Ep 90 | Understanding your Payment Processing
When was the last time you took a look at your credit card fees. When it comes to making donations easy online, fees are often an expense that is hard to swallow. Jen is here to talk about things to think about and questions to ask your processing company to save money.
In this episode you'll learn:
→ when and how to evaluate your credit card processing fees
→ if Square, Stripe, PayPal, etc are the right solution for you.
→ what questions should you ask a sales rep.
→ key terms you'll want to understand.
→ the importance and benefits of underwriting.
Want to skip ahead? Here are some key takeaways:
[6:43] Payment processing isn't a set it and forget it solution. Most people don't have a personal connection with the people that process their payments.
[9:43] Building a relationship with your processor can help ensure that you're getting the right solutions for your unique business needs instead of a one-size-fits-all solution. Jen's advice is if you're processing $10,000 or less a month than Square, Stripe, etc are probably ok. If you're doing more than that, then you're probably overpaying.
[13:49] Understanding the language that is credit card processing can be confusing. Start with negotiable and nonnegotiable rates so you know what you can get reduced and what is just passed on to you.
[36:02] Use referrals to find an agent. But if you can't BNI chapters might be a great place to reach merchant providers and getting more information from other business owners for people they trust.
Founder, High Desert Merchant Services
Jennifer Nielesky owns and operates High Desert Merchant Services, a company dedicated to helping Businesses and Non-Profit Organizations navigate the tricky world of payment processing. She prides herself on creating true, long lasting partnerships with her clients and takes great pride helping others. Learn more at highdesertmerchantservices.com
9 Ways for Non-Profits to Raise Money Online
Download our free guide to help you get online with your fundraising fast and reach your fundraising goals.
[INTRO] Hey there, Sami here with another episode of the digital marketing therapy podcast. Welcome to 2021. How exciting is that I hope you guys are as excited as I am. I am, you know, today's a little bit of a different episode. And we're talking about credit card processing. And I know that doesn't sound real sexy or marketing related. But there's a lot of things that happen within your tech stack within your, you know, in person processing donations. And I really want to make sure that you have some information regarding how to think about your credit card processing and how to make sure that you're paying as little as possible so that you can take as much of that money and put it towards your programs or services, whatever it is that you need to do.
So today I brought my friend Jennifer Nielesky on to this episode, Jennifer Nielesky, owns and operates high desert merchant services, a company dedicated to helping businesses and nonprofit organizations navigate the tricky world of payment processing. She prides herself on creating true long-lasting partnerships with her clients, and takes great pride in helping others and she is so generous with her time and so generous with her information. And guys, she does not get paid, unless you sign up with her. And I know that might sound a little creepy at first or shady at first, like well, she's just going to tell me whatever she wants, so that I sign with her. And that's what she's here to talk to you guys about today is like how some of these things can happen, how you can get yourself into contracts that don't actually benefit you as an organization. So there's a lot of valuable information in here. And, and so I think it's important that you kind of make yourself aware, like we don't know what you don't know. And so we all need to learn. And this is a great way to save some money, especially for nonprofits and, and put that money back into what you're trying to do. So that's what we're gonna talk about today. I hope you enjoy.
But before we get into it, this episode is brought to you by the online fundraising virtual summit. Jen is going to be a speaker at the summit, which I'm super excited about as well. But this summit is a five days virtual summit for free from February 8 through the 12th. And we're going to have 20 plus speakers talking about all things helping you build, grow and expand your monthly recurring donor program. If you know that you have money coming in every month, like how great does that feel that you don't even have to ask for it's just coming in on a regular basis. So we're going to teach you how to start your program, how to build it out how to retain your donors and how to grow them into larger donors. And we also have some amazing nonprofits that are going to be talking about how they have built out their programs and how they make them work, which is awesome. So head on over to https://onlinefundraisingsummit.com. Get on the waitlist registration officially opens on the 18th. But you can get on the waitlist so that you get the handy little email telling you it's time to sign up. And for now, let's get in the episode.
[CANNED INTRODUCTION] You're listening to the Digital Marketing Therapy Podcast. I'm your host, Sami Bedell-Mulhern. And each week, I bring you tips from myself and other experts, as well as hot seats with small business owners and entrepreneurs to demystify digital marketing and get you on your way to generating more leads and growing your business.
[SAMI BEDELL-MULHERN] Hello, everyone. And please join me in welcoming Jen Nielesky to my podcast. Jen, thank you for joining me.
[JEN NIELESKY] You're welcome. Thank you for having me.
[SAMI BEDELL-MULHERN] I call you, Jen, because we're friends and colleagues. But
I mean, do your professional people call you Jennifer? I should be respectful of that.
[JEN NIELESKY] Most people call me Jen, the credit card processing it. So yes. Okay, perfect.
[SAMI BEDELL-MULHERN] Perfect. So you and I have been connected for quite some time. But I think the reason why our bond is so close is because we both feel the connection to relationships, not just about a transaction, which is I didn't mean to even say that since you handle credit card processing, but you really feel a strong connection to helping businesses grow. So I was hoping you could just start off by talking about that a little bit.
