They Said Credit Card Fees Were Inevitable... Then We Found This Loophole

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1. 0:00
   Guest

   If your business is generating 10% profit and you're paying 3% of the credit card, you're losing 30% of your profit. Most people will tell us that credit card fees is just the cost of doing business. That's not the case.

2. 0:11
   Wes Mathews

   Dave Iava and Ilyssa Grant are both pioneers in the merchant processing, saving customers millions of dollars. We were really one of the first companies to aggressively begin offering the cash discounting model.

3. 0:24
   Guest

   When it comes to credit card, you're faced with that 3% fee. Let's look at what is that 3%. Who's the beneficiary of this? The credit card company and the client. The person that's taking the hit is the merchant.

4. 0:34
   Wes Mathews

   How do you guys make an impact from the new way of doing merchant processing?

5. 0:38
   Guest

   We make real adjustments for the profitability of companies. We model this in a way that we can be more beneficial to businesses.

6. 0:46
   Wes Mathews

   I'm really excited to introduce Dave and Ilyssa. Thanks so much for both of you coming on. It's awesome.

7. 0:51
   Guest

   Hi Wes. Hey, happy to be here. How are you?

8. 0:54
   Wes Mathews

   So I'm really excited to dive in here because I think as an entrepreneur, just speaking from my own experience in my first company, what always used to really get me irritated was that line item on what I was paying the credit card companies. And we paid several hundreds of thousands of dollars every year. And I just sat there as an entrepreneur, right? It's hard enough to run a business. You're billing clients. They're paying. And then 3.5% or whatever percent goes off to this invisible entity. And then if you actually look at the breakdown of the bill, it's like, who are all these six people that are taking these fees?

   Like that's money coming out of my pocket that we work so hard, but the same token, like we need our money. And this is like the only way for us to get paid versus people saying, yeah, checks in the mail, checks in the mail. We all know how that goes. So really excited to have you both here. Like rewind back. I just want to ask that question. You know, what's the one thing that people think they know about your industry, but they're completely dead wrong about it?

   Most people will tell us when we talk to them that taking credit cards and paying those fees is just the cost of doing business. So they just feel like, like you said, I need to collect my money. It just is the way it is. I have to accept it, but we're here to tell you that that's not the case. And I think I said that to you guys when I first met you. Like that is what it is. Like there's no other solution out there. So like what, you know, you guys got some great interesting backgrounds.

   Like what ultimately led you to dive in and get involved in the merchant processing space?

9. 2:44
   Guest

   Well, I was, uh, I'll jump in on this first. I was, I was training athletes at my old business evolution of sports performance. I had a business major with a minor in kinesiology. Go figure, you know, two opposite ends of the spectrum. But, you know, I read a book a long time ago called the Cash Flow Quadrant, which kind of changed the way I looked at business. And in that book, it talks about getting to the fourth quadrant at some point in your life where 0% of your time represents 100% of your money.

   And basically it came down to a residual concept. And it's like, where can I get involved in a business that can really develop a residual cash flow? And this was a great business for that. When I got into it, I look at business in different avenues. And the way I saw this business is there's, it's a necessity, but I don't really like the way the process impacts businesses. Like we see things a little bit differently. You know, when people look at their business and they say, I got to pay this 3% to a credit card company, they think, oh, it's 3%.

   I'll just build it in. I look at it as there's nothing you're gaining from paying 3%, right? Other than another form of payment. You know, you get payments by cash, you get payments by check, you get payment by credit card. I see it as something that's coming out of your profit margin. So if your business is generating 10% profit and you're paying 3% to credit card, you're losing 30% of your profit to credit cards. It's pretty simple math. And that's a big chunk because like you said in your business, hundreds of thousands of dollars a year, what can you do for that?

   That's your kid's college tuition. That's your mortgage payment. That's payment for both of your cars. You know, your life could be really simplified if you could find those alternatives and that when we got into this business, we didn't get in to join and be like everybody else. We were like, what can we do differently? How can we model this differently to help businesses still make an income for ourselves? Because you know, with any partnership, it's got to be win-win. But how do we do that in a way that we can be more beneficial to businesses?

