Marci Gagnon, Vice President of Strategic Alliances, and Jon Gilbert, Director of Ecommerce and Partner Development for Qualpay, joins Brian Cohen, Multimedia Specialist and host of ADDcast, to discuss: what companies should look for on their merchant statements in terms of hidden fees; why customer service is so important in the payment processing space; what upgrading your payment technology entails; the red flags that your current technology is out of date; payment hot topics for the upcoming winter heating season; what companies can do to help with chargebacks; how commodity prices impact fuel marketers; and much more!
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Brian Cohen: Welcome to ADDcast. I’m ADD Systems’ Multimedia Specialist Brian Cohen, and I’m joined today by Marci Gagnon, Vice President of Strategic Alliances, and Jon Gilbert, Director of Ecommerce and Partner Development for Qualpay. Marci and Jon, thank you both so much for joining us today.
Marci Gagnon: Thanks for having us.
Jon Gilbert: Yeah. Thank you.
Brian: Marci, for our first question, let’s start at the ground level here. Can you talk about what payment processing is, and, in general, what Qualpay does for the industry?
Marci: Absolutely. The quick answer to this is that we offer the ability for businesses to accept credit and debit payments from their customers. And, of course, there’s a longer answer to that. A processor really manages all of the non-cash transactions that a business accepts. What that means is, if a customer is making a payment in store online, it looks really simple, but there’s actually several moving parts that really often require multiple companies working together to make sure that that company gets their money. For instance, we’ll work with your website or back end software to accept payments for customers, we communicate with the card brands to confirm the customer has enough money to make a purchase, and we initiate the money movement and deposit into your company’s bank account. That’s kind of the general rule of what all processors do. Specific to Qualpay, we also provide customized reconciliation reporting. We manage fraud We assist customer disputes. We advocate and build technologies specific to our industry. You can think of us as the webbing that really folds your receivables together and keeps everything really working in sync.
Brian: Excellent. Now Marci sticking with you, I viewed several of Qualpay’s webinars, and a topic that comes up frequently is hidden fees. What are some things that regular companies should look for on their merchant statements in regards to that?
Marci: We do a lot of educating on this topic, and we do so because, unfortunately, we do see a lot of added fees and markups when we’re reviewing different processing company statements. We’ve seen so many at this point that we can look at a processor and just know if we’re going to see a Kilobyte Base II Fee or an interchange adjustment. Some of these fees are added because the processor is using outdated technology and needs to sort of cobble a couple products together to make a solution work. And other times it’s just a clever profit center in disguise, and unless you know what you’re looking for, these fees can really sneak up on you. A couple of things to look out for: whenever you see a random security product that’s not related to PCI, probably something that’s an unnecessary fee. Any online impression or reputation management products? Again, probably something that, if you were to reach out to your current processor, they could remove that off your bill. Any business management products not related to processing at all, and don’t really seem to make sense? These things alone could add hundreds to thousands of dollars on your payment processing bill.
A big one that we’re seeing lately is surcharging for next day funding. That can add as much as 45 basis points to your processing costs, and that’s a lot of money when you start to add it up. So we’ve kind of seen it all, and this is a good example of processors, just quoting really low rates, and then needing to make up income somewhere else on the statement. All costs can be marked up, but if all of a sudden your rates increase, you don’t necessarily know why, these are the fees that we call hidden, even though they’re probably on the bill, but they’re just there in a creative way to raise the rates. So, it can be deceiving.
One of these things that we see a lot is a markup under a Kilobyte Base II Fee. If you’re an office manager, and you look it up, it’s an actual fee. Sometimes it’s a separate line item on a billing statement. Sometimes it’s lumped in with another fee somewhere, but it’s real. If you quickly do a web search, you’ll find it and may not think anything of it. But you should always read the notification section on the merchant statement because this is where your payment partner will announce any rate updates or changes to your account. Typically, your company could go months without having any type of rate increases or changes and then multiple increases all at once. So again, it’s pretty common because the card brands will change their rates a couple times a year, in October and April. So it’s especially important to check this section, and if they’re raising it in April and October, probably check in February, March, August or September, because this is when the new rates will be advertised and sometimes processors like to sneak their own increases in there just like that Kilobyte Fee adjustment.
