The New Playbook for B2B Payments

Narrator: Foreign.

James Shepherd: Shepherd here with another edition of the Merchant Sales Podcast. I've got an episode for you today that I do think is going to surprise you and be very interesting. So every once in a while I do these episodes where I know somebody got a connection with them and then I do an interview and I'm just kind of blown away of like, oh, wow, I did not realize that this is what they did or how amazing it is. So that's the case here with Ron. So I want to clarify, Ron and his company are not sponsors or anything like that. Um, I was, uh, uh, very pleased with the solution that they have. So they have an incredible integration to all of these B2B platforms, um, that really do, I think, open up a big opportunity. Um, I've been talking a lot about B2B as this $30 trillion a year volume opportunity for a long time and frankly, I haven't really seen a lot of solutions that I was excited about that I thought, yeah, that's the one that you can go out and grab these opportunities. But what we're going to talk about today I do think has the potential for that. So I, um, think it's pretty cool and looking forward to, uh, you know, hearing your feedback on it. Um, we also, of course have the Today in Payments, so we'll go into that, um, after the interview. A lot of interesting things happening in the payments industry as always, and Patty Murphy, uh, is guiding us through all of that. Also want to mention our sponsor, Nativia. Nativia's got such great solutions right now. They've got their new app with the tap on phone for iPhone, um, and Android. Really cool. Got a link for that actually in the email. But if you want to learn more, just head over to, um, ccsalespro.com the TV up, that's cc salespro.com the TV up and visit there to learn more about our sponsor. With that being said, let's dive into today's episode. Welcome to the Merchant Sales Podcast. Hey everybody. I'm here today with Ron Halverson. Ron is the president of Clarity Payments. How are you doing today, Ron?

Ron Halverson: Doing great. Good to see you again, James.

James Shepherd: Absolutely great to see you. So, Ron, you've never been on my podcast before and so I always like to ask my new guests to share a little bit of their story. So how did you end up, uh, getting into this crazy payments industry? What was your kind of storyline to get to where you're at today?

Ron Halverson: Yeah, it's kind of crazy. Uh, 20 years ago our company was founded in Texas by two rocket scientists. So it's a great, it's a great story.

James Shepherd: Oh, that's crazy.

Ron Halverson: Uh, and they were approached by a company looking for a custom B2B commerce platform integrated with an Oracle ERP and a homegrown CRM. So after the project they found out there was this niche and this need out there for, uh, businesses that took on these what they used to call impossible integrations. Right. So immediately our E commerce products turned into marketplace, auction, uh, HIPAA portals, medical. Matter of fact, 40% of our portfolio for the last 20 years is medical. So we've done in the 14 years. I was a client 17 years ago, met the team, worked with them for two and a half years and then I joined as one of the owners, um, 14 and a half years ago. So been with these guys forever. And um, about four years ago paytrace, um, reached out to me and said, listen, everywhere I go I keep seeing your name pop up doing these commerce based integrations with NetSuite. Can you do a demo? And I did a demo. And he said, that's awesome, but can you turn off the storefront and just leave the invoicing portal and kind of make a billing portal? And I said, well, yeah, it's modular. So we did a couple projects with them and they came back and said, you realize what you have there? And I said, no, no idea. Said, you have a payment hub. And I said, what the heck is that? And then he explained the need that ISOs have with all these integrations to be competitive. You know, Sage is in bed with Paya, uh, Epicore's in bed with WorldPay and EP Server, NetSuite, FreedomPay, I mean they all have one that they've locked down.

James Shepherd: Right, right, right.

Ron Halverson: But then those ISOs trying to get into a NetSuite account can't. And so the merchants, NetSuite, Freedom Pay, they're paying 6, 7% effective rate. So they're overpaying, but they're stuck and nobody had an option. And that's really where we came in to be. So really our payments business, even though we've been around forever in commerce and doing payments with all these ERPs for 20 years, we've really just had Payment Hub for the last four years as an official product M. So, all right,

James Shepherd: so help me understand that when you, when you say that, I know there's a lot of questions ISOs are going to have, right? So one of the big ones they're going to say is like, are you saying it's Processor agnostic or are you saying you have an ISO program where they can use your payment rails like. Well, how does that work?

Ron Halverson: Yeah, great question. No, we are an isv, we're a technology company. We, we've built this billing portal that has an agnostic integration to any erp, accounting software, emr, CRM and an agnostic integration to any gateway processor combination.

James Shepherd: Got it. Okay, that's actually really cool. So, all right, so I know a lot of the ISOs now are like you know, salivating over this. So uh. Yeah, so let's dig into that a bit more. So how does that work? What is the process usually like? Is this something that's pretty much like it's already pre built, they just kind of plug and play or is there some customization of all? What is the sales process like for an ISO that wants to board a merchant like this?

