Eliminate Payment Fraud with Marshall Greenwald | IoniaPay

Welcome to the eCommerce Traffic and Conversion Podcast that is specifically for eCommerce CEOs, executives, and marketers who are passionate about improving their SEO, CRO, reputation, and more. Hosted by Scott Brandly and DJ Sprague, CEO and CMO of Shopper Approved, and co-authors of the book Reputation King. Hey, everyone. Welcome to the e-commerce traffic and conversion podcast.

I'm Scott Brantley, and I'm here with my co-host, DJ Sprague, and our special guest, Marshall Greenwald, who is the president and founder of Ionia Pay, the money man himself. Welcome to the show, man. Thanks for having me. So, Marshall, the million-dollar question.

As an expert in online payment processing, What's the one actionable strategy that you think will have the biggest impact on e-commerce brands right now regarding your industry? You know, if there's anything we've learned from Amazon over the last couple decades, it's how important operational efficiency is to the bottom line for an e-commerce business and ultimately for their survival. The areas that you should focus on are those areas that introduce additional time, cost, or risk into the business model and your cash flows.

Payment processing happens to be an area that merchants often find to be inefficient, costly, and risky when it comes to online payments. So I would start by reviewing what you're doing for payments and how that impacts your business and your bottom line. Fantastic. And we're going to get into how to reduce your risk and cost.

That's right. Yeah. So, I mean, let's kind of just jump right in. What makes Ionia Pay different than other merchant providers out there?

You know, I started the company specifically to address those issues that merchants have. I've been in payments since about 1999. And after selling my company, spent a couple of years interviewing 200 of my merchants. and I spent thousands of hours with them one-on-one just trying to understand what's going well in their business, what's not, how does payments impact that, what can I do better.

And I kept hearing the same three themes over and over again. And they were things I really couldn't solve for at the time. They were, first of all, that they take risk on every payment, and they didn't think that that was fair. And I agree, right?

It's not their problem that the payment systems are insecure and that fraud is rampant. Number two, it takes two to three business days, which really is more like four days on average to get their money. And then third is the cost for acceptance. And I was really captured into the current ecosystem.

I had all the same outcomes everybody else had. So in creating Ionia Pay, we've been able to accomplish solving those three problems. Number one, the merchants take no fraud risk on their payments. Number two, they get their funds instantly instead of several days later.

And we can reduce their operational costs. Yeah, it's pretty shocking when you first hear what we can do, but it's real and it's pretty amazing what we've been able to do with a great team behind us. Can you kind of go into how you're able to do that? I've never heard of a merchant company being able to pay instantly like that.

You know, it's really two sides of the same coin when you look at fraud and instant payments, right? One of the reasons that payment companies take so long is there's a lot of parties involved, right? There's about 10 companies involved in every payment. You don't see them all, right?

You know, the consumer and the merchant, that's obvious, but the merchant has an acquirer and a gateway and they have a processor and then there's the network. I mean, it's a huge maze of all of the money movements and it hasn't changed fundamentally in 40 or 50 years. So what we've done is we've brought the consumer and the merchant directly together. This allows us to do two things.

We can move the money more efficiently without having to go through all these other parties. and because we know the consumer and we know the merchant, we can eliminate fraud and therefore indemnify the merchant against it. So it's a very different approach. We definitely didn't try to just tinker with what exists.

We kind of started from the ground up and said, how can we build this to solve these problems? How do you do that with the fraud chargebacks? I know that that's one of Ionia Paye's kind of claims to fame is reducing fraud chargebacks, but exactly how does that work? Yeah.

And I would go a step further and say, we don't just reduce it, we eliminate it. It's impossible for a merchant to have any fraud chargebacks on our platform. And there's really two ways that we do that. I know right That a big claim man And believe me I went round and round with my compliance team and our marketing team on whether we should say eliminate or like nearly eliminate But the bottom line is it is impossible for two reasons.

One, we built technology that actually positively identifies the consumer and the cardholder and marries us together. So we know this is Marshall Greenwald. This is Marshall Greenwald's card, and he is authorizing this payment. So we start there, right, marrying the mobile phone and the credit card or debit card together.

The second step is because we have that technology at the core of our platform, we actually indemnify the merchants. By contract, they are not responsible for any fraud. So the network design itself allows them to have that peace of mind and know if I get a $100 payment or $1,000 payment or $10,000 payment, I'm keeping it. I'm getting my money immediately and I keep it.

Wow. That's amazing. They get it immediately and they keep all of it. That's right.

I mean, that's a dream come true. Well, I wouldn't say all of it. They do pay us fees, of course. Sure.

