flyer miles, but for credit card processors to give to their customers. So if payment experts podcast was an iso, it would be frequent flyer points or frequent processing points from payment experts podcast processing company.

Hersh Moskowitz (31:52):

So you’re essentially taking loyalty, which is clearly a need in retail service and everything else that we service, we service that and we’re providing the loyalty, the ISOs providing the loyalty tools to the merchant to give to their customer, but nobody’s providing the loyalty tool to the merchant for the merchant to receive that benefit. And that’s what the ISOs need. They need that relationship. They need that engagement to be able to tell their merchant, I’m giving you more than a commodity and I’m your partner. I’m not just giving you a thing where you get your money in the morning like I’m here to make you more successful and to make you happier and to give you more benefit from my service than anyone else give you. And I think that’s when you could pick up the phone and ask your customer, how are the gifts that you bought your family for Christmas or how was the trip you went on and really have a conversation that’s not centered around the business anymore, but more about them. I think that’s where you’re winning. And you could give someone a hundred bucks, it disappears today, but when they could work towards a goal and know that you provided that to them and they benefit from that, I think there’s a really something powerful to that.

Christopher Dryden (33:09):

Yeah, I like that last part, what you just said, because every time that dude looks down at his watch, he remembers you, and it is the symbol of it, right? Because cash is fungible, you remember it, you don’t remember it, right? I mean, I don’t know how much my mom gave me in my birthday card. I do know, but it’s that idea that it’s something a little more unique than a frequent flyer mile, right? I mean, because it is towards some actual good or something that’s an experience that you will remember and what contributed to it. I like that personally. I think that’s the winner sales pitch right there.

Jeff Moskowitz (33:51):

Yeah, I mean, we’ve actually seen ISOs using that as an engagement tool. They’re telling their merchants, Hey, when you get that reward, take a picture of it with you, send it to me, and I’m going to give you 10,000 more points just for doing that. Because the ISOs now engaging new customers with, Hey, here’s Bob, got a watch. Look at Bob with his watch, and Bob’s smiling with his watch. He’s all excited, and now they’re able to show that to the next customer and say, look what I did for Bob, I could do that for you. So it’s not just the engagement of the customer, the initial customer, it’s leveraging that engagement for future customers. We have ISOs who are offering bonus points if you submit a referral, that’s a really cool way to use the platform to engage your current customer base and grow it, because now that customer is super incentivized to help you grow your business the same way you’re helping him get gifts for Christmas for his family or get him the Cancun vacation or the Rolex watch or whatever it is that he’s choosing now. He’s helping you grow your book. That’s wild. And he wants to help you because he’s benefiting from it in a way that you couldn’t offer before. You offer the guy 300 bucks, 500 bucks for a lead, I’ll take the 500 bucks, but am I super incentivized for 500 bucks? I don’t know. No.

Christopher Dryden (35:18):

This is where I think you guys are fascinating because you brought up it when we started insurance, and the thing about insurance is having a good broker is because either you don’t understand or you don’t want to take the time to learn the fucking insurance policy, which is not meant for you to be able to read as a normal person, right? As a lawyer, I have a hard time reading it, and that’s really what it is, is for somebody to sit down and explain to you in layman’s terms, here’s your coverage, here’s your cost, here’s a few bells and whistles associated with it, and that’s the utility and it’s worth paying whatever the commission is over for the origination of the policy and the renewal. I get it. This is the same thing, and it’s doing it in a way where you’re finding in a commodity, a retention or a value function for retention that you’re going to be able to stick with people and you are essentially giving them something that they wouldn’t have otherwise known of to a, it’s not just earned rewards, it’s a way to actually manage your business because what they’re doing with you, they can equally do downstream to their customer.

Christopher Dryden (36:32):

And then you’re now creating, like you said, Hirsch some level of relationship with the merchant around something that would just be nondescript, like going to the gas station. You’re not really choosing who you go to buy gas from other than seeing the sign and looking at the price potentially. And I mean, I really find that this is a value that it goes beyond price, which is great.

