Amberly Allen is the CEO of Dealer Merchant Services, a firm that is helping car dealers save up to 75% on their credit card processing fees. In this episode of the Dealer Playbook, Michael and Amberly explore how dealers can save thousands of dollars per month by reframing the way they handle credit card processing.
00:53 - Jokingly Michael and Amberly laugh about how this is probably the least sexy topic to ever be discussed on the show, but at the end of the day, what's sexier in business than keeping more money in your pockets?
01:57 - Amberly got her start selling direct mail to dealers and eventually started her own digital agency. During her time building the agency she started hearing about how much car dealers were spending on credit card processing and she determined to find a solution.
03:06 - When making any changes to how credit cards are processed, it's important to find a solution that is both legal and won't destroy CSI.
05:49 - For every $100 dollar that gets spent, $2 dollars of that goes to credit card processing fees. Credit card processors don't want you to know that there are limits to how much they can charge so they're not in the current hardware that many dealers typically have in the showroom.
07:49 - Amberly encourages car dealers to look at how much they are spending on fees and question whether or not it's necessary.
Listen to the full episode for even more insights and context about providing a killer customer car shopping/buying experience.
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Thanks, Amberly Allen
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[00:00:00] Michael: Hey gang. Welcome back to this episode of the dealer, playbook podcasts. You know me we've been together for like what nine years. I like to bring in topics that we don't get to hear a lot about. I mean, it's always sales. It's always been eyes. It's the car best. I don't know. I don't know how many more ways we can talk about negotiating a car deal.
[00:00:22] And so we're always looking for new relevant information that can help. This industry move forward and no better person to help talk about that. Then our guest today, she is the managing partner of dealer merchant services. They're on a mission to, well, let me just put it this way. She'll speak to it better than I ever could save you a crap ton of money and remain compliant and keep the CSI high, high, high, where it should be.
[00:00:50] Amberley, Alan. Thanks so much for joining me on the dealer playbook.
[00:00:53] Amberly: Michael. Thanks so much for having me. I'm thrilled to be here. Uh, we're going to talk about probably the least sexy topic in the world of credit card processing. Right. But it's also a necessary evil, so I'm thrilled to be here. Well, look, I
[00:01:07] Michael: was, I was on your website and I'm seeing savings between five and 15,000 a month.
[00:01:12] And I'm like, well, okay. Maybe credit card processing sounds unsexy, but saving. That amount of money. I mean, this is a good, decent six figure savings potential every single year. And I think about, well, Hey, what could a dealership do with that extra money back in the, in the pocket? And it reminds me Amberly of what my dad used to say, growing up.
[00:01:32] He says how much you earn does matter, but how much you keep matters. More. No question. And so first, first and foremost, how did you get into dealer merchant services? How did you decide to start something like this?
[00:01:48] Amberly: So good question it. 2005, I started my marketing company. Uh, admittedly, I started in the business when I was 23.
[00:01:57] I was a wee pup selling direct mail to dealers. And if it tells you a little bit about how long I've been doing it, it was back when they had radio remotes and greeters and gifts and blends and the whole nine, right. Um, that's how long I've been handling the marketing side of things for dealers. And I still have that company, but, um, I took a little bit of time off and, uh, when I got back into it, I kind of called it DEI marketing 2.0.
[00:02:22] And when, um, you know, direct mail has changed and all of those things, but, um, I reached out to every colleague I knew in the business, Hey, what's working, what's not working. What are you seeing out there? And obviously on the marketing side, we moved very quickly over to digital. But at the same time, I started hearing about these law changes and I started hearing, okay, well, this is happening and dealers are spending a ton in credit card processing.
[00:02:48] And so I've been really lucky that I have a dealer body that I work with, that I could seek counsel from like, Hey, what do you think about this? Do you think that it would work in the dealership space? We're seeing it at taco stands. We're seeing it in universities, on our utility. Venmo cash app, but will it work in the dealership space?
[00:03:06] And I asked a ton of people and some of their first questions were like, well, is it legal? Okay. So I went back to the drawing board. Okay. Did a ton of research. Okay. Looks like it's illegal. Okay. Let's find out more. And then since I've started down that path, even more states have become legal. And so I have a merchant services attorney on retainer and really just making sure that no dealer's going to get started down this path if they can't clear, you know, just making sure it's legal and compliance.
