Interview with Rhonda Sher

Jonathan: I recently spoke to Rhonda Sher, the expert on everything about LinkedIn, about how to get most out of LinkedIn’s platform.  Below is an edited version of our conversation:

Jonathan: Rhonda, what makes you the LinkedIn expert?

Rhonda: I have nearly a decade of experience helping clients leverage LinkedIn for business development, and I wrote one of the first books about Linked ("The ABCs of LinkedIn" back in 2009) and I have over 32,000 followers and 200+ recommendations on LinkedIn. 

Jonathan: What is the biggest mistake that people are doing or not doing on their LinkedIn profiles?

Rhonda: If I had to pick one, it would be not having their contact information.  Having a profile that doesn't tell you their phone number, email, website.  You're like, “Wow, I really want to get to know this person. And there's no way to contact them”.  Another big mistake is that they don't have any information in their “About” section about what it is they do or what they've done for their clients.  It is just all about them and it starts out with “I, I, I”, and the truth is I do care about what you do, but profiles that focus too much on themselves and not enough about what they can do for clients, are not ideal.

Jonathan: For people that are in business development and acquiring prospect and clients, how can they use LinkedIn to find their people?

Rhonda: We all get messages that say, “Hey Jonathan, I just curious, could you use more customers?  We have a system that basically can get you 30 appointments a week”…

Jonathan: I get that 10 times a day.

Rhonda: …What has happened is a lot of people, instead of looking at what's possible, they're just looking at the noise of all of these people that are using automated systems.  They're what I call “Spraying and Praying”. Well, the truth is that can you make money using LinkedIn.  And the way that you do it is with integrity and authenticity and actually getting to know people.  I think the big thing is to get business you have to do it in a way that you're not just pitching people.

Jonathan: Assuming one is avoiding mistakes on LinkedIn and doing some really good things, do you find that LinkedIn works better for people in particular niches?

Rhonda: It really benefits more B2B people than those with a brick and mortar store.  If you're a an acupuncturist, for example, that only sees clients in a geographic area because people are going to drive to you and you're not selling anything else, LinkedIn is probably not the right platform for you. 

Jonathan: What about targeting someone in particular, because you really want to work with them or speak to them?  How would you facilitate that?

Rhonda: First and foremost, your profile should position you as the only logical choice. I call that going from “hiding out to standing out”.  And then the formula that I recommend is to look at that person's profile. If they're posting, comment on their posts consistently every day.  Show up and put a thoughtful comment, like it.  If you find real value in their post, repost it and share it with your audience, then go and invite them to connect and say, “hey, John Smith, I've been following your posts.  I love your content. Looks like we share some common connections. Would it make sense for us to connect?”  They have already seen me interacting with their posts, and what I’ve done is making it a deposit before I'm asking for a withdrawal. Then once you connect with me, what I'm going to do is send you a message that says, “Hey, John Smith, I like to get to know my connections.  I really be honored if you would just want to call with me for a few minutes”. And then these are the magic words.  “I promise this is a “no-sale zone” call. I won't sell anything to you”.  So if I want to get to know you and I tell you I'm not going to sell you and I give you my calendar link, there's a very good chance you're going to get on my calendar.  If you do these things you will never have an empty calendar.

Jonathan: Are there any professionals you find either you've either had rates success working with or you prefer working with them compared to other types of professionals.

Rhonda: I have a lot of success with commercial real estate brokers.  I've also had a lot of success with attorneys and a lot with executive coaches.  This seems to be the sweet spot for me.  I think it's my ability to understand who they are with their audiences and give them a strategy that's tried and true that actually gets them appointments.  And it's just the fact that I've been doing this for a decade or more.

Jonathan: Is there anything that I'm missing that I should have asked?

Rhonda: When it comes to LinkedIn recommendations, make sure they're current.  If they're old, they're not relevant, right?  They're probably not even relevant to what you're doing today. So if they are more than a year or two, it's very easy to just go out and get new ones.  And the best way to get someone's attention, believe it or not, is to give somebody a recommendation.  It's like, “wow, this is so cool.  Somebody really appreciates me”.

Jonathan: I would think most people that you're dealing with have been in business long enough where they have more than one client to ask….

Rhonda: …. Yeah. I teach everybody this in my classes, my favorite four words, “I need your help”. What's worst they could say?  “No, I'm not going to help you”.  Most people will help.  “It would mean the world to me if you'd write a recommendation on LinkedIn” It’s not a huge favor. 

