Spend Advantage Podcast

How to save 40% on payment processing fees?

December 05, 2022 Varisource Season 1 Episode 11
Spend Advantage Podcast
How to save 40% on payment processing fees?
Show Notes Transcript

Welcome to The Did You Know Podcast by Varisource, where we interview founders, executives and experts at amazing technology companies that can help your business save a lot of time, money and grow faster. Especially bring awareness to smarter, better, faster solutions that can transform your business and give you a competitive advantage----https://www.varisource.com

Welcome to the Did You Know Podcast by Varisource, where we interview founders and executives at amazing technology companies that can help your business save time and money and grow. Especially bring awareness to smarter, better, or faster solutions that can transform your business. 1.3s Hello, everyone. This is Victor with Varisource. Welcome to another episode of the Did You Know podcast. Today I'm excited to have Jeff Lyons, who is the general manager for Stax. Stax Payment is actually an inspirational unicorn startup based in Orlando, and they are definitely our inspiration for all the startups to look up to in the Florida market. But Stacks essentially is an all in one payment platform that saves you up to 40% on payment processing. Welcome to the show, Jeff. 

U1

Thanks, Victor. Good to be here. 

U2

Yeah. So, Jeff, why don't you maybe give us a little bit of your background? How do you end up with Stacks, and 2.7s what your thought now that you're with Stacks? The whole 1.1s industry knowledge on kind of the pain side of things. 1.2s

U1

Yeah, absolutely. Well, I grew up in Florida and went to University of Florida for engineering and then later for business school and then moved here to Orlando to join Stacks. So pretty much everything in my bio starts with Florida, man, so we should probably get that out of the way at the start, 1.4s but yeah. I started life as a software developer, and in the startup world, we had a company focused on the human resource and learning and development space, grew that and then moved into the private equity world. And I've had just about every job there is to have in a tech company, but mostly on customer facing functions would be sales and delivery and support, and that's what I do for Stacks as general manager of our pay division. I came to Stacks a little over a year ago, and they were at a great point in their development. Rocket ship growth, really, really innovated the space, and had gotten to that point in life where as a start up, you need to start thinking about scale and process and how do you kind of transition to the next level. And that's what I had done throughout my history. And so that sounds learned a lot about the business and. 1.1s And made that leap. Just basically leaving my meetings with the executive team here, thinking, this is the group of folks I want to work with. This the company I want to join because they just really had this great balance of we want to innovate this industry. We want to totally change that, grow super fast with with being very customer focused and an opportunity, frankly, to grow the team here. It's an amazing team of folks from that startup background, a lot of raw material and I felt like I could add a lot of value in helping them replicate that and grow it as we hired new people and over the past year and a half we've grown our headcount by about 50%. That's really been a big part of what we do is how do we create an environment that helps us bring people in and grow the business 

U2

effectively. Yeah, well, I think with the economy right, the way it is now, but also in 2023, that it might be even more challenging for every business. A lot of companies are looking for cost savings or optimization, 1.8s especially the top areas of their business right. Whether that's technology or payment processing and side of things. And when I understood you guys'business model, I really just thought to myself like that is so simple yet so it makes so much sense. Like why hasn't anybody done it? And I think for those people that are not familiar with Stacks, can you kind of give us a little insights into how do you guys differentiate from companies like Stripe, right, that people are 1.3s known about in the payment processing payment side of things as the go to what is different about your business model that makes it so transformational? 2.7s Stax was so unique when Sunrise started it eight years ago and has continued to really lead the industry. And the biggest thing that's a differentiator if you think about the payments industry, which frankly does not have a great reputation, right, it's built upon big bang that weren't very customer friendly and very hard to understand complex long term contracts. And it's an industry where you want to have a relationship between the business and the customer and you want to accept payments quickly and easily. But in order to do that, you go through this byzantine maze of different vendors and providers with everybody tacking on fees upon fees upon fees. And what makes that different is I think of it sort of like a Costco or a Sam's Club for credit card processing and that you pay a simple monthly membership fee, it's a flat fee, it's very clear and transparent. And then in exchange for that, you get access to wholesale interchange rates. So these are the direct rates set by Visa that traditionally you had to be a billion dollar company to get access to or be a big bank. And so we take out all those layers of markup and hidden fees that are sort of rampant in this industry. The other big thing was, if you think about a business, they typically have multiple different ways that they need to take payments. So I might be taking credit cards in person for some orders and maybe over the phone for others, or having invoices go out or recurring payments. In the past, a business had to have different vendors for each one of those. And so when you try to rationalize all of that at the end of the month, you're going from system to system to system trying to add it up. And Stacks was created to simplify all of 