[00:03:33] So that was step one. And then of course, step two is what about my customers? How is CSI going to be effective? You know, we're not trying to trip over dollars to pick up pennies here. So again, back to the drawing board. Okay. How do we communicate this to our customers in the right way? And so we created a dealer merchant services university to certify the staff on the word track and all of those things.
[00:03:59] So, and then of course the next thing is if the controller's not happy, nobody's happy. So how do we implement this? You know, in the accounting department and you know, my right hand is a former controller. And so we figured out how to navigate all that, but very specific to automotive is the only way this thing will work.
[00:04:17] Michael: Yeah. Like a ton of work. Is it, is it D do you have a passion for keeping track of legal compliance?
[00:04:30] Amberly: Yeah. No. Now that is so boring, but it's also, it also was step one. Right. But what I realized pretty quickly is that dealers wanted to save this money, but if we had one dealer that was a bad apple, That did this all wrong.
[00:04:45] Then they go back to their 20 groups and say, okay, I got sued. My customers are pissed off this wasn't worth it. And so we kept going, okay, if we do this the right way, if we do it for automotive, it'll work, it will work. And so that's where I got to a point where if they don't go with us, they need to make sure they're doing it the right way.
[00:05:03] And you know, naturally people will go to us if it makes sense, right. That's where I kind of started down. Let's focus on educating the dealer body and being the foremost expert and the rest will work itself out.
[00:05:15] Michael: I love it. And so I see that there are a variety of things you do. You mentioned the university.
[00:05:21] Um, but when it comes down to, and I'm looking here, it says proprietary solution to help dealers save up to 75% of their credit card processing fees. Without disrupting CSI. What does that look like from where the rubber meets the road? What does that, what does that mean? You go into a store and are you swapping out hardware?
[00:05:40] Are you like, what does that actually look like? And what, what is the potential disruption that you're seeing to CSI in current models?
[00:05:49] Amberly: So great questions, uh, twofold. So first things first, we want to create some awareness with the dealer body on how much. Right. And so on average, every hundred dollars that gets spent $2 of it goes to credit card processing.
[00:06:04] But what's interesting is that in 2010, with the Dodd-Frank out, they started regulating debit card costs to the businesses, but they don't your credit card processor. Doesn't want you to know. So they're not in the current hardware you have typically you don't have an opportunity for the customer to put in a pin, all these various things, because they basically don't want you to see under the hood.
[00:06:28] And so when we do these webinars and start teaching people, I will, it's, it's hard to say, but there's probably 60%. Dealers that don't even know what they're spending. Right. It comes out every month. It's not line items on their financial statement. It's just an outside services. It's being debited at the busiest time of the month for the controller.
[00:06:47] And so when we survey the dealers, they say, I haven't looked at it in six months, or I don't know the last time I looked at it. Right. And so now there's some that know their numbers and think there's nothing they can do with. So the first thing we want to do is make sure we create that awareness on.
[00:07:04] Look, how much are you spending? Even if you don't go with a second provider, you should get a second opinion. You may need more updated machines. For example, if you don't have a chip reader these days, you are going to get penalized for it because there's a higher, higher level of risk. So that's just one thing that dealers need to know that they could be saving money right away.
[00:07:25] And then from there, we actually do bring in brand new machines and that is required for our program or frankly, any other program that's synonymous is that the program, the machines themselves are backed by a us patent and they differentiate between credit card and a debit card. And that's part of the regulations and the Dodd-Frank act.
[00:07:47] And there was even a Supreme court case in a class action lawsuit. These are all really important. And so the machines themselves differentiate between credit and debit, because you're not legally allowed to add a surcharge or a 3% cost on top of a debit card. So that's where the proprietary piece comes in.
[00:08:08] And that's where it's really important that dealers don't go, okay, this is a DIY project. I'm just going to add it to my aro. No, no, no, no, no, no, no. This is not a DIY. Is this, it comes in the
[00:08:20] Michael: machines. Gotcha. So is this, I mean, being a Canadian, this is the one thing where I was like, Canada might be ahead of the game for once as compared to the United States, because I might've been, I don't know, 10 years old, like we're talking mid, mid nineties, early to mid nineties when.