[JEN NIELESKY] Sure. Well, I found out that in the payment processing space, there was a lot of ambiguity, a lot of inconsistencies. In fact, that's kind of how I got started in this business. I didn't wake up one day super excited about payment processing. I didn't go to school for this. But it just so happened that a friend a long time ago asked me to help her with some of her services when she was opening a business. And one of them was setting up for credit card processing. And it was crazy. I mean, I had conversations with a lot of different people, and they were all talking different languages. And it just really felt for lack of a better word slimy. And this is of course before Square and PayPal and all these published, well, no names existed and so you just sort of had to fight this battle. And ironically, shortly thereafter, I met somebody who was a sales rep or an agent on the other side and I met him on a personal note and I was like what is the situation with this, and he explained it. And that was about 15 years ago.
Recently, three years ago, when I was looking for a way to earn an income around supporting my family, it came back to this. Because I remember when it was like being a business trying to negotiate this service. And I've always thought, why can't somebody just be honest and normal? Mm hmm. And so I got into this, really, obviously, to generate an income for myself, I'm a mom of two little girls. And, you know, I want to be present for them. And there's not a lot of things you can do to make money these days and also be present. But I wanted something that was good for my soul, kind of like what you said, I don't want to be a salesperson. And I certainly didn't want to be what I dealt with, I wanted to be the opposite. And so in the payment processing space today, in the year 2020, there's still exist that opportunity to really help businesses.
And I have a portfolio of businesses that I've helped so much, whether it be renegotiating the rates or ironing out, getting them the right solutions, and it feels good. And so I just think that in life, we can make money, we can also do something that helps others and feels good to us.
[SAMI BEDELL-MULHERN] So we're recording, I love this. So we're recording this at the end of 2020. But this will launch in 2021. And as we are kind of in that transition period, with budgets, I feel like credit card processing isn't necessarily the thing that we maybe think of at top of mind, that could be the thing to kind of help us either add additional funds into our budget to be able to do things like marketing or outreach, or just be a cost savings. Like it's just not necessarily something we think to evaluate on a regular basis.
[JEN NIELESKY] So I went to business school. And from that, I took away two things only, there's two ways to make money to things only do things it comes down to this bunch of money, here's what it comes down to do things you can win by selling more. And spending less and good business people understand that balance. And so you're absolutely right. It blows my mind when I ask a business owner or somebody running a nonprofit, who is the person that you work with? For your payment processing? I usually get a blank stare or no answer, I don't know. Or I get a company, oh, we use such and such company. Oh, we use this company. But it's interesting, because they'll have a personal relationship with their accountant and their CPA and their bookkeeper and their marketing person or lawyer. They might even know their phone service rep internet provider, I don't know, right? They hardly anyone knows their payment. But yet, they're spending 10s of 1000s of dollars in credit card processing every month, and it comes down to this. It's too confusing, hmm. People don't want to deal with it. They know they need it. And so they sign up. And that's the genius behind square PayPal and stripe.
Now, that's not always the right solution or the best solution. In fact, in most cases, it's not. And we'll talk about that later. But I totally get where they came from. They feel the need for transparency and integrity in this industry. And so people, especially new businesses, I think it's a necessary evil, they just sign up for an account real quick, and they're on their way. In fact, most of my clients are people that signed up or set up their business that way, and then are reevaluating, because like you said they recognize they're overspending and
I'll give you one example. This is a restaurant that I'm working with out in West Virginia, he was using square does about 140,000 in processing a month. And based on you know, his his his mix of transactions. He was paying square about 2.88 as an effective rate. With me, I was able to get him on to what I call a real processor and a different point of sale system. And he that pays now about 1.95. That translates in his business to about $1,500 a month, every month. And see. In other words, he was overpaying to Square also getting less service and less functionality in my opinion. If you know for a restaurant, that's new equipment at the end of the year.
[SAMI BEDELL-MULHERN] I was gonna say 15 $100 a month. Like, that's a lot. It adds up.
[JEN NIELESKY] It really does. Yeah, okay, but let's so I know we were going to talk about Square and Stripe and PayPal and all that stuff later.
[SAMI BEDELL-MULHERN] But like since we're on the topic, let's talk about it now. So it's definitely the easy thing. Like when you're signing up for new software, and especially because we preach kind of the online space and like your automatic scheduling your donor platforms and all that, like they integrate easily into especially Stripe, and PayPal and Square. So, um, what might be some things that people might want to think about, like ease versus savings.
[JEN NIELESKY] Okay, so that's a good question. So I'm going to back up a step because I want to talk about how anybody, any business or nonprofit should shop for merchant services. They should shop for a person, a partner, or relationship. And so I kind of alluded to that earlier, but you know, the way that I've set myself up, I I've remained non-exclusive to any one company because I really want to be a true consultant. So somebody comes to me, we're gonna ask some questions. Who are you? What do you do? What do you sell? How do you want to sell it? Who do you know, all the things. And from there, there are literally 1000s of solutions.
Now, Stripe, Square and PayPal, essentially, our gateway, and stripe especially makes it really easier. So a lot of web developers say, let's just use Stripe, and let's do it. But there are other gateways out there that are just as functional and also just as easy to use. And I don't really want to, I'm trying to make this a non sales call. So I don't really want to throw out different names and brands and companies, but anybody can Google payment gateways, and they'll all come up and they all function just pretty much the same way. So the ease of use kind of a myth, because it's just as easy to use a gateway connected to a real processor with iterates. Right? These platforms just have a partnership with those gateways that say, Okay, well, you can integrate easily with stripe. So that doesn't mean that you can't integrate easily with other platforms. They're just missing out, right?