But then I could get chargebacks, which is always a risk. And there's always a percentage, right, that you're going to lose just based on those chargebacks. And that's factored into your cost of doing business. But really what you're saying is you can eliminate that cost of doing business in terms of the chargebacks.

Yeah. And I think that's more important right now than ever. With AI, the direction it's going, they're predicting massive increases in fraud rates. And it'll be much more difficult to tackle by an individual merchant and by platforms that try to provide these solutions because AI can potentially go as far as imitating human behaviors and looking just like a legitimate customer.

And how, when you're a website, how do you identify, is this a sophisticated AI attack using stolen cards? Or is this actually a legitimate customer? And you don't want to risk turning away real business, but you also have the risk of what if it's not real business, our system takes that question away from you completely. You just have to do business, get people to the door, we'll make the decision on approvals and get them approved, instantly funded.

And then you take no risk on the payment. Wow. That's phenomenal. Quick little clarifying question.

Do you have any kind of data or averages that would say, because of our system, you're able to generate X percent more bottom line revenue? I love that question. And the way you phrased it is great because it is all about bottom line, right? Whether it's increasing sales, which I think we help with, or whether it's decreasing the cost of the business, which we also help with, both of those are very important to consider and they both impact the bottom line.

So our system on average is 5% to 10% positive impact to a merchant. And if you think about it, they may be paying 3% or something like that for their current processing. That seems weird to think you can save us two or three times that. But the reason is operational efficiency has impact as well.

And here's what I mean by that. A business who's doing $10 million a year and has a fraud rate, you know, kind of based on industry standards, nothing crazy. We'll see about $425,000 a year to their bottom line. Plus we'll free up hundreds of thousands of dollars in cash that they'll never have access to because every payment is another delay.

And it's like, yeah, but I'm getting payments every day, right? On Monday through Friday, if it's not a holiday, but then the actual attribution of that is in the past, right? And so if you can get your money immediately when the sale is recognized, then you can actually utilize that cash and you can use it for things like expansion of your inventory, finding other vendors, you know, marketing campaigns, all sorts of things that help you actually grow your business and be more profitable.

That's groundbreaking. I mean, that's not just a little improvement. That is a completely new way to address the payment processing industry. Yeah, absolutely.

Thank you. We're really excited about it. And our clients are, you know, pounding on the door, getting ready to be the next ones to go live. It's pretty exciting.

Well, what's crazy is what you said is you can add five to 10% more to the bottom line from their gross sales. Well, if you look at a lot of electronics resellers who are reselling name brands, they might only be making 10%. Yeah, exactly. So you just doubled their net profit is what you saying It quite possible And every business will have various nuances But our team has a great tool where we plug in the information for that the merchant provides us and it tells us what that impact will be based on operational efficiency fraud elimination, and cost reduction.

Wow. So Marshall, you also talk about how you can help lower costs. What does that look like for a merchant? There's really three ways that their costs are going to be impacted.

So there's always, of course, the actual rates and fees that they pay. And depending on the merchant, we do find that we are sometimes a cost savings, even for enterprise clients that negotiate for many decades and have a lot of volume to do that. We can still bring them a cost reduction. In fact, we have a client, we're in an LOI right now with them in that phase.

They're about a billion dollars a year. And one of their subsidiaries is about $7 billion a year in their parent company. And we're able to increase their bottom line by about $60 million a year just at the subsidiary alone. Part of that's through cost reduction directly with the fees.

Part of that is through the elimination of the fraud costs. And then part of that's through moving the money faster. Sure. But the other thing that businesses don't always think about when they first get a merchant account and start taking cards online is if you do have fraud, if you have any issues at all, the processor is going to start holding some of that money back.

It's what they call a reserve account. And that can be sometimes significant, but even if it was only one or 2%, it's money you'll never have access to. Effectively, it's permanently on hold and every new transaction funds the reserve again. So by eliminating fraud, there's actually other fallout that's pet positive, such as elimination of the need for a reserve account and other things too.

But one thing that people don't always factor in that is important, every dollar in fraud doesn't cost a dollar for a business. There's chargeback fees, there's impact on their merchant account, there's logistics, there's fighting it, there's legal costs. It costs them on average $3.75 to $4 per dollar of fraud.

So you can eliminate fraud, even if it was one or 2%, that's still a big impact on your bottom line at the end of the day. And that goes into your calculator to project what your net gain is going to be using your system. I have a question for you, Marshall. And this is something that we deal with.