[00:08:45] You know, chip card readers and all those sorts of things. And I mean, you would come down to the United States to visit and they were still bringing out that credit card, carbon copy. And I'm like, what is happening here? Aren't they supposed to be more advanced than us, but to your point, Interesting to me that I can in Canada, I have a debit card, which, which means money comes out of your checking or savings account.
[00:09:11] That's right. It can be a visa check card, but it's never looked at or treated like a credit card. It's just like, it's a visa it's visa, meaning you can use it at any terminal that accepts visa, but it's not looking at. Is that what you're talking about here, where the machine can say, oh no, this is a debit out of the actual bank account transaction versus out of a credit card account.
[00:09:35] Amberly: Well, so all of that's absolutely true. As it pertains to credit cards, there are two rails. You've got the debit and banking rail, right. And there's less liability and risk there because it's coming right out of your account. And then you've got the credit rails that have to ping and say, okay, this is Jones has this much credit available, ping back and say, yes, And there's just higher level of risk as far as that goes.
[00:09:58] So you got two different rails and therefore, when they started regulating it, they said, well, this costs less because there's less liability and therefore the businesses should have to pay less. And so that's where things came in. And let me give you a real world example, you've got a hundred dollar aro and as it sits today, the dealerships only keep keeping 98.
[00:10:19] But if you give the customer a choice and say, Mr customer, your aro today is 1 0 3. If you use your credit card, but it's only a hundred. If you use cash check or debit, how would you like to pay? And so the benefit is the transparency and the dealership keeps a hundred dollars of now that credit card transaction.
[00:10:38] So that $2 is coming back to them. But the benefit is we didn't have to raise our prices across the board. I mean, frankly, Mike, this is the only fee that we're not passing onto the customer that we legally. I mean, we go back to the shop supplies. We go back to dock fees at the end of the day, this is the one thing that, you know, they don't know that they can, they don't feel like they can do it safely without disrupting the apple cart and making sure that they do it within compliance.
[00:11:03] So again, there's, there's some different pieces of it, but that's where that 1 0 3 comes in and you can get that 75% or so and savings because they can't charge the customer anything additional on debit. And do you even alluded to okay. Debit or credit? Well, with our program, it's, what's called Ben range and not to get too far out into the technical weeds, but it actually can tell if the customer's using a debit card or not.
[00:11:29] Right. It can show based on the bend that this is a banking rail. And so therefore I can't charge this additional 3% and it does that all automatically. It does it all automatically with our machines and they're all custom program.
[00:11:44] Michael: Now you had mentioned, you've mentioned a couple of things. The Dodd-Frank did I hear that right?
[00:11:50] The Dodd-Frank
[00:11:52] Amberly: act. Yeah. So in 2010, it was actually the Durbin amendment, which was a part of the Dodd-Frank act. And that's where they started regulating debit card fees, especially with the big banks with over 10 billion in assets.
[00:12:07] Michael: Gotcha. From a dealer's perspective. We hear this, I go man, up to 75% of the savings and all these sorts of things, new machines, all of that.
[00:12:19] Does this vary state by state? Is it, why is it a federal regulation? How does that work?
[00:12:25] Amberly: Great question. So 48 of the 50 states. Allow for surcharge. So the ban on surcharge has been lifted. The last two states are Connecticut and Massachusetts, and we anticipate there in the docket. We anticipate them switching relatively soon.
[00:12:41] So right now it is a state by state. And there's also specifics based on certain states. For example, Colorado can only charge a max of 2% on a service. And again, that's why you want to have a partner that can help you navigate that. And then in New York, for example, we have dealers there. Well, you have to be specific on showing the customer, both prices, both cash and credit.
[00:13:02] And so we have tools for them to be able to launch according to compliance as well. So those are just some of the components there that you got to make sure of. Here's
[00:13:10] Michael: what impresses me just as a little bit of a sidebar, I asked you point blank. If you were passionate about this year, Heck. No, but it's clear that you're passionate about helping dealers and helping this industry.
[00:13:24] And it, to me, that's the Testament of you can get your hands dirty and think outside the box to bring a solution to people that actually serves them versus what like everybody else tends to do. They're like, you know, I think I'm going to be an entrepreneur. And clubhouse told me that all I need to do is create a $7 PDF on whatever.