10. 4:44
    Wes Mathews

    So my experience with merchant processing has been kind of all over the map, right? I mean, there was a period in my last company where I swear every day I'm getting phone calls, emails, like show me your statement. We'll save you X amount of dollars. And it was like this game, right? And I think, you know, if I rewind back, I think I had, oh man, authorize.net tied in with first merchant. Like all these people's had their hand in the pot, right? And they did absolutely nothing for me.

    You know, you know, if there was a charge back, like maybe we had a charge back once every five years or something. They would not act like they would work for you. But how did you like enter merchant processing in a world that's like just what I saw as an entrepreneur is like so bloated because I came from the SEO web space. So I entered the same complicated mess of for every thousand companies, like 990 are complete garbage for the most part. And there's like five to 10 good ones.

    How did you guys do that successfully?

11. 5:43
    Guest

    Ilyssa, you want to jump in on that one?

12. 5:44
    Wes Mathews

    Well, Dave actually started in the business before I joined him. And I think it's always been coming from a place of disruption, coming from a place of doing things differently that are going to be inexpensive for the client to get into and save them money, increase their profit and efficiency. We've always looked at being different from our competitors in the way that we built our relationships with our clients in the ways that we strive to bring new products and services that are going to be beneficial to the client's bottom line.

    That's a lot different than the folks that you're talking about that are calling. Hey, let me save you a dollar on your processing this month, whatever it might be. We never look at it

13. 6:35
    Guest

    as just trying to save a few pennies here and there.

14. 6:38
    Wes Mathews

    We look at trying to make real adjustments to the way that people are taking their payments that are going to make real effective changes for them for the future and for the profitability of their companies. So in the beginning, we actually started out mostly working with restaurants and point of sale systems. And when we got in there, it was looking for free equipment. How do we save people money and really giving them a lot of bank for their buck, a lot of value. Nowadays, what we're trying to do is turn the tables completely and give them back as much of their processing money as possible.

15. 7:15
    Guest

    And we have a couple of great tools for doing that.

16. 7:19
    Wes Mathews

    So what year is this? What year did you guys start in the merchant processing? We started in 2011 and we began offering cash discount in 2018. So we were really one of the first companies out there to aggressively begin offering the cash discounting model. And you guys started at a time before technology really kind of took off from my perspective. So I appreciate that, but okay, I'm going to ask a question from my entrepreneurial brain and how I think most entrepreneurs look at this. So if I have a service and I charge a customer $10,000, I need them to pay me for that.

    So the only options I see as an entrepreneur sitting today, it's cash, which probably isn't going to happen. ACH credit card, and maybe we can talk about crypto, but that's probably not going to happen either. So I can either run a credit card or get an ACH. In my experience, ACH, like maybe it's $5, $10 a transaction. You typically have to wait a week or so for your money. But then when it comes to credit card, when they pay with a credit card, you're faced with that 3% fee, right?

    So as a business owner, I'm going to pay, yeah, what's my math? $300. For that transaction. So what is it? Like, how do you guys look at that? And you're saying we do things a little bit differently. So what does that mean to you? Or how do you educate your value to the entrepreneur that's sitting with that question I just asked?

17. 8:55
    Guest

    Well, let's look at what is that 3% because that's kind of the important issue. For these fees that we're paying now, we can thank Senator Durbin from South Carolina for screwing with the entire industry and setting this whole mess in motion that causes you to spend $100,000. One thing, when you're in a financial business, it is really easy to see how dumb Congress is. Everything that they pass in the financial industry is to protect the first step. And we know as business entrepreneurs that when you throw anything in a lake, you get a ripple, okay?

    And they can't see past the first ripple. So here's what happened. Senator Durbin regulated the debit card industry. And when they did that, people moved from using credit cards to debit cards. And as a result, banks lost $45 billion. Now, I'm going to go on record. This goes back to like 2009, I think it was. I will go on record to say that the CEOs of banks around the world are probably a little smarter than Senator Durbin, okay? And they're not going to sit and lose $45 billion.

    They're going to figure out new ways to get $45 billion. So what they did was they, you know, Debit Discover card was the first one to jump in with 1% cash back. So they went to all the people who were using debit cards, says, we'll give you 1% of your cash back. And people are like, oh, that's cool. So they start using the Discover card. Then Citibank jumps in and says, well, we're going to do cash. We're going to give you points where you could buy stuff in our online store.