Having said that marketing pieces right there in front of your face. It's called a gateway. Yeah. But again, if you're working with a person, and they're gonna say, Okay, this is the gateway, I would suggest, and more importantly, agents like me, we have that we have the ability to negotiate the rates down. And so, you know, when we talk about that, that's really where one of the benefits or other benefits as well, but square stripe and PayPal, they have their space. And I often tell people, if you're doing about $10,000 or less in processing, that's the space that I think they feel the best a month, a month exactly right. In processing. Now, if you're doing more than that, I can pretty much assure you that you're probably overspending by how much? You know, it just depends. But the higher the volume. You know, the more I call it waste there is.
[SAMI BEDELL-MULHERN] Okay, so let's talk about, like, what it means to talk to a sales rep for credit card processing, like am I paying you to like, negotiate rates for me? Like what does that look like? Because I might feel nervous about Okay, well, I might be ready to make the switch, I'm making more than $10,000 a month in my business. I don't like these per transactions fees, especially if you're a business that has high volume transactions at low dollar amounts, right? Like, what does it mean? If you say like, talk to some local people build that personal relationship? What does that look like?
[JEN NIELESKY] Well, I say, shop a person and there's some questions you should ask ask them, How long have they been in the business? Ask them what companies are they partnered with just one or more that matters. Because if somebody is only representing one, they're just going to tell you that and it may not be the right thing. Um, you know, an industry knowledge is important. For example, I'm gonna throw something out cuz I know a lot of your listeners are in the nonprofit space. Yep.
So in the nonprofit space, our special special rates for nonprofits, but what I have found in my experience is that a lot of agents like me, don't even know that or they're too lazy to do the paperwork to make sure that they get that that's something you want to ask, you want to ask, you know, do you work with nonprofits? Because they'll know these things. And so, you know, it's Unfortunately, there's no way to check some of these reviews, one of the best ways to find somebody to work with is good old word of mouth, ask somebody who you know, that runs a business? Who is your merchant services person? They don't know, ask somebody else. But if they somebody says, Oh, you know, I use Paul at such and such, that's probably going to be a good referral.
[SAMI BEDELL-MULHERN] No, that's, that's a good point of view for anything. Um, and then when it comes to like, I mean, it's a, I've learned this because I know you very well, and I still get confused. Sometimes. It's a whole different set of words and language and terms that we might not understand. So what might be some key terms that people would want to either ask for or make sure they understand before they talk to somebody?
[JEN NIELESKY] Okay, so you're right.
In this space, there's this whole bubble of what we don't know, we don't know. And that's really that my intention with this with this podcast today, I really want to educate your listeners on what they don't know that they don't know. I'm going to back up a little bit and I want to talk about rates.
As fun as it sounds. This to me, because if anybody knows me, like I'm a math flunk out. I mean, I couldn't even do math 40. But I love numbers. And I love talking about this. Let me explain it.
First of all, there are two parts to credit card processing rates. The first part is the part that's negotiable. And the second part is the part that is not negotiable. So we're going to talk about the nonnegotiable part first, this is the cost that is passed through by the card brands Visa, MasterCard, American Express and discover, okay, every single card that a business takes in has a different rate associated with it. And that range is from point 05 percent, all the way up to about three and a half percent plus a transaction fee. Okay Average for a retail client would probably be somewhere around 1.6 to 1.8. Okay, so that's the cost is not negotiable, but it is influenceable. And we'll talk about that here in a minute.
The other part is the part that is negotiable. Now the negotiable part is your merchant services fee. And that's the part that somebody like me can negotiate on your behalf. And the pricing structure that I usually pass through to my clients, which is in their best interest is something called cost plus or interchange plus pricing. And all that means is that you're going to pay a true pass through on whatever that card fee is by the by the card issuer, and then a negotiated or pre negotiated rate. On top of that, we call it on top of cost.
So for example, point five oh percent, or one half of a percent, and 15 cents of transaction on top of cost is a very good rate. So for perspective purposes, if a cost, the average cost coming through with all the mix of cards that a business takes in a month is let's just say 1.5, and 15 cents, or whatever. And now you're tacking on an extra point five, you're still close to 2%. But look at what square and stripe with these guys are doing two places.
[SAMI BEDELL-MULHERN] So I want to make sure we're talking about this. Because when you look at what you provide first or, and this isn't meant to be like a sales thing, like you should call Jen and she should be your credit card processing person. But like, when you look at what a credit card processing person could provide to you versus stripe, square PayPal, they're giving you a like a blanket rate per transaction, whereas with a processor, you're it's a variable rate. Because it just depends on the card that they're using. Right?
[JEN NIELESKY] That's right, but nine times out of 10, probably even 10 times out of 10, the cost will be lower than what you're paying with anybody that gives you a flat rate, here's why.
If the range is from point five to three and a half no business, not square, not PayPal, none of these guys, they're not going to give you a price that's lower than what your cost might be to hedge against that bet they're going to they're going to raise a high, you know, in in 2.6, may not seem high. But when you add that 10 cents to you know, per transaction to a business that does, you know, sells coffee or or low ticket items, then it really it adds up. And that's where you know, my friend out in West Virginia went from 2.6 2.8. Now that's one part of it. And so I like to present interchange plus but the other part of it right now, where businesses are really hurting, especially in the restaurant space, because of COVID.
