Revolutionizing Trade Payments with Jim Kolchin from iWallet

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So what core pain points is iWallet trying to solve specifically for trade business?
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And so there was no easy way to deposit checks. And that's how we started.
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I love the tap to pay. So you guys use tap to pay with iWallet?
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That's right. And so this is one of the reasons why technicians love iWallet
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is because it makes it so much easier.
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And it actually is a piece of mind for consumers, for customers as well.
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Welcome to the Home Service Hacks podcast, the show for contractors who refuse to settle for average.
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Hosted by Bill Brown, licensed HVAC contractor, AI and automation expert,
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and founder of Service Titan Hacks Community.
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Each episode features real conversations with contractors, tech founders,
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and innovators who are reshaping the trades.
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From AI and automation to pricing, marketing, and management,
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if it's working in the field, You'll hear about it here. Let's get into it.
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Jim, welcome to the show. How are you doing today? Hi, Bill. Thanks for having me.
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Awesome. Well, thanks again. So you've spent decades in appliance and HVAC before launching iWallet.
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Can you walk us through your field service routes to founding this cutting-edge payment solution?
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Yeah. So I started off as a technician, this company, appliance repair company
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in Canoga Park, California.
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I worked there for about a year and then I started my own shop and grew that company.
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Google started at the time, Google AdWords, it was new back then.
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And then I got my HVAC license and it became an appliance and HVAC company and I realized the,
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high-ticket margins of the HVAC world, and that was really exciting.
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And you have always, when setting up my business, my first business at the time,
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it was like really difficult to understand, like, what do you do?
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What is S-Corporation? What is LLC?
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What is sole proprietorship? Which one's right for me, right?
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And then what's telephone system? How does it work?
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You know, how do you hire people? And what's this payment system all about?
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So I naturally, I just called my bank, which happened to be Bank of America.
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And there were partners where they owned First Data at the time.
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And they set me up with a processing plan, which had like three tiers,
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non-qualified, qualified, and mid-qualified.
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And of course, I was hoping that most of my transactions would fall into the
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qualified bucket. Sure.
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But they ended up all in the non-qualified. And at the end of the year,
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when I looked at my statement, I was like, why am I paying so much money?
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Because you usually, you don't really have time to look at it during the year.
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You only look at it when it's time to pay taxes. Well, it's a nice write-off, they'll tell you.
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Yeah. But we're not operating on write-offs. We're operating on profits. No.
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I'd rather have the cash without the write-off, right?
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Yeah. That's right. So you were actually able to read one of those credit card statements.
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Whenever I saw them, they were pages long. They looked like a cell phone bill.
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And I just looked at the number at the bottom and said, wow,
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thousands and thousands of dollars a month just to swipe a card.
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So congratulations for being able to read those things. Well,
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no, at first I wasn't able to read it at first.
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And that's all I saw that it's a lot of money and there's nobody to ask about
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this, like, can you negotiate this?
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Like nobody would explain anything to you, especially at the time,
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you know, it was, there was no information about this online, not as much as it is now.
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And, you know, year after year, I was struggling with this and,
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and then I was like, no, there gotta be a better way.
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So I decided to look into this and, and then.
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I've realized that there's this thing called card present and card not present.
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That's how you qualify yourself to better rates, but you have to swipe more.
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And then it was around 2012, then the mobile became popular.
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That's when Square started around that time. Yeah, I remember that.
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That's when I started my HVAC business was 2012. So I got in right when all
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these companies were launching.
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And Square was probably the first one. And they had the little dongle you would
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plug into your phone's headphone. Jack, I remember that.
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That's right. That's right. Yeah, and Jack Dorsey has a whole story of the founder of Square.
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Fascinating story on how they started with that little dongle.
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But at the time, I didn't know about Square. I didn't know anything about Square.
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I was just researching, and so my first website was called swipe2payless.com,
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and I thought, okay, I'm going to create a payment startup,
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and I'm going to make it easy for others to sign up, and I'm going to save people
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a bunch of money just because they start swiping.
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Because usually when you swipe the so-called card present, on average,
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you pay 30 to 50 basis points less in interchange costs. This really adds up, right? Right.
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And then I quickly realized that this is not going to work.
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The payments processing is really difficult to sell.
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We as merchants, we're too busy, don't really have time. We only look at it
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once a year, judging by myself.
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Or some more professional guys would have an accountant or CFO that will look
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at it once a month or maybe a bit more often.
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But yeah, I couldn't sell it. And so I kind of put it on the bad burner.
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And my own company was still using it, though. And, you know, that was kind of my...