    Great, so there's now rewards. Now you created a reward war between all the credit card industries. 2% cash back. We saw last, I think it was last year or two years ago, Ilyssa, we saw one card gave 5% cash back on deals and entertainment. So what people do now is they move back toward credit cards. And we went from, it was like 65% debit card usage to now 85% credit card usage. Well, that's got to get paid for by something. So, you know, what would typically be at 11 or 12% credit card is now a 15% credit card.

    And then the industry, in its genius, said, you know what? We could double dip. We could charge a higher percentage to the customer on the credit card end and we could also charge the same percentage to the business on the business end and they could double dip. So now they doubled their money instead of being down 45 billion, they're up 90 billion, okay? So it's the most ingenious business model there is because they make every single company that they're working with pay for their own marketing.

    So this is why the fees go up and the fees could be as much as 4% and 5% when you factor in what MasterCard or Visa is going to take, what the ISO is going to take all the way down the line until it pays for you. So when people come into your business and they tell you, we'll give you a 2.4% rate, that's never really the rate you're paying. It really comes down to an effective rate. So this is how we got into the, this is going to cost you money.

    Now, who's the beneficiary of this? The beneficiary is the credit card company themselves and it's the merchant, I'm sorry, the client who's paying for it because now they get rewards, they get air miles or they get cash back. The person that's taking the hit for no reason at all is the merchant. So the business owner is the one that basically is paying all the bills. The credit card company's taking the profit and the clients get the rewards. So when you think about it, the fee shouldn't even be on you, it should be on the client.

    If the client's taking the rewards, they should pay the bill. So that led into the future of how we go about doing cash discount programs and we saw that as this should, this can be a clear disruption. And if we can develop a model that could get that money back in the hands of the business and get that to be accepted and it was tough to get accepted and when it was initiated, clients kind of rebelled. And matter of fact, 10 states had laws against it but have since dropped those laws to allow this to happen because it makes sense.

    You can't argue that. That's where the fee should be. So over time, this started to take hold where we help businesses start to recover those fees. And now it's generally accepted wherever you go.

18. 13:10
    Wes Mathews

    Yeah, I feel like maybe two, three years ago, I started to recognize that whether I'm at a restaurant or even maybe some small boutiquey retail where it's like, here's your cash price, here's your credit card price, here's your whatever price. So is really then the big change that it's just becoming more acceptable for a business just to pass that fee on to the customer. So in my example of, hey, my client, I have an open invoice for $10,000. Is it as simple as just me as a business owner from a merchant processing perspective rounding that up to $10,300 and then just giving that customer that invoice or what specifically.

    And I ask that knowing that there's probably repercussions fine print terms and conditions violation. So how do you guys come in and make an impact from the old traditional way to the new way of doing merchant processing?

19. 14:05
    Guest

    Well, initially that was that. It was just add the fee and give the customer the choice. Now you need to give them choices. Like if they don't have a choice, a customer is going to get upset. Okay, especially in your market where it's a $10,000 bill, that's a lot of money. Okay, they're going to get hit with a $300 bill and they're going to be like, well, what's this $300 for? So that's why having an ACH system in play where they could do either or, it's really up to them.

    You can pay the credit card fee or you could just pay by ACH and everybody's happy. So as long as people have choices, they don't have a problem. The negative side to it is that government regulatory agencies continue to stick their nose into this and create and it's semantics. That's all it is. It's complete semantics. So they like, for example, in Massachusetts, Massachusetts doesn't want you to surcharge but it's okay if you build it into the fee and remove it as an advantage later. So let's say you have a $10,000 bill.

    If you just simply bill them $10,300 and if they want to pay by check it's $10,000, you're giving it cash back. Okay, that's why it's called cash back. So they consider that fine when all it is adding an extra step that doesn't need to be there. It's complete semantics because governments like to look like they're involved in consumer protection. They just don't care if they really are. So that's how the, it's evolving into what's called dual payments now, a dual payment system. So basically what you're saying is the $10,300 is our price and we're going to reduce that to $10,000 if you want to pay by cash or check.

    So there's a constant evolving in this process that's taking place but it's really just nothing more than semantics.