Jonathan: Rhonda thank you for your time and insights.  Rhonda can best be reached on at Rhonda@theshermethond.com, www.theshermethod.com, 760-515-2822, and of course https://www.linkedin.com/in/rhondalsher/

Interview with Yaro Shevchenko

Yaro Shevchenko

Jonathan: I recently spoke to Yaro Shevchenko, the Saleforce and automation expert, about aligning business goals and technology.  

Jonathan: Yaro can you give me a top-down view of the interaction between business and business goals and technology?

Yaro: Decades ago most business interactions happened in person, with the occasion phone call or snail-mail.  Now we have e-mail, text messages, websites, videos, social media, chatbots, apps, etc.  There are so many channels and the ways to engage with customers are more complicated.  Businesses should aim to present a single, unified face to their customers.  I say that by grabbing data from different sources, with a 360 degree view, businesses can do a better job of marketing, selling, servicing and retaining their clients.

Jonathan: How can we get the 360 degree view of our clients and prospects?

Yaro: It takes a lot of effort but it’s very achievable.  One should start with collecting data and organizing it in a way that supports an analysis.  Businesses need to understand who they are  trying to reach, how to reach them, and which messages will resonate with that target audience.  If you “know” your Ideal Customer, you’ll be able to be able to know what you need.  But it’s more than just having the name, e-mail address, and phone number.  That’s the starting point.  A good lead management process makes it easy to add depth and perspective to the client’s profile. Data from social media channels, for example, can help you accurately shape your view of the individual or organization, providing helpful clues for your future interactions with them.  Your sales process should help you populate data points so that you have depth and richness to the client/prospect profile.   And the key is making sure all of your findings make it into your Client Relationship Management system.

Jonathan: This seems like it’s hard and even harder to do well.

Yaro: That’s basic.   What comes next is what I call “data enrichment.”  Data enrichment is where we add new layers of information to a customer’s record, supplementing it with contextual details that ultimately help us to reach that customer with the right messages, deepen the relationship, and generate more business value.  We’re not aiming to simply collect information for its own sake. Our goal is to gather the raw material that will fuel growth and profitability for the business.

Jonathan: This begs the questions, what are the sources of data enrichment?

Yaro: Whenever a customer or prospect makes direct contact with your company, everything about that even should be recorded in your CRM.  Did they call, e-mail, complete a survey, get referred to you, etc.  To best grab this your CRM needs to be fully optimized.  We need to track their purchase history. What and when did they buy.  You should have prompts in place to ask for the right, specific information from your customers.  You probably want to know information related to purchase like did they pay on-time, did they return a product, were they not fully satisfied.  Again, prompt your team to ask for this information and make it part of your CRM record for each client.  Your company’s website can be a goldmine.  Which pages have they visited?  Which documents did they download, and when? Did the customer rate your product or write a review?  Lastly, if you can find your customer’s social media profile, store that information part of your customer-360 view.  We can get demographics, lifestyle, values, and economic status.  This can be especially valuable in segmenting your customer base, and in reaching out to look-alike audiences with offers tailored to their unique needs.

Jonathan: Yaro, again this sounds like a lot of work

Yaro: It is, but that’s why I get hired.  I help businesses make this process automated so that it’s not a burden. 

Jonathan: Yaro thank you for your time and insights.  Yaro can best be reached 877-635-3305, yaro@addaxlab.com and www.addaxcrm.com

Visa Payment Passkey Service

Visa's Payment Passkey Service is a groundbreaking solution designed to enhance security and streamline online transactions. By leveraging the Fast Identity Online (FIDO) authentication standards, this service aims to provide a more secure, efficient, and user-friendly payment experience for both consumers and merchants.

At its core, the Payment Passkey Service eliminates the need for traditional passwords, which are often a weak link in cybersecurity. Instead, it employs FIDO authentication, which uses public-key cryptography to ensure secure user verification. When a consumer registers with a participating merchant, a pair of cryptographic keys is generated: a public key, stored on the server, and a private key, kept on the user’s device. During authentication, the private key is used to sign a challenge issued by the server, which can only be verified using the corresponding public key. This process ensures that only the rightful owner of the device can complete the transaction, significantly reducing the risk of fraud and unauthorized access.

Visa’s implementation of FIDO authentication within the Payment Passkey Service offers several advantages. Firstly, it provides a seamless user experience by enabling authentication methods such as biometrics (fingerprints or facial recognition) and device-based PINs. These methods are not only more secure than passwords but also potentially faster and more convenient for users, leading to reduced friction during checkout and potentially higher conversion rates for merchants.