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Introduction to the payments world that's when i started thinking
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okay then there is the so you can do
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the cost plus right interchange plus which
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is quite common with more sophisticated guys then there
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is the flat rate pricing kind of like what square offers right remember how
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they rolled out 2.6 or 2.8 percent and then stripe came out with 2.9 plus 30
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cents and then there is the tiered pricing that I fell into when I just started.
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So yeah, those were kind of the things. That's how it all started.
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So that first website that you had, what year did you start that? Was that back in 2012?
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Yeah, that's around those times. It was easy to register it on GoDaddy.
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I just found an available domain, swipetopayless.com, and that's how it all started.
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Now, iWallet, the story of iWallet and how that started, it was actually after
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I sold my fourth company, which was like a knife sharpening company.
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And I wanted to create, you know, I still had this idea of creating something in payments.
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And payments is still fascinating. Only this time I knew this is going to be much harder.
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Payments are much more competitive than people realize. Right.
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And I thought, well, I have to create something truly unique.
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You know, it's not going to cut it if I just add a dongle.
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And then it's not going to. Because everyone has that now, right?
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Very quickly, everyone has it.
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That's right. And by the way, I've always hated those dongles because my technicians, they lose them.
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They break them off in the iPad.
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They broke a couple of them off. remember I had
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one from Chase that you had to charge and the
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guy and the guy say well I lost my charger and then
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the technicians they could
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key in the card so they would just start keying cards
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in because they couldn't keep track of their dongles and
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and so every time I looked at my statement
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I just saw where I had to keep up on
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it just like another thing so not a big fan
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of the dongles in general and how
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do you how do you get around those do you still have those
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today or what do you do with those with those
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we see that there are a lot of companies that do try to use dongles so in particular
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you know your channel that the customers that that you know read your blog is
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primarily with those crm systems that they push customers into buying those dongles,
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But I would say that 90% of the people we speak with don't use dongles at all
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because it's such a pain, as you mentioned.
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Technicians just refuse to cooperate. I mean, there are some really big companies
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that are really strict about this.
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They can hire you if you don't use a dongle. But most of the business owners
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understand how difficult it
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is to hire a good technician, how difficult it is to find a good person.
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That dongles is not a deal breaker for them. You have to pick your battles, right?
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You know, and you can only, anytime you put a rule in place,
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you have to hold the technician or the employee accountable for it.
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So if you have a million rules, then all you're doing all day is checking in on that.
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So yeah, it's just, that's how it is with the technicians.
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I picked my battles with them. I wanted them to get reviews, do a great job.
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But I just gave up on on the dongles, you know, just sell the job,
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get paid and we will add in the processing fees to, you know,
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as our cost of goods. Right.
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So, you know, iWallet and I first met you at a roofing conference in December.
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You had a booth there right up right up front, which is actually great placement
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for the booth, by the way, and saw your brand and it was very clean.
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The booth was very clean.
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And I believe, yeah, I met you directly. And that's where we started our relationship.
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So it's been about seven months now.
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And so with that.
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You're focusing on the trades. So what core pain points is iWallet trying to
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solve specifically for trade businesses?
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Yeah, so the whole idea to help trade businesses came through checks processing pain point.
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You know, there are a lot of checks out there and people actually,
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most of the people think that checks are dying.
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Nobody's writing checks anymore in our day and age. But we see that 30% to 40%
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of businesses actually get paid by checks.
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And at least that was the case in my business.
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It was actually more than that because we like to pass the fee onto a client.
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We give them a discount if they pay by check or by cash.
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So more and more people are preferring to pay by checks. And so there was no
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easy way to deposit checks.
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And that's how we started. We
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actually looked into it and found a way to deposit checks in an easy way.
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That's one of the problems with apps out there is that you have to have two-sided
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checks and you have to endorse it.
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Again, talking about technicians, they don't want that thing.
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And that's why a majority of companies actually bring checks into the office.
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We had to do that for a time, I remember. Right, right.
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So what we came up with is with an idea of one-sided chair capture,
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where we can detect the backside and endorse it automatically.
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And that's what really started this. We looked into what other new technologies are there.
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And then there was the tap-to-pay technology that recently came out.
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So now we can turn any phone into a point-and-sale device.
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And that's awesome. I mean, I'm disappointed when I go to a merchant and they don't have tap-to-pay.
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And I'll look at it. I'll wait for the little kiosk to come up.
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And it'll say, insert your card or swipe.
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And if it doesn't show something to tap, I'm like, oh, really? I got to get my card out.
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And, you know, this is first world problems, by the way. Get your card out, insert the chip.
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The chip stops working. I love the Tap2Pay. So you guys use Tap2Pay with iWallet? That's right.