Ron Halverson: Yeah, uh, great question. The real answer is all of the above. Right? Because I don't know that I've met in the 15 years I've been here, uh, an enterprise account that has not customized their accounting process or customized their erp. So yes, we have an off the shelf. Yes, we could have it. We literally can. I did three videos last week, they were seven minutes apiece starting brand new from scratch and installation and fully integrated with. I did an Epicore P21 and Epicore E10 and an Epicore Eclipse and it was off the shelf ready to process fully integrated, bidirectionally integrating information, invoices and payments with less than 10 minutes. So we have an off the shelf for virtually the top 22 ERPs out there. However, after we get that off the shelf and normally with some 10 testing and some QA and sometimes we do it in sandbox, it's a couple days, right? So within a couple days they could be processing and then usually what'll happen is we'll sit down with their accounting team and start going into the to the UDFs, the user defined fields, the customizations, the custom workflows. Some clients want to add extra pos, uh for card present, sometimes they want to go in and even that first two days we can have surcharge or convenience fee, dual pricing, all that stuff already pre set up level three interchange optimization, all pre gateway as part of that two day setup. But most enterprise mid to enterprise always has some customizations that they need but we can be up and processing in literally days.

James Shepherd: So I want to zoom out a little bit because I, I'm realizing some of my audience may not understand the erp. World as much a lot of my audience is kind of that like, uh, brick and mortar retail, restaurant type, you know, situation. So help us understand what types of businesses are you primarily serving in your portfolio? And what is an erp? Let's go with that as well. Right. So give us a little more kind of market dynamics, if you would.

Ron Halverson: Yeah. Well, to use one of your clients, uh, names, then they might be using Toast in the restaurant. And Toast, for all intents and purposes, is the erp, the enterprise resource planning software that the staff runs the business on the back end. So the ERP is all it is, is really what back office software runs the business. Mom and pop shops may just have QuickBooks, they call QuickBooks, either accounting software or an ERP. A business a little bit bigger might have Sage 100. When you start adding in a warehouse or inventory tracking or any of that kind of stuff, you start adding manufacturing. You're into Dynamics 365 or NetSuite. Right. So all of the ERPs kind of have their sweet spots and have their industries, but virtually every company out there that needs something more than QuickBooks to run their business basically has an ERP, if you will. And so we integrate with all the ERPs, but also all the accounting softwares, the CRMs, the EMRs. So we do doctor, um, patient portals, we do billing portals for medical, because they're running on an emr, which is the ERP for medical. Right. So really it's just the back office software that the staff uses to run their business, where they do their own accounting, their own billing, their own everything in their office. That's what we have to integrate with to then put a billing portal so you and me, their customers, can go in, view our bills, view our invoices, pay our doctor's bills, pay our past invoices, view our invoices, download them for tax purposes. That's really kind of the whole thing in a nutshell.

James Shepherd: Got it. And so, um, let's talk about the economic model a bit. So, like, I would assume your average client is probably a bit larger in terms of. Maybe you could talk about that. Like, what, what is your, what is your icp, I guess. And then what do the economics look like in terms of upfront and kind of monthly? You don't have to give any specifics, but just how much you want to share. But they're going to want to understand that piece of it. So I would assume you mean they're keeping all the payments, margin. Um, but then obviously you guys are making money, so help Us understand that.

Ron Halverson: Yeah, yeah, that's a great question. So, um, I'm trying to make it as easy as I can. Sometimes it's difficult. So the difference with clarity is we started in the B2B space, right? So we were originally only working with clients that were, whatever call it 10 million and up for, you know, 15 years. That's where we played. And so our prices were there. But because of those prices, we were able to spend $30 million building a platform.

James Shepherd: Right?

Ron Halverson: So now for us, when we already have all the off the shelf integrations for these 22, it's easy to go downstream because all we're doing to go downstream is just lowering the price and making it more automated and easier to install. Where the other products that are mom and pop shops that are charging little, that are trying to go upstream, they can't get there because they can't spend 10, 15, $20 million building something in a market they've never been.

James Shepherd: Right.