Moreover, Visa's Payment Passkey Service enhances security by minimizing the risk of phishing attacks. Since the private key never leaves the user's device and cannot be intercepted or misused by malicious actors, the potential for credential theft is drastically reduced. This increased security fosters greater consumer trust in online transactions, encouraging more frequent and higher-value purchases.

For merchants, integrating Visa's Payment Passkey Service means fewer instances of fraud-related chargebacks, which can be costly and damaging to reputation.

By no means is this the standard or even widely available now, but in time this is going to integrate smoothly with existing payment systems and will be implemented without extensive modifications to the merchant's infrastructure. In two years when Passkey is ubiquitous you can say you read about it first on Liberty Credit Card Solutions’ blog.

Interview with Alicia Connor

Jonathan: I recently spoke to Alicia Connor MA, a Registered Dietitian Nutritionist (RDN) and chef, about diet, meal planning, and nutrition.  Below is an edited version of our conversation:

Jonathan: Is there a distinction between nutritionist and dietitian?

Alicia: It’s different training and different required coursework.  There could be a two or four year program, or there could be a master's degree included. To become a registered dietitian nutritionist (RDN) specifically, an internship and passing the registration exam is required. RDNs are also required to have a master's degree.

Jonathan: And your background is dietitian?

Alicia: Correct, and I've had this credential for just over 10 years now.

Jonathan: And the chef part?  

Alicia: I worked as a cook and chef first and then went back to school because I didn't finish my college degree originally.

Jonathan: How much of your work is spent with people that have an underlying medical condition that necessitates dietary constraints compared to others who are just well and want to continue to stay well?

Alicia: A lot of people that I work with have Pre-diabetes or Type 2 diabetes, want to lose weight, and/or want to manage chronic disease.  Other clients have underlying issues. For example, one of my clients has pancreatic insufficiency and he had a lot of digestive issues. Since working with him, symptoms have resolved.  We're going deeper to see if we can improve the health of his pancreas.  I would say most people have something deeper that  they're not giving enough attention to, like sleep quality.   

Jonathan: What would you say to the person that is under a lot of stress, because I imagine people who are reading this are business owners.  

Alicia: I would recommend it's eating balanced meals and snacks throughout the day, focusing on a nutrition-based eating plan. I work with a lot of clients on behavior and how they think and feel.  If we're pulling the trigger on emotions all day long, we're responding in a way that's elevating our stress, then that has a huge impact on health.  When we're stressed, that’s one variable that increases blood sugars.  Our body thinks we're being chased by a tiger when we're stressed, when in fact we might be just sitting at a computer.

Jonathan: You mentioned more meals or more snacks…is there an optimal number?

Alicia: Four to six, but everything depends.  If you're somebody that exercises in the morning, have something before you exercise.  This could be a small thing.  But if you're doing strength training, have something protein-based afterwards.  You are trying to fuel what you're doing. In general, I recommend four times a day.

Jonathan: Inflammation as the cause of illness has been a hot topic for a while.  How hard is it to counter that with an anti-inflammatory diet and what does that entail?

Alicia: There's some major foods that you could avoid like gluten, dairy, vegetable oils to name a few. Some people have a response to nightshades which include  tomatoes, eggplant, peppers, and potatoes.  And, yes, inflammation is the precursor to a lot of illnesses.

Jonathan:  After you’ve done your assessment, how much of your efforts are recommendations, suggestions, and recipes?  Are you giving an entire menu to follow for the week, or is it just ‘here are some suggestions to eat’ or ‘more or less of this and do less of that’?

Alicia: I don't necessarily say eat more of this and less of that because most people know what they would like to reduce already.  If somebody wants me to create a meal plan for them that's individualized, I’ll usually give ideas.  I find that if it's too rigid, then people don't follow it, and the whole idea is to create a plan that's sustainable and flexible.  

Jonathan: The idea of being a dietitian and having a chef background; they're complimentary. 

Alicia: Absolutely.  You came to one of my meal planning sessions, the one about meals that heal.  The idea of bringing back Sunday suppers with the meals that heal to help with physical, social, and mental health.  If we eat and cook together, then that'll help everyone.  I also do workshops like Workplace Wellness, and encourage people to bring in what they make and it can be a creative outlet.  Quick & Delish Life Sessions are monthly topics that include life reflections; the February 2024 topic is about how to apply research-supported benefits of the Mediterranean diet and lifestyle. 