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That's right. There are some other companies out there. It's becoming more and more popular.
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But most of the crm systems don't support
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tap to pay yet and and so this is one of the reasons why technicians love iWallet
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is because it makes it so much easier and it actually is is a peace of mind
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for consumers for customers as well they don't have to worry about technicians
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typing in their card number somewhere in the app they don't know you know where it's been written to,
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And now you can, because of Tap2Pay, you can accept Apple Pay and Google Pay,
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which is another technology that's really convenient to modern consumers out there. Yeah.
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So you guys are really ahead of the curve with that, especially that CRMs don't have it.
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You know, it's been six months since I used Service Titan payments after I sold my HVAC company.
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Does Service Titan have tap to pay yet?
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Well, from what I understand, they have a legacy product, which is Thesis,
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which is what 90, probably 8% of their customers are on right now.
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And all of the new customers are being onboarded to a new processor called Adian.
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I'm not sure if they support that yet. I know they have the technology because
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Adian is one of those innovative companies. We love Adian.
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We use them as well on the backend. But I'm not sure if they offer it to service-type customers yet.
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So when did iWallet officially kick off? When did you guys start?
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The company was incorporated in January of 2019.
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It's actually a longer story here.
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My idea was to completely disrupt credit card payments first.
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And my idea was to use QR code payments, kind of like what they use in China
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and India, that require zero hardware and base it on ACH.
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Since ACH is already subsidized by tax dollars ran by a central bank,
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and ACH at scale is really cheap.
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It's like less than a penny per transaction. We could somehow make it work.
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It didn't work out. We tried it at the University of San Francisco with a bunch
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of students and merchants around USF.
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Unfortunately, my takeaway was that the habit of using credit cards is just way too strong.
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The product is good. In China and India, they went from cash to QR codes.
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So cash is really cumbersome and difficult to use. But when you already have
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a good enough technology, it was difficult.
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Plus, ACH inherently is super slow.
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Merchants are not willing to wait for days for transit, especially like a coffee shop.
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Coffee shop needs cash immediately. Sure. Right.
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So it didn't work out. So after a year or about a year and a half of trying
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to get that off the ground, I realized it's not going to work.
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And then COVID happened. And that's when we transitioned to the current system,
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which is about three years old now, with this particular effort.
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And so your question earlier, what other products you're doing?
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And one other product that we launched is reputation management.
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So we were able to, you know, I started thinking, okay, what can we do to make this product better?
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And, you know, getting reviews, oh, my reputation is extremely important in our day and age.
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And tying it to payments, it actually aligns the motivation of technicians to
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the motivation of the business owners.
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I'll tell you how. Yeah.
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In our app, we rolled out tips. So now you have the capability to get a tip as a technician.
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Tips have not been possible historically before in our industry, as you know.
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People would occasionally give you like a bottle of whiskey or a bottle of- $20 bill once a year.
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Right. Very, very rare to get a tip as a technician.
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Yeah, they would even like feed you. They would love you so much because you
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spend so much time and save their kids from- milk getting spoiled, right?
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People will teach you well, but there was no mechanism to add tips to technicians.
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So now we actually see a lot of technicians making a killing of tips.
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And not every business owner would allow it. So business owners,
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there are still a lot of business owners that don't like tips in this industry
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and you can easily turn it off.
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But we actually have majority of the business owners that we work with,
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they love tips and they allow their technicians love
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it even more right because now yeah that'd be great that
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goes right to the technician how does how does
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the technician get paid out for that does it deposit into
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their account or is it responsibility of the owner
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to distribute that money yeah the way it works
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is we don't usually want to
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touch technicians tips and you know
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we don't have a direct relationship with technician because i wouldn't like
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it as a business owner myself right so we just pay it to company's account and
00:18:02.395 --> 00:18:06.215
then you run a report and just add it to technician's payroll on a weekly or
00:18:06.215 --> 00:18:13.315
monthly basis okay that makes sense okay and so so and so the tips when you land on a.
00:18:13.875 --> 00:18:19.595
Signature page with a tip so you get the tip and then right after that you get
00:18:19.595 --> 00:18:21.315
a a review for the company.
00:18:21.615 --> 00:18:26.395
So that means technician would work really hard to get the tip, right?
00:18:26.575 --> 00:18:29.755
And that aligns with the review, with the online reputation,
00:18:29.995 --> 00:18:33.695
with what the business owner wants, right? Because that's what business owners usually struggle with.
00:18:34.555 --> 00:18:36.995
You know, they ask technicians, and now they ask for a technician,
00:18:37.195 --> 00:18:40.215
hey, you got to use the dongle, you got to deposit the check,
00:18:40.455 --> 00:18:42.395
right? And you got to ask for review.
