How to save 20%+ on credit card processing fees

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Transcript

Welcome to the Spend Advantage podcast by Varisource. Spend advantage is the competitive advantage for your spend across 100 plus vendor categories. This podcast is all about interviewing amazing people, company, and solutions that will help you ten x your top line growth as well as bottom line savings for your business. Hello everyone, this is Victor with Varisource. 

Welcome to another episode of the Spend Advantage podcast. Today we have a savings partner that I'm very excited to to talk to. She's a great friend. And, uh, Jennifer, who is the VP of strategic partnership with Verisave. Uh, Verisave, helps companies lower credit card processing fees without changing processors. Welcome to the show. Thank you for having me on your show, Victor. I've been looking forward to this. I know we've been talking about it, uh, you know, for a while. And, uh, again, you know, the spin of an edge podcast is all about educating the market. Uh, company CEO, CFO, CTOs on, you know, different ways to drive savings for their business. So, um, but, yeah, if you don't mind, maybe, you know, give a little bit of, uh, kind of the company story, the background, uh, would be great. Absolutely well. Barrow save years ago began as an accounts payable auditor, and it was during that time where we noticed a recurring issue, and that was overcharges within the merchant processing line item, and clients were coming to us frustrated by the lost revenue that was happening when they were receiving electronic payments. And they struggled to reconcile those changes accurately each month. And it was really that discovery that led us to pivot and focus exclusively on optimizing merchant fees. And we've been refining our approach ever since. And, um, yeah, so obviously, you know, every time I talk to you, I learned something. Uh, and that's why I love just calling you and picking your brain in this category. But, you know, for a lot of the, you know, audience out there that may not be familiar, truly familiar with credit card processing fees and processors and how it all kind of works and where you know how that impacts company. Can you kind of just give, uh, a bit kind of a, you know, explanation around that? Absolutely. And, Victor, I have to say, you always ask really great questions. I love our conversations as well. You are educated and actually have really gotten to know your clientele. So I know that when you're coming to me with those good questions, it's it's all due to the diligence that you're doing on your side. So so thank you for that. Um, but really, credit card processing fees are a part of a very vast financial ecosystem. 

And those fees cover the cost of moving money from the issuing bank, which is the client's bank, to the acquiring bank, the merchant or the business bank. And so when a merchant pays their processor, that fee is inclusive of several different components. So naturally the processor itself and we'll call them the vehicle for the transaction. Uh, but then there's also a point of sale system or maybe some sort of technology that's used to accept those payments. And then there's the card brands visa, Mastercard, American Express, discover, you know, those names. Um, they're getting a cut of that. And then also finally interchange, which is the fee that goes to the Cardholder's bank. And really, for businesses, these fees, um, they directly impact profitability. But then the systems complexity often makes it difficult to really pinpoint where those costs can can be reduced. And, you know, obviously kind of based on, um, what you just mentioned. Can you kind of maybe, uh, focus on the, you know, focus a little bit, uh, more on why, uh, and where our company is usually getting, you know, maybe overcharged or mis charged. Uh, and because you talk about financial system are so complex, right? Uh, so where, where are these kind of little charges happening that they may not usually see, even when they look at maybe their statements and things like that? Absolutely. Another great question. So we see that most of the overcharging occurs within the interchange fees. And those are really the most complex and also the least transparent part of the merchant account. Um, and those errors can arise from several different areas, such as how the account is set up. Uh, maybe it's how those transactions are processed, you know, how that card is being captured and how, um, or just the tech stack, you know, the specific technology that they're using. Those are just a couple of, of, of reasons why this, um, their errors occur, but each merchant is really unique. So uncovering these issues really does require a forensic level analysis. And it varies save we do these deep dives. Um, and we're looking at those details but also uncovering errors that most businesses really couldn't detect on their own. Yeah. And you guys, you know more than that. I'm going to come back to to that to talk a little further. 