Brian: What would you recommend if maybe you have an issue with the fees that were added on? Is there a way to challenge that or bring that up with the credit card companies?
Marci: You always have the ability to reach out to your credit card processor and ask for them to explain any fees that are on your statement. They should be able to answer any questions that you might have, and they should be able to answer them pretty quickly. You can always do a Google search for certain things, but like that Kilobyte II Fee, that’s a real fee, it’s just been padded up a little bit. What I would recommend is to reach out to your processor, ask them to review the statement with you, ask them to review any of these security plus fees or reputation impression management fees. All of those they should be able to describe and walk you through, and if it’s not something you need, they should be able to be removed. But another really good exercise is to reach out to an auditor, and Qualpay will do this for you complimentary. We’ll audit every single card and every single transaction on your statement. We’ll let you know what is a real fee, what is a paid out fee, what is an additional fee, what has been padded, and then that’ll give you a lot of really good information to go back to your credit card company and just ask questions on some of those as well.
Brian: And now Jon, I’d like to pivot over to you. It’s obvious that customer service is extremely important in all aspects of the industry. But, could you possibly talk a little bit about why it’s so crucial in terms of payments?
Jon: Yeah, well you don’t really think about your payments much until you need something, and when you need it, you need it quickly. Payments is the lifeline of your business. It’s literally how you get paid. There are quite a few things that involve customer service that can come up, for example, disputes. You may have questions on how to respond to disputes, and how to mitigate them in the future. One that comes up a lot for us are new acquisitions. You may have purchased a new company. Well, how do you align all the parts of your new business with your current business, without interrupting customer service? You have to update your descriptors in the information that you put on receipts, but you also have to take the tokens from the company you purchased and bring those into the company that you are now. It takes some technological massaging in order to get that information in, and that’s exactly where customer service comes in. And the same thing if you’re dealing with token transfers, whether you’re switching providers, and again with acquisitions. If you’re coming from another gateway, and you want to move to a new merchant provider, for example, you’re going to need to transfer your customer information. So you don’t need to contact your customers and get their credit card information again, you need great customer service to be able to implement this data extraction and data exchange, so that this can be done securely. Maybe you need some new users or update some company information. Again, this is something that can be tedious if you don’t have a good customer service team. The right customer service team can just implement these changes right away, or more importantly, give you a way to self-service these things so they can be done in an instant.
Maybe you just need to know “what would happen if I did this?” I want to offer a recurring payment plan. Maybe I’m interested in surcharging, or adding a convenience fee to my transactions. What are the rules and regulations for this? What are the risks? A good customer service team can also provide some advice on how to do this properly. So it’s really more about support, it’s really a partnership, and that’s why it’s beneficial to work with a provider that specializes in your industry. They’ll have a deep understanding of the unique problems and challenges your business faces.
Brian: Jon, a phrase that’s tossed around a lot in the industry is upgrading your payment technology. Can you talk a little bit about what that actually entails?
Jon: Yeah, it really entails simplification and automation, to really put it simply. Many fuel marketers evolved in a similar way. In 2005, for example, you may have purchased ADDs, and then maybe a different part of your company needed to use a virtual terminal in order to take phone orders, and you may have chosen a different payment provider for that. Maybe a few years down the road, you started to use another payment provider because they work with a portal company that you use. And so, in the span of ten, fifteen or five years, you could have three different merchant account providers and three different gateway providers, just by the way that your company evolved. If you’re using updated technology, you should be able to unite all of those accounts into one. That comes down to credit card processing, but also ACH processing. Updated technology allows you to do everything through one solution.
Payment technology can also have an effect on the rates that you pay. Most of the payment technology was integrated in 2005, where they allowed fuel marketers to get utility rates. But we find, due to some of these technological limitations, some fuel marketers are only getting set up for utility rates on Visa, and not on MasterCard, or vice versa. It’s kind of like a car analogy. You could pay $13,000 and get a Chevy Spark, and if I bought that when I was 20, that would have been able to do everything that I needed to do. I could have put all my college stuff in the back, maybe something on the roof, it got good gas mileage, I was fine. A few years down the road, if I have a baby, all of a sudden, I have more luggage, and I need to get car seats. Well, that Chevy Spark really isn’t providing any help in this part. You need something that you can utilize that represents your needs well.