U1

that one payment platform across every different channel, whether that's phone online, in person, what have you. So you've got a simple dashboard and you can manage your business quickly and easily. 2.2s

U2

So basically what you're describing short is cheaper, better, faster, and all in one. I think that's the best of both worlds. And that's why you guys been so successful 2s throughout all this. 2.5s Yeah, that's incredible. So when I think about this traditional, either the stripe or the other company, the traditional payment companies, they do very much on usage, right? It's kind of like AWS cloud in a way where 1.2s usage sounds good. You only pay for what you use. However, the problem is you end up using a lot of it, and they know you're going to use a lot of it. As you grow as a business, you keep using a lot more and that becomes a handcuff or a very high cost for a business very quickly. Yet you guys provide that subscription model, which is just like what people are aware of on the software. That's how people buy software. Right, but like you said, at Costco, that membership model, you pay a subscription and then yeah, that's I think, a tremendous business model. What have you seen in the last twelve months or 18 months being a Stack? Because obviously in combination with COVID right. And I think with COVID what has happened is digital transformation has changed a lot for accelerated for a lot of companies. Have you seen any differences just from your kind of own career? And now with Stacks, have you seen a huge difference? 

U1

We absolutely have. The first thing that you mentioned about more of a subscription model versus layers of additional fees. The other big thing that that adds in addition to we're just typically much, much cheaper, it's also predictable. Right. So you know what you're paying each month going in regardless of volume, so you don't get hit with surprises. But in terms of changes over the last couple of years, you'd have to be living in a cave to not see what's going on in the economy. Right. And I think it makes Stacks more relevant than ever. Businesses are seeing their costs go up, whether that's supply chain, whether it's interest rates, whether it's the cost of their raw material they need. And so they're looking to be way more efficient in how they do things, number one. And so we can provide huge cost savings on credit card processing fees. I think more importantly than that, we've seen businesses try to get more creative in how they reach their customers and more flexible. So if you can offer more ways to engage your customer and more options for payments, you can grow your business faster. So we've transitioned in our relationship with merchants from just being savings focused to really being growthfocused. And I'll give you my favorite example of that. There's a music store that we work with. And if you think about the music store business, one of their really, really busy times is the start of the school year where all the parents come in to get the clarinet or the saxophone or the drum kit or whatever for their child that's in band, right? And so of course, they're staffing up to manage that. But you also have for that one week everybody in the store all at once. It gets really hard to keep up with it. And so, in a very traditional walk in retail business, what this guy did was he used our Payments link functionality where you can essentially pre configure an online payment with a QR code. And so you walk up and you see the clarinet display and there's a little QR code and the parent can just scan that on their phone and actually pay for that right on their phone in the store. And so they've got on their phone a receipt and it saves that long time essentially creating like a self checkout option for people who go in knowing immediately what they want. And so it enabled him to much more quickly service customers and get folks in and 1s get the products into their hands more quickly and manage that rush time. So we're seeing merchants be way more creative in how they engage their customers. 

U2

Yeah, that actually brought up a really interesting question I want to ask you, which is we always say adverse source that technology can be your company's competitive advantage if used correctly and you have the right technology, but it also can be a handcuff and hold your company back. Because that perfect example you just mentioned. You know, it's also about the education. But you know, obviously this merchant was creative and utilizing that because those type of technologies out there right today. Pretty common now, but understanding that not just working with stacks, that I can utilize it this way to make it easier, faster for my clients to pay for things and better buying experience, which ultimately grows as business, that is tremendous. But sometimes I feel like obviously these merchants or these companies, companies still require some education on how to leverage technology. So, because you guys offer so much, how do you educate, how do you help these companies better understand how to leverage all these feature functions to grow their business? Because even if you have it, but if they don't utilize it or have that creativity, it's really holding them back, right? What do you think, 