There's something called card not present. And so, for example, I know the square goes from 2.6 to 3.5. If the card is run, and it's not run through a chip or a swipe, it's run, you know, you've entered it on online or somebody keyed it in. And so, for example, restaurants are all converting to online ordering, and they're seeing this huge increase, I'm getting a lot of calls, it's putting people over four and a half percent. Now, if they should be paying 2%, four and a half percent is two and a half percent of what they're processing times $100,000 a month, you can do the math. And so one of the advantages of having a cost plus pricing structure is that whatever that negotiated rate is that doesn't change.
Now, you will see a little bit of a bump in the cost passed through by like Visa and MasterCard. And the reason why is this, the higher the risk, the higher the rate. And so if you're attending a card without seeing the person having a signature checking ID, they presume it's a higher risk. But the bump in the rate is not a whole percent. It's a small it's a fraction of a percent. And so again, there's that benefit to having somebody sign you up on cost plus pricing, you know that there will be a small bump from the card brand providers, but there will be the rate that you've negotiated for your merchant service rate. Let's just say this example is point 5% and 15 cents, half a percent and 15 cents per transaction that will stay the same whether it's a card present or a card present transaction, right. So let's just let's take a look at the comparison.
[SAMI BEDELL-MULHERN] So if I have an e commerce business, or I have a donation page, if somebody is putting their credit card in online, Is that considered card not present or his card not present? I call restaurant to place my to go order and they take my credit card over the phone like can you explain kind of what those differences might be?
[JEN NIELESKY] Well, it's exactly what it sounds like it's covered is not present. Yeah. What you described though with the restaurants near is even a higher weight that's called I forget what it stands for. It's like ti RF. Don't quote me on that. But it essentially means that Visa and MasterCard can say this is a really risky transaction because you didn't capture the zip code or the address. And so one of the benefits and why I make sure that my restaurants are good to go on online ordering is because in that process, you can capture information. And again, the lower rate is associated with a lower risk. And so if you've got somebody whose address their email address and their phone number, which we're all happy to put in, you know in a secured payment page, we call that your level two level three processing where it's going to reduce.
So when I say that the cost or the interchange is not negotiable, but it is influenceable This is one way that we can advise our clients to pay less, not more is by setting up their payment page properly. Like there's a lot of restaurants that are taking payments over the phone right now. It's a huge No, no, it's a huge risk. But when you talk about that, because people think, oh, everyone's doing it, it's really bad. If it's, if you write somebody's credit card information down, and you're really honest person, and you run that card, and you walk away, just real quick to go potty on the podcast, because you have girls.
What if somebody walks by and just snaps a picture? Yeah, 100% phone, walking, and now you've got a compromised credit card. And that merchant is online. Like, it's just so easy. I'll give you kind of a funny story. You can cut this out if you want.
But, you know, I'm going through a divorce, and my divorce lawyer doesn't believe in technology should have been a red flag, but she's hard to pay. And she wants me to call her assistant and give her my credit card information over the phone. Am I comfortable with that? If I send her an email, it's like, a phone call to your merchant service company and $10 a month would solve this problem for you. Mm hmm. Legal for you should not be asking. And there was ever a right there was ever a fraudulent charge. Like you're opening yourself up to a ton of liability. It's not good. And that's something called PCI compliant, which I don't really want to get into that.
[SAMI BEDELL-MULHERN] Um okay, but this list lends to the next piece where it's like you, just like we talked about with websites, like you really need to understand what technology you absolutely need, like how are you taking money? How are you selling things? How are you taking donations? How are you processing things? So people need to really understand what they need before they talk to somebody who's going to provide credit card solutions, because all of your technology is going to create those integrations and set that system up.
[JEN NIELESKY] Yes, and no, I want to address this. I'm going to kind of be a little sporadic. First of all, I would rather somebody come to me close your eyes and give me their wish list. I tell him in a perfect world, whether it's possible or not. Just tell me what you want magic money to show, how do you want it to show?
That's my personality, I want magic money to show up. But I want to go backwards a little bit because I still I want to talk about rates, because there are there are things that need to be known in this area. So I'm gonna rewind a little bit on you if that's okay, that's okay.
Okay, so in the rate space, there are different rate structures. And I sort of talked a little bit about the flat rate and why that would never be to the merchants advantage, because the price of that will always be higher than the anticipated cost and how much is just, it's just that it would make more sense for me. But, you know, to benefit me as an agent to put clients on a flat rate, I would make more, but that's not what's best interest for the merchant. So that's one quick pay structure. And that's what most of the published guys that have experienced start with those guys are doing okay.
The second part is the interchange, or the cost plus pricing, which I described. But there's also a third part, actually, let me go back under interchange cost. I alluded to this earlier. But if you're a nonprofit, you really want to make sure that you're working with somebody who understands that there is a special rate for you, because Visa and MasterCard have a special rate for nonprofits. And what I have found in my experience is that either the agent who signed him up didn't know was too lazy or wasn't set up correctly to be able to do that. What needs to happen is that paperwork needs to be filled out correctly and your MCC code needs to be accurate. And once that is, you know that the account is set up that way, you will actually see a lower cost which is also what's an NCC code. Okay, so an NCC code I don't even know what it means you can google it but it's essentially on how your government and taxes code your business. They say this is the kind of business you are Oh, and and is it m as in monkey. N as in Nancy? m like Mary CST okay. NCC code.