[00:13:49] You're like, screw that. I'm going to get into the weeds here and I'm going to like it, you know, to me, I'm just so impressed by it because it's not something my brain would ever do. I'd be like, oh, Th the dealerships need a guitar player. You know, like my brain wouldn't go to what's that like scary unsexy, deep regulation.
[00:14:12] And you went there, you were like, no, I went there. What? I'm curious as a little kind of get to know you, what part of you is. That's me. I got to do that.
[00:14:24] Amberly: So it's nice of you to even ask. So I'm a, I'm a third generation entrepreneur, my dad and granddad, and all of the powers that be within it. Uh, we're entrepreneurs.
[00:14:36] And at 24 is when I started my marketing company, I felt like I could do it better. And with more integrity and I'm grateful that we've sold over $40 million in marketing to dealers sense. And with all that being said, I really have a plan, a decent amount of scar tissue, right? I've made some huge mistakes.
[00:14:56] And I think at the end of the day, I felt like it was not only a great idea, but dealers have given me tremendous opportunity in my career. Here I am. 18 years later. Dealers or some of the best entrepreneurs out there. Right. They know their numbers. They work harder than anybody I've ever seen. And you know, it's one of these things.
[00:15:15] They help their community. Their philanthropic efforts are beyond measure. I mean, there's all these things. And I dunno, I guess it just stuck that I, I loved the automotive space. It was just the right gig for me. And I always felt like I'm really lucky to have the right gig. So many people aren't in the right seat on the bus.
[00:15:32] In their career. And for me, I've just, I've been there. And, uh, it certainly, there were some moments where I was in the corner, in the fetal position going, what in the world am I doing? Right? What am I thinking? You know? Um, I don't know why credit card processing. I don't, I really just felt like I had something special and I started with one.
[00:15:54] I mean, that's all there is to it. I had one dealer that I had worked with on the marketing side. They knew I could execute. But frankly, just at that point, I felt like he, he said, he'd give me a shot. And then now we have almost a hundred dealers since,
[00:16:08] Michael: wow. You've got a, you've got a fighter's spirit. Is
[00:16:14] Amberly: that accurate?
[00:16:15] Also that's accurate. But part of that too, Michael is I had a brain tumor three and a half years ago. And, uh, you know, we won't get too far off topic, but, uh, that I would say gives me a huge amount of perspective in my life. And, uh, so fight is definitely a part of it, for sure.
[00:16:33] Michael: I love that, you know, I, I've never had to deal with the tumor or anything like that.
[00:16:38] My, my journey was like severe depression, suicidal depression. I dealt with that for the better part of a decade, but I understand what you're saying in that when you recover. It shifts your purse. It just shifts the lens by which you see the world, doesn't it. And especially the way I see this industry, um, you know, some of the light, like you were saying, just some of the best people I've ever known in my entire life work right inside of the auto industry.
[00:17:06] Um, and I can understand how that's fueled my desire to do things that I probably wouldn't otherwise do. And that's kinda what I'm picking up.
[00:17:15] Amberly: Well, I mean, I joke cause most of our dealers play golf. Right? That's how big the tuber was. So I tell him, you know, anytime you're playing golf, think of me, but even what you've been through, I mean, there is, there's a lot of, as far as recovery and the things that happen on the other side of it and it's terrifying and all of those things, but it's true.
[00:17:34] I mean, I've been given a tremendous amount of opportunity within automotive. There's just, there's no question about it.
[00:17:40] Michael: Let me ask you this. Because we've talked to savings, we've talked about, you know, the proprietary stuff, um, the, the hardware and your process. And you've got a university, which I want to talk a little bit about in a minute.
[00:17:53] Um, why, if any, is there, is there any hesitation to, like, why, why is this not a, no-brainer why, why to more dealers not join the bandwidth?
[00:18:06] Amberly: So for us, I feel like we've had this exponential growth and we've had, we've grown over 2000% in the last 12 months. And part of that is because the consumer conditioning has changed, right?
[00:18:19] We've seen the way that people pay for things is changing cash app and Venmo have nearly 120 million users on just those two platforms alone. And they have this same policy credit card is additional 3%. If you use your bank. It's nothing additional. And so I believe that just the subset of customers that are used to it as changing dealers also know.