Ron Halverson: So for us, that's literally all we've done. We've literally used AI for the last five years to automate the deployment. Every project up till a year ago when I would do one of these integrations was two to three months. So you can imagine with a two to three month project, there had to be an expense there, there had to be an upfront cost and then there had to be a license. Now that license could be paid for upfront or it could be in a SaaS monthly. Right. So let's call it might be 5, 10 grand setup fee and then you know, 599amonth for a license as a SaaS model, or if they want to pay the license, which is 15k, then it would be 25, you know, 20 to 25. The whole thing in, we'd be done in two or three months. Well now it's becoming so quickly that we can install this thing in minutes and days. And so that 5 to $10,000 setup fee is no long, it might be an hour or two. So it might be like $500 setup fee, 599amonth. And that is with an enterprise integration platform that you get a license for that could actually replace and be used for the integrations that they're using. And I won't throw out competitors here, but they could be using enterprise level software that they're paying 50 to $100,000 a year for integrating. They could literally rip that and replace it and get it for free. Yeah, for time and materials. Because they're getting our enterprise platform that we've used for those integrations for 20 years and they're basically getting it for 599amonth. No limit on transactions, no limit on the number of integrations. No limits.

Narrator: Right? Yeah.

Ron Halverson: So it really changes the model for companies of all.

James Shepherd: And so when you look at the ISO partnerships that you have now and you look at that portfolio mix, what are the top three or four business types that those ISOs are bringing your way to that find that are a good fit for your software?

Ron Halverson: You know, it's funny, every ISO, you know, I, I'll have one ISO that comes to me and says, we're trying to break into construction. We've got sage 300 cre. Can we do that integration? And we're just going to go after every construction company. Another one that comes in and says, we want to go after plumbing and H vac, so we want to do a service titan integration and we're just going to stick right there. We've got others that are like, we specialize in Sage. All flavors of sage 50, 100, 300 x 3 intact. We want to do all those. I've got one partner right now. The reason I just said the videos on Epicor that I just did, that's all they want to do. They came to us and said, we're attacking Epicor and the industries that Epicor specializes in. We picked these three and we're like, okay. So I literally just did those three videos for them last week so we could launch a new partnership. So it's hard to say what kind of businesses because every one of those focus different. One is construction, one is plumbing and H vac, another one is manufacturing. Um, very few are retail. Many of them are going after service industries. Right. Um, another one is Garage Door. Man, we got a multi billion dollar client right now. We just finished. That's Garage Door. We've got another one that does all of the embroidering for the Dallas Cowboys. We've got others that are, you know.

James Shepherd: So it's all over the place. Yeah.

Ron Halverson: More around a specific ERP and the industry that that ERP serves.

James Shepherd: That makes sense, right?

Narrator: Yeah.

James Shepherd: Just to clarify something for my own curiosity. So like, these integrations are, I think it sounds like you're saying, pretty robust and, and, and, and legitimate integrations. And the reason I, the reason I'm clarifying this is there are some companies that are doing some things with like maybe a toast or some of these others where they're like trying to hijack the browser and somehow pull data out and back in I'm assuming that's not where you guys play. You play where there is like a service titan, where there is a legitimate API or like a real integration that can be done.

Ron Halverson: Yeah, well, when the integration, remember our billing platform is a subset of, remember our E Commerce. Remember we shut off the storefront and everything to make the billing platform. So traditional integrations that we've done, we've got this storefront up here pushing orders and payments and returns and refunds and custom quote requests. And then down here on the ERP we've got products and inventory and pricing tables and invoices coming up and then invoice payments. So we've got this bi directional with five or six different integrations with hundreds of fields going back and forth. That's our integration. It always has been. We're literally shutting off the quotes and the refunds and the other things and just doing the invoice and the invoice payments to strip down to get to this integration. So it is a true full blown enterprise integration with certain features turned off if you don't want the E Commerce and the quotes and the marketplace stuff.

James Shepherd: Right, got it. Okay, so I think my last question, infrastructure wise here. Let's talk about gateway for a minute. So you mentioned earlier kind of working with different gateways. So just to clarify, the ISO would need to bring a gateway to this relationship, it sounds like. Uh, and they, you know, you support, I would assume there's, you know, fluid pay, nmi, uh, auth Net, you know, some of these common ones that I.

Ron Halverson: Hundreds of them.

James Shepherd: Yeah. And so they, so the idea is the, from the ISOs perspective, they're going to go sell a merchant account and they're going to set up that merchant with a gateway account. Then they're going to come to you and go, okay, I got a new account for you and you're going to charge this merchant their setup fee plus their, you know, whatever it is, 599amonth or whatever in licensing fee in order to do the integration that allows that larger, you know, kind of merchant to continue using their ERP or EMR while doing the payments through this gateway connection. Is that, did I say that right?

Ron Halverson: Uh, yes, in the wrong order, but yes, you said it correctly.

James Shepherd: Give me the right order.