The other thing that I wanted to point out or or throw out in this section, if your listeners are still paying attention to the conversation about rates is this? Well, one half of a percent and 15 cents over cost is a good deal. Anybody who's listening and wants me to negotiate their rates for them. Number one, I'll make sure that they get the nonprofit rate. And number two, I'm going to offer one 10th of a percent and 10 cents a transaction. No questions asked doesn't matter on volume, no matter the circumstances. So a little gimme right in the middle of this podcast just for those who are paying close attention.
Okay, so the third, the third pricing structure that is very relevant to the nonprofit space that a lot of people aren't totally knowledgeable about is something called cash discount or surcharge to different programs. There's a lot to each of them so I can't go into too much but essentially how both of them work is they pass the fees associated with processing to the end user. And so you see this a lot in coffee shops actually don't even recognize it, because it's usually between three and 4%. So 3% of a $10 transaction is 30 cents. And, you know, it really saves the business 1000s 10s of 1000s of dollars a year.
Now, in the nonprofit space, it's highly acceptable, because people are giving a donation, and they want to give their money, and they want to give as much of it as possible. And so everybody knows that it costs money to process credit cards. And so I like to set nonprofits up with either cash discounting or surcharging, and cash discounting just says, you know, the price is $10.30. But if you pay cash, it's $10. And, you know, in the online world, you can create that cash option, you'll get a CH and some other ways, but just knowing that that's an option, you know, whoever you're talking to about your merchant services, definitely talking about that, ask them a lot of questions. You know, the one thing that I will say is that the rate should be somewhere between three and three and a half percent. So if somebody automatically says, Let's set to at 4%, my advice is find a different person.
[SAMI BEDELL-MULHERN] Well, and that's as of, you know, December 2020, right? Like, we want to, if people are listening to this far, the future, which I hope you are, that might that rate might change. But I just want, I just want to throw that disclaimer up there.
[JEN NIELESKY] Not really. Because here's why 4% 4% is the max allowed by Visa and MasterCard. And so when I say shorter person, and ask them about their experience, you know, they need to be working with a company that knows how to set this up correctly. Because this and MasterCard are a little touchy about this. And so you need to let them know, in writing that you're planning on, you know, performing one of these programs, you can do it more than a certain percentage, it's designed to cover your costs, not for anybody to make extra profit. And when somebody sends you a 4% cut, your cost is really coming in at 2.9. That money is going to that person. And so when I say if somebody offers you 4%, right off the bat, that's a red flag, because what they're doing is they're sending you at the max and their customer, they're, they're passing that cost on to your customer, but the program itself is a good one. But you want to find somebody that will set it up with integrity.
[SAMI BEDELL-MULHERN] Okay, so you talked about cash discounting, but the other way that people can also kind of, you know, maximize donation, at least on the nonprofit side maximize donations, is there's a lot of software programs out there that will allow you to have your donor cover the transaction or the credit card fee.
[JEN NIELESKY] That's exactly right. And that's essentially a surcharge program. Because I know that this is being heard by people in different states, and you want to check your state laws because some don't allow surcharge, or some might allow cash, they essentially do the same thing. They just do it differently. So surcharging was just like what it sounds who you're going to buy a product, we're going to tack 3% on. Thank you very much. And people were used to it. We do this every time I pay utility bill online, I paid 495 to do it, but I'm getting my points. So I love it.
[SAMI BEDELL-MULHERN] Okay, so what else might organizations want to think about? I mean, you mentioned like interviewing you know, your person if they don't align or answer some of these questions that we're talking about today to maybe interview somebody else, like I get hit up all the time by people saying, Let me help you lower your rates, like how do we weed through the people that are genuinely trying to help us versus the people that are just trying to like, get in front of our faces?
[JEN NIELESKY] Yeah, that's unfortunate. I have a lot of clients that get calls like that all the time. One of the biggest compliments is one of my restaurants here locally, whenever they call, she says we work with an advocate. Thank you. And they stopped calling and she's talking about me, and I appreciate that, you know, how do you find an advocate? That's, I don't know, it's hard. I mean, you know, that's why I say ask around. If somebody has a merchant service person that they rave about, that's probably a pretty good person.
[SAMI BEDELL-MULHERN] Um, well, I talk a little bit about like you as an advocate, like, um, why would I want to not just go with somebody that I talked to you versus somebody that's local? Like, what are some of and I know, you're not trying? No, you don't want to be we've had conversations about this, that Jen really doesn't want to be super salesy and smarmy. So just like, trust me with this, this question. But when you're talking to people, like, what are the some of the things that you do that goes above and beyond and like why people would want to have somebody local versus just going with a National Agency?