But you guys have one of the, the best, I would say savings models, which is savings without making changes. As you know, customers are change management is always difficult. Um, so how can you kind of describe how do companies, you know, save but without having to change processors? You're absolutely right. I think a lot of times when we approach a prospective client, they automatically think that we are a payment processor and we're not we we are agnostic to payment processors, but really our savings model is simple but also powerful because we can help businesses save money without requiring them to switch processors. And we do that in a number of ways. Um, first, we always start with a no cost, a very unbiased analysis of their account. And then because of most of those savings found, are found within interchange, we can really collaborate with their existing processor to correct those errors. And then that really ensures the minimal disruption to business operations. So I guess kind of something to to drive home is that we're not a processor, but we're also not a processor negotiator. Most of those savings that we find don't exist within the fees that the processor themselves charges. It's really again, within interchange. So we're actually going to partner with your processor. And we're compensated on gain share basis, meaning that we're only getting paid a percentage of the savings that we deliver. So if a merchant doesn't save they don't pay. And it's really as simple as that. Yeah. I love that model. Um, you know, obviously there are saws. We we have similar model because we, I feel like, uh, incentives, drives, behaviors. And ultimately, you know, we're dealing with humans, right? Other humans and people work on behaviors. And so I think the savings, ah, savings model, uh, together, uh, it's aligned with the customer only if they're successful. Only if they are getting value. Uh, do we get paid. So, um, so, yeah, you know, love, love that piece. Um, again, a lot of the audience may or may not be, you know, familiar. I mean, obviously, credit card processing. Uh, you know, you kind of described it. Uh, and then processors, you kind of describe that. 