Ron Halverson: Never happens that way. Because they will never win that deal and sign a merchant because they don't have the integration they con. That's how they come to clarity in the first place. They're like, I lost 10 deals last month because I didn't have a Sage X3 integration and I can't break into that market. So when they walk into the door and start talking to them, they figure out that they're invoicing out of X3 and they're like, oh, I don't have a gateway or payment option for X3. I got to compete with Paya. They go to Clarity. We go in together with the merchant, uh, or the ISO. We do a demo together and we sell the account together and then they provide the mid and become the ISO of record. Uh, we provide the integration. Now back to your original question. You asked two questions ago. How does that get paid? We have multiple options. You can drive the, you can buy the car, lease the car, lease to buy the car, finance the car. Right. Opex and Capex. So, so the ISO can say, hey customer, I'm saving you so much money on these fees. You have to pay Clarity for the integration and for the solution. So that's just handing it off. And they have to pay for the car, which they can buy the car or lease the car. We have both options. Right. Uh, or the ISO can say, hey client, instead of two years, I'm going to sign you on a three year deal. I'm going to pay your setup fee and then you're only paying 599amonth, but we're saving you and 800 bucks a month. A thousand, three thousand a month. It just pays for itself out of the gate so you have no upfront costs and they're using that as an incentive to up their contracts. Or sometimes they're saying, listen, we'll pay that setup fee and we'll kick you in seven bips, eight bips, nine bips. Does that help lower the price? We'll do a calculation and go, yes, as a matter of fact, that drops it from 599amonth to 99 bucks a month or $200 a month or whatever.

James Shepherd: Right, right.

Ron Halverson: And because we're willing to bet on the customer and bet on the come as well. So we want ISOs to be able to close and open more doors and close more business. So we're really flexible on the way we price it and the flexibility of how we get paid so that the ISOs can just close more deals.

James Shepherd: Yeah, yeah, I love it. That's super interesting. Uh, any, uh, any other tips or, or things that you've noticed? You kind of mentioned with the ISOs. The ones who tend to focus on kind of like one, you know, maybe erp, slash vertical tend to be really successful. Any other tips or things that you've noticed, whether it's from, like, you know, business, you know, prospecting side or whatever. What are some other thoughts you'd share with the ISOs that are like. Because again, a lot of the ISOs that hear this, they're like, well, this is what I want. I've been wanting to go after B2B. Uh, I've been wanting to go after manufacturing or, or medical, and I haven't been able to break into those. And so they've kind of like given up on those verticals, right?

Ron Halverson: Yeah.

James Shepherd: And. And so they. They want to go after them, but now it's like, oh, wow, wait a minute. So now I could do this, but this is like a whole new thing. What do I do? So give them some tips, if you would, on that.

Ron Halverson: Sure, yeah. It's really about two things. It's the pain point you're going to solve and the ROI you're going to deliver. Right. And really it comes down to that. So when you start thinking about pain points, it's like, what is their pain point? Are they overpaying on an effective rate because they're stuck on pia? Sorry, PI. I, um, just had to pick on a name.

Narrator: Right.

Ron Halverson: Not picking on them. Love Paya. We're a PI partner, but just had to pick on somebody. Right. So is it a problem because of the ERP and the limitations of options they have on the erp? So they're paying too much. That's a big one. But what I try to tell isos is don't race to the bottom. Every ISO I see is they're like, well, the competitors at 19 bips, so I gotta come in below. Everybody's racing to the bottom to make no money. Why don't you find out what the real problem is? I have another client that he went out for nine months trying to close a deal. Matter of fact, it was the one with the Dallas Cowboys we were just talking about. He came back and had me a DO demo. I asked the CEO of the company we were pitching, I said, have you ever thought about getting rid of all your fees altogether and just charging a surcharge and making it a convenience fee that your customers either pay you ach and give you cash, or if they want to pay by card, they have to pay the 3%. And he goes, you know what? I want to do that. So now we turned that on. Well, guess what? All of his business is B2B. So then we turned on level three interchange. We got back those extra 85 bips. We didn't have to give any discount whatsoever. This ISO now is making 150 bips. And they said what would the price be if I kicked in clarity 25 of those bips? I said free. So client has no out of pocket expense. Merchant has no out of pocket expense. ISO has no out of pocket expense. They're making 125 instead of 17bips. Clarity's making 25bips. The only person paying is the person that if they want to use a card versus paying ach or paying cash, that's literally the only person that has to pay the convenience fee. And everybody else gets paid and saving money. Right. Uh, so the tip is figure out how and where the money is. Is the money in you? I've got many that are on gateways that don't support level three. Well, guess what? We do level three pre gateway. So if you could take an authorized.net that doesn't do level three, put it in pass through mode and say, hey, we're going to send you the transaction, but we're sending you some extra data that needs to be forwarded up to tsys. Guess what that extra data is? We're forwarding up level three qualifying data. The new CEPD Visa spec.

James Shepherd: Right, Right.