00:18:42.735 --> 00:18:46.075
And technicians are like, well, we're not marketers. We're not going to do any
00:18:46.075 --> 00:18:47.795
of that. Okay. I'm just going to fix things.
00:18:48.715 --> 00:18:53.035
Right. And, and you have to make it easy. And, and that's what we found.
00:18:53.155 --> 00:18:57.535
If you make it easy enough, you know, and if you align the interests,
00:18:57.915 --> 00:19:01.915
then we see some tremendous results with tips and reputation.
00:19:02.475 --> 00:19:07.575
Do the majority of the customers utilize the reputation management and kind
00:19:07.575 --> 00:19:12.275
of feedback have you got from that as far as them improving their,
00:19:12.275 --> 00:19:16.735
you know, Google reviews or Angie's List reviews, things like that.
00:19:17.334 --> 00:19:22.514
Yeah. So what we see is that if you compare a typical follow-up that companies
00:19:22.514 --> 00:19:25.174
send, some companies don't even send anything at all.
00:19:25.314 --> 00:19:30.074
They don't care about online reputation, which is not a good business decision, right?
00:19:30.114 --> 00:19:35.174
If you want to grow your business, then online reputation is critical in our day and age.
00:19:35.974 --> 00:19:39.034
And those that do care about that, they usually send follow-ups.
00:19:39.214 --> 00:19:43.174
And follow-ups are annoying to us as consumers.
00:19:43.414 --> 00:19:46.654
You don't want another text message or another email. With iWallet,
00:19:46.794 --> 00:19:48.614
you essentially get reviews in real time.
00:19:49.414 --> 00:19:55.654
And so if you compare follow-ups with real-time reviews, we see up to five times
00:19:55.654 --> 00:19:59.774
as many reviews that are being given to our customers.
00:20:00.794 --> 00:20:07.134
That's fantastic. Because they already have the phone in their hand, right?
00:20:07.254 --> 00:20:11.774
They already have the iPad in their hand. And so do they, as far as the workflow
00:20:11.774 --> 00:20:18.594
goes, the technician shows them the invoice or the bill, the customer does the tap to pay,
00:20:18.874 --> 00:20:20.974
the customer decides the tip,
00:20:21.114 --> 00:20:24.674
and then they can leave a review right there all from the same device?
00:20:25.074 --> 00:20:31.254
No, no, no. That would be, you know, that would not work. That would be illegal.
00:20:31.534 --> 00:20:37.454
Is it because of the way that Google has it set up for reviews and tracking and things like that?
00:20:37.574 --> 00:20:41.994
Right. Because you have to leave a review from your own device. Right.
00:20:42.194 --> 00:20:48.454
And that's the whole secret sauce with our system. And that's kind of like a
00:20:48.454 --> 00:20:53.214
COVID thing because people didn't want to touch technician's devices at the time.
00:20:53.534 --> 00:20:58.854
I remember that. I remember that. So we created this remote signature capture,
00:20:58.914 --> 00:21:01.374
what we call it. We send you a text message or an email.
00:21:01.714 --> 00:21:04.574
And then once you get the link, you just click on that link.
00:21:04.574 --> 00:21:09.434
So you open that on your own device. that is actually more familiar to you,
00:21:09.574 --> 00:21:11.094
more comfortable to use, right?
00:21:11.294 --> 00:21:13.694
And that's where you sign and that's where you tip.
00:21:14.094 --> 00:21:18.334
And that's where we send you to a Google page. And most of the time,
00:21:18.554 --> 00:21:21.634
people are already signed in, right? Because Gmail is so popular.
00:21:21.914 --> 00:21:26.394
Then it becomes authentic customer review. At the minimum, if a customer doesn't
00:21:26.394 --> 00:21:28.914
want to add review, we have the thumbs up, thumbs down.
00:21:29.334 --> 00:21:33.134
At the minimum, you get real-time feedback. If it's a thumbs down,
00:21:33.354 --> 00:21:37.034
you would immediately be notified that something is going on in the field.
00:21:37.174 --> 00:21:42.114
So this is a great feedback mechanism as well from the field before it escalates, right?
00:21:42.194 --> 00:21:46.874
Because that's usually how owners and supervisors find out about problems when
00:21:46.874 --> 00:21:50.794
the customer already cannot tolerate it anymore. They're calling you.
00:21:50.974 --> 00:21:55.734
Well, when they're calling you, that means the house is already on fire, right? Right.
00:21:55.834 --> 00:22:00.854
Or you see a one-star review on Google pop up right after the technician leaves.