Another analogy that I use is, you could think of a person trying to cut down a tree, and they may be using an old, dull blade. If they actually wanted to cut down the tree faster, they had to take that blade out, sharpen it, and then use it again. So yes, there may have been some time that it actually took to sharpen that blade, but having the sharper blade actually lets you cut faster, and that’s really what payment technology does. Having updated payment technology can really have an impact on how fast, automated and simple your payments can be.
Brian: Jon, what are some of the key things one should look out for, the red flags if you will, if the payment technology they’re currently using is out of date?
Jon: That’s a really great question. One of the things I see a lot is, if you’re logging into your payment gateway (authorize.net, NMI, there are a few others) and you’re using the gateway in order to kind of run your transactions and so forth to look up your customersyou’re also getting a statement in the mail from your merchant account provider, that’s a really good example of out of date payment technology. Because you should be able to do both of those things through one account. You shouldn’t need a merchant account and a payment gateway. Those can be united, and that will actually help lessen your fees and make a lot of your day to day operations much easier, because instead of looking at two reports, you’re looking at one.
Another thing that I noticed is, if you’re spending any time whatsoever reconciling your payment data, that’s another sign, because a lot of that reconciliation data should be able to be automated. When I hear that people are taking an hour a week to reconcile their payments, because some of their payments came in at this time, and this time, and the batches with the gateway or the merchant account don’t necessarily add up, that’s something that could also be simplified through updated payment technology.
Or if you’re accepting the majority of your payments over the phone or the mail, as opposed to doing those payments in a recurring fashion, or maybe text messaging or invoicing your customers, that’s another way too.
Brian: Marci turning back to you, believe it or not winter is going to be here before we know it. What is something that you think is going to be a “payment hot topic” during the upcoming heating season?
Marci: Price is always going to be a topic of conversation, especially because of the increase in fuel costs this year. But this year, we’re going to be talking a lot more about customer disputes and chargebacks than we ever have before. This year marketers are going to have to really be on point when it comes to chargebacks and customer disputes. No doubt. Hands down.
The reason is because we don’t typically see a lot of customer disputes in our industry. Obviously, if there’s a problem with the delivery, then marketers usually make it right, so there’s very few chargebacks that come in. But in the past couple of months, just at Qualpay, we’ve seen an increase in customers disputing direct to the card brands and not even going to the marketers themselves, which removes the ability of the marketer to make it right, and then it can go into a chargeback situation.
There’s a couple of reasons for that. The first being that the average delivery cost is almost doubled. We went from about $450 to an $800 average ticket, and marketers just need to be prepared that some customers are going to try to dispute the cost after delivery, because they just might not be able to afford it.
You couple that with folks that are now going back into the office, so they’re not at home every day, and it’s not something that they’re going to need as much as they might have. Obviously, everybody needs heating fuel all the time, but they might not be home to accept that delivery, and they might not be able to refuse it. So it could be a challenge this year, and marketers are really going to need to know how to set themselves up for the best chances to win a dispute. What they need to submit. When they need to submit it. Also. revisiting any refund and cancellation policies that they have on their website, and maybe really circulating those out to customers to just give a reminder of what those refund policies are. So I think we’re going to hear more about it, and we definitely have been coaching folks on the Qualpay side, as they’re getting their first couple in for the season. It’s definitely been an increase this time, and it’s only going to get worse.
Brian: Sticking with the chargebacks topic here, what can companies do to help with that? Are there set policies or best practices that can help give you the best chance at possibly fighting fraud here?
Marci: That’s a great question. Chargebacks are definitely going to eat into your profits. All disputes are different. The dispute process, unfortunately, is a 50/50 chance. We can’t guarantee the outcome, but there are some best practices to fight a chargeback. The first one is to react immediately and have a process in place really to gather the correct documentation. If you’ve had a few in the past and you have one or two employees in the office that manage your chargebacks, again you probably don’t receive a lot of them, but this is a really good time to have them reach out to your payment processing partner, or reach out to us at Qualpay, and we’d be happy to give them a little bit of a tutorial.