Ron Halverson: So figure out where the money is to be made and what the value of the proposition is and then pitch the value and then the roi. I've never seen a client that isn't paid, isn't paid for this whole solution in just months and most of the time single digit months, it pays for itself. So quickly, just figure out the value, calculate the ROI and close the deal. It's really that easy?

Narrator: Yeah.

James Shepherd: You know the other thing that makes me think of Ron is like from a pain point perspective, like there's so much that has to do with like the way people are handling their accounting and reconciliation.

Ron Halverson: Right.

James Shepherd: A lot of times the pain point is like operationally like they're paying a person $60,000 a year to do something. That's ridiculous. And, and that person could be using their time doing something else with a very simple automation. And when I find, when I talk to these larger clients, especially B2B, um, almost always when you dig in and you're like, okay, so how do you actually give me beginning to end of a payment? How does this happen? Somewhere in that process I'm like, wait, hold on a second. So you mean you have a person who does this and they're like, yes. And I'm like, okay, how about they never have to do that again? How would that work, you know, and they're like, oh, my word, I could have them do this and this and this, you know?

Ron Halverson: Yeah, yeah. We've tracked it for the last four years, and on average, and I kind of missed that one. That's. That's a big point. I'm glad you brought that up. Our clients that use our solution, their DSO usually drops between 8 and 15 days. And their time to. Their speed to payment is usually 43% faster. When we know time is money. Tell your merchants to stop being banks, stop loading your money to your merchants and get paid faster. Yeah, there's your money. Right. And that might be the value. So like you said, it might be completely operational. And, and that is a big one, too.

James Shepherd: Yeah, I like that. I think we've actually kind of identified three interesting pain points which are probably going to vary on the different vertical, the different erp. But it's. You have like, the cost, uh, of acceptance. So you could do a, you know, again, uh, convenience fee or surcharge, depending on the model, or do a pricing or whatever. Um, and then you have your operational component, which is more of that, like, you know, that friction or whatever. And then you also have your cost of capital. And so you're like, from a purely financial perspective here, you're holding this float. Do you realize that we could help you to have, uh, you know, less time to payment, um, maybe less push card in a way that makes sense for you, so that you could push people to card and say, hey, go this direction. And then we'll give you, you know, your credit card company will give you whatever terms you want. You can get net 30, that's fine, but get it from them, not me, you know, so. Yeah, yeah, super interesting. I love it. So, all right, awesome. So, Ron, I have a feeling that many, many people in my audience are going to want to reach out to you about this. So, uh, where would you send them if they want to learn more and contact you to, to, to, you know, inquire, uh, about working with you guys?

Ron Halverson: Yeah, you can go to either clarity-ventures.com, uh, that's the parent company. Or if you want to go straight to Payment Hub, you can go to getpaymenthub.com.

James Shepherd: awesome. So getpaymenthub.com and what was the other one you said? Clarity. Clarity-ventures.com clarity-ventures.com awesome. Ron, thank you so much for your time today. Appreciate you jumping in and sharing your insights. I know my audience is going to love this one and be reaching out to you. So thank you.

Ron Halverson: Thanks for having me, James.

Narrator: Now for today in payments brought to you by Proscribes Inc. With Patty Murphy and James Shepherd. Hey James. Um, we talked a few months ago about uh, European uh, countries wanting to displace Visa, MasterCard. So um, it's. The European um. Parliament's Economic and Monetary Affairs Committee has now approved a legal framework for a digital euro and ordered immediate talks to finalize the law. Um, EU officials and the European Central Bank's President Christine Lagarde argue that a digital euro is needed to safeguard Europe's monetary sovereignty and reduce reliance on US dollar pegged stablecoins and foreign payment giants like MasterCard and Visa. The rules paved the way for online and offline versions of the digital Europe to be implemented by 2029. They're going to have a prototype ready by the end of this year and do a 12 month pilot to um, test the system with select merchants beginning uh, next year.

James Shepherd: Oh, wow.

Narrator: Yeah. Lawmakers in debating the law noted that nearly two thirds of all card transactions in the Eurozone are processed by non European companies, mainly Visa, MasterCard. And in a world marked by geopolitical tensions, they said they cannot rely on the goodwill of a few foreign providers or digital payments. I was reading a report in Le Mans, which is the French uh, newspaper, um, about this and they were, they were using the example of um, one of their citizens who is on the um, International court. What is it called? I think it's the International Criminal Court. Yeah, I think that's what it's called. Yeah. And uh, he hasn't been able to use his visa or MasterCard because uh, the ICC, he's um, considered a Persona non garada because of the um, the designation of um, Benjamin who as a um.

James Shepherd: Criminal.

Narrator: Uh, yeah, as a criminal, as an international criminal.

James Shepherd: And that, and that has somehow made it to where he can't use his Visa and MasterCard.