20. 15:46
    Wes Mathews

    But what's important though is a merchant doesn't want to take this on and try to do it themselves because they're going to be non-compliant. There are lots of actual rules and regulations that Visa has in play.

21. 16:00
    Guest

    So that's where we come in and we have a great system with a phenomenal gateway that gives you lots of reporting information that allows our merchants to do the offering of both credit card and the ACH digital check payment. And everything is fully compliant and that's really something we've put together to make sure that people are doing this the right way and they can take advantage fully of that dual pricing model.

22. 16:29
    Wes Mathews

    And I think for me, I think as a business owner it takes a lot of time to create an invoice for $10,300 or one for $10,000 because ultimately I think one of the challenges we ran into personally in our business was you really don't know how a client is going to pay. And I know a lot of systems out there in existence like one of the biggest ones in the country right now, you can't control if they pay by ACH or credit card. And if you put a fee out there and they pay by check or credit, there's no way to manage that.

    So on your platform, which I've also been in and I think what's amazing to me is if I rewind back to 2009, 10, 11, we used to pay so much money for software integrations, teams and for reoccurring revenue. And I, everybody's hands were in the pod and I think I had an employee to manage that entire process. Your platform, like I was kind of laughing at like, we had like six things going on back in the day and your platform like solved all those problems. It's so easy to use.

    Yeah, so like what's a benefit then? You know, if you take an entrepreneur that's on an old archaic system, bringing them over to like what you guys have built out, like what are some of the big things and some low hanging fruit that they'll find right away? Just like you said, streamlining processes, they're going to save time, they're going to save money. They might be able to get away with less employees handling the payments. You know, besides the fact that if they're going to start charging people using these modalities, they're going to be increasing their profit by eliminating those credit card fees as well.

23. 18:13
    Guest

    Right, and you know, when you deal with, when you deal with like, when you're dealing with multiple softwares, you're dealing with multiple expenses. And the nice thing about our gateway is it kind of, it kind of takes an invoicing platform, merges it with a gateway and it eliminates things like Authorize.net, which is $35 a month. And we not only can do the billing aspect of it, we are the connective gateway. So it's not, you don't have to pay additional software fees. So everything's kind of handled in one place.

    And even the dual payment side, which you said, hands down, the software that's out there right now, the general billing software or general CRMs aren't built to handle dual payments. So now you need to almost manually handle that. So our system, you put in $10,000, that's all you have to put in. It presents both those prices to the customer and says, it cost us $10,300 or it's $10,000, you decide how you want to pay. And then if they click by check, that's handled at $10,000. If it's click by credit card, that's handled to $10,300 and everybody goes away happy.

    So it gives people options, it gives people choices. And then the multiple payment opportunities for them, the gateway builds a payments page for your website so that if people want to go to your website, they can make a payment there, they can make a payment through the invoicing, you can take it by phone. There's just a million ways to take a payment. So it reduces the friction of discomfort on how people want to pay. You can even send a text to your client to get paid, which people pay very quickly when they get the text on their phone.

    Like 70% faster. And you can also set up recurring payments as well.

24. 19:48
    Wes Mathews

    Yeah, what I love about your guys so simple. And you guys have like really like I've just I've been in this world and I just know the pain. And when I looked at your platform, I'm like, this is like too easy. Like it's too like, where's the hook? Or like, what's the catch here? Let me ask you a question, right? So like, let's go back, you know, back in my day where I'm getting calls of like, we're going to give you interchange or the best rate.

    Like, how do your rates work? Or how does, how is that even determined, right? Because obviously now we've got the client paying for that fee. But what's the fee, right? Like, what's the fee structure on the back end?

25. 20:24
    Guest

    Yeah, we just, it's real simple. We do compliant pricing. So it's 3% to the customer and that's it. And that fee wipes out whatever the credit card cost is, that fee wipes it out. So it ends up being, if you're on a dual payment model, it really just wipes out your fees and it's gone. So you don't even, that's the best part is the businesses don't even have to think about the fees because you don't have any anymore. You just have credit card service. When it gets to the customer, the customer gets, it's 3%.