[JEN NIELESKY] So one way is to figure out how they're paid. And some people feel uncomfortable about this, but I like to just when I'm talking to a client, I let them know, this is how I get compensated, just so you know. And it matters because I think it drives behavior. So for example, if I was a W-2 employee of some company, and I'm getting a salary and whether or not you stay with me or not, does it really affect my income? That's one scenario, versus somebody else, and maybe as an independent agent, and we're 1099 status. Now in the merchant services space, how we get paid is residual, right? And so, as an independent agent, I don't get money out front. I don't get a salary. I have no guarantee but what I do do get is a simple little sliver of the processing money, the merchant service rate every single month. And so that drives behavior because we're more motivated to stay engaged, right? Like, I set myself up more like a partner because I want my money to last. In fact, I, I often felt like, I want to be your last merchant service person, and I want to be your partner, because most businesses will be in business for a long time. Now, if I'm a W-2 employee, I'm only there for as long as I'm at that job. Right? And it doesn't really matter. So that's one question to ask, Are you a W-2 employee? Are you an independent agent? No, I think in any situation, a business owner has more equity in the deal than a W-2 employee.
[SAMI BEDELL-MULHERN] Okay, so we talked previously about how websites and systems and things like that sometimes can be overwhelming. So what kinds of things should people consider or think about when it comes to if they're going to make a shift in their credit card processing, like what what systems and things might they need to think about it before they kind of create the solution that fits them?
[JEN NIELESKY] Well, integrations is a big thing, you know, you need things to talk to each other. And that's probably one of the reasons why people go with something simple like Stripe, because it's easy to integrate. But whoever is doing their web, their website or web development, they should know about gateways. But also, if they if they find a good merchant service person that they're able to work with, that person should have quite a few options as well. So people should understand the integrations that they need, and that goes through like their website, through their in person, through their phone system, everything right, not just digital. It all depends on what they want.
So for example, a restaurant is a good example, because they need a point of sale system, right? A point of sale system is the most elaborate because it's going to do a lot of tracking, it's going to do a lot of different functions. But take an order and send half of it to that printer and half of this printer, all that good stuff. Now, in the in the restaurant point of sale space are used to just be a few players. But now there are 1000s of point of sale options out there. And people tend to shop based on function and features. And what they find is that that tends to be really costly, because they're not paying attention to the processing piece. And so again, it just really comes down to finding a good person who's knowledgeable and who has good access to various programs. Because, you know, people that I work with and how I work. Like I said, I'll ask, you know, in a perfect world, how do you want things to run for you. And then from there, it might be a mix, it might be a point of sale solution, it also might be a gateway, I'm going to tell you in the in the nonprofit space, there's a couple of things that I see where we're really missing out on capturing money.
So like, in the nonprofit space, it's so important to make it really easy for people to give money. And there are so many cool programs out there that that do this, one of the easiest things to do is a hosted secure payments page. Now any gateway will work. And this is what you're talking about where you have a donate now button on on the website. What happens is, somebody hits that button, boom, a secure payment page comes up, they put in all their information. And now they're donating some of these gateways even let you set it up to where it's reoccurring. Would you like to make this a once a month donation, which is great. Yes. And it's just amazing. It's really great. It's really shocking, though, like, there's a lot of a lot of, for example, churches, I see that missing on church websites one, huh? Okay, so it could be, it could be like, maybe you need to be able to take online orders. And you need to be like maybe your e commerce and you want to just do things on the website. But then you also want people to call you so that you can deliver the products in person, right? Because right now, delivery is crazy. It could be that you're a nonprofit, and you want people to be able to do donations online as well as text to give as well as have a platform for an online fundraising event that you're going to do. It might I mean, like there's like all these things, right?
[SAMI BEDELL-MULHERN] So it's really figuring out what you absolutely need and having that clear conversation with that local person that you're working with, to be able to give you that holistic solution. Right?
[JEN NIELESKY] All those things are possible.
Oh, no, I was just gonna say but like, make sure you know what you want. Because otherwise, like, if I come to you and say, Hey, I'm so and so. And I need this, like that's not helpful.
[SAMI BEDELL-MULHERN] Um, yes and no. So we sort of alluded to this earlier, and let me let me yours. I think at the end of the day, you're so much more patient than I am.
[JEN NIELESKY] Oh, girl. Are we talking about knowing what you want? Okay. So the thing is, you know, like I said earlier, there's, there's this whole goal of you don't know what you don't know, and how does somebody know what they want? If they don't know? And so it's our job if you have a good agent to ask the right questions. So for example, we're working with what's going to be a grocery store pretty soon. Well, I can assume that inventory is important. But when I started asking questions like, would you like a system that you can scan your POS and it keeps par levels and automatically orders for you when you're low and you hit a certain point he didn't even know that existed? And so I know that exists without somebody knowing and asking, Well, your grocery store, it makes sense if this would be something you would want. And then he told me, he's gonna be doing deliveries, and he's planning on taking payments over the phone, no need, they have mobile devices, have your driver collect the payment. In person, it's more secure, you know. So there's things that like, all the things are possible, every so many ways to take payments, it's just a matter of connecting with somebody telling them, close your eyes, and just in perfect world, tell them all about your business. And let them come to you and say, This is what I would suggest. And this is why and here's how I work.
[SAMI BEDELL-MULHERN] So you mentioned earlier asking for referrals, but if we don't know anybody that's doing kind of what we're doing, or we've asked, and nobody has referrals, like Are there other ways that people can find trusted processors to have these conversations with?
[JEN NIELESKY] I mean, they can always use me Of course, shameless plug right there. But also to you know, you and I met and BNI chapters business networking International. One of the things I like about that fraternity is that they tend to attract and retain good people. So you might want to just see if there's a BNI chapter in your area, and if so, there's a merchant service person, and have a conversation with them.