Can you maybe give 2 or 3 examples of kind of the type and area of and range of savings and also potential ROI that, uh, companies can, can expect? Absolutely. Before I do, I wanted to to compliment you too. I, I do agree that there's a really nice marriage between our organizations because we are incentivized to, to, to find savings. Right. Um, so it's it's it's kind of a win win there. Um, so, you know, that you've got better resource and very safe working together to, to help reduce those costs. And, um, we're not paid if we don't find them for you. So that is and so that's one, one good reason why we all work really well together. But I would say that most Ferris Ave clients see between like a 10 to 30% reduction in their merchant costs. And, uh, for businesses in the B2B space, those savings tend to be even higher. And that's really due to the types of cards that they process. But that said, we also work very well with B2C and hybrid companies, and we can deliver significant savings across the across the board. So is it. So kind of walk through that a little bit. Is there a certain industries again when I think about credit card, you know, processing maybe it's more retail uh type of type of clients. What if there are SaaS companies or can you kind of maybe talk about certain industries that maybe, um, you guys, uh, you know, do best with. Absolutely. Um, there is such a wide variety, but, um, you know, we've worked with media companies. Um, things like subscription based organizations, um, you know, whether it be kind of a high transaction amount, um, or a higher volume, we I mean, really, I guess there really is no, uh, best industry for us, but we work with, uh, manufacturing, for example, I don't think a lot of businesses would think that manufacturing would be a great, um, source of revenue, but they are, um, because I think there are some complexities and they oftentimes don't have the sophistication in their back office to support, you know, dedicating the time to just this one particular line item. Uh, but we can really service like all industries. I, um, don't know that, uh, there's any one in particular that that doesn't work. That's, uh. No, that is amazing to know. And again, you know, like you said, I wouldn't think of manufacturing being a, you know, kind of a big credit card processing type, but, uh, but no, that's good to know. Um, so obviously, you know, people usually when they think about ROI is also time to value, right? Um, so when you think about your program, how long does it usually take for a company to be able to maybe get a saving estimate to know how much potential savings? Um, and then let's say they're interested. How long does it usually take to achieve those savings? Are we talking about days or 12 weeks or months or what do you think? Yeah, it's business dependent. But I would say the analysis takes really no more than 3 to 4 business days. Um, within that time frame, um, we can within just we would need like 2 to 3 months worth of, of your merchant statements. And within that 3 to 4 day time frame can turn around an analysis. And that analysis will provide you here's our extrapolated annual savings. You know, based on those 2 to 3 months that you sent us, this is what we anticipate. Um, you know, you, um, have to save within a, you know, a year's time frame. Um, and then from there, uh, the merchant has the opportunity to decide whether they want to move forward. And if they do, um, I think that their participation has a lot to do with how quickly we can move, because I think we can implement those savings really within a couple of weeks. But naturally we may need, um, some involvement from that merchant, uh, to partner with us and to hand us off to their processor so that we can be efficient. And they can the merchant can be as involved as they'd like to be. And if they don't want to be involved at all, that's even better. Let us take that for them. Uh, but the more engagement we have from the merchant and the processor, naturally, the faster we'll get things done. But I would say on average, our implementation takes about four weeks. Okay. That's, um, that's a very fast time to value. Uh, one question A lot of customers always ask me when, when looking at these, any category is how much work do I have to do. You know, they they're very busy. They, they gotta run businesses and departments and uh, so is there a lot of involvement or work that's needed to be done from a customer perspective, or is it really you guys, uh, you know, kind of what I call savings as a service, meaning you really, you know, take on, uh, engaging with the merchants and taking care of kind of the saving process or how much does the customer themselves have to be involved. Did you say savings as a service? Yeah, yeah, I love I really like that. We're not using that at Versailles, but we may, uh, star. That's really cool. And that's exactly what it is. This is really more of a service. Um, we're in the service business. Um, and we do have some technology, naturally, that helps us get these things done more efficiently. But I like the the merchant really will need to be involved in that those first couple meetings. But once the handoff, um, happens to the processor, typically they can be hands off. Um, and it really requires maybe just a checks and balances type of process monthly, uh, to ensure that we're capturing those savings. And if we needed any involvement, if we're getting any pushback from any of the third parties and we need the merchants maybe approval, or we need them to, um, to, you know, give us some authority, then that's really The most of what we would need from the merchant themselves. Right. Um, so as we, you know, finish up with last, uh, couple of questions there, I mean, here, um, you know, I always like to kind of understand, uh, I'm always curious and wanting to learn. Uh, especially for the CFOs that that, you know, we work with when I think about things like telecom or, you know, a lot of these vendors, their their invoices are hundreds of pages long, you know, hundreds of line items. And they do it on purpose to make it very complicated and hard to read and understand and decipher, uh, especially when customer, you know, are doing 100 things and they don't have the time. Right? Um, so I want to kind of talk about how vendor, you know, these vendors in the ecosystem are able to kind of overcharge. So what are, you know, why are the merchant accounts able to kind of take advantage of customers without them noticing or understanding? You think? Well, I think the, the biggest reason is, is the complexity, but also that lack of transparency in how those fees are presented. So for example, some processors even use a proprietary coding on their statements. And that's something that you really have to be, um, like an insider to decipher. Um, so while we'd like to believe that this really isn't done intentionally to confuse clients, the reality is that it's not the processor's job to optimize your fees. It's their job to process the transactions. So that's why businesses really need an advocate like Versailles to ensure that they're not leaving that money on the table. Yeah, I, um, I love that. And obviously throughout the whole conversation today, we talk about kind of ROI for the business, kind of the value. Um, but, you know, how does this, um, how does this cost a company, uh, when they're not using a savings program, like, very safe. Um, you know, obviously, then they're overspending. Is there other impacts, um, you know, or cost to the company that you've seen, uh, with customers? Well, I think for most businesses these they're kind of like hidden costs and they can add up to thousands or even tens of thousands of dollars annually. But the good news is, with the right analysis and expertise, much of that can be reclaimed. Um, and that kind of turns what feels like a sunk cost into meaningful savings. Uh, but I think that, um, this ideology can be applied. As you had mentioned, I think telecom and there's other, um, other parts of the business that that are complex and confusing. I often think about my own cell phone bill and cable bill when it comes in, and there's all these taxes and fees and you just pay it every month. And, um, the reality is there there may be opportunity to save. Uh, but I wouldn't have the expertise or knowledge to, to dive into that. So that's why I'm working with a company, especially if there's no out of pocket, additional out of pocket cost to use that company just to, um, at least get a third party. No skin in the game, expertise to put eyes on it and let you know one way or another. Um, and maybe, maybe the results are good after the initial analysis. 