    Now there's people out there that are charging 3.75%, 4%, 3.5% for the same similar type of service. However, that was allowed, but it's not allowed anymore. But people are still doing that. Visa, and this isn't a regulatory issue. This is a visa requirement. Visa basically just, like on MasterCard you can charge whatever you want. On Discover you can charge whatever you want. But with Visa, which is 70% of the market, they require that you can't charge any more than 3%.

26. 21:21
    Wes Mathews

    And interestingly enough, Visa does conduct audits of businesses and they will find you.

27. 21:27
    Guest

    And in some cases, take away your ability to accept credit cards if you're not doing things compliantly. Right.

28. 21:34
    Wes Mathews

    So what's a typical turnaround time, right? Like if a customer swipes the card today for $10,000. I've had experiences with different type of processors and vendors where like the money shows up in nine days. Sometimes they hold some of it back because they feel like it. Right. The company starts with an S, ends with an E. But I feel like there's like no control over your money.

29. 21:59
    Guest

    That's why your vendor is very important. If you have a, there's a lot of companies out there that do what's called automated risk assessment. So what that basically means is that when you fill out an application, when you hear instant approval, okay, instant approval basically means that they've taken a quick snapshot, okay, of your company. They allow you to do credit card processing. But if you hit certain thresholds, they'll hold your money until they do a proper risk assessment. Okay. So it's kind of like the press, right?

    It doesn't matter if the story is real. It just matters that they're first. So that's the same thing that's happening in the credit card industry. It's like those automated risk assessments are to get to you first. It's like, hey, look what we have. We have this great service. We'll have you approved in an hour. Okay. A proper company is going to take 24 hours to do a proper risk assessment. When you do that and the goals are set properly, you never have holdbacks. We don't, I'm going to be honest with you, we worked with, we were thinking about a couple of different vendors.

    We worked with one company. First company I signed up with that company. They did $79,000 that month. It was a glass company and they held the entire thing for over a month. And it took us almost, the amount of hours I had to put in to unwind that process. And it was because they did an absolute terrible job of risk assessment with this company because it was automated. The company we primarily work for has a massive risk assessment team and they do appropriate risk assessment, making sure that your numbers are proper, making sure that you have your thresholds set properly and they never withhold anything.

    So to answer you, that's the long answer to a short question. We give you your money next morning at 6 a.m. No, that's great.

30. 23:41
    Wes Mathews

    And the other thing I think about, like I get a lot of emails. I know entrepreneurs, I've had this discussion of hey, there's this like borrowing called factoring, right? And my merchant processing company is offering me $100,000 of a loan, right? And they're going to take X percent of the deposits. What's your guys' experience on that? Is that something you think positively about that you promote? Or what are some pros and cons relative to that? It looks really attractive, but what's the downside? We actually have a partner that we offer that service through and we do have merchants that have had very good experiences with that.

    It's definitely,

31. 24:23
    Guest

    our concerns would be why is a merchant taking money?

32. 24:28
    Wes Mathews

    We want to make sure that they're taking it for the right reasons and that it's not going to be something that's going to be the speeding up effect of them going out of business, so to speak. But sometimes people need additional equipment. They need to hire more employees. They need whatever it might be that they need, and it is a very nice item for us to be able to offer when those needs are out there and they make sense.

33. 24:58
    Guest

    Those loans can be very dangerous, so you do have to be very careful with it because you're talking about, these loans are non-collaterized, so they're quick loans, which means you're going to pay a higher interest rate and your profit margin of your business has to be able to absorb that rate. And you're paying in a very short term, so when you're dealing with a $100,000 loan, they're basing that on your credit card volume. Okay, so if you're really hurting and you're taking a loan because you need to survive the next three months, it's just going to speed up your process to go out of business.

34. 25:34
    Wes Mathews

    Yeah, I was going to ask, is that sort of like, I hate to say last ditch effort, but is that kind of low on the totem pole in terms of traditional ways to get money into the business?

35. 25:47
    Guest

    It's, that's a tough question to answer. So if you are a profitable business doing a good job dotting your i's, crossing your t's, making money, it's a very good way to get a loan to get certain things to happen faster. So if I'm upping my inventory toward Christmas time, it's a great way to just say, give me the money because I don't have to wait a month to go through the bank to get my money. I can buy my stuff. It's removed from your credit card processing volume daily.