00:22:00.854 --> 00:22:06.894
So I like that idea of the thumbs up, thumbs down, because the thumbs down can
00:22:06.894 --> 00:22:12.094
prevent that one star review, which is very costly to a business,
00:22:12.274 --> 00:22:15.334
especially if it's something other than price, right?
00:22:15.939 --> 00:22:20.799
One of the big things that I had in my business, and I think that everybody
00:22:20.799 --> 00:22:26.859
else experiences it, is the high fees associated with processing credit cards.
00:22:27.039 --> 00:22:30.619
It's just one of those things that we've all come to deal with.
00:22:30.739 --> 00:22:37.659
But every time we look at our P&L and we sort it from most expensive to least
00:22:37.659 --> 00:22:44.199
expensive expenses, I see those credit card fees and they're huge.
00:22:44.419 --> 00:22:48.859
They're near the top. And you see things like marketing and labor and payroll
00:22:48.859 --> 00:22:52.539
and insurance, and you can't really cut a lot of those things.
00:22:52.779 --> 00:22:57.299
But as a business owner, every at least every quarter, I would look through
00:22:57.299 --> 00:23:01.519
my expenses and I try to reduce them as much as possible. Right.
00:23:01.919 --> 00:23:07.259
And when I switched to I've switched to many credit card processors over the
00:23:07.259 --> 00:23:13.079
years, I use Chase, I use Square, I use Stripe, I use Heartland, First Data.
00:23:13.079 --> 00:23:15.239
And I usually actually went to
00:23:15.239 --> 00:23:21.179
the ones that had what I felt was the best technology. I also used Pazer.
00:23:21.699 --> 00:23:22.899
Then I switched to Service Titan
00:23:22.899 --> 00:23:27.559
payments for the convenience of the fact that it was in Service Titan.
00:23:27.779 --> 00:23:33.779
But I noticed when I switched, I paid a lot more money for that convenience.
00:23:34.279 --> 00:23:38.439
So I know that what iWallet can save over that.
00:23:39.021 --> 00:23:44.901
How are you able to save on these processing fees over what a big company like Service Titan can do?
00:23:45.341 --> 00:23:51.601
Yeah, so for a lot of these companies, they understand the value of full integration,
00:23:51.601 --> 00:23:54.941
and that's why they off-charge you, right? Because they can.
00:23:55.361 --> 00:24:02.521
And we position ourselves as this alternative to those business owners that do want to save.
00:24:02.741 --> 00:24:06.981
It might not be for everybody. Some business owners don't feel it's necessary
00:24:06.981 --> 00:24:11.681
to save, processing fees. They'd rather grow the company.
00:24:12.721 --> 00:24:16.761
All business owners have different stages of their business life.
00:24:16.941 --> 00:24:18.281
Some are focused on growth.
00:24:18.821 --> 00:24:22.941
Some are focused on the bottom line. The truth is probably somewhere in the
00:24:22.941 --> 00:24:27.301
middle because you do want to watch the bottom line as well to improve the valuation
00:24:27.301 --> 00:24:28.761
of your business and the cash flow.
00:24:28.941 --> 00:24:33.641
We just don't have the margins as big as our competitors are.
00:24:34.361 --> 00:24:38.781
And that's how we're able... I mean, we're still cash flow, positive and profitable
00:24:38.781 --> 00:24:43.241
company, but just don't charge as much as others.
00:24:44.061 --> 00:24:49.681
And we just come to this with a different mindset. Our mindset is something
00:24:49.681 --> 00:24:54.681
that I struggled with myself for many years, is to create something,
00:24:55.241 --> 00:24:58.821
that is honest, that does not overcharge businesses,
00:24:59.141 --> 00:25:05.401
and does not raise your prices every year You know, secretly when you're not
00:25:05.401 --> 00:25:10.781
looking and, you know, we're in the mission to save business owners time and money.
00:25:11.341 --> 00:25:16.341
And that seems to be resonating so far quite well with our market.
00:25:16.861 --> 00:25:22.301
That's great. That's great to hear. So you were talking earlier about mobile check deposit.
00:25:22.781 --> 00:25:28.541
And I agree with you, a lot more consumers, a lot more homeowners write checks
00:25:28.541 --> 00:25:30.561
still today than you would think.
00:25:30.561 --> 00:25:33.361
Maybe that's because their checkbook is at
00:25:33.361 --> 00:25:38.261
their house they don't bring it around with them and when it's time to pay the
00:25:38.261 --> 00:25:43.761
technician or pay the salesperson the deposit for the install your checkbook
00:25:43.761 --> 00:25:49.361
is usually right there by where you're working or where you're doing the transaction
00:25:49.361 --> 00:25:52.241
and mobile check deposit.