Hersh Moskowitz (37:00):

And that’s what we’re trying to get away from is at the end of the day, you have a lot of ISOs that are very quick to walk into a business. And this is a great story. We had an ISO call us. He had a customer he’d been trying to sign for a year. He went to the guy, the guy was at 3 9, 9 dual pricing. So he said, I’ll take you to three and a half sign with me. The guy’s like, okay, cool. Yeah, three and a half. That sounds good. Well, calls his current processor, the merchant does and says to the processor, I’m leaving, why are you leaving? Somebody took me down to three point a half percent charged to the customer, okay, I’ll match it. Oh, I don’t have to leave and you’re going to match it. Cool. Click, call the guy back. Sorry, no, go. My guy matched a three point a half percent. So what did they just do? They took 50 basis points and they threw it in the wind merchant’s not getting it. ISO is not getting it, and the consumer is saving 10 cents. Great. It’s a complete wash. Now what happens with tzo is, and this is the exact scenario, is he went back to that business after a year of prospecting and pitched him on rewards, and the guy didn’t just switch, he switched at 3 99, he brought him back up to 4%

Christopher Dryden (38:16):

Because he’s incentivized, right?

Hersh Moskowitz (38:18):

And what would he have done with that business that’s now three point a half percent? He would’ve gone and be, I’ll take you to 3%. And then the ISO would be like, I’ll match 3%. Hey, you got the phone click and the same thing over. But what did he do? He offered him something no one else could offer him. And when that guy called up his current processor and said, I’m getting rewards. I don’t have rewards to offer you, right?

Christopher Dryden (38:39):

You guys took something and superimposed it in an area of the architecture of payments that wasn’t being serviced. It’s fabulous. I really do. But in your day to day, what do you see as the biggest challenges that go on in getting people? Because look, I see you guys at the shows and I talk to you and you’re like, oh yeah, we’re going out to dinner. You guys are busy. I mean, nobody really wants to talk to a lawyer at the show. So I see you guys are hustling and you’re busy, but what do you see as the biggest challenges to really getting people to convert over to what you’re offering?

Hersh Moskowitz (39:16):

So I guess I’ll lead with this, but I think one of the biggest challenges and everybody’s super excited when they hear about it. I think the industry is kind of slow to change in general. I mean, we’ve seen amazing traction so far with this product. I mean incredible growth, but I think a lot of ISOs get really excited and just don’t take the time to implement it and really test it out. They get caught up in the day-to-day and they got so much going on and they’re dealing with their reps and they’re dealing with this fire and they’re dealing with that fire. And until they take the time to really meaningfully put it into their sales and lead with it and implement it into the retention departments to make sure that when a customer calls and he’s not happy, you’re enrolling him in rewards and getting him back on track.

Hersh Moskowitz (40:11):

All those aspects, if you don’t dive in, you won’t get the benefit. And what we’ve seen is people who dive in and use this, they’re winning more conversations, they’re closing more business, they’re customers are activating faster. We didn’t even talk about that, but we’ve heard from our partners, and it wasn’t even something that we recognized as a pain point in the beginning, but that time to activation from when a customer goes and signs a contract until they put that terminal live, you have a lot going on. You have their current processor trying to hold the business and stay the line and keep the guy. He’s got all different things to turn it on, but if he knows that he’s missing out on something he could be earning, he’s going to actively faster. So you have your winning more conversations, closing more business, activating faster, keeping your customer longer.

Hersh Moskowitz (41:04):

And once you have that customer in, and if you have other customers, you could upgrade them. So you could go to your current existing book and you can get them from three and a half to 3, 9, 9 and all the way through the life cycle to that retention point where a customer calls and he’s not happy. You can give them benefit all the way through. If a guy’s about to leave, you could say, but you have 20,000 pending points sitting in your account, you’re going to lose those points if you leave. You know what? Why don’t we give you another 15,000 and let’s try to work through this together. And ultimately using this tool not just in one aspect as a lifecycle product for an iso, we’re seeing incredible results. It’s just the biggest challenge is getting people to jump in headfirst.

Jeff Moskowitz (41:48):

I think I would just accentuate that point is that it’s not just getting them to jump in head first on itself. It’s that ISOs view this as, I don’t want to give up any basis points to my merchants already. My margins are this, that and the other. But what they don’t realize is every time they sign an account and lower from 3, 9, 9 to three and a half or three and a half to three and a quarter, they’re literally throwing basis points out the window. They don’t understand that sometimes you have to invest in your merchants in order to get that long-term play. And a lot of processors are very set in their ways and they’re like, I have a system. I speak to my merchants. I signed them and I’m doing great. They’re doing great. They were doing great. And the people who were doing great prior to dual pricing weren’t doing so great.