    My profit margin could absorb it. Money gets in, money gets out. It's, you know, the rule of thumb, right? Money isn't really money unless it's moving through the market. So it's a good way to do good things for your business. However, the reverse can happen. If it's a survive, like we've told people we wouldn't do it because we knew this was a survival technique and we knew like, yes, you're going to feel better for a month and then you're going to be out of business in three.

    And because you could see like some of those loan rates are 16, 17, 18 percent. And the reason, you know, unfortunately, it could be a last ditch effort for them because if they go through a bank, they probably won't get the loan based on their where their business is. So we're very wary of that in the marketplace because we're just speeding up the process. It is a great short-term loan option for businesses.

36. 27:06
    Wes Mathews

    Yeah, it's a forced payback too. So I see like pros and cons of you can't delay paying it back because the processor is going to take it out of your deposit. So I see the idea of, hey, this next two, three, four weeks, we're going to feel great. But if my expectation is a hundred thousand dollar deposit next month, but I'm only getting 75 of that because a chunk of that getting paid back, like that's going to affect payroll, that could be a big challenge.

37. 27:30
    Guest

    But like I said, a properly managed company, it really works for what they're doing. Yeah,

38. 27:36
    Wes Mathews

    we've seen clients successfully use those loans time and time again. They'll take one, they'll pay it off, they'll take another one and they've been in business for years, and it just works for them. So it depends on the individual situation. So I hear just overly educate yourself on factoring before you enter into that, which makes sense. That's great. That's great feedback. So what about crypto, right? I hear a lot of XRPs the way of the future for processing cash and, you know, people still don't really, you know, Bitcoin and like, what do you guys see or what are you hearing on the inside of what cryptocurrency is doing to your world?

39. 28:11
    Guest

    Well, XRP is interesting. I'm glad you brought that up because it is something that people have been talking about for seven years, like XRP is going to be the wave, right? So much so that the SEC shut down trading on them for a while. So the issue is I'm still waiting for that. There's been talk around. It's a great way to move money. It's much faster than the Bitcoin blockchain. It's being used right now for things like FedNow. It's being used for how central banks are moving money back and forth.

    So it's a very fast system. There's a lot of technology that has to get in place for it to make the retail environment. But I do think it's better than it's better than 5050 that that's going to happen and it's going to go in that direction, which means that's going to be another alternative. There's inherent again. Again, you have to educate yourself on this because there's inherent risk to that. Okay, if you're moving money through XRP, especially if you want to get into blockchain payments like Bitcoin, that can have a real positive effect and it can have a real negative effect.

    So if you pull in, if you pull, if you allow payment for Bitcoin and Bitcoin drops $30,000 a coin, you know, you can lose all your profit margin, including some of your costs. If it goes up $30,000, you could have doubled your amount of money you made on that product. So and then there's another thing about coming around where it's going to be Bitcoin to cash, where the back end central bank will hold on to the Bitcoin and send you the appropriate amount of cash. There's all kinds of discussions on how this is going to happen.

    Fed now is really the first dive into that where the movement of money is going to be handled by a blockchain. And then that is the first step toward a U.S. digital currency. So it's all moving in that direction. I still think we're two, two and a half years away from really seeing that really grasp hold. It's the nervousness of a technology that's never been seen. I mean, it's the same thing that AI is now. You know, the investments on AI technology companies are high, but they can immediately turn.

    I mean, look at NVIDIA. NVIDIA went through the roof and now NVIDIA has dropped and it's tanked over the last six months. No one's really sure of the technology yet, although it sounds awesome. So it'll balance itself out eventually. But I know that our backbone is looking into adding blockchain, but we've been talking about it for two years now. So we'll see how it pans out.

40. 30:50
    Wes Mathews

    Yeah, it seems like an interesting vehicle, right? Because on one hand, I hear it's like, it's good store of value, right? Bitcoin's like a storage of value. Is it an actual form of payment? But then you hear XRP. It's like, well, that's not a store of value. It's got like features and functionality. Yes, the technology, right? Kind of above my head, but so like right now in the merchant processing world, if you guys onboard a new client, are there options for people to pay that $10,000 by Bitcoin or any other type of alternative?