Narrator: Right. Because uh, we have, we've, we've imposed sanctions on, on, on the judges and as part of that sanctions they can't use the visas or MasterCards.

James Shepherd: Yeah, I think it's, I just think it's really interesting because it does feel like um, you know we had like decades of time where it seemed like kind of just the world, you know, economic machine was kind of like becoming more intertwined and coming closer together. Um.

Narrator: Right.

James Shepherd: And I think that you know, lately it definitely feels like it's going in the opposite direction of that. And so I think countries have to um, hedge their bets a little bit and so they have to think about what does this mean and you know, where, where are the, what are the levers that foreign powers could pull and yeah, payments is one of those levers for sure.

Narrator: So that's, it's a very important level. And you know one of the things that surprised me is there, there are several European countries that have no domestic card schemes whatsoever.

James Shepherd: Yeah.

Narrator: Um, and that kind of puts you, you know, puts them in a precarious position I would think. M. Yeah. And you know, it, you know, when you look at it like the Eurozone is a, is not as big as the US but it's a fairly large, you know, if it were considered a country.

James Shepherd: Right, right.

Narrator: You know it is fairly large. And it, and, and with all of the um, work going into stable coins and, and, and digital payments, it would, it would stand to reason that they should have something of their own.

James Shepherd: Yeah, it's actually kind of interesting to me. Like it, it makes me wonder and again I, I certainly don't have the tax or, or business law expertise on this. But it does strike me as odd that you would think Visa and MasterCard would respond to this by creating a European uh, subsidiary that's not subject to you know, US based sanctions or. You know, it seems like there would probably be a workaround for this.

Narrator: Like I think that there would. Right. You know, because they have Visa, uh, you know, Middle east and Africa. They have, you know. Right, right.

James Shepherd: You wouldn't, you wouldn't think that this would be like. I'm sure that Visa MasterCard are not going to stand idly by while the Eurozone creates their own competing form of, of digital exchange. I would imagine that they're going to do something about that to assure the Eurozone that yes, they will be able to count on decent MasterCard rails for payments.

Narrator: You know and I, I agree with you and I think that uh, you know, I don't think that they're, that the Euro European um commission is doing this, the you know, to prod Visa MasterCard, but I think a Visa MasterCard were to lessen their uh, you know, somehow address this.

James Shepherd: Yeah.

Narrator: They would not be averse to it.

James Shepherd: Yeah, I'm, I'm sure, yeah, I'm sure we'll be hearing more news about that in the coming, you uh, know, months.

Narrator: Yeah.

James Shepherd: Though.

Narrator: Yeah, I just, I just uh, posted a story for you know, if anybody's really interested. I wouldn't post a little bit deeper on this. Um, in a story I posted the green sheet. Um, awesome. Had some really interesting quotes from you know, from lawmakers and so forth. Yeah, so very cool. Okay, so next up, domestically, Deluxe Corporation, which is a company name that's synonymous with checks. Right. Is acquiring Solero Commerce, which is a financial technology company focused on payment solutions for small and mid sized businesses. Now I've been, as you know, I've been in a payment space for a really long time and uh, so I have to note this, that this is not Deluxe's first foray into the world of digital payments. Uh, probably few of our listeners know that back in the 1990s, which was quite a while, you know, 25, 30 years ago. Yeah, they purchased an ACH business with the intention of competing head to head with the Fed in ACH processing.

James Shepherd: Really?

Narrator: Um, that unit, along with a check authorization system that it was built for retailers, was spun off in 2000 as a company known as E Funds, which was eventually, uh, purchased by Fiscal. Um, and then of course in 2021 it purchased first American Payment Systems to get into the merchant acquiring space.

James Shepherd: I was literally just searching right now on chatgpt of like, what. Because I was like, wasn't it them that purchased First American Payments? I couldn't remember. But yeah, yeah, yeah, that was a big, that was a big deal.

Narrator: That was a big deal. And um, they claim that it would, that when you take Solero's portfolio and combine it with the first, you know, the portfolio that they have now, which used to be First American, um, it would uh, puts them in the ranks of the top 10 non bank merchant acquirers. Wow. Uh, based on 2025 data, the two companies combined processed $70 billion.

James Shepherd: Well, they're definitely top 10 if that's where they're going to end up at.

Narrator: So, yeah. So, uh, Deluxe, and Deluxe is paying $625 million for Solara. So that's a pretty hefty bet that they're gonna stay with merchant acquiring for a while.

James Shepherd: Well, yeah, and I think that, yeah, that, I think that ship sailed when they did First American Payments. Deal. But uh, but yeah, it's, yeah, but

Narrator: I think that, that, that they've really, you know, that this makes it even more so. You know what I'm saying?

