Ideal Cost, a consulting firm that helps companies lower their credit card acceptance fees.

Interview by Mike Sullivan of Sully’s Blog

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Robert Livingstone is the president and founder of Ideal Cost, a consulting firm that helps companies lower their credit card acceptance fees. In 2008 Robert was a top performing sales rep at a credit card processing company.  Offered a management position at the company, Robert turned it down to seize an opportunity.  He saw a trend in the utilities industry where auditors were coming and and reducing utility fees through negotiation with existing providers on contingency.  Robert believed that he could transfer this idea to the credit card processing industry.  At the age of 24, with a few thousand dollars from his savings, Robert opened Palm Beach Merchant Services.

Palm Beach Merchant Services began to pick up local clients and renegotiating rates and fees on their behalf.  Merchants appreciated that they didn’t didn’t have to cancel their existing contracts, pay early termination fees, or touch their  equipment/software/websites, but simply received fee reductions every month and protected from future rate increases.  When merchants realized that Robert was serving them and not the banks, business gained success and referral poured in.  At this point it was time to expand nationwide and Ideal Cost was born.

Today, Ideal Cost has clients across the country.  They specialize in mail-order and e-commerce clients as they are afforded less protection and are charged at much higher margins than “swiped” transactions.  Ideal Costs has been featured in Forbes, American Banker, Business Leader, and many other media sources.

MO:
You are referred to as the “merchant rights advocate” in many articles that we have found online.  Can you tell us what this nickname means?

Robert:
That nickname came from the reputation that my company has gained by working for the merchant rather than the banks.  I feel that I am very outspoken about the lack of important regulation in the industry.  Many merchants are too embarrassed to admit when they have been scammed so I feel that it is my duty to speak up for victimized merchants nationwide.

MO:
You’re providing a risk-free service to your clients because your compensation comes only as a percentage of the savings you provide to these companies.  That has to build instant trust with clients.  Do you find some companies are still resistant to exploring your services?  If so, what do you attribute that to?  How do you help them see the benefits?

Robert:
We find that prospective clients are extremely receptive to our pricing model because we aren’t asking for a check immediately.  Our clients are able to trust us immediately and not worry if they are really getting value for their payment because we won’t accept payment if we can’t perform.  I personally have found some scattered prospective clients that are very hesitant about our pricing model just because they are so unfamiliar with it and are do distrusting of the credit card processing industry.  Our most resistant prospective clients see the benefits when we provide them with references and show them case studies from other clients.

MO:
How are you able to reduce your clients costs with the processors?  What keeps then from just telling you “no, we won’t reduce the fees?”

Robert:
We perform a variety of tasks ongoing.  We retrain the client’s staff if they aren’t entering in transactions efficiently, ensure that sales are secure and avoid surcharges, monitor the rates and fees, and have them adjusted whenever necessary.  Processors almost always work with us because we are able to speak their language and communicate effectively. They are actually relieved that they aren’t dealing with a screaming merchant making threats.  Most processors already know about our company and are willing to work with us because of our reputation of being fair, but firm.  We understand that processors need to obtain profits from their customers, but not at the risk of gauging them.

MO:
How much are your clients saving with this program?

Robert:
We have smaller clients who are saving $2000 per year and we have some extraordinary cases where clients are saving up to $300,000 in annual fees. The beauty of the program is that we aren’t discriminating against smaller businesses who often feel unimportant because they don’t boast a large sales volume. We want to help everyone.

MO:
What are the specific services you offer to your clients and why are those important to them?

Robert:
We offer three basic services.  Each of these services is important in its own unique way.

1. Merchant Savings Program – we help merchants reduce their credit card processing costs ongoing with their existing processor.  The savings program is important because it helps provide a objective audit every single month complete with an executive summary of our results.

2. Merchant Consulting- we help merchants with any non-pricing related issues with their business usually pertaining to security compliance or a risk/underwriting solutions.  Many companies are risking large liabilities because they are not properly trained on how to reduce the chance of causing identify theft for their customers.  These businesses are also
confused on how the banks perceive their risk based on their industry type, processing histories, and executive profiles.

3. Chargeback Resolution – we help merchants who are being scammed by customers who have disputed legitimate transactions on their credit cards. During this economic hardship businesses need to be protected as dishonest customers are trying to get products and service for free by attempting to utilize loopholes in the payments industry.  We take these cases on contingency as well so if we can’t win a chargeback for a client they owe
us nothing.

MO:
Why is there lack of regulation in this area of commerce in our country? Do you see any changes to this in the near future?

Robert:
The payments industry is very lucrative and it does seem to feel any obligation to provide any sort of licensing, testing, or certification for its sales reps.  Merchants seem to be forced to prove compliance in many ways that the credit card processing reps are not and this is very unfair. At this point I do not see much regulation occurring outside of the Durbin Amendment although Ideal Cost has campaigned for some sort of protection
for merchants nationwide.

MO:
At 24 years old, did you feel like you were taking any risks to start you business or would you advise more young people to take some chances early in their careers?  How difficult did you find it to launch a successful venture?

Robert:
I felt like I was taking a large risk in trying to go out on my own at such a young age, but I knew my industry very well and saw the potential. I didn’t, however, have any education in business and graduated with a college major in English so it was a bit scary quitting my day job. Fortunately, my business wasn’t very expensive to start up compared to most
others and we started to see income very quickly.  I felt that it was certainly an uphill battle as a young business owner, but I earned respect from colleagues and clients rather quickly because even though I was half of their age they had confidence in my knowledge of my industry and dedication to doing the right thing.  I would advise other people my age to
take calculated risks in areas that they have experience in because learning the business world is very overwhelming, it is almost impossible to learn an industry at the same time.

MO:
Do you have any tips for entrepreneurs and small business owners who are accepting credit cards for their businesses today?  What should they watch out for?  What questions should they be asking?

Robert:
It is very important for companies to read their statements every month. Even though they may be difficult to read it is important to track your expenses.  They should watch out for unnecessary rate increases with their existing provider and snake-oil salesmen from competing providers.  Be very careful as there are a lot of predatory telemarketers that will call you claiming to be some kind of a third-party firm with your best interests in mind, but at the end of the day they are always just a salesmen from another company.  If a someone calls you claiming to be from your current provider you should ask them to what the name of your existing company is, and what your merchant number is, and how much you processed last month. If they can’t provide that information then you should hang up immediately.

If business owners have any questions that they can’t figure out themselves then they should feel free to contact us as we are always happy to answer questions.  In this business there is no such thing as a stupid question.