Jeff Moskowitz (42:37):

Six months after dual pricing or a year after dual pricing came in because they were like, wait, I didn’t adopt this. It is funny. One of the partners that we have today, back in the day, we pitched him on dual pricing before we went to Jete. Before any of that stuff, I called him up and I pitched him on dual pricing At the time, we didn’t call it that, but I’m passing the fee of the customer and he’s like, Jeff, you’re out of your fricking mind. Nobody’s going to do that. Stop wasting my time. He called me back six months later. He’s like, do you still have that tech that you were talking about? I was like, yeah. He’s like, can I license it? And I was like, dude, we excited and exclusive with someone else. And he’s like, damn it. And he was so upset because all of a sudden he realized that he started losing business to everybody else who was doing dual pricing cash discount at the time, and then he had to go and build his own thing, and it took him months to catch back up.

Jeff Moskowitz (43:27):

So what happened in this scenario is he told me at the time, he’s like, if you ever do something like that again, you call me first. And that’s what I did. I literally picked up the phone when we launched tzo. My first phone call was to this guy and I said, this is what we’re doing. And he said, explain it. Show it to me. And me and Hirsh walked into this office, we showed it to him. We had a contract signed within 20 minutes, and he’s been totally, look, dude, he’s been pushing it day one. It’s crazy.

Christopher Dryden (43:50):

I tell people all the time, the law is a slow moving beast in many

Jeremy Stock (43:55):

Respects.

Christopher Dryden (43:56):

And there are some areas of the law that they’ve got periodic changes to it. Employment law, I mean, there’s things that do change. They move a little bit here and there. Nothing moves like payments, like what I do on a daily basis. Next week I’m going to look, I’m going to ETA next week. I’m going to learn something that I didn’t otherwise know probably. And again, it’ll change. Look, I do these podcasts. We did a podcast this morning with Bryce from our office about something related to the match list that I learned that was new this week that he had kind of identified and through a particular circumstance that all of a sudden it rang in my head and I was like, oh, wow. That was a profound statement that you just made when we were just talking to all that’s a podcast, because something just changed in my framework of reference, and now we can talk about it and we can actually share it with people out there.

Christopher Dryden (44:55):

Tuesday is the same thing. You guys are disrupting the actual what’s happening. And cash discount was that. And look, it amazes me how many people think that they can exit and then come back because when they come back in two years or three years, you’re not looking the same paradigm. We’re in a totally different place, and if you’ve been disconnected from it, you’re going to have a hard time reasserting yourself. So I think that it’s great how you guys have progressed, and this is one of the things that I actually like about my job, is that the subject matter that I’m dealing with on a daily basis is so dynamic. I don’t know what it’s going to look like next week.

Hersh Moskowitz (45:34):

I mean, people have no idea how deep this channel runs of ISOs and sub ISOs and acquiring banks. They just tap their card and three seconds later it says approved. They have no idea the complexities that go into this. I

Christopher Dryden (45:51):

Did that. We’ve grown a lot, and so we’ve taken on new people, whether it’s a paralegal, whether it’s an attorney. And so we periodically do trainings. So we opened a Florida office, and I was down there last week after the NEA show. I was on that time zone. I said, screw it. I’ll go down there. One of the reasons I went down was to do a training because everybody that we’ve hired down there has no background in payments except for one of them. But even then, that background in payments is on cashless ATM, which is an entirely different animal than traditional payments. And so I go down and I do the training. Now, the group of people we have down there, they’re very inquisitive. Immediately I started doing the training. I started getting a ton of questions, and I’ve always done the training top down from card brand down.

Christopher Dryden (46:38):

So when I came back here, I had this thought when I was on the plane ride home, I’m like, okay, I’m going to do a training. We’ve got a few new people in the office, but it’s always good for the other people that have worked here for a while because things are so dynamic and changing. I did the training, but I did it entirely different. I said, look, I’m going to try something new out this time. I’m going to be a little disjointed. If I say something that doesn’t make sense or I’m not connecting the dots very well, just tell me. But I did it from consumer to merchant to issuing so that I could identify for them that you guys participate in the system every single day, and this is exactly what we do in this office. You just don’t know everything that happens from the time that you tap or insert to the time that the money goes by.

Christopher Dryden (47:23):

Even to the fact that the merchant application is the credit application because there’s a float time period between payment the merchant and payment by the consumer and explaining some of these things to ’em, but doing it in a consumer-centric way because they all have cards and they’re all using their cards on a daily basis. And I don’t know if it was better, but it was different for me at least, and I thought maybe it resonated a little bit more with them. But I agree with you. There’s this whole architecture that’s taking place that we operate in that most consumers have no idea what’s going on, but they’re participating in it every single day. I think it’s fascinating.

