A masked man walks into a brick and mortar establishment at closing time. The owner and his wife were about to lock the door but they freeze.
“Listen here asshole: I’m going to draw a circle and you’re to remain inside at all times.”
The burglar takes out a piece of chalk and draws a circle on the ground, grabbing the husband and sticking him inside.
The burglar then takes the wife and rips off her clothes.
“Now you’re going to watch me have my way with your wife.”
The burglar rapes the wife. When he finishes he pulls up his pants and boasts, “Ha! How do you like that you SMB turd?”
The husband is grinning ear-to-ear, bouncing on his heels like a kid on Christmas.
“What’s so funny?” asks the burglar, utterly perplexed.
“I stepped out of the circle four times and you didn’t catch me!”
Like Toast, Shift4 knows how to play to their audience.
Who’s their audience?
The guy who stepped out of the circle four times.
But he runs a restaurant, and goddamn if he ain’t the smartest person in the observable universe.
What are we talking about?
Shift4 telling merchants that they should come to Shift4 after the abuses they endured (for a week) at the hands of Toast.
Shift4 Payments Inc. said early Thursday it will pay restaurants a dollar for every online order they receive across the first three months that they use the company’s SkyTab POS system.
Shift4 contends it is making the move in response to what it calls junk fees charged by other payment processors, including additional charges for accepting online orders. Toast Inc., for example, began levying a fee on restaurants for processing online orders over $10 last month.
In addition, Shift4 announced plans to pay a $5,000 signing bonus for new customers in the hopes of wresting merchants away from competitors and attracting new business in general.
And this where it gets rich.
Like a feces sundae topped with vomit.
When our competitors began implementing junk fees for online ordering and threatening even more fees, we knew it was an opportunity to show restaurateurs there was a much better alternative. This is really about trust. Clearly some of our competitors are looking for new revenue streams and they are getting creative and aggressive with their billing tactics.
Jared Isaacman
Shift4 is such a benefactor, they will pay a merchant to use their online ordering and their POS.
And buy them a house.
And a private plane.
And a yacht.
And give them infinite life expectancy.
And every other fever dream a low-IQ person might believe.
Turns out, though, that companies actually need to make money.
In fact, one might reasonably argue the reason Toast foisted such fees was to find EBITDA themselves.
So when someone with an IQ over 70 points is presented with an argument as outrageous as “We’ll pay you to use our online ordering and pay you $5,000,” they think, “Hmm, how is this possible? The company needs to make money somehow. This isn’t UNICEF.”
Well, we’ll not only tell you how it’s possible that Shift4 offers such amazing terms, but show you.
See here.
And here.
And here.
And thousands of others we’ve missed.
Shift4 will make up junk fees and raise rates under the cover of darkness.
They’ve been doing it for decades: why would now be any different?
Hell, Toast’s average payments margin is 55-60 bps while Shift4’s blended average is 76 bps, with Shift4 restaurants paying > 100 bps.
And Toast has ay better technology (because they actually invest in R&D).
Shift4 was a big winner on the Free POS bandwagon and we read this as a perpetuation of the same scheme to fleece people who don’t know any better.
Prove us wrong.
Show us some ironclad language that prevents Shift4 from raising rates after onboarding these merchants.
But we all already know who’s right, and how this will play out.
The plight of the merchant is to travel from abuser to abuser.
What investors don’t understand is just how unsophisticated the merchant is.
These people cannot do math, are terrible at time management, and can’t spell ROI.
When Lightspeed demands payments, or Toast raises fees, 90% of their merchants have no idea what’s going on (although both Lightspeed and Toast were transparent and efficacious in their messaging, which is not something you’d get from conventional payments companies).
The ones that do “read” the messaging aren’t even reading it for comprehension, and the seven that actually read it AND understand it are too few to matter to earnings.
Put it this way: is there an investor reading this periodical that doesn’t understand where 3% of their top line goes?
Where 30% of their EBITDA goes?
Of course not.
But brick and mortar merchants operate their businesses like this every day and don’t think twice.
It’s hard for someone with an IQ above 120 to relate to someone with an IQ below 80 because the latter’s decision making seems so irrational it may as well be based on a magic 8 ball.
But these are the people who will literally believe that Shift4 will pay them $5,000 and pay them $1 per digital order because they are so much smarter than Shift4.
After all: they stepped out of the circle four times and you didn’t catch them.
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