To Catch A Predator: Payments Edition

You might recall our Payments SOS series that outed the unethical behavior of payment processors.

Well, as payment processors all buy each other to wring out costs and find growth (which is hard to find when every software company is adding payments on a Stripe or Adyen backend), we see legacy processors getting even more aggressive with their nonsense.

Think about it.

As payments processors merge, there’s less competition for merchants.

Less competition means merchants get boned harder: choose between the XXXL pineapple or XL cactus right up the rectum.

No lube.

Boning someone harder when you offer no value means you have to become an even bigger scumbag, moving from XXXL all the way up to incalculable numbers.

So we felt it fair to rebrand the SOS series to something more apropos.

We give you…

To Catch A Predator: Payments Edition.

The parallels are uncanny.

The premise of NBC’s show of the same name was simple:

An adult member of the cast would pose as a child in various online chat forums.

When a predatory adult would seek to take sexual advantage of that minor, a meeting would be coordinated.

The preying adult was under the impression that they would have an intimate encounter with the minor.

The cast of the show knew otherwise.

What ensued was the zenith of reality television.

https://www.youtube.com/watch?v=aYxEqs6KVhM

We watched these videos and you know what occurred to us?

Holy shit, how do we bring Chris Hansen out of retirement to run his playbook on payment processors?

Processors are the adults who wrote the rules of payment processing?

Check.

Merchants are payment processing juveniles, unfamiliar with the rules of the game and ignorant to the the sick, perverted tactics of the game-makers?

Check.

Well, we doubt NBC would give us a call back, but that shouldn’t stop us from exposing predators when we see them.

And you know the best time to catch a payments predator?

April and October. Every year.

Know why?

Because the card schemes change their rates every April and October, and the processors have a field day.

Christmas does come (at least) twice in payment processing land it would seem.

Because merchants:

1) have no idea that the networks are changing rates

2) have no idea how much the processor is going to then mark up those rates

3) have no idea how to read a processor statement, even if they wanted to

4) have no time to check the statement even if they wanted to

Frankly, it’s the perfect system to be a predator if you lack any vestiges of morality.

And unfortunately for merchants, there is no morality in payment processing.

(At least with legacy processors who have zero means to grow.)

In April 2022 the card networks made their first real changes since the pandemic broke out.

For starters, most merchants should be on interchange plus. That’s because being on interchange plus pricing will allow merchants to evaluate each card type to determine if they’re being fairly billed.

Now, we know a lot of processors simply lie about the definition of interchange, padding categories and, naturally, marking up their padding as the “plus” part of their agreements, but this is still the best processing format, with flat rating and tiered being a nightmare to audit.

So if you’re a merchant on interchange plus pricing with Shift4 and see the below, Shift4 is using the network price increases as an opportunity to….

be a predator.

Take a Shift4 restaurant merchant at $1M of annual processing volume.

Let’s assume a $33 average ticket, so that’s 30,000 transactions per year.

Shift4 feels entitled to $0.02 * 30,000 = $600

+

0.05% * $1M = $500

For a total of $1,100 extra per year.

That merchant probably does $50,000 in profit if they’re lucky.

Shift4 “earns” an additional 2% of the merchant’s profit (on top of their current take that’s likely already 20% of the merchant’s profit) doing what, exactly?

What other value are they adding here to justify the increase?

At least be honest and say how the money’s going to use.

This is a call for statements.

Send us what you got and we’ll strip out the identifying information and call out the predators.

Can’t say that we’ll be able to confront the evil doers on candid camera, but at least we will expose their butt diddling of minors in the hopes it will on the internet forever.