00:25:53.038 --> 00:25:56.218
Was the biggest pain, the biggest pain.
00:25:56.598 --> 00:26:03.118
So we had, when we used payments with Stripe, we couldn't do mobile check deposit.
00:26:03.778 --> 00:26:10.958
The only way we were able to do it consistently in the field at the time back
00:26:10.958 --> 00:26:12.198
in the day was with Pazer.
00:26:12.458 --> 00:26:19.118
Even Service Titan's mobile check deposit didn't work the way that I had expected.
00:26:19.398 --> 00:26:25.338
So you're saying that you guys can do mobile check deposit just taking the picture
00:26:25.338 --> 00:26:28.518
of the front of the check and not having to endorse it or anything?
00:26:28.518 --> 00:26:31.878
I've never heard anything like that before. That's really cool.
00:26:32.098 --> 00:26:34.098
Can you tell me a little bit more about how that works?
00:26:34.638 --> 00:26:37.678
Yeah. We actually have a patented technology.
00:26:37.898 --> 00:26:43.498
We have an issued patent for this because we ran so many checks and we know
00:26:43.498 --> 00:26:47.778
the business that is depositing checks. We know who you are, right?
00:26:48.018 --> 00:26:52.278
So we can just do a virtual stamp on the back of the check.
00:26:52.278 --> 00:26:54.998
For you and yeah it works quite
00:26:54.998 --> 00:26:58.618
well yeah the checks the checks business is
00:26:58.618 --> 00:27:01.718
interesting because there is very little margin
00:27:01.718 --> 00:27:05.138
in checks processing right nobody wants to pay anything nobody
00:27:05.138 --> 00:27:08.218
wants to pay anything but the losses are humongous right
00:27:08.218 --> 00:27:10.918
if there is fraud then you know you
00:27:10.918 --> 00:27:15.038
can lose a limited amount of money especially with us we usually
00:27:15.038 --> 00:27:18.178
don't charge merchants anything for checks processing if
00:27:18.178 --> 00:27:21.578
they process cards with us because business owners
00:27:21.578 --> 00:27:24.778
usually like to think that well i can just deposit checks
00:27:24.778 --> 00:27:27.518
for free at the bank right but you still have to go to
00:27:27.518 --> 00:27:32.378
the bank and you know spend your time it's not really free right but you know
00:27:32.378 --> 00:27:37.198
we don't argue we just give it away for free right and it works really well
00:27:37.198 --> 00:27:44.678
there is a lot that goes into fraud and fraud monitoring limits and making sure
00:27:44.678 --> 00:27:46.498
that things are working well.
00:27:46.658 --> 00:27:50.898
And you also don't want to have the experience of holding up funds.
00:27:51.378 --> 00:27:55.618
That happens a lot, we see. Because from the processor's perspective,
00:27:55.658 --> 00:28:01.518
if you see a large check that is very suspicious, you might want to wait for
00:28:01.518 --> 00:28:04.518
seven days or maybe for 14 days.
00:28:04.698 --> 00:28:07.738
And I understand that as a processor. That's an eternity.
00:28:08.178 --> 00:28:11.578
Right. From a merchant perspective, it's unacceptable. That's really bad because
00:28:11.578 --> 00:28:17.078
that big check is, the majority of it, at least in HVAC, is equipment and you
00:28:17.078 --> 00:28:20.218
might have already paid payroll and commissions on it.
00:28:20.838 --> 00:28:25.378
I've experienced that before where I've had transactions that were held,
00:28:25.518 --> 00:28:30.038
especially when I switched to new processors, and that can add up really fast.
00:28:30.238 --> 00:28:34.918
Are you guys able to circumvent around that with their technology so when they
00:28:34.918 --> 00:28:38.358
switch to you, you don't have to hold those big checks?
00:28:38.698 --> 00:28:42.998
Correct. That's what we've been doing so far quite successfully.
00:28:43.398 --> 00:28:45.918
So underwriting is a big part of that.
00:28:46.412 --> 00:28:51.452
Fraud monitoring is a big part of that because it's really the bad guys that
00:28:51.452 --> 00:28:54.932
spoil everything to everybody, right? Sure.
00:28:55.532 --> 00:28:58.932
Because if there is no risk, why would you hold the money?
00:28:59.392 --> 00:29:05.392
But once you get hit with fraud, that's when you become extremely cautious.
00:29:05.712 --> 00:29:10.712
We with our partners have been quite well at this and our merchants have not
00:29:10.712 --> 00:29:17.332
had any hold times whatsoever. But we might not approve just everybody for checks processing.