U1

Victor? You are exactly right. So this is a huge focus area for us right now, product adoption. So in the past, I think businesses looked at this as just as long as the credit card payment gets processed effectively, gets deposited by bank, that's all I'm worried about. And so they don't think that there's as much opportunity there because they're used to just working with a bank versus a software company. So we're looking at features we add to our tech stack. How does it make it easier for you to engage your customers? There's a great example. Is there's a messaging platform built into the system. So educating folks on things like text to pay, things like recurring payments. What happens when you have recurring payments and somebody loses their credit card or it expires? Make sure you're taking advantage of features to auto update that so 1.5s you don't lose a month payment or have to go in and call that customer, et cetera. So a big part of what we do right now is educating customers. And we do that from day one. So we get them ramped up, set up to process really quickly. But then we have inperson onboarding so they don't have to go read a manual, they don't have to do a lot of research. We put them live with one of our experts to walk them through here's all the key features, including the things you may not be aware of and how are they relevant to your business. So, depending on whether you're a veterinarian or a dentist, you're doing a lot of inperson stuff, or maybe you're a moving company where all your payments are out in the field. Two very different scenarios. How do you take advantage of these features to make it quick and easy and reliable to let your customers pay you? So that's a huge focus for us. And in addition to the in person, we record those so that customers can then reference that and learn about 1.1s like the music store example, these different ways they can offer more channels to their customers. 1.4s

U2

So what about online? If I'm a software company looking to offer subscription services or 1.3s for software and these kind of things, how do you guys help from the software side? You mentioned I see the merchant, which is maybe in person. What about online? Is that also a good fit for you guys? Yeah, 

U1

absolutely. And in a couple of different ways. So, one is a small business that has an online presence, so we can integrate with that and they can take payments directly from their website. And most of our we work with within my division, small and midsize companies, so typically they don't have a ton of inhouse tech resources. So we make it super easy to just here's the code snippet plop it on your website and you can take payments. We don't want our customers having to learn how to code or anything like that. 1.3s Kind of the next level up is still what I'm working directly with a merchant. We can integrate with their technology. So we offer an API layer that if they're running a system, for example, to manage their business and they take payments through that you can plug in and still benefit from the Stacks technology stack and the lower rates, the access to direct interchange rates. And then the last element when I think of software is 1.3s the other primary business unit at Stacks, what we call Stacks Connect. That's where we work with software companies and they can actually embed our payments technology right within their software. So they can essentially become like white label that Stacks Tech and become a payment processor. And that's one less layer that their customers have to work through. So whether it's through a larger enterprise software company embedding our tech, or whether we're working directly with the business, it's all about how do we streamline that and just make it very easy for you to take payments so you have more time to spend focused on running your business. Right. Nobody really wants to. 1.3s Become a payments processor. If they went to school to be a veterinarian or if they went to school to be an attorney, they want to focus on that part of their business, not on how do I get paid. So we just try to find that. 

U2

No, that's awesome. So one of the questions we see a lot from customers, especially in the SMB to mid market, which is change management. Right. Anytime you tell them, first of all, there's something cheaper, better, faster the years they're interested, and then they validate that, wow, I can consolidate three or four or five of my stack stack payment down to one and at a fraction of the cost. I mean, that's just like a no brainer. That's a great business decision. Right. But then the next thing they think about is, okay, I'm running a business. What does that change migration look like? Right? 1s I would love to have you talk a couple of minutes about if a customer, if a company is interested in your service, but they already have a payment processing with whatever, however they're doing it today, what does that migration look like? How easy or simple it is? Because sometimes that's one of the challenges preventing the SMB from making that change, because they're worried that, oh, I'm still billing my customer, I'm still will do all these things. I don't want to rock the boat, right? But can you help educate these business owners or decision makers? What does that migration look like? 1.3s

U1

It's a great question. I think that people are justifiably scared of technology implementation. They've gotten a bad reputation. And in thinking about my background, I come from that enterprise software world. Typical implementation project is six to twelve months and it's hugely expensive, intensive. You compare that to At Stacks where from day one it was all about how do we just make this simple? We have customers set up able to take payments within 48 hours and then depending on if they have integrations with existing systems or setting up terminal hardware, things like that, where the biggest impact to our timeline then is simply the time of overnight shipping. Right? The technology setup is very, very easy. We also have customers that have, if they're working with somebody where they have a lot of recurring payments. So think about like a monthly membership for a gym where they've got your credit card on file and that's tokenized, that's really the only migration effort where they would get that data into our system. And that's obviously a big part of what we do. So we make that very easy as well. So our goal is to have new customers up and running in less than a week and our average is typically four to five days if we have to ship them hardware. 

U2

So the time to value or time to saving is potentially in a week they can start saving, is that what you're saying? 