Jonathan: Alicia, thank you for your time and insights.  Alicia can be reached at:

email: alicia@aliciaconnor.com 

website: www.aliciaconnor.com 

Alicia on LinkedIn

Quick & Delish by Alicia Connor on YouTube 

Schedule a free consult!

2024 Payment Prediction

My top payment prediction for 2024 is that businesses which can set-up a subscription like billing model will continue to do so.  They will prioritize the certainty of a consistent revenue stream even if it means having to offer a discount to clients or nudge some prospects look for other providers.  I suspect if companies are big enough to have the data at their fingertips they will know exactly how much (if at all) to discount for subscribers to optimize their revenue.  If I was forced to come up with another prediction is would be to expect an even larger rejection of tipping.  Individuals have no problem spontaneously tipping, for example, salon workers, but don't want to feel pressured to tip someone who merely hands them a pre-made sandwich.

Pay at the Pump Trends

Pay at the Pump (PATP) merchant services, which allow customers to pay for their fuel directly at the pump using a credit or debit card, have evolved significantly in recent years. These services are becoming increasingly sophisticated, driven by advancements in technology, changing consumer expectations, and regulatory requirements. Here’s a summary of the current trends in Pay at the Pump merchant services:

1. EMV Compliance and Security Enhancements

One of the most significant trends in PATP merchant services is the shift toward EMV (Europay, Mastercard, and Visa) compliance. EMV technology involves the use of chip cards that are more secure than traditional magnetic stripe cards. The implementation of EMV at fuel pumps has been driven by the liability shift, which mandates that merchants who do not support EMV technology may be liable for fraudulent transactions.

The push for EMV compliance has led to widespread upgrades of fuel pumps across the United States. These upgrades not only enhance security by reducing card-present fraud but also pave the way for the adoption of contactless payment methods and mobile wallets.

2. Contactless Payments and Mobile Wallets

The COVID-19 pandemic has accelerated the adoption of contactless payment methods, including near-field communication (NFC) technology, which allows customers to pay using their smartphones or contactless-enabled cards. This trend is particularly relevant in the context of Pay at the Pump, where minimizing physical contact is beneficial.

Major mobile wallets like Apple Pay, Google Pay, and Samsung Pay are increasingly supported at fuel pumps, offering a convenient and hygienic way for customers to pay for their fuel. This shift aligns with broader consumer preferences for seamless and touch-free payment experiences.

3. Integration with Loyalty Programs and Mobile Apps

Fuel retailers are leveraging Pay at the Pump technology to integrate with loyalty programs and mobile apps. These integrations enable customers to earn and redeem points or discounts directly at the pump, enhancing customer engagement and loyalty.

Mobile apps provided by fuel retailers often include features such as digital receipts, fuel price comparisons, and the ability to locate nearby stations. These apps can also facilitate mobile payments, allowing customers to authorize payments via their smartphones without needing to interact with the pump’s payment terminal.

4. Advanced Data Analytics and Personalization

The integration of Pay at the Pump systems with advanced data analytics is another emerging trend. Fuel retailers are increasingly using data collected from PATP transactions to gain insights into customer behavior and preferences. This data can be used to personalize marketing efforts, optimize pricing strategies, and improve overall customer experience. For example, targeted promotions can be sent to customers based on their purchasing history or location, encouraging repeat business and fostering brand loyalty.

5. Enhanced User Experience and Interface Upgrades

To improve the user experience, many fuel retailers are investing in upgraded pump interfaces. These interfaces often feature larger, more intuitive touchscreens that provide clear instructions and support multiple payment options. Enhanced user interfaces can reduce the time customers spend at the pump and improve overall satisfaction.

Additionally, some fuel pumps are now equipped with multimedia capabilities, allowing retailers to display advertisements or promotions while customers refuel. This creates a new revenue stream and an opportunity to engage customers with relevant offers.

6. Sustainability and Eco-Friendly Initiatives

Sustainability is becoming a significant focus for many industries, and this certainly includes retail gas stations. Some PATP systems are being integrated with features that support eco-friendly initiatives. For example, customers might be given the option to offset their carbon emissions from fuel purchases through donations to environmental causes directly at the pump.

In conclusion the trends in Pay at the Pump merchant services reflect broader shifts in the payment landscape, driven by technological advancements, consumer preferences, and regulatory changes. The emphasis on security through EMV compliance, the rise of contactless payments, integration with loyalty programs, data-driven personalization, enhanced user experiences, and sustainability initiatives are shaping the future of PATP services. Fuel retailers that embrace these trends are likely to enhance customer satisfaction, increase loyalty, and remain competitive in a rapidly evolving market.