We've for years, I'm sure every other merchant, especially that does recurring revenue, right? So how is there any way or any secret sauce you have where we can increase our likelihood of being able to charge a credit card that maybe might have expired or, you know, like continually charging that card in a way that we don't have to always chase the client on a recurring payment? You know, it sounds so great to think I'm just going it charges the customer every month automatically forever.

But the reality is if their card is stolen and used without the permission, they cancel the card. Sometimes they don't have funds on the card or sometimes the card issuer will just block the payment. There's all sorts of things that can happen that will make it impossible to keep billing that card. One of the things that we do that I think is kind of a behind the scenes benefit for recurring payments and actually for all payments is when you transact with us, we sit between the merchant's website and the current processor.

And because we sit in the middle, we're not eliminating anything that they currently have. You don't have to change your payment processors. You don't have to remove them and cancel anything like that. So you pass the payment to us first.

We try to process it. When we process it, we have a higher likelihood of being able to approve it if it's legitimate because there is no what they call MCC or merchant category code being sent to the issuer. Sometimes issuers will block it because it's an industry where they see a lot of fraud. Even large recurring subscription businesses that are household names have this issue where your card will get declined by the issuer because that's a common place for fraud to happen.

And so higher likelihood of approval. But let's say we don't approve it. You're not done. You don't go back and say, hey, it's declined.

You got to go collect from it. We then pass it on to your traditional processor. You get a second bite at the apple. And so it's like having a failover processor built in, but one that has a different way of authorizing the cards on the network.

So between those two things, merchants should see an increase in approval rates, a decrease in the amount of time and energy they have to spend trying to chase people for a new card and all of that kind of stuff Very cool Yeah that something I sure it not just us No right Right No we hear it We hear it all the time Absolutely not Yeah Ongoing issue So here another interesting question that I think a lot of people be interested in. How does Ionia pay help with conversion rates on the website?

You know, we took a couple of things that we saw in market that we thought were great trends and built them in at the core. One of those things is a one click checkout experience. There's a couple of people doing this really well in market today. And I think that that's a very nice feature.

PayPal does it with their fast lane. Let's see, ShopPay does it. There's a couple of really good one click checkout experiences. I personally love it as a customer because all I have to do is put in my phone number or email.

It recognizes me. It sends me a text. I put in the code or click the link and all my information is there. My shipping address, my billing address, my cards, my bank accounts, everything that I use for e-commerce is right there for me and securely.

And I can just hit pay. So we've brought that same feature, not just to each merchant, it's not just for like, you've been to this merchant before, but when any consumers used us before at any merchant, the next time they make a payment, they get that one click checkout. So imagine somebody's coming to your website for the first time. And the only thing they have to fill out is their email address and bam, they can hit pay.

It's like magic for the consumer, but it takes away the critical time that they are going to think about their purchase. And it's not just, I don't want to say they don't want to think about it, but they're questioning it. They're like, Hey, I'm about to put my card number in. Oh, I don't remember that card.

Let me go find it. Let me put it in. Oh wait, I got a new one. Let me go.

You know, all of those things that happen are opportunities to lose a customer. They're all, that's where the funnel gets really small very quickly, right? Is that that checkout experience? So it's really sensitive.

And so being able to improve the speed and do that securely gives the consumer confidence to go forward with that purchase. Love that. Love it. Because at my house, whenever I'm looking for my credit card, my wife is, what are you buying now?

Do you really need another book? Maybe not. I think you just solved the mystery of why there's so much fallout at checkout. It's not the person, it's their spouse.

That's right. What are you buying now? Are you kidding me? I have another question for you.

Integration. How hard is it to integrate Ionia Pay into a site in general? I will say that was a big challenge when we launched our beta, right? We started with an API, which is functional and great for customized solutions.

But for the average business, they don't have developer resources to be able to do something like an API integration. So we've launched a set of tools that allow much faster, simpler integration. It now takes between 10 and 15 minutes for most merchants to go live. On some platforms, it's faster than that because we're pre-integrated.

WooCommerce, Shopify, others like that, where you can literally turn it on, put in your PI key and a password, and it's basically live, right? There's very little work. So I'd say the highest end of effort is going to be taking some code that's a few lines, you know, five to 10 lines of code, put it on the website and you're done. And the fastest would be flip it on and fill out some fields.

That's a dream. Well, Marshall, it's been fantastic having you on the show. It's been very enlightening. We've learned a lot.

I'm sure our audience has learned a lot about this really streamlined, profitable payment processing system. And we'll have a link to Ionia Pay in the show notes. We'll also have some information about your bio and how to contact you. And as always, go to ReputationKing.

com and get a free copy of our book on online reputation management. We thank you for joining us on the e-commerce traffic and conversion podcast. and we'll see you next week. Have an amazing day.

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