U1

Exactly. It's much, much easier than what people typically think of for a technology implementation, 1.3s especially one of our main verticals is field services. So think about people who are out in the field that could be, for example, like an AC repairman, so that business has technicians out in the field that's more difficult to bring them in and train them on new technology. Every minute they're back in the office getting trained on technology, the minute they're not being productive, they're not helping their customers. So we want it to be very easy. They can download an app to their phone, there's not big change management and training involved. It's all sort super simple. 2.4s

U2

Yeah, no, I mean, you guys just keep getting better and better. And that's why I can see, you know, you guys have 98% customer satisfaction. These numbers that you guys have is just tremendous, right? Customer retention, customer satisfaction. I can totally see why. I mean, it's fast implement fraction of the cost, and it's an allinone solution. So we talked now a lot about savings and optimization, but I want to talk about growth a little bit because again, in this economy, yes, people want to save money, but more than ever, they have to, from a competitive advantage perspective, one roofer to another roofer. Like, you have to offer something different, you have to offer something better. There's a lot of competition out there for anything that you're doing. So again, we talked about earlier how 1s fully understanding and being educated on how using creative solutions from you guys can help them support their customers better. But can you give me maybe one or two examples of your favorite examples or use cases where educate the audience about how they can leverage some of the feature to really make payment a competitive advantage? 1.3s

U1

Absolutely. So I love my music story example, but I'll give you a comparison from real life. I had my car in to be serviced at the dealer recently, and I got a text on my phone with the bill. And this is a feature that staff offers called Text to pay. And if you're like me, you interact with your phone with much more frequency and sense of urgency than a bill that comes in the mail. So I get that text link, and because it's just my habit, I easily click on something on the phone. I enter my payment information right there. I've actually paid for that before I'm even at the counter getting the keys to pick up the car. Right. So that business got paid instantly. 1.1s And a few months before that I had some work done at my house on my air conditioner and I got a bill. First of all, the bill was about six weeks after that because so much time had passed, there was some confusion about exactly some of the line items. So I had to call them in. We're trading voicemails because I'm doing business this hours, as you can imagine, usually pretty busy. So this went on for another couple of weeks of trading voicemails. I finally get in touch with them, get it cleared up and then give them information to pay. And that was still a credit card payment. It's not like I mailed a check in, but because that was not quick and easy, it took that company two months to get paid. So when you think about growing your business, cash flow is the number one problem for a small business. So just simply getting paid faster and easier. But now imagine when I talk to my friends about vendor experiences, I say great things about that check out experience with the one company. I got great experience from my AC company as well. But you know, what sticks in my mind was a little bit more convoluted. So I think we offer more ways to engage your customers, more options for your customers as well as help you manage your cash flow better. And that has been the engine for growth. 1.7s

U2

Yeah, I've had similar examples as well myself. And it's really fascinating because I think a lot of these companies, if you ask them, like, well, why don't you do tech to pay? Or why don't you do some of these things in their mind is just so, like, technology is so complicated or just so, so challenging, right? It's kind of like climbing a mountain or something to them. But yet people that you and I look at it and say, it's not that complicated. It's actually quite simple nowadays. Right. And so I think sometimes it's just that maybe it's the fear or just uncertainty of how to use those technology. They're like, wow, it must be so difficult to set all this up and I don't have any expertise yet. If they just work with staffs and your team, like you said, less than a week, they could be out there collecting money two months earlier. 1.6s

U1

Exactly. And vicar, it's not just about, can I collect that credit card payment? I'll give you an example that we use a lot. Consider like a veterinarian today. Most of their payments are probably somebody in the office. They present their credit card when they bring their pet in to get looked at, and they think about, can I expand my business online? That's maybe not the first thought for a business like a veterinarian where it's an in person business and they probably lack the expertise. And it's a little bit daunting, everything you said about confusing. If that veterinarian is using the stacks platform to collect payments, not only can they do the realtime text communication with their customers to let them know when the pet is ready for pickup, there's like one click access to be able to then set up an online catalog. So obviously I'm going to bring my pet in when they have an issue, they need to be seen. But this would let the veterinarian allow me to like, purchase products, order medications, any, whatever. 1.5s All online with their website and they don't have to worry about going out and creating a new website, new technology, that's all just point and click within the stacks platform so they can embed that if they have a website for their business, the online catalog functionality can be completely supported by stocks. It's just super simple, easy way to generate additional sales. You can also use our recurring payments technology. Imagine if they had more of like a membership. So I was a monthly member with that veterinarian and that included my annual check up and included maybe a discount on some of the products. Now, as a customer, I'm more likely to buy those products because maybe I get a 10% discount as part of my annual membership. But I'm also more likely to not put off that annual visit and check up that my pet needs because I'm already paying for it. It's already in there. So by getting technologies easily into the hands of that company, they can now engage their customers in a better way and grow their business so their customers can easily buy more to make sure they're not missing things like an annual checkup, which we all put off to the last minute, and then maybe it becomes inconvenient. So I think it enables them to think about their business a different way. And to your point, it's easier. They don't have to be an expert on online payment technologies or on web based catalogs. All of that's just embedded within the platform for them. 

