Seriously, there is almost no worse industry than payments processing, and Global Payments is really working hard to solidify themselves as the king of fake fees. While they’ve “earned” themselves a ranking on the Fortune 500, we’re not sure how their merchants would feel about the accolades when looking at a few recent statements.
For starters let’s look at some recent Heartland statements.
Yes, that’s the same Heartland that blocks third party integrations and can’t get their accounting systems to work properly.
For this bad boy it’s 65 basis points.
65 basis points.
Holy shit.
In the old days when Bob Carr owned Heartland he refused to go above a certain fee threshold even though everyone else wanted 100 bps or more of margin.
Meanwhile Jeff Sloan (and surely the good ol’ Heartland crew who will say otherwise all week at RSPA’s Retail Now) are like, “Nah, we’re just gonna rip your face off.”
Insane.
But surely there’s no correlation between the gluttonous volume of fake fees and the revenues of a company in an industry with zero organic growth that’s hemorrhaging market share to software companies that provide value, right?
Just look at this ridiculousness from Global across their other divisions. How do these people sleep at night?
Here’s how software companies expand revenue.
Ever Commerce which just went public states the following in their S1: “Our ability to cross sell additional products and services to our existing customers can increase customer engagement with our suite of solutions and thus have a positive impact on our net pro forma revenue retention rate. We believe we have the opportunity to drive incremental revenue growth from our existing customer base through increased cross-selling of our integrated solutions, including digital payments, customer engagement and marketing technology.” Furthermore, “This “land and expand” strategy allows us to acquire customers with key foundational solutions and expand into offerings via product development and acquisitions that cover all workflows and power the full scope of our customers’ businesses. This results in a self-reinforcing flywheel effect, enabling us to drive value for our customers and, in turn, improve customer stickiness, increase our market share, and fuel our growth.” No mention of upsells via expanding seat count.
Sentinel One which just went public states “As we enhance our platform functionality and value proposition, we expect many of our customers to adopt additional platform functionalities and Singularity Modules to address all of their cybersecurity use cases through the same platform and agent. We have architected our single agent such that we can immediately activate additional modules for our customers on the already deployed agent, so adding increased functionality is seamless for us and our customers. This gives us the ability to show in-product promotions and trials and to drive the expansion of our Singularity Modules, The power of our land-and-expand strategy is evidenced by our 119% and 117% dollar-based net retention rates as of January 31, 2020 and 2021, respectively.” No mention of upsells via expanding seat count.
CouchBase states “The Couchbase platform is licensed per node, which we define as an instance of Couchbase running on a server. Our subscription pricing is based on the computing power and memory per instance, as well as the chosen service level. Growth of our revenue from our existing customers results from increases in the scale of their deployment for existing use cases, or when customers utilize our platform to address new use cases. In addition, our professional services organization helps customers deploy new use cases and optimize their existing implementations.” Use cases, not seats.
Payments?
You don’t need no stinkin’ value.
Now grab those ankles, merchants!
WorldPay announced in April to start in July a similar fee called a Transaction Risk Fee of 38 bps at least for the statement I reviewed. They are also adding a 6 bps funding charge similar but more greedy than Heartland’s 2 bps
So. much. value.