Jeff Moskowitz (47:59):

Oh yeah. I mean, we actually did a training, we do trainings for our ISO partners, and one of the things that we focus on is training their sales agents to change the way they sell because they’re so used to selling processing that what we’re telling them is, guys stop selling processing. One of our agents who is actually really successful says, I don’t sell processing anymore. I sell dreams. Because he’ll walk into a store and be like, have you taken your wife on vacation recently? That’s how he leads the sale. That is not a logical position to take when you’re selling processing. It’s weird, but his close rate is insane because he’s walking in, he’s engaging them with something that they want, and these other guys are walking in being like, Hey, I’d like to talk to you about your processing. And they get the door slammed in their face 4 million times until they get a deal.

Jeff Moskowitz (48:47):

But this guy, he’s engaging over and over and over again. So we’re trying to help our processing partners realize that the sale is different when you’re pitching rewards and we help them with a lot of things. We tell them, stop using the word, Hey, I want you to change processors to me. Don’t use change is scary. People don’t like change. We tell ’em, use the language from the rewards companies. We’d like to upgrade you to our rewards processing program. Everyone loves upgrades. They hate change, love upgrades, stop talking about change. It’s a bad sale. It doesn’t work.

Christopher Dryden (49:25):

Well, not only that, but I’ll tell you, so I have this conversation in my house from time to times, but I’m not a things person. I just don’t care. I am. I don’t like to be wasteful. And it was just kind of how I grew up. So I don’t buy a ton of stuff, and I don’t feel like possessions matter. I really don’t care. I mean, if you see the way that I dress on a daily basis, he’d be like, yeah, that guy, he doesn’t, doesn’t care about clothes evidently. But I do value experience. I’m not frugal by any nature, but it’s more about, Hey, what am I going to do that I’m going to remember? And what you just described on the sales pitch is literally walking in and going, Hey, this is about experience. So the people that really value experience, but that gives them an opportunity as well of, Hey, here’s all the things that you could do with this upgrade.

Jeff Moskowitz (50:17):

Right?

Christopher Dryden (50:18):

Yeah. No, I think it’s great.

Hersh Moskowitz (50:20):

Jeff, how many people did you pull out of retirement already?

Jeff Moskowitz (50:23):

It was quite a large number. Call us.

Hersh Moskowitz (50:25):

We had so many ISOs be like, I really thought I was done. I sold my book two years ago. I’ve been chilling. And when I heard about rewards, I literally like, I’m back. I could do something with this. I could make a big dent. I’m going to go out there and close it

Jeff Moskowitz (50:45):

Crazy. We had someone say to us, if I had had this when I was building my initial book, it would’ve been three times the size. That’s what they’re telling us. And I’m like, wow, that’s crazy. He’s like, so I’m coming out of retirement. I sold my book. I don’t even need to work. But I love this so much and I enjoy the idea of selling it. So I’m going to go out there and I’m going to give all these merchants rewards because they’re going to love me. I’m going to build a massive book. And the cool thing is when you add rewards to your book, you’re actually increasing the value of the book because the book’s stickier. It’s more effective. So when you’re going to sell your book eventually as an iso, you’re going to get a higher multiple than you would’ve if you didn’t.

Jeff Moskowitz (51:27):

And it’s funny, we actually have a guy who brokers books and he said to us, anyone who buys a book, he’s like, the second you buy that book, implement rewards, and you just took a book you bought for whatever x, and you’re going to make it worth a third more, now you’re extending the life. It’s almost like getting brand new contracts on everybody because once you throw rewards in, they’re never leaving again. So now it’s this really cool, it’s not just the processing, but it’s the actual value of the book itself, which I think is a whole finance play even. It is really cool.

Christopher Dryden (52:03):

No, I hadn’t really thought about that, but as you just said it, I was like, yeah, I got three people you can talk to that can probably help you

Jeff Moskowitz (52:10):

Out.

Christopher Dryden (52:10):

No, no, because that’s what I’m working on most of the time is portfolio sales. And there’s other stuff that goes on in this office, but my focus is on, I’m dealing with contracts most of the day, so I see the value play between parties to the agreements. And so this is one of those places where there’s a lot of strategic partners that you guys might not even have considered that could really bring two zero to another level of just bringing awareness to people about what you got going on. So I’m going to give you guys the last word first. Before we do that, tell people how to get ahold of you.