James Shepherd: I mean, yeah, I feel like they paid, I was trying to find that. I mean, I feel like they paid quite a bit more than that for First American. Yeah, so First American payments was 960 million. So not, not that much more.

Narrator: But well, yeah, but still, yeah, 300.

James Shepherd: So that was in 20.

Narrator: I'll tell you what, James, if I had 300 million, it would Be a lot of money, percentage wise.

James Shepherd: Uh, but so, so 2021 of June. So almost June 1st. So almost exactly five years ago.

Narrator: Right.

James Shepherd: They purchased first, uh, American Payment Systems for 960 million. All cash. Crazy.

Narrator: Um, yeah, this was, this was cash and. And stock is what it was. Yeah, yeah. And they picked up the, uh, transaction cost, you know, the cost of facilitating the transaction.

James Shepherd: Got it. Okay. Are they publicly traded?

Narrator: Yes, they are. Are they?

James Shepherd: Okay, I thought they might be. Yeah. Yeah. Very interesting.

Narrator: I don't do. I cannot tell you what their ticker number is. Dlx. Although that sounds logical.

James Shepherd: Yeah.

Narrator: You know, they're, they have a really interesting story. They, they actually started in 1900. A guy bought a newspaper, was printing the newspaper, wanted to make it a big newspaper. He was in Minneapolis or St. Paul because, you know, one of the twin cities there.

James Shepherd: Right.

Narrator: And, um, he. He got really sick and had to move to Texas and then moved back to. Move back to, uh, Minneapolis and decided that somehow, I can't remember exactly what it. How it came about, but like a bank asked him to print checks that they decided it would be really cool to have like, checks with their names on it because at the time. Yeah. Ah, they would just go to the local fed and get a check. Right, right. And so he. That was 1915. And he started, um, you know, he had, he knew how to print because he had a, had, had a newspaper.

James Shepherd: Right.

Narrator: So he started printing check and started selling it to all the other banks in Minnesota.

James Shepherd: Yeah. Interesting.

Narrator: Uh, and survived the Depression. Interesting is very interesting. And then, you know, to take going from printing a newspaper to printing checks and then he, uh, you know, basically walked around to all the local, uh, banks because at those time, at that time, every town had its own bank.

James Shepherd: Okay.

Narrator: Huh. You know, national banking. Didn't really like statewide banking. A lot of states started doing statewide banking in the 70s, but before that, most, most of it was, you know, um, you know, city, uh, or town based.

James Shepherd: Right, right.

Narrator: With very little branching outside of, um, your geographic. Yeah.

James Shepherd: So I, I find it really interesting. I actually just pulled up. So on June 2nd of 2021, they did the acquisition. They announced it June 1st. On June 2nd, they were trading at 47.75 a share.

Narrator: Okay.

James Shepherd: Today they're trading at 2350, really down, um, 50% from the first Market Payments acquisition. Now they were down to March of last year. March of 2025, they were at 1461. So from that low they're up to 2350. Um, uh, so it's interesting that you

Narrator: know, but again that's interesting. I mean, you know, I mean look at Fiser. Fiserv stock is plummeted. In the last six months it was up over a hundred dollars and now it's down to something in the 40s I think.

James Shepherd: Right. But what's interesting is in their case, I mean they really didn't have any big, you know, they pretty much dropped down to 14 bucks in February, um, of 2023. And since then they've been kind of in that, you know, 14 to $25 range.

Narrator: Um, right.

James Shepherd: So anyway, so yeah, I think it's interesting. We'll see how, we'll see what the uh, Solero acquisition does for them. But um, it doesn't necessarily, I guess I would say it doesn't seem to me that them acquiring big portfolios of merchant accounts is doing them very much good at this point. So we'll see if this one does

Narrator: paying that much money for them.

James Shepherd: Well yeah, I mean their market cap is 1.08 billion and they just spent 600. I'm sure they borrowed the money but it's like still they spent 600 million to acquire this other one. So anyway, yeah, that's a very big bet. That's one thing. The main thing I was checking was like how much money is that? I mean if I serve acquired something for 600 million it would be like a, uh, you know, it's like oh yeah, of course they did that and you know, but I mean this is like, I mean they're only worth a billion dollars total. So 600 million acquisition is a really, really big bet.

Narrator: So really big bet.

James Shepherd: Especially after they made a really interesting to see especially if they made an, after they made a 960 million dollar bet that apparently did not pay off.

Narrator: So basically they're, they got a billion and a half bed on bet on uh, merchant acquiring. Yep, yep.

James Shepherd: So yeah, we'll see how it goes. So keep us posted on that one for sure.