41. 31:19
    Guest

    Not yet. Not yet. There's a reason for that. It's because there's not enough regulation around it yet. Let me give you an example. This is a perfect example. Elon Musk, who I love, by the way, but Elon Musk goes out and buys $1.5 billion in Bitcoin, right? Announces that Tesla's going to take Bitcoin. Drives literally that alone, drove Bitcoin up like $15,000 of Bitcoin, right? Sells everything and then says, Tesla's not taking Bitcoin anymore. Okay. It's like if you do that in a stock environment, you go to jail for 20 years, right?

    You go to jail for 20 years. So it's very easy and not to mention, whales can call each other. Like, you know, if you have $8 billion in Bitcoin and I have $4 billion in Bitcoin, I could call you and say, all right, we're going to dump 50% of our Bitcoin right now and drop the market and then buy back in and explode the market. And that's collusion, you know, if that's handled in a stock environment. So again, you go to jail for 20 years. So because the regulation doesn't exist, it's, I think, you're not going to see processors add that until there's sufficient regulation to control what would be considered insider trading in stock.

    It's not quite the same thing, but they have to prevent collusion.

42. 32:34
    Wes Mathews

    It'd be interesting too to see like how they would pull it together for like, where do you actually access that stored value to then actually make that transaction because you have like the coin basis of the world. I actually had a lot of crypto on Voyager Digital, right? And what happened was, one day they decided to declare bankruptcy. And every single one of their clients got locked out of their account. So, you know, you think about all the times you read terms and conditions and just click the box and move through.

    Well, the reality was, really wasn't yours. It was on their platform, which was under their control. So what they did is they blocked out. So to me, it's gonna be very interesting in how to, how do you connect your cryptocurrency to then that transaction or where it is a pull from, right? Because right now it's like, well, you have a credit card from Visa, right? Or whatever. I can just take that number. And then there's this whole back end ecosystem. But for crypto, it's I've since got a little smarter and there's these little devices called treasure or hard, you know, cold wallets.

    So now it's safely on that.

43. 33:42
    Guest

    But don't lose your password.

44. 33:45
    Wes Mathews

    Yeah, the password crazy too. I think it's like 20. I have one here. They're everywhere. And I gotta be. Yeah. It's a wild, wild, wild.

45. 33:53
    Guest

    No, that's that's the issue. I mean, that that's what happened with FTX. That's what I mean, like if you're if you're and most people don't even aren't even aware of this. If it doesn't make a digital wallet, you're not that's not your Bitcoin. You're investing in somebody else's Bitcoin.

46. 34:09
    Wes Mathews

    I learned the hard way. It was an expensive lesson.

47. 34:11
    Guest

    And I got burnt too, brother. I did. I did some I did some investing in FTX and lost it.

48. 34:19
    Wes Mathews

    So we actually have a connection there because it's that Sam Fried guy that actually that little down boy digital because they went. So what they did is they took all the cryptocurrency from all the people and then they lent out like 700 million over here to Sam Fried from FTX and they burned them. And they just walked everybody's account. So that's really interesting. So

49. 34:45
    Guest

    I just got the I just got the letter the other day for the for the class action suit against them. And I'm going to get like eight cents back.

50. 34:55
    Wes Mathews

    Yeah, I ended up getting what I get back. I think I got like 55 percent. But the problem was when they time stamp the value was like the lowest value point. Right, right, right. As they block me out, like it literally shot up. But, you know, I think as an entrepreneur, though, you can kind of, you know, what's the learning? It's like you're really not in control when you think about it. But what else? Like, how does AI impact merchant processing? Is there anything there that you guys are thinking about or worry about as AI sort of evolves?

51. 35:29
    Guest

    From our perspective, it's going to be more about the efficiency of the process. You're going to see AI involved in risk management. You're going to see. So again, when we talk about like quick risk management, that process will get better and you'll see more instant approvals as a result of the AI doing its own risk assessments rather than, you know, you know, right now, those quick approvals are based on hitting like two criteria and then you're instantly approved. Well, now you're going to have an AI doing the risk assessment that a person is going to do and they're going to do it in seconds, you know.

    So we'll see. It's going to make that process efficient. I think what you'll see is AI. If you're a company you want to get on board with a credit card processor, it's going to turn it into minutes eventually as opposed to 24 hours or 48 hours. You'll just everything will happen instantly or close to instantly. Um, AI will be a process involvement in ours. It's not going to really change the financial side of it, but it's going to change the efficiency side of it.