U2

Yeah, some of those examples I wasn't even aware. I can just imagine so many 1.2s different things you guys can expand into. It's incredible. I love it. So maybe a couple last questions for you as we wrap up here. Jeff, what do you think the future of and again, a loaded question, but what do you think, especially with the disruption stack has done in the last decade or so, what does that next decade potentially look like? Maybe just from your there's no right or wrong answer, right? But kind of just what's your thought in the next 510 years? Where can payment go? Is it crypto? Where can it go? You think likely? 1.7s

U1

So obviously there's a ton happening, whether it's buy now, pay later, or you think about not just credit cards, but paying with PayPal, all the different new payment platforms that are coming out. I think it makes our value profit stacks all the more relevant because we're about saying we want to embrace all of that at, but I want you to have five or six different relationships. Let's do that all in one platform. So I think we're really well positioned as the newer technologies come online. How do we adopt that? You mentioned crypto. If we're looking at the news recently, there's been some really scary stuff coming out about crypto, and I think it underscores. One of the key themes is just safety and security. So being able to provide a place that I know I can go to, a partner who's going to protect me and have the right level of security, who's PCI compliant, who is doing all the right things, 1.2s reading articles about 1.9s people who were right out of college starting up a huge billion dollar business from their swimming pool in the islands. It's kind of a cute story until you read the news from last week where that all blew up and people lost billions of dollars. So I think going with a company like Stacks that is well established has the scale to safely and securely support you as we get into more and more and more technologies is hugely important. 

U2

Yeah, you guys are based in Orlando, not in Bahamas, so that is 1.2s

U1

exactly 1.8s and I think lastly, what I've seen over decades of technology company management, 1.4s I had a big learning curve when I moved into the payments industry from enterprise software industry, about just the payments industry. But what was very transferable and I think will continue to be core into the future is there's nothing more important than the customer. So as we're focused on how do I make things simpler for the customer, how do I make it fast and easy and much more affordable, how do I save them a ton of money by eliminating all these different people in the middle? That just becomes more and more relevant. So I don't think that ever goes away. To focus on doing the right thing for your customer. And that's a key value at Stacks. 

U2

That is probably one of the rarest things people in Fintech will say, because we've seen kind of a lot of these banks and traditionally how yeah, they really put these customers at a disadvantage. And that's why we love partnering with you guys to really bring companies to your solution. So my last question for all the guests is whether it's through your career or personal or business experience, if you have to give people one advice, again, it could be a personal or business advice. What are you most passionate about? What would you want what advice would you want to give people, you think? 2s

U1

Oh, what a broad question. 1.5s

U2

You take a couple of seconds. Anything you're passionate about that you really believe in or just advice maybe, that has really served you well in the last in your career or in your personal life? 

U1

Yeah, I think I would go back to what the topic we just talked about, which is taking great care of your customers. Right. I think that's critical to stacks. As we scale, we're growing very, very fast and so making sure that we're constantly getting better and faster about taking care of our customers. And from time to time where I drop the ball, making sure that I handle that appropriately and make sure I do the right thing for the customer. And that's what I've seen when I think about my customers customers, that's where I see I can add a lot of value to them as well. So we're helping small companies take better care of their customers by all those different ways of engaging them and making it easier for them to engage and pay as well in the examples we mentioned. So I think everything is about that customer relationship. 

U2

That's exactly kind of how we think we often think of customers we work with, but their stakeholders and their stakeholders could be customers, could be partners, whatever. And now we're super excited to partner with you guys, obviously working together to make Orlando in Florida the best tech hub in the world for the next decade. But thank you so much for joining and look forward to continuing partnering with you guys. 

U1

Victor, we're really excited about the relationship with Varisource and it's great speaking with you today. 1.3s

U2

That was an amazing episode of the Did You Know podcast with Varisource. Hope you enjoyed it and got some great insights from it. Make sure you follow us on social media for the next episode. And if you want to get the best deals from the guests today, make sure to send us a message at sales@varisource.com.