Narrator: So sure will James. So next up, Zelle uh, is going to India and it's taking uh, a stablecoin along for the ride. As we know the Zelle uh, is a peer to peer payment network, um, early warning services. The bank owned um, Fintech that operates Zell said India is the first of many countries it hopes to expand into. Now India already has a popular P2P payment network called UPI. Um, but the market you know, is probably, it seems big enough for two and, and certainly um, Zell hopes so. Um, you know India has a population of 1.5 billion people and fewer than 500 million currently use UPI.

James Shepherd: Okay.

Narrator: Okay. India also is the world's largest recipient of remittances, making it a, quote, natural starting point for American consumers who regularly send money there, uh, making, you know.

James Shepherd: Right, right. People. The current Zelle users would be able to send money to Zelle users in

Narrator: India, to their family. Yeah.

James Shepherd: Right.

Narrator: Yeah. The company also made clear its intention to expand into other countries. And to do that, it says it needs a stablecoin. Because, you know, having a stablecoin will meet consumer demand for fast, reliable, secure digital payments that can be exchanged across borders near instantaneously. And as we know, stable coins can achieve that by eliminating the need to funnel transactions through multiple correspondent banks.

James Shepherd: Yeah.

Narrator: Um, so, uh, I thought that was, you know, I, I had personally thought this, the stablecoin was news enough, but going to India and having other countries, um, you know, on the horizon.

James Shepherd: Yeah, that's, um, awesome.

Narrator: Yeah, that's pretty big news, I think.

James Shepherd: I agree.

Narrator: And then finally, um, I think our last story of the day. Yes. Finally, um, North Carolina, uh, has legislation pending that would cap credit card surcharges at 2%. Wow. Uh, the, the bill, HB13, um, also would, uh, includes a fine of $500 for any, uh, for each violation of charging, um, more than 2%. Not surprisingly, business groups are adamantly opposed and have written a letter to state lawmakers urging them to reject the bill. Uh, we've talked about, uh, surcharges a lot here, and you know, as most people know, they're permissible in all but four states. Connecticut, Maine, Massachusetts and California. And New York allows them. But you have to jump through a lot of hoops. Right. Uh, um, three states cap permissible surcharges. Colorado, which allows a maximum of 2%. Illinois, which allows 1% or the actual cost of processing, whichever is lower. And Nevada, which allows a surcharge of 1.5%. Um, so, um, you know, it's unclear whether this has the, uh, support to. To, you know, make it to the governor's desk. It, it cleared the, uh, committee bases. You know, the committees.

James Shepherd: Right.

Narrator: Have that need to vote on it. Have voted on it, but it has not been scheduled for a floor vote yet. And there's no corresponding, uh, that. That was the House. Uh, the, uh, State House, you know, the Assembly.

James Shepherd: Right.

Narrator: Uh, the state Senate does. There's no corresponding bill in the state Senate. So they'd have to take that bill and, and, you know, take it over to the Senate and let it go through that process.

James Shepherd: Right.

Narrator: And, you know, there's not a whole lot of time left in the year to do that, so.

James Shepherd: Yeah, that's.

Narrator: But I think it's interesting, you know, that, that they're, that they're talking about capping. Um, yeah, it is.

James Shepherd: Yeah. And you know, and again, you know how I feel about all this stuff because, you know, I, I, uh, believe all of this is, you know, free speech rights of the merchant to be able to, you know, to me, I really believe that the government's role in all of this, the, the correct role, I believe, is regulating transparency. So I think the idea of, you know, these laws that are really more like just no surprise laws, like even the, even the one in New York.

Narrator: Right.

James Shepherd: Which I think is a little bit, uh, over the top in terms of control. But even that one, it's like, okay, like I, I got it. You know what I mean? Like, you don't want the person to have to do a calculation at the counter. So, I mean, I, you know, I get it. Um, but I think the idea of, of the government setting some arbitrary percentage, it's like, well, wait a minute. Like, that's not fair. I mean, the, the coffee shop has an effective rate of interchange of 5% and the auto body shop has an effective rate of 1%. So really a 2% surcharge is more than enough for the auto repair and not nearly enough for the coffee shop. So it's just like, I hate when the government gets involved in things they don't understand and they try to make blanket standardizations in areas that they just don't. They shouldn't. It's like, this is a complex thing. You can't, you can't regulate it in that simplistic way.

Narrator: Right. Yeah, I agree. Well, that's it for this week, James.

James Shepherd: Awesome. Well, thank you, Patty. Always, uh, great to, to uh, have all these updates and uh, keeping us up to speed on what's happening in the industry. So we appreciate it.

Narrator: My pleasure.

James Shepherd: Thank you for listening to the Merchant Sales Podcast. Whether you are an industry veteran processing executive or just trying to learn about the payment space, we appreciate your time. We hope you will tune in next week for more information and tips on building your merchant services business.