52. 36:29
    Wes Mathews

    Well, it's cool. It's kind of, it's crazy where things are headed in this world with AI and crypto and what you guys have done. I mean, think about like what you mentioned, I think it was 09 or 11 till 18 and just thinking back how merchant processing was relative to where it's at today. So like talking about that digital currency, right? Like I have an iPhone like most people I'm weary about people that don't have the people that have Samsung. They get a little wary about, but I use I use I use I can't stand iPhones, man.

    I really can't stand this is my world, right? Like I have a master an Apple MasterCard. I got my American Express on here. I rarely I rarely like I carry a wallet but it's like sticks to my pants because I rarely take it out. I'm waiting for Michigan to like do the driver's license. So how do you guys see that? I look at my parents and like the old school traditional like we use cash for everything like the Dave Ramsey thing. I look at is like I pay off my credit cards.

    I get the 1% 2% Costco gives me a $1,500 check every year. Like I'm very diligent about what I do. But I'm sure like over the years cash use is going way down. Yeah, like how likely are you thinking about like this digital dollar to dollar currency? You know, really taking over and being the thing. Do you see that as a reality in the next couple years?

53. 37:51
    Guest

    It's absolutely going to happen. I don't I don't see any methodology that stops it. There's a lot there and you know, if you ever start a podcast on politics, we'll get into that. But the there's no stopping at digital is coming. They the federal government has invested billions of dollars in their own blockchain to get fed now off the ground. And that is the precursor to digital currency. And it does make a lot of sense because, you know, where digital currency is going to be really helpful is in the movement of money.

    And no matter what book you make on personal finance or you read on personal finance or business finance, it's money. Money isn't really money when it's not moving. And this is going to move money at a much faster rate. It's actually going to create a lot of a lot of wealth once it's once it's fully in play. You know, we also have silly little issues like, you know, people tear up bills a penny, a penny actually costs two cents to make. You know, it's it's it is becoming when you think about technology.

    Our cash system is so antiquated in comparison to where the technology is. It's it's it's almost it's almost mind numbingly laughable. But there's a control issue. Now you have the federal government controlling all of your cash. They can see your cash movements. They know where you're going. They know your investment. Your investments. They know everything. So, you know, that worries a lot of people, you know, what their the federal government will be capable of doing having 100 percent control over your digital process. But on the other hand, okay, you can look at it this way.

    The printing of money has lowered the value of the dollar by 90 percent since 1971. So we lose that that's something that the government has now we can't just print money anymore. There's digital assets. They are what they are. You can't just go print. So it has advantages. It has disadvantages. It has things that scare people. It has things that are going to make people wealthy. It's just, you know, we got to find that balance. But I have no doubt my mind. There's no doubt my mind that that digital dollars on its way.

    Interesting.

54. 40:05
    Wes Mathews

    I'm excited for it. I'm ready. I'm kind of already doing it. But it does freak a lot of people out, right? Because it's interesting to think about. I mean, it kind of makes my head hurt to think about how we base our U.S. financial system on printing money and if that disappears and now it's on here. And like there's tracking of that, right? Like a lot of you just can't track cash, but that's great. So I really appreciate the time and I want to say like the one thing I really value with you guys is you guys really care about small businesses.

    You want to see them when there's a lot of stuff on the back end. I think you guys deal with that a lot of customers don't realize or see. So if anybody out there is listening, like what's the easiest way to get a hold of you? What is your process look like? Does it go to the website or how can people get in contact with you guys? Go ahead and listen. So they could either go to our website. It's www.skypaymentsgroup.com or they could call us directly at [phone number removed] and we'll be happy to take their calls, answer their questions and see what we can do to help them out.

    Awesome. Well, thank you to you both for coming on. Learned a lot. I think there's a lot behind merchant processing. Super insightful, super helpful. And yeah, thank you so much. I appreciate it.

55. 41:23
    Guest

    Thank you. Thanks so much.

56. 41:25
    Wes Mathews

    It's great meeting with you. This has been another episode of Entrepreneur Intel. Thank you for joining us. For show notes, for other episodes, please visit us at entrepreneurintel.com. Until next time.