00:29:17.512 --> 00:29:22.652
Some people do get upset that they've done some bad things in the past.
00:29:22.832 --> 00:29:27.152
And unfortunately, we cannot help them. Right.
00:29:28.152 --> 00:29:32.152
But we're usually really upfront about this and there are no surprises.
00:29:32.612 --> 00:29:35.912
So let's talk about these voice AI phone payments.
00:29:36.112 --> 00:29:40.752
Never heard of that. And I feel that I'm kind of on the forefront with AI.
00:29:40.752 --> 00:29:46.092
I'm always searching for products and services that can help contractors.
00:29:46.512 --> 00:29:50.572
Never heard voice AI phone payments. How does that work?
00:29:51.432 --> 00:29:56.572
Yeah, so this kind of relates to PCI compliance, which I'm sure a lot of your
00:29:56.572 --> 00:29:58.152
listeners have heard about.
00:29:58.712 --> 00:30:03.972
PCI compliance has not been around up until, I think, 2004.
00:30:05.492 --> 00:30:11.832
And that's when Visa and MasterCard really started cracking down on those crazy
00:30:11.832 --> 00:30:17.652
practices where people would just write down card numbers on a piece of paper and it will fly away.
00:30:17.852 --> 00:30:21.192
So people were really sloppy with those card numbers before.
00:30:21.852 --> 00:30:28.332
And then in about 2010s, they rolled out, I think it was actually 2018,
00:30:28.772 --> 00:30:32.472
where they rolled out strict regulations about call centers.
00:30:32.472 --> 00:30:37.132
Because, you know, whenever now, whenever you have a call center,
00:30:37.492 --> 00:30:39.692
it's so easy to record a phone call.
00:30:40.032 --> 00:30:44.372
Back then, it was really expensive. Right. Now, almost all of them are recorded,
00:30:44.752 --> 00:30:45.732
right? Right, right, right.
00:30:46.112 --> 00:30:48.232
And because the calls are being recorded.
00:30:48.951 --> 00:30:54.111
Card numbers are being recorded. And they call this PA, PAN,
00:30:54.391 --> 00:30:57.611
personally identify information, something like that.
00:30:57.971 --> 00:31:04.131
And this sensitive information is not allowed to be recorded anymore,
00:31:04.711 --> 00:31:06.371
according to PCI compliance.
00:31:06.651 --> 00:31:11.571
And so what companies came up with is the so-called DTMF signal,
00:31:11.771 --> 00:31:14.151
right? That's been around for a while.
00:31:14.351 --> 00:31:18.771
I think it's called digital tone modulation frequency. You know,
00:31:18.871 --> 00:31:22.631
whenever you press on the phone, it's really awkward to use.
00:31:22.891 --> 00:31:26.771
You know, if you mess up a digit, which is easy when you're doing it on the
00:31:26.771 --> 00:31:32.651
phone, then you can't really go back because that robot thing does not understand go back.
00:31:32.831 --> 00:31:36.271
You know, there's no backspace on the phone. That's true. Yeah.
00:31:36.691 --> 00:31:40.071
And so you have to start all over. It seems so antiquated too, right?
00:31:41.111 --> 00:31:48.211
So actually manually entering your card on a payment system over the phone with
00:31:48.211 --> 00:31:53.031
your keypad, wow, that seems like, I don't even know. It's terrible. Yeah.
00:31:53.671 --> 00:31:57.871
Well, there's still a lot of that out there, believe it or not, in our day and age.
00:31:58.011 --> 00:32:06.371
And so what we came up with is an idea of making it easier to be PCI compliant for those call centers.
00:32:06.371 --> 00:32:10.711
Because the majority of companies out there, they either run their own call
00:32:10.711 --> 00:32:13.531
centers or they outsource it, right? It's a big problem.
00:32:13.891 --> 00:32:19.371
And some companies we see, it used to be allowed that you could just pause the
00:32:19.371 --> 00:32:21.451
recording, take down the card number.
00:32:21.671 --> 00:32:26.391
But now it's not allowed anymore. In the PCI compliant world,
00:32:26.531 --> 00:32:30.371
in the latest 4.01 PCI compliant.
00:32:31.226 --> 00:32:36.866
Document, it actually says that it's not allowed. So you have to go through
00:32:36.866 --> 00:32:44.886
additional steps and you have to, you're on the hook for more liability if you do it this way.
00:32:45.406 --> 00:32:49.066
And that's when VoiceAI was born.
00:32:49.246 --> 00:32:57.046
So the idea with VoiceAI is that we have an LLM engine that is hosted on our PCI compliance server.