A.I., Personalization, and Merchant Services

Businesses are working not only to streamline transactions, but also to personalize them.  As consumers become increasingly discerning, the need for tailored and individualized experiences has never been more critical.  Merchant services are stepping up to the plate, leveraging data analytics and cutting-edge technology to create personalized customer journeys.  At some point, probably sooner than expected, every interaction with a business will feel uniquely crafted for you – from targeted promotions based on purchase history to customized loyalty programs that reflect your preferences.

One of the key drivers of this shift is the integration of artificial intelligence (AI) in merchant services. By harnessing the power of machine learning, businesses can analyze vast amounts of customer data in real-time, offering insights into shopping habits, preferences, and even predicting future needs. This not only enhances customer satisfaction but also fosters long-term loyalty.

Personalization extends beyond just product recommendations; it encompasses the entire shopping experience. From personalized marketing emails to customized offers at the point of sale, merchant services are creating a more intimate and engaging environment for consumers.

As businesses embrace this transformative facet of merchant services, they will not only stay competitive in a saturated market but also forge meaningful connections with their customers. In the era of personalization, merchant services are no longer just about transactions – they're about building lasting relationships.  

Consumer Spending

According to MasterCard, January retail sales, excluding the automotive sector, was up 8.8% over last January.  Spending in restaurants was very strong; up 24.2% over last January.  Robust U.S. consumer spending is also noticeable across entities.  Bank of America has said that credit and debit card spending is up 5.1% year over year in January, and they are on record as viewing this one more sign that there is “a strengthening in consumer spending”.  The trend of good news continues.

How to choose the best Automated Recurring Billing software for your business?

Selecting the right subscription management software is crucial for businesses looking to streamline their payment processes and maximize revenue. With so many options available, it can be overwhelming to determine which platform will best suit your needs. Here are some key factors to consider when choosing a billing system: 

1. Features: Look for a software solution that offers a wide range of features such as automated invoicing, customizable billing cycles, and securely connects to your payment processor. 

2. Pricing: Consider the platform's pricing structure and how it aligns with your budget. Some platforms offer tiered pricing based on usage or the number of subscribers, while others may charge a flat monthly fee. 

3. Ease of use: Choose a system that is user-friendly and easy to navigate, allowing you to manage subscriptions efficiently without any technical expertise.

4. Integration capabilities: Ensure that the software can seamlessly integrate with other tools and systems you currently use in your business operations.  Not all will, and that just might mean finding a tool from a different company that does a task that a current provider does for your business.

5. Customer support: Opt for a platform that provides excellent customer support services in case you encounter any issues or need assistance with using the software.

Tracking gun sales

Over the past few months the groundwork has been laid so that gun store purchases can be tracked. Not tracked by the government but rather by the card brands (American Express, Discover, MasterCard, and Visa). It is worth noting that this will not make it possible to determine what exactly was purchased, but it will convey how much was spent and by whom. Some argue this can help law enforcement spot suspicious transactions, whereas others see this as a path toward curtailing Second Amendment rights. So why is this happening? The card brands have all made statements that they support all legal commerce and don’t want to affect any purchases. However, their hands have been tied because a new merchant code was created specifically for gun stores and now they have to comply with the gathering of data; there is a merchant code nearly every other business type. Do you have any thoughts about this?

"More" does not mean "Better"

A recent conversation with a prospect yielded a lot of insight.  Her top priority was selecting “the Point of Sale (POS) system that had the most integrations”.  When asked why she explained that “having the most integrations means having the most options and the greatest likelihood that, whatever I need now or in the future, would be available to me”.   Although this seems rational, it was very misguided.  First, having the most does not mean best or best for you.  Second, most businesses will only use a fraction of the available functions and integrations of any POS.  They are all so powerful and offer a very robust ecosystem.  Third, if you are going to go down the multiple integration path, instead of getting built in features, it means being prepared to speak to multiple companies for support.  When these points were shared with her, some of her concerns about missing out on integrations were reduced…more so when I told her that most of her needs are features in some of the POS systems and she would not have to consider paying more for redundancies.  I don’t know what she will decide, but I know that her final selection will be better.

Venmo will charge for goods and services

Venmo announced that they will start charging businesses and sellers who use their platform 1.90% + 10 cents per transaction starting in August. This is not surprising as PayPal stated that they were raising their rates, and PayPal is the parent company of Venmo. There are additional fees if the business/seller wants to receive their funds faster, and there are not the same kind of protections for both parties as with a credit card transaction. This is another example of the payment landscape rapidly changing.