[00:18:42] I mean, just to give you an idea on the five to 15,000, we have calls with dealers every day that could save 1 million, $2 million over the next three years. And so, you know, the hesitation is always power. My customer's going to react and there certainly is a subset of customers that may be. Older haven't used Venmo, haven't used cash app.
[00:19:05] They want their American express points. They don't want any pushback. Right. And so before we ever get to the store, we communicate that we're not trying to hide from it. There is going to be some people that will ask and some people that may push back. At the same time you at the store level have the autonomy and now the ability to be much more generous.
[00:19:24] Should you choose to, okay, Mrs. Jones, I understand you've been coming here for 15 years. I'm going to go ahead and waive this 3%, give you that 3% off this time, but just know for next time, uh, you know, next time you come in and we're simply doing this to make sure that we have more resources for our employees and our, and our facility and that sort of thing.
[00:19:44] And so I think it's important to note, I have a dealer. Got to raise their minimum wage because they could save this enormous chunk of change 20 grand a month. So I think we just have to see why are we doing this? You know, what is the point at the same time we see about less than 1% of people push back on it.
[00:20:03] And we give the dealers the tools to make sure how do we communicate that to the customer ahead of. So you mitigate any heat and if you do have heat, we tell them, never let the toothpaste out of the tube. Don't ever let it get past, you know, a point where you've got this frustrated customers, they deal with heat all day, every day, they know how to handle this.
[00:20:22] Right. Just fix it and get on
[00:20:24] Michael: down the road. Yeah. Oh man, that makes perfect sense. Talk to me a little bit about you. You had mentioned you have a university, is that built to train on the implementation of, of your product in your.
[00:20:39] Amberly: It is. So for us, we feel like that's where we shine is me and my executive team have over 75 years in the business.
[00:20:47] My VP is a former controller, 30 years, uh, controller with van tile. That's now Berkshire Hathaway. And, uh, and then I've got another gal that's been 28 years in the business and she actually focuses on the launch and we reverse engineer this in a way where we understand the steps to make it as seamless as possible.
[00:21:05] And. Well, not only do we show up on site at the dealership, oftentimes some require virtual because they're smaller or only doing one department, but we show up at the store. We don't just send them a box of machines and a one 800 number and wish them good luck. We do a huddle beforehand with all of the management, and then we do a full training program.
[00:21:27] So we actually, they go through dealer merchant services university and get a certificate at the end of. To make sure they understand why are we doing this? What's the word track? You know, what's the point? What is the point of all of this? You're going to make me fly into a hornet's nest supposedly, and how do I, how do I mitigate that?
[00:21:45] And so before we ever get there, we make sure that they're trained ahead of time. They know how to communicate this in a way that they can mitigate any heat. And they're all certified by dealer merchant services, university.
[00:21:57] Michael: Amazing. Um, And we offer
[00:22:02] Amberly: training. We offer training into perpetuity as well. I mean, we, aren't just going to, you know, these things where sometimes they need some holding and that's okay.
[00:22:10] Michael: Hey, I got a client that they keep saying this, we'll figure it out on your own.
[00:22:15] Amberly: Right. Right. Exactly. Uh, Hey guys, something's going wrong with my machines or something's happening with this customer and their debit card, whatever the case may be, you know, that white glove service is really where we shine.
[00:22:27] Michael: Yeah, this, this makes a ton of sense to me. I mean, why would I not want to recoup this, this money? And like you said, I love that there's dealers out there that are saying, Hey, now that I've recouped it, let's reinvest it back into our people. I love that. I could talk about that all day. I'm not going to do it to you, but that's, I just love that element of, of these strong leaders in the industry.
[00:22:49] And, um, you know, it's just been such a delight to spend some time with you today. How can those listening get in touch with you?
[00:22:56] Amberly: So I'm all over LinkedIn, you know, we're trying to continue to educate the dealer body. So Amberley Allen on LinkedIn. And so please reach out, connect with me. I'd love to connect to all your listeners.
[00:23:07] And our website is dealer merchant services.com. So pretty simple there
[00:23:24] Michael: I'm Michael . Listening to the dealer playbook podcast. If you haven't yet, please click the subscribe button wherever you're listening. Right now, leave a rating or review and share it with a colleague. Thanks for listening.