As a company, if you get a chargeback, the number one thing to do is to politely reach out. I know when you get a chargeback, it can be a little stressful, but it could be a misunderstanding. So politely reach out, let them know you received a chargeback and ask if you might be able to resolve the dispute.
Because in some cases, it might be a double payment, or they forgot they actually received the delivery, so it could be really a quick one to resolve. If you do that and there’s still a dispute, there’s a couple more things that I would recommend on the processor side. Number one, if the order was placed through an online portal or a will call engine, collect the original order information. That’ll have the IP address, the timestamp, and you should be able to have all of that. If it came in to your order system, you should be able to pull that have a screenshot of your company’s signup process or order process. Any acknowledgments that the customer agreed to and they placed the order, you should have this already, but this would be something really easy to pull just so that you can have it there in the event that you need it. Pull and review the terms and conditions on the website that the customer agreed to when they’re placing the order. Review them and make sure they’re out there on the website, so that if somebody does dispute it, you can bring up those terms and conditions, and you can review that with the customer.
Everybody’s using route management software these days. So pull the route ticket, the timestamp of delivery, have that available. Any receipt that you’ve provided or notification, that will be beneficial to be able to submit. If you have a text message system, or an email that was sent out, those would be really helpful as well.
Any communication with the customer when there’s a dispute at first receive, that’s going to give you a good footing to be able to fight it. Finally, you’re really going to need a quick write up of the timing of the order dispute. It doesn’t have to be long, a couple bullet points: when the order came in, when it was delivered, confirmation of delivery, all of those good things.
Here’s a key as well. Some trucks have the ability to take a photo, some don’t. But if you do, and you’d have a photo of it, that’s nice to submit as well. You know, some customers deny making orders that they received, so make sure you have a clear refund and cancellation policy. I cannot stress this enough. I know I’ve said it a couple of times, but when your customers are placing orders, they really need to be able to be aware of what that is.
It doesn’t hurt, as we’re going into the new season, to send out an annual refund policy reminder to customers, and just let them know. I receive updates and contracts every single year that I get in the mail that just says “Hey, FYI, we’re so happy to be working with you this year. Here are a few things you should know. Here are our office hours. Here’s how you get in touch with us. Here’s our refund and return policy. If you have any questions, let us know.”
Those are things that are really going to help and as always, any questions, reach out to your processor or reach out to us here at Qualpay, and we’re happy to walk you through that process.
Brian: Jon, turning back to you, it’s probably no surprise that this has been a tough year for commodity prices, especially when you take into account the current fuel prices. How does this all affect fuel marketers?
Jon: Well, one obvious way is higher transaction cost, right? That $500 average transaction that you may have had to deliver fuel is now $600. Maybe it’s $700. And so, getting set up with the right kind of payment technology can really have an impact here because if you’re not set up for utility rates, like many of the merchants that we see, you could be getting charged 3% for a MasterCard transaction as opposed to a flat $0.75. So on a $600 transaction, you’re talking about paying $0.75 versus $18 on the same transaction.
Now I know that a lot of fuel marketers have to do all kinds of different things just to get drivers on the road, it’s so hard to find them. Many times, they have to have drivers on call just because of COVID and drivers getting sick, and so a lot of times they’re looking for incentive programs for these drivers. If you’re saving $17, every time you’re filling up a tank, you could help buy your driver a hamburger once a night or anything just to kind of keep these incentives going, so it can really have a big impact.
Having the right payment technology is more important now than ever. Even if you’re taking a commercial card. The difference between having the right technology and not having the right technology can be $5 per transaction. As Marci alluded to, this brings up a little bit more potential for chargebacks. People are penny pinching now and you know utility costs are 10% of people’s budgets generally, so you may see a little bit more friendly fraud, or chargebacks. As Marci was saying, do all those things that you can do, take the pictures and so forth, so that you can respond to disputes better.