PayPal announces many price increases

PayPal has announced new rates for their services starting on August 2nd.  The most noteworthy of their new rates are 2.59% + 49 cents per transaction for Visa, MasterCard, Discover and debit online transactions.  They will institute a 2.99% + 49 cents per transaction for chargeback protection if desired.  Given their usual markup for American Express we anticipate the rate will be 2.89% + 49 cents per transaction.  Lastly, they will charge what seems to be an exorbitant  3.49% + 49 cents per transaction to accept payments using their digital wallet. On the whole, these rate changes put them out of step with the rest of the industry where the trend has been to hold rates/costs steady.  The last big increase from a well known brand was Square, which occurred more than two years ago.  

Surcharging is Charging Ahead!

As the economy has started to pick up steam post Covid-19, we are noticing very high demand for flipping the processing fees from the business to the card holder.  We used to see this only in small ticket-high volume businesses like bagel-bakery-coffee shops, convenience stores-bodegas, car washes, etc.  Recently, we have seen a tremendous increase in businesses with higher average tickets moving their costs to their clients.  For example, plumbing, heating and air conditioning, locksmiths, and auto repair.   From our conversations with the recently converted merchants, there was no loss in business, but they received more cash as payment.  This is a huge win for the businesses as they cut their expenses and do not suffer a loss in revenue.

Level 1, Level 2, and Level 3 Processing

Several month ago, we engaged with large business to streamline their payment platform.  What became apparent was the opportunity to convert their system from Level 1 processing to Level 2 and Level 3 processing.  Most businesses process at Level 1, however, if the business provides additional information such as sales tax, invoice number, postal code, etc., the transactions which are business to business will qualify for lower interchange rates (lower costs to you).  The most extreme case, going from level 1 to level 3, with the most expensive card type would save more than 1%.  Going from level 1 to just level 2 often translates to 7/10ths of 1% (0.70%, or $700 per $100,000).  This solution does not make sense for every business, but if your business sells to other businesses, let’s explore this opportunity together.

Square changes its rates

Several months ago Square changed it’s standard pricing.  It went from a flat 2.75% to 2.60% + $0.10 for swiped transactions.  This may not seem like a big change, but for businesses with an average under $66.50 it’s going to cost more to use Square.  Who is this hitting the hardest?  Coffee shops, pizza and take out food businesses, wine and liquor store, bodegas, nail salons, etc.  I understand Square’s motivation to raise their rates on the majority of their clients.  They were hemorrhaging money and no business want to lose money.  Consequently we have been able to save many of Square’s low ticket clients $400-$800 per month.

How do merchant services work?

Merchant services are the backbone of modern commerce, enabling businesses to accept electronic payments from customers. Understanding how this service works is benefits all parties involved, especially businesses that need to use them, so let’s demystify the process and explore the key components that make merchant services tick.

Merchant services encompass the infrastructure, technology, and support required to facilitate electronic payments. This includes the ability to accept credit and debit cards, process online payments, and handle point-of-sale (POS) transactions. The main components of merchant services include:

1. Merchant Account: This specialized bank account allows businesses to accept credit and debit card payments. It acts as a holding account for funds before they're transferred to the business's main bank account.

2. Payment Gateway: This software encrypts and securely transmits transaction data between the merchant and the payment processor.

3. Payment Processor: This company handles the communication between the merchant, issuing bank, and acquiring bank to authorize and settle transactions.

4.  Point of Sale (POS) System: This hardware and software combination allows businesses to process in-person transactions.

This is a step-by-step breakdown of how merchant services operate during a typical transaction:

1. Customer Initiates Payment: A customer decides to purchase a product or service using a credit/debit card, either online or at a physical location.

2. Authorization Request: The merchant’s POS system or payment gateway captures the transaction details, encrypts them, and sends a transaction authorization request to the payment processor.

3. Transaction Routing: The payment processor forwards this request to the card network (e.g., Visa, MasterCard) which then contacts the customer’s issuing bank to verify the transaction details. For clarity, the issuing bank “issued” the cards that were used in the transaction.

4. Approval or Decline: The issuing bank checks the customer’s account for sufficient funds or credit limit and sends an approval or decline message back through the card network to the payment processor.

5. Authorization Response: The payment processor relays the authorization response to the merchant’s POS system or payment gateway, usually within seconds. If approved, the sale is completed, and a receipt is generated.