Um, you know, the benchmarks are going back to the rate structure, ask them for interchange, plus for cost plus pricing structure. And pretty much anything over 2.50 and 15 cents of transaction is high. Another thing to look out for is any additional fees. So if there's any additional fees, really ask them why because that isn't negotiable. And a lot of people don't know, for example, I'm working with a client in Hawaii, who's been paying 59.95 a month every month for something called business management. No idea what that is. It's just something that the agent wrote in and it's going to him so ask those questions. It's okay to ask.
[SAMI BEDELL-MULHERN] Yeah. Okay, so what other questions? That's a good point is, if I'm taking a look at my statement, and I'm taking a look at the fees that I'm paying, and all of that good stuff, if I'm not on stripe, square, PayPal, etc. What kind of, like, how do I address that with the person that I'm working with? To say like, these, these fees don't seem correct me.
[JEN NIELESKY] So that's why you wouldn't have an agent or a person. But I'll tell you, there are a few fixed fees that are we can't really negotiate one will be a monthly service fee, one will be PCI fee, you and I both know, compliant industry fee. And so there are some but they don't necessarily have to charge an annual fee. They don't necessarily have to charge early termination fees. That's really usually up to the agent. I'm sure all my co workers in the space are hating right now, but not necessary. And so those are negotiable things.
[SAMI BEDELL-MULHERN] So let's talk about I just want to make sure we drive home, like square stripe, PayPal, like those are the easiest platforms. And so if I'm a nonprofit, if I'm a small business, and I'm listening to this, and I'm like, okay, whatever, I don't give two craps about what she's saying. Because these things are easier. they integrate with everything, and they're true. So why might I want to think about that from a different perspective?
[JEN NIELESKY] Sure. And I think that's a lot of people's stance, it's easy, and it's convenient, and they don't have to really think about it. And that's why I say, you know, over 10,000, it's not really something to think about because 1% of 10,000 isn't quite the same as 1% of 100,000. But there are some other vulnerabilities. And let me describe the difference between the square the stripe and the PayPal world versus what I call old world or traditional processors. Okay? When you say Old World, Old World, right? Like what I mean, okay, I love that one anyway, carry on like one.
So the squares, the stripe, and PayPal world, there were almost like a marketing or money Movers. And what I mean by that is when you sign up for an account, they approve everybody right off the bat. So they don't put you through underwriting. They don't know about your business, they don't know what to expect in terms of transaction volume, or, or patterns and things of that sort. And the thing is, there's a lot of fraud in the payment processing space. It's how people launder money. And so when you don't have underwriting checking you out, in a risky industry, what ends up happening is when there's some tricky transactions or questionable transactions, they're their way to mitigate risk is to hold your phones or to put you on a reserve program where you know, you're you don't get 40% of your money until 20 days after and it's a rolling reserve and there's a lot of that happens, but it happens after the fact and so people are often surprised to say,
[SAMI BEDELL-MULHERN] Oh, wait, oh, so I wouldn't say like this could be something like let's say your nonprofit has like a monthly service fee for like childcare or for pet care or for health care. Like, so all those could all be considered risky industries, right? Like where things can you can be making claims and things that are valid.
[JEN NIELESKY] So for example, this actually happened to me on the consumer side, I had hired somebody a painter to paint my house. He said he needed $3,000 upfront for materials, it's a no problem, I gave him my party ready to square. Two weeks later, he's knocking on my door, and he's like, square won't give me my money. And I'm like, I'm sorry, but they have it. I don't have it. It's not in my bank account. And so here the situation was that it was a big transaction that they hadn't seen before. And so instead of funding it, they said, Whoa, let's put on the brakes. We want you to tell us who are you How about your license number, we want to know that you're insured and bonded, give us that information. We're going to be bank records from you. And it took them all this time to jump through hoops.
Now, on the contrary, a client of mine, here's what who was here locally, they're a co working space, they were just about to open, they sell memberships. And they're using a bunch of different technology to streamline the process. And so the program that they're using, it dispenses credentials, usernames, and all the things that their clients would need, but to trigger that it had to have a payment. So what happened right before they were about to do a grand opening, they ran a bunch of transactions, big ones to like 400 to $500 transactions, and the next day, they were refunding them all huge red flags, right? If that was square pay, pal, they would have stopped that account immediately have been suspended, and there would have been a problem, right? Right before opening, they wouldn't have all these issues. But instead, the bank that I signed him up with called me and I had already called him and said, What do you guys do it? No, I knew what they were doing. Because they explained it. And so I explained it to the bank. And that was enough for them to say, Okay, we'll go ahead and leave it going. The client never even knew they never even knew they were in danger. But they were it was square stripe or PayPal, like that kind of irregularity. What set off bells. And because square and stripe and PayPal don't really know who they are what to expect or have somebody, they're not going to call the claim. But what do you guys do, and they're just going to go up, right? brakes on this because that's how they mitigate their own risk.
[SAMI BEDELL-MULHERN] It's the difference between the relationship versus the I'm just a number.