Jeff Moskowitz (52:45):

So our website is two zero rewards.com. You can reach me at jeff@twozerorewards.com. Hersch is H-E-R-S-H, hersch@tzarewards.com. You could hit us up through the website or email or whatever it is that you’d like to get us at, but we’re also at all the shows. We do our best to get as much exposure as we can everywhere. So just look around, you’ll see us.

Christopher Dryden (53:09):

Perfect. Perfect. So last word, what do you guys want to tell people?

Hersh Moskowitz (53:14):

Hirsch. Jeff, you want to lead it? Sure. I guess maybe we’ll take turns, but my last word would be that give TSO a shot. Give it a chance to see what it could do for your business. There’s no downside. We really believe in the upside here. We’re a young company and we’ve seen really, really impactful growth from this product. And we’re only making it better and better to add more features for ISOs to have insight and things that are going to enhance their business and really strengthen the relationship with their customer. And what I’ll really end with is we’re here to serve ISOs in the industry. We’re here to bring a product that changes the way that they do business at the core, and we really believe that this is the next frontier that rewards and loyalty are the next frontier of that relationship between the ISO and the merchant.

Jeff Moskowitz (54:13):

I’ll leave it with that. That’s perfect.

Christopher Dryden (54:15):

No, that sounded great. And by the way, I just want to say this, I got Jeff on Goose May A through 10th, San Jose Del Cabo in Mexico.

Jeff Moskowitz (54:25):

Oh yeah.

Christopher Dryden (54:25):

Guys like jam bands.

Jeff Moskowitz (54:26):

That’s it, man.

Christopher Dryden (54:27):

Put it out there. All right. Jeff, you a Goose fan?

Jeff Moskowitz (54:32):

I’m a music fan in general. I grew up listening to Love Goose. Anything in, he

Christopher Dryden (54:35):

Told me he went to Mo when I saw him. The first thing he said to me when I saw him in Atlantic City was, dude, I just saw Mo last week. And I was like, all right, that’s all him

Jeff Moskowitz (54:42):

Too. Actually, it was funny. I actually went to String Cheese

Christopher Dryden (54:45):

Week. Oh no, you went to String Cheese. That’s

Jeff Moskowitz (54:46):

Right. Literally a week ago, maybe 10 days ago. And it was fantastic. But I grew up in Tennessee listening to Blues and I saw BB King as a sneaking in as a 17-year-old to a 21 and only a 21 up show. And you grew up listening to music on Beal Street and anything, any opportunity. I have to listen to live music pretty much in any genre. I’m open to it and I do play guitar and an

Hersh Moskowitz (55:16):

Active guitarist by the way.

Jeff Moskowitz (55:18):

I dabble. I dabble. But no, it

Christopher Dryden (55:21):

Doesn’t surprise me. Anybody who sports a beard like that, he’s either a farmer or an unreal guitarist. Right.

Jeff Moskowitz (55:27):

Go on. No, it takes years of practice. But I will say that I don’t want to age myself, but I’ve been playing for a significant amount of time. But it’s a great thing and I love teaching my kids. My kids are learning how to play guitar now, which is really awesome.

Christopher Dryden (55:44):

So Rick from Goose and no joke, and look, I’m going to go see The Dead next month and

Jeff Moskowitz (55:50):

In Vegas.

Christopher Dryden (55:51):

I’m so thankful that John Mayer ended up with them because he’s such a wonderful musician. But his bubble gum stuff that he was playing, I mean, continuum’s a great album. I think it’s one of the best pop albums ever made. And he’s a really good pop songwriter. Maybe one of the best of all time. But when he’s on stage playing Jerry’s part, dude, it’s insane. He’s, he’s such a good musician, but Rick from Goose is probably the best guitarist on the planet. No joke. I’m talking like,

Jeff Moskowitz (56:20):

It’s amazing. I love watching

Christopher Dryden (56:22):

Music. Jeff Bish or Jimmy Page ish. I mean this guy’s, the control that he plays with is really incredible.

Hersh Moskowitz (56:30):

Yeah, I like that. They chose Goose instead of beast. It keeps it.

Christopher Dryden (56:38):

Alright guys, well thank you for being on this. We really appreciate it. Yeah, pleasure everybody. S and Jeff from Twoo and I hope you guys reach out to, because these are not only really good guys, but they have a really incredible product that could definitely help any ISO agent out there.

Jeremy Stock (56:54):

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