6. Clearing and Settlement: Approved transactions are grouped and sent in batches at the end of the business day to the acquiring bank. The acquiring bank, through the payment processor, requests the funds from the issuing banks and deposits them into the merchant account after deducting any fees.

Using merchant services involves various fees, which can vary based on the provider and the business's size and type.

• Transaction Fees: A percentage of each transaction and a cents per transaction, although it’s sometimes is billed as a single (percentage) flat rate.

• Monthly Fees: Regular fees for maintaining the merchant account and payment gateway, and sometimes equipment cost are charged. 

·         Incidental Fees: Charges for things like chargebacks, PCI compliance, or additional services.

Merchant services are crucial for businesses of all sizes for several reasons:

1. Enhanced Customer Experience: Accepting multiple forms of payment, including credit cards, debit cards, and digital wallets, meets customer expectations and can lead to increased sales.

2. Security: Merchant service providers offer security features that help protect businesses from fraud detection and data breaches, ensuring customer trust.

3. Efficiency: Automated payment processing reduces manual errors and speeds up transaction times, enhancing operational efficiency.  Reporting tools often yield actionable data.

4. Scalability: As businesses grow, merchant services can scale with them, providing more advanced features and support for higher transaction volumes.

As technology evolves, so do merchant services. The rise of mobile payments, contactless transactions, and alternative payment methods like digital wallets are continuously shaping the landscape of electronic payments.  By leveraging merchant services, businesses can streamline operations, enhance customer experience, and ultimately drive growth in today's digital economy.

Interview with Mark Stone

Mark Stone
www.salestaxdefense.com

Jonathan: I recently spoke to Mark Stone, the founder of Sales Tax Defense about how to best handle sales tax issues and how to prevent them from occurring.  Below is an edited version of our conversation:

Jonathan: Mark, why don’t you share a little bit of your background dealing with sales tax issues?

Mark: I am the Managing Partner of Sales Tax Defense LLC since 2006. We specialize in Sales, Use and Transaction taxes. I have worked as a New York State sales tax auditor as well as a Tax Manager at several prominent accounting firms over the past 25 years. I am frequently invited by various organizations to speak on Sales & Use Tax issues and I have served as an expert witness testifying in tax court on behalf of my clients.

Jonathan: Excellent.  What are the best practices a business should employ so that the proper amount of sales tax is paid on-time? 

Mark: First you want to register for Sales & Use Tax, so you have the legal right to collect sales tax.  Sales tax is collected on retail sales, leases or rentals of most goods, and any taxable services in the state required.  Use tax is due when a seller hasn’t properly charged a purchaser sales tax.  Businesses should understand when they need to charge sales tax and what documentation they need from their customers if the customers are not paying tax.

Then you want to make sure you file on time, even if no tax is due.  Lastly, mail your returns by certified mail with a return receipt requested so that you have proof it was received on-time, or file electronically.

Jonathan: OK, what should you be doing in your business?

Mark: You need to know what you are supposed to charge tax on and charge it.  Too many sellers make excuses as to why they didn’t charge their customers tax.  The State comes back years later and make the seller pay what they didn’t collect, plus interest and penalties.  Your business should keep adequate and complete records for at least 3 years and make sure your customers pay the tax when they are due.  You also want to collect Exemption Certificates from the customers you don’t charge sales tax.

Jonathan:  It sounds like a POS system would solve many of these issues.  Also, you mentioned Exemption Certificates?  How do I get that?

Mark: Exemptions certificates are provided by the customer and given to the seller.  They are blank forms downloaded from the NYS Tax Department’s website.  The purchaser completes the forms and gives them to the seller to document why the purchaser is not required to pay the seller sales tax on the transaction.

Jonathan:  Anything else?

Mark: Generally, NYS gives a person or business 90 days to respond to a notice.  If you don’t respond within 90 days, then the amount claimed to be due becomes “fixed and final” and the Taw Department can now begin seizing your assets to pay the assessments.  If you get a bill from the government, you should call your tax professional immediately.  The bill is not going to go away on its own!

Jonathan: Mark thank you for your time.  Mark can best be reached at: Sales Tax Defense, LLC

673 Deer Park Avenue, Dix Hills, NY  11746, 631-491-1500 x.11, www.salestaxdefense.com

mstone@salestaxdefense.com

Interview with Ambere St. Denis

Ambere St. Denis

 www.crimsoninsurance.com

Jonathan: I recently spoke to Ambere St. Denis, the founder of Crimson Insurance, about insurance in the cannabis industry.  Below is an edited version of our converstion.