[JEN NIELESKY] That's right. But also to it helps having gone through underwriting because the bank has already given you approval to process through their network, they've already checked this out. And I've never had anybody not make it through underwriting. But they do raise an eyebrow, if you say you're going to be you know, doing $20 transactions, and suddenly you're doing a $2,000 transaction, it's a red flag. And it's also good for the for the merchant, because it might be mean that your network has been hacked, or there's something going on that you need to know about, maybe an employee is doing some crazy rebounding because they're mad, and you're getting a phone call instead of just getting your account shut down. Or worse. What usually happens is the funds get held. And that's great. Because they need the money. They don't any Yes. I mean, if you are in a situation where your funds are being held, and it's you know, one week, two weeks, like that's painful, especially right now.
[SAMI BEDELL-MULHERN] Yeah. Okay. So I think we've talked about a lot of ideas and things for people to think about when it comes to their credit card processing. Is there anything we haven't touched on that you feel like people should be thinking about the back of their head like, processing or like whatever I mean, I, I feel like we talked about, interview some local people, you know, build a personal relationship, take a look at the tech and the solutions that you need to have so that you make sure that you're getting the best opportunity.
[JEN NIELESKY] Pay attention to your rates, and work with your team, your financial team to make sure that you're auditing that on a regular basis. Like what else are we missing? That's kind of like the thing we don't know. So that's all I hope I didn't scare your listeners. But to give a more, a more brief summation, you know, you have a good rate, it's close to 3% or less or not too much higher, depending on how you run cards. And the way you can figure that out is simply divide what you paid for credit card processing into how much you processed and that's called your effective rate. And so I always tell people, if you're over 3%, definitely shop around and check even two and a half percent depending on the kind of business you're in. It all depends on how much those percentages mean to you. Again, if you're doing 10,000 it's not really worth the trouble but if you're doing 15,000 or more and these percentages really add up definitely shocked that the other thing that I would I would share with your nonprofit listeners is theirs.
I sort of mentioned this before but I'll go a little deeper. There's so much technology out there that is really awesome that can help drive more business to you. One of the programs that I like to recommend they do really cool stuff. One of them is a kiosk so you know wherever you are, you can take that kiosk to connect to wireless or the or the internet and people can give just by by putting in their card. This is really great for churches, but my favorite thing that is really I think underutilized but it's becoming more utilized.
The other two things QR codes, which I'm not really going to dive into because anybody can just Google that. It's a simple set of QR codes. But I love the text to give programs that are out there, especially for nonprofits. And so here's how it works. This is how I like to do my shopping. I like to buy things on Amazon the other day, I needed duct tape. And I didn't want to go to the store. So you know what I did, I had had duct tape in Amazon, and I hit buy now and automatically it was ordered, and it showed up the next day. And I will do that all day long, because it's easy. And people will give that way too. So text to give. Here's how it works. Let's say you have a dog shelter and Sammy, Sami's dog could be your code. So I want to get to Sami's dog. So I type in your text code, which might be 15111. And I type in Sami's dog $10. Now the first time I do that, a payment page is going to show up on my phone, and I'm going to put in my information, my name, my address, my credit card information. But the second time, all I do is write Sami's dog 10. And boom, it's an automatic, it's an automatic donation. So think about that, from a perspective of your donors. It's so easy for them to give, especially for example, churches every Sunday, you can just say pull out your phones, you know, let's give here's our keyword, you can advertise it, you can put it all over your marketing. And it's just so easy for somebody to grab their phone, type in five numbers, a codeword and a number and in them and people want to get it, you have to make it easy for them, especially with online events or online interactions and things like that.
[SAMI BEDELL-MULHERN] Yeah, I think text to give is a huge is a huge thing and something that's probably very underutilized. 100% Well, Jen, you've given us a lot of things to think about. We will link up a lot of these resources and information in the show notes at thefirstclick.net/podcast. If they want to find out more about you or reach out to you, I know you are very generous and that you offer free audits of their processing reports. How do they do that?
[JEN NIELESKY] I think probably either. Facebook, you can find me at high desert merchant services. I'm not really sure what my link is. Maybe post it for me or I'll pull it my website which is https://highdesertmerchantservices.comwhere they can just send me an email pretty easy. It's email@example.com I'd be happy to I get free advice. Not everybody has to be a client of mine. I'm happy to help. And I really love looking over statements because it's kind of like reading a novel. I like to look for things that shouldn't be there.
[SAMI BEDELL-MULHERN] Yeah, well, and that's why I love this conversation so much is because I feel like it's one of those industries where things get hidden, much like our cell phone bills, right? So however, we can help nonprofits save those expenses and use them in a more healthful way. That's what I feel like I'm here to do. And that's why I brought you on, because I feel like that's what you're here to do as well. And that's something that's true to your heart.
[JEN NIELESKY] Very good. I agree. Okay, cool.
[SAMI BEDELL-MULHERN] Well, thank you so much. Thank you.
[CLOSING Thank you so much to Jen again for joining us for this episode. And if you're a little bit overwhelmed, I totally get it. There's a lot of information that she shared with you. But like I said, she is so generous with her time. So head on over to https://thefirstclick.net/podcast, check out the show notes for some information, how to find her how to get some more things, more value from this episode, and I really hope that you'll subscribe where you listen, so you don't miss out on a single episode. We are rounding up. We're almost to 100 episodes, 10 more episodes and we'll hit 100. So I'm excited to celebrate that with you guys this year. 2020 is going to be amazing. And it all starts with you. So thank you so much for listening, and I'll see you in the next one.