Jeremy Lessaris, a seasoned entrepreneur and investor, shares insights on credit card processing fees and how aesthetic practices can cut costs effectively. He discusses the predatory nature of the processing industry and the complexities hidden in statements. Lessaris emphasizes using AI and technology to navigate these challenges, highlighting innovative solutions like VeriFee. The conversation also sheds light on the importance of partnerships in achieving financial efficiency, making it a must-listen for small and medium-sized enterprises.
Credit card processing fees are often complex and hidden, causing small businesses to overpay by six to seven percent of their revenue.
Advanced technologies like AI and machine learning can automate credit card fee analysis, revealing actionable insights for significant cost reductions.
Partnering with fintech companies and advocacy groups can empower businesses to negotiate better terms and recover unfairly charged fees effectively.
Deep dives
The Burden of Credit Card Processing Fees
Credit card processing fees can significantly impact the bottom line for small and medium-sized businesses. Many companies are subject to complicated pricing structures that can lead to them unknowingly overpaying by up to six or seven percent of their revenue. These fees are often hidden within a complex matrix of different rates based on card type, processing method, and additional services that can confuse even seasoned professionals. Understanding this burden is essential, as it not only eats into profits but can cripple businesses, especially those that rely heavily on credit card transactions.
Unpacking the Complexity of Merchant Processing
The credit card processing industry is notorious for its complexity, making it nearly impossible for business owners to decipher their processing statements. Rates are categorized in such a convoluted manner, split across dozens of fees that most business owners cannot effectively challenge them. Even forensic accountants, who are supposed to analyze these statements, struggle to provide clarity. This opacity often results in businesses accepting charges that are not only excessive but also completely unnecessary, ultimately leading to a loss of capital that could be used for growth.
The Role of Technology in Cost Reduction
Utilizing advanced technology such as machine learning and optical character recognition can aid businesses in analyzing credit card fees more efficiently. By automating the complex process of statement analysis, companies can gain insights into the real costs and identify areas of potential savings that manual reviews would miss. This technology allows for continuous monitoring and helps in negotiating rates by providing data that reflects actual costs rather than flawed estimates. Implementing such tools can lead to significant cost reductions, turning previously hidden expenses into easily manageable figures for business owners.
Partnerships for Financial Advocacy
Establishing partnerships with advocacy groups or financial technology providers can empower businesses to negotiate better terms with credit card processors. These partnerships focus on collaborative efforts to push back against predatory pricing and create more transparent financial relationships. By aligning with organizations that prioritize client savings and operational efficiency, businesses are better positioned to reclaim unfairly charged fees. The value of such alliances is prominent in the success stories where clients have saved thousands of dollars without needing to switch processors or alter existing arrangements.
Taking Action to Reduce Financial Burdens
Business owners need to take proactive steps in evaluating their processing fees to mitigate unnecessary costs. Simple calculations can reveal whether a company is paying an excessive percentage in fees, with the recommendation to seek assistance from experts or technology solutions that specialize in this area. Services that facilitate easy and effective fee analysis can provide insights that enable better decision-making and ultimately lead to remarkable savings. Those proactive movements can significantly enhance cash flow and allow businesses to redirect funds into growth-related activities.
Jeremy Lessaris: Jeremy Lessaris is a seasoned serial entrepreneur, investor, and former global marketing and communications executive. He is the founder and CEO of Payment Brokers, which is now Verifee, a fintech company leveraging AI to reduce costs. With over two decades of entrepreneurial experience, Jeremy has founded and led eight companies to successful exits. His vast expertise spans across SaaS, payments, and healthcare, and he has the distinct honor of ringing the bell at Nasdaq. Jeremy's insightful approach to business and dedication to helping small and medium-sized enterprises make him a revered figure in the industry.
Episode Summary:
In this episode of "In Touch with Terri" host Terri Ross dives deep into the intricacies of credit card processing fees with Jeremy Lessaris, founder and CEO of Payment Brokers, now Verifee. The conversation focuses on how aesthetic practices can significantly reduce their credit card processing fees without changing their current systems. Jeremy brings his extensive experience in the fintech industry to the table, explaining the various nuances, hidden costs, and the predatory nature of the credit card processing industry.
Jeremy underscores the complexity and intentional obfuscation of credit card statements, sharing how his company, Verifi, uses sophisticated AI and machine learning technologies to help businesses navigate and minimize these costs. The discussion also touches on the unethical pricing strategies adopted by many processing companies and software vendors, and Jeremy provides actionable advice on how businesses can save money immediately. This episode is a must-listen for practice owners seeking to optimize their financial operations and boost profitability.
Key Takeaways:
Understanding Hidden Fees in Credit Card Processing: Jeremy explains the complicated fee structures and hidden costs that processors and banks impose on businesses.
AI and Machine Learning in Cost Reduction: Verifi uses advanced technology to analyze and reduce credit card processing fees for businesses without requiring system changes.
The Impact of Predatory Pricing: Jeremy shares insights into how some software vendors exploit their clients by embedding excessive fees into their contracts.
Actionable Steps for Immediate Savings: Practical tips, like eliminating paper statement fees, and leveraging Verifi’s resources to ensure you are not overpaying on processing fees.
Partnering for Better Outcomes: The importance of partnerships in identifying and rectifying excessive charges and ensuring ongoing savings.