Jonathan: What is the state of the Cannabis market with regard to insurance?

Ambere: The Cannabis industry has been in flux over the past several years, but never quite as fluid as it has been this past year.  Since Lloyds of London pulled out of the American Cannabis Insurance Market in 2015, options have been slim.  And although Lloyds is still offering coverage in other countries where this industry is nationally legalized, until it becomes federally legal here in the states, Lloyds will not offer coverage.  However, several other carriers have finally started to offer terms for the cannabis industry. Unfortunately, most of their terms have been restrictive and fairly limited, but it's a start.

Jonathan: What do you mean by restrictive and fairly limited?

Ambere: Several carriers are only offering fire coverage, which means if you have a fire- you are covered.  Any other peril is not covered.  For the cannabis industry this is particularly bad.  Most claims in the cannabis industry are in the crime (employee theft) or robbery categories.  Manufacturers have the additionally defect issues that require coverage like E-Pens exploding.

Jonathan: OK.  But why are the insurance carriers so restrictive?  The point of insurance is that you can quantify risk and thereby come up with an appropriate price to charge to mitigate the risk.

Ambere:  Insurance can be a very, slow moving machine.  Many carriers are hesitant to offer coverage in "untested" industries.  Meaning that there is not much actuarial information yet available for them to base their rates on.  Many industries only have non admitted carriers available, specifically due to the exposures contemplated.  Admitted carriers tend to market to the conservative exposures like offices and storefronts.  Non admitted handle the higher hazards like trucking and construction.  So until there is more data, the cannabis industry falls into the higher hazard arena. 

Jonathan: Ambere, what do you mean by “non-admitted carriers” and “admitted carriers”?

Ambere: An "admitted" carrier means the Department of Insurance guarantees claims payments up to 80% if the carrier becomes insolvent.  A nice add to an industry that has only had "surplus" lines offering previously.  And while many surplus carriers are AM Best rated A or higher (billions in bank), it's still preferable, when available, to have your state guarantee.

Jonathan: AM Best? 

Ambere:  Sorry, AM Best is a third party that rates the financial strength and solvency of insurance carriers, and so getting an “A” rating from them could give one some comfort.

Jonathan: Have the fires in California affected the insurance market? 

Ambere: The California fires have definitely impacted the market, causing a moratorium on any cultivation or production operations in many zip codes.  It has taken almost three months to fully contain these fires, which are reported to be the largest in California history, and they have caused the insurance industry to review and revise how they offer terms for agriculture, including crop coverage for cannabis farmers.

Here in California, our Insurance Commissioner has been pushing, and quite successfully, for an admitted market to make products available to this burgeoning industry.  

Perhaps it's motivated by the influx of tax dollars Colorado has seen over the past several years since marijuana became fully legal there.  Whatever the reason, California blazed the trail on offering an admitted option, albeit limited, to this industry.

Jonathan: Are other states, with regard to insurance, set-up in the same manner as California?  Do they have admitted carriers to cover cannabis?

Ambere: The Western states have been at the forefront with cannabis, likely due to how well it is cultivated here.  Other states are following suit and many states across the country are starting to offer medical as well as adult use options for cannabis consumers.  And while existing options expand their offerings, other carriers have come to compete.  And why not? With billions of dollars being spent in this industry and its ancillary industries, there is room to grow for everyone.

Jonathan: From the perspective of someone who has a cannabis business, I can imagine that they would need to insure against, theft and fire.  Are there other types of insurance that they should have?

Ambere: Many municipalities are requiring Cannabis Bonds and General Liability to open their operations.  As previously noted, employee theft is a concern as is crop failure.  And with the medicinal use permits, the potential for cyber claims if personal data gets compromised would also be a concern.  Many operations are delivering directly as a service to their clients. This brings up the possibility of cargo theft as well.  As the industry develops, new concerns are mounting and looking for a way to offset new liabilities will always be an issue.

Jonathan: Ambere thanks for your time.  Ambere can best be reached at Crimson Insurance,  www.crimsoninsurance.com, 888-405-7479, or ambere@crimsoninsurance.com.

SCAN Data program

The SCAN Data program is Altria and RJ Reynold's (tobacco) platform that gives incentives to merchants who sell cigarettes.  Most POS companies charge $25 to $99 per month, but with us, it's free.  Ask us how we can help you save more than just these fees if you sell cigarettes.