Marci: Jon, if I might piggyback on that, cause it was a really great answer, and I have a little bit that I’d like to add to it.
Jon: Absolutely.
Marci: What’s interesting in the past couple of years is that folks have been at home, and they’ve really increased some of the subscription services that they’re using. What I mean by that is, prior to the pandemic, folks were maybe having one streaming service, so maybe they had Netflix, or maybe they had Hulu. But now the average home has three or four. And what we’re seeing is those subscription services like Leaf’d Box, and Bark Box, and Farm Fresh, and all of these things that folks are getting are increasing their monthly subscriptions. Those are things that are built into people’s budgets, and so they know that every single month, they’re going to have $200 or $300 that immediately comes out of their bank account, and those are budgeted things that are planned for.
This is something that fuel marketers really need to pay attention to because the cost of fuel has gone up. The average ticket is now around $700 – $800, and, if customers are not on a budget plan or not on a subscription plan, rather, where it’s part of their monthly budget, they now have all of these other subscription plans that have made their way into the monthly budget. So at the end of the month, when they’re paying all of these things automatically, and then all of a sudden they get their energy bill and it’s $700 or $800, it might not be something that was budgeted, because they’ve increased all of these other subscription services during the pandemic.
One thing that we really want to be cautious of in the industry is that, if it’s possible, get folks on a subscription plan, because then you’re getting into their monthly payments every single month, and it’s something that is almost guaranteed to be paid.
Whereas, if it’s a little bit more of a price hike for them, and it’s not planned for in the monthly budget, it could be a situation where they didn’t budget it, and they might not have enough money to pay for it. Or they might wait a little bit longer than they should have, and then it becomes an emergency situation where they run out of fuel in the middle of the night, and it costs more to get a technician out there. It’s dangerous for the family itself.
Something to consider as we’re moving into this heating season that a lot of families have increased those subscription plans, and might not have as much discretionary income as they had in the past.
Brian: Qualay is a gold sponsor of the 2023 BTC, which takes place May 8 through May 12, 2023 at Disney’s Yacht and Beach Club in Orlando, Florida, and you are both hosting a breakout session there. While the show is still a ways away, it will be here before you know it! Could you possibly share a small preview about what your session might include?
Marci: Absolutely! We’re super excited to partner with ADDs, and we’re super excited to be participating in the BTC. We’re going to be chatting specifically about some of the technology that we’ve built for ADDs customers, in which we can insert ACH tokens into the credit card module, so that you can run a credit card and an ACH in the same batch process. This is going to eliminate some steps and make it so you can have a lot of really good streamlined reporting. We’re going to demo that product, and we’re also going to be talking about some of the new products that we’re developing with the ADDs team. I don’t want to give too much of a teaser away, but we’re excited, and we think that the ADDs members will be excited as well!
Brian: Excellent. If people would like to learn more about Qualpay prior to the BTC, and find out about how your service can address their specific needs, how would they go about getting in touch with you both?
Marci: Absolutely! They could reach out to energy@qualpay.com. We also are very active in a lot of the associations, so they can come and see us at some of the trade shows and networking events. We are presenting in a couple of different trade shows as well, so folks can learn about the different topics and our updated technology at any time. So, please reach out. We’re happy to chat with folks and provide insights, and look at folks credit card statements and provide audits for them, just so that they have a good understanding of what their overall payment acceptance costs are, and what they might be able to do with their current processor, or even with Qualpay, to really streamline some of those costs down.
Jon: We’ll also be at the Heat Show in September, and we’ll also be at the Pennsylvania Petroleum Association trade show in October!
Brian: Marci, and Jon, I’d like to thank you both for taking the time to speak with us today, and I’m personally looking forward to catching up with you both in person at the 2023 BTC!
Jon: Thank you.
Marci: Thank you so much.
Brian: To keep up with the latest happenings at ADD Systems visit addsys.com/blog or connect with us on social media by following ADD Systems on LinkedIn, Facebook, Instagram or Twitter. If you have any questions about ADDcast, feel free to reach out to us at addcast@addsys.com. Thanks for listening and have a great day.
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