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• Foreign automakers will never have more than 15 Furthermore, when a buyer surpasses a certain point in
percent of the U.S. market. volume, the supplier will dictate that going forward,
• The secret to financial success is strict financial con- the buyer will use the supplier's portal to pay, and the
trols. payments will come from a bank account via check,
electronic check or automated clearing house debit, not
• Government is the enemy and should be constantly from a credit card. This is the current reality of business-
repelled. to-business purchasing.

We know how this ended. Management myopia caused a If I were a company treasurer and my accounts payable
downhill slide that culminated 36 years later when GM manager told me he wanted to pay our suppliers sooner,
asked Congress for a bailout in 2008. Do you see parallels I would tell him he should look for a new job, or possibly
with your company or the acquiring business overall? new career. Additionally, today the one-month London
Interbank Offered Rate is 1.88 percent, and the prime rate
Sometimes I wonder if we are suffering from the same is 3.75 percent, so the time value of money is not all that
myopia that afflicted GM. We have built a network that critical today.
has been mainlining on interchange for decades, with the
card brands extracting tollbooth like fees and imposing There is continual press about how Zelle and Venmo
price increases twice a year like clockwork. There is no are revolutionizing payments but, news flash: banks
reason for mainstream merchants to have rate increases will never make money with Zelle, just like they never
twice a year, pay 2.5 percent for a card-present payment or made money when they originally issued ATM cards
pay over 3 percent for a card-not-present payment. and told consumers they would never be charged for
Notions to question using them as long as they didn't actually come into the
branch. Consumers are not going to pay $1.50 to send $15
Digitization should cause costs to go down every year, electronically, and unless businesses can ask consumers
not up twice a year per the card-brand business model. to make payments with their phone and pay a fee for it, I
Our merchants have incurred massive fraud and data don't see how banks will monetize this either.
breaches, no end is in sight and the industry response has A new Golden Age
been inadequate. The EMV conversion deadlines were
poorly planned and executed – and an embarrassment for The humble POS system, which was previously used just
all. to authorize and clear credit and debit card transactions,
is now becoming the hub for all the business services
Now merchants are dealing with additional security issues merchants need. This includes inventory management,
they don't understand. Too many ISOs send out complicated time and attendance and payroll, customer retention
statements merchants cannot fathom and pack statements and loyalty programs, ecommerce gateways, third-party
with bogus charges like "Merchant Club" and "Non-PCI delivery, and just about any other service tracked in the
certified." The chargeback process has been a nightmare general ledger.
for merchants for many years: highly inefficient, with
unrealistic timeframes for dispute resolution and the deck ISOs are now in the software business and have to figure
stacked in favor of friendly fraudsters. out the data integration and overall configuration in
addition to ensuring that everything works together.
We continually hear nonsense that "cash and checks are When they do this, they are working with software
going away, and pretty quickly too," when the truth is developers and independent software vendors who are
that cash in circulation continues to increase; checks are slowly but inevitably encroaching on their space.
a trusted, highly efficient form of payment; and check
declines have plateaued (there were 17 billion checks Merchants just want one system that works, not a
written in the United States last year). Checks are far patchwork of systems that sometimes work together and
cheaper to use than interchange-based cards, which is sometimes don't. ISOs that "get it," will enjoy the second
why commercial cards (P-cards) have been a failure in Golden Age, reminiscent of the first one sparked when
the marketplace for the last 20 years despite massive ad mag-stripe terminals were introduced. This will come to
expenditures by the card brands. pass if they heed the advice Frank Sinatra used to give his
children: "Be aware."
Then there is the droning about "faster payments." But
companies do not want to pay their accounts payable Brandes Elitch, Director of Partner Acquisition for CrossCheck Inc., has
sooner; they want to delay payment for as long as possible, been a cash management practitioner for several Fortune 500 com-
until they get complaints from whomever they are paying. panies, sold cash management services for major banks and served
No business wants to pay suppliers sooner unless it is not as a consultant to bankcard acquirers. A Certified Cash Manager
on credit and is on "cash in advance." and Accredited ACH Professional, Brandes has a Master's in Business
Administration from New York University and a Juris Doctor from Santa
Clara University. He can be reached at brandese@cross-check.com.

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