Hey, you know, we've compared this against benchmark data. We've compared this against other organizations that are similar in size and industry. Um, you know, in your rates are good, and that's always just a kind of peace of mind. I think that you can gain from just the initial analysis. Again, that doesn't cost anything. And then if there savings to be had, then that conversation can evolve and determine if there's a mutually beneficial opportunity to partner and help capture those savings. Yeah. Uh, I have an interesting, uh, last question for you. So, you know, obviously, you know, every company has a finance team. And I think we talked a lot about, um, you know, obviously these these invoices or statements are very complex. And, um, a lot of times the finance team, you know, just have to pay it, uh, you know, because there's not a lot of transparency. Do you think? Um, you know, the bigger CFOs that we work with are always trying to give what I call superpowers to to his or her finance team, right? To help complement them, to help, to save them time. So, um, it is this program. Can you talk about maybe the time potential time savings as well for, um, you know, for, uh, the finance team and, um, and obviously more than just time savings. Is it because they don't have the expertise or is it more time related, or is it expertise related as far as not being able to identify these savings in these statements? I'm wondering. You know, it could be, uh, one or both. I've certainly we've worked with, um, finance teams that are, um, very educated on this topic. Um, and those are the ones that say, like, we just don't want to dedicate our time to this. We want our our analysts, you know, doing other things. Right. So I kind of place bare save as almost an additional employee in the room there. Um, that just completely eliminates the, uh, the tasks, the tasks that are affiliated with reconciling these accounts. And from there, um, like I said, it's like having a, you know, an employee that that you don't have to pay. Um, at that point, we're just, again, capturing a portion of those savings. 

So, um, there's always just a variety of, of, um, of people that we're working with. Um, we're not out to replace anyone. I think it's just to give those finance teams time spent elsewhere. Um, and that's the that's the real value is, you know, I can have my, um, treasurers and my analysts working on, um, other opportunities versus this very this is just a sliver of their day. This is really just a sliver of their PNL. Um, so to have one person dedicated to it, um, it would be a full time job and really not not an area where most CFOs want, you know, their, their team, uh, being assigned or spend, spend, um, working on this. Yeah. It's, uh, no, it's such a no brainer. Um, you know, and that's why we're excited to have you guys be part of the savings program and look forward to continue expanding, you know, business with you guys. So one last question we always ask our guest is, uh, you know, you you've seen a lot you've done a lot in your career. If you have to give one business and or personal advice that you're, uh, pretty passionate about, what what advice would that be? Oh, wow. That's a that's a deep question. Um, don't don't do anything for money. Don't don't do it for the money. Yeah. Easier said than done, I guess. But yeah, I know. Don't don't chase. Don't chase the green paper. Uh, chase, chase your passions. Um, and and take care of people, and then the rest will follow. I 100% agree. Yeah. If you provide value, just like what we're doing, if you provide value and help people solve problems and treat people well, I think, uh, good things follow from that. So, no, thank you so much for the conversation, the education and the partnership. And, um, I appreciate you being on Victor. It is always a pleasure. 

We are very grateful for this partnership. And thank you for the opportunity to connect here on your show today. That was an amazing episode of the Spend Advantage Podcast, where we show you how we can help you ten x your bottom line savings and top line growth for your business. Hope you enjoy the conversation and if you want to get the best deals from the guest today, make sure to send us a message at sales@varisource.com.