00:32:57.246 --> 00:32:59.666
Unfortunately, it cannot be done on ChatGPT.
00:32:59.906 --> 00:33:05.266
They have a wonderful product. But ChatGPG is not officially PCI compliant.
00:33:06.806 --> 00:33:13.446
Twilio is. So, you know, it's a common, Twilio is a common voice IP provider.
00:33:14.506 --> 00:33:20.046
And so what we do to keep you out of scope, what they call PCI scope,
00:33:20.046 --> 00:33:24.886
is we would use a Twilio number where customers can call that number.
00:33:25.606 --> 00:33:30.626
And you will talk to our LLM and our LLM is specifically designed for payments
00:33:30.626 --> 00:33:33.346
process to take the payments over the phone.
00:33:33.566 --> 00:33:38.246
And because it's an LLM, it can actually speak really well with you. I bet.
00:33:38.426 --> 00:33:42.806
And understand what you're saying and you can say the credit card pretty fast
00:33:42.806 --> 00:33:45.546
and everything. Wow, that's really cool.
00:33:46.006 --> 00:33:48.686
Yeah, you can even say, oh, sorry, I gave you a wrong invoice number.
00:33:49.046 --> 00:33:53.726
I can go back and you can, you know, you can manipulate the numbers a lot easier.
00:33:53.726 --> 00:33:59.626
And so, yeah, we basically work directly with Twilio, our PCI compliant LLM
00:33:59.626 --> 00:34:03.006
server, and then the processor, which is also PCI compliant.
00:34:03.366 --> 00:34:07.886
And that's how we keep this whole chain out of the PCI scope.
00:34:08.478 --> 00:34:15.078
Wow. So with that, my office would call customers right through Phones Pro and
00:34:15.078 --> 00:34:17.218
get credit card information over the phone.
00:34:17.398 --> 00:34:21.458
I did not know anything about the PCI compliance whatsoever.
00:34:21.498 --> 00:34:24.358
I know about it when it comes to web forms.
00:34:25.018 --> 00:34:31.878
So when I was creating web forms, there are PCI compliance systems that don't
00:34:31.878 --> 00:34:35.618
store the credit card data and you can take a payment similar to,
00:34:35.858 --> 00:34:39.858
I believe, Service Titan's online payments probably have something like that.
00:34:40.358 --> 00:34:47.838
But who is at risk if your CSR calls a customer and gets a credit card over
00:34:47.838 --> 00:34:52.398
the phone and that phone call is recorded? Is that something that the contractor
00:34:52.398 --> 00:34:55.258
can be liable for or get in trouble for?
00:34:55.758 --> 00:34:59.838
Absolutely. They are. According to their merchant services agreement,
00:35:00.118 --> 00:35:04.018
contractors are liable to make sure that those numbers are not leaked.
00:35:04.318 --> 00:35:07.478
In fact, there were a couple of famous cases. I don't know if you remember.
00:35:07.718 --> 00:35:11.078
In 2013, Target got hacked.
00:35:11.478 --> 00:35:16.718
Their point of sale system got hacked. They were on the hook for over $200 million. dollars.
00:35:17.318 --> 00:35:24.038
In 2014, Home Depot's 56 million customer car details also leaked in a very
00:35:24.038 --> 00:35:26.518
similar fashion when it's not PCI compliant.
00:35:26.678 --> 00:35:28.798
They want to hope for like $179 million.
00:35:29.418 --> 00:35:35.878
That's wild that a corporation that big wouldn't be PCI compliant since it's
00:35:35.878 --> 00:35:39.258
been around for 20 years now, right?
00:35:39.598 --> 00:35:44.858
So if they, if Target and Home Depot are not, what,
00:35:45.405 --> 00:35:47.665
What's the chances that a $5
00:35:47.665 --> 00:35:54.145
million HVAC contractor has all their T's crossed and I's dotted on this?
00:35:54.285 --> 00:35:57.345
That's, that's something, you know, that's the thing about business.
00:35:57.665 --> 00:36:02.425
You don't know, really, you don't know when you're breaking the law because there's so many of them.
00:36:02.825 --> 00:36:06.685
And when you're really small, you're just trying to grow your business and hire
00:36:06.685 --> 00:36:08.665
people and serve your customers, right?
00:36:08.885 --> 00:36:13.965
Save money. And there's so much risk of things like this that you didn't know
00:36:13.965 --> 00:36:17.985
and what you didn't know in business, ignorance is not bliss. It actually hurts you.
00:36:18.405 --> 00:36:26.145
And so I wonder if, you know, what contractors are doing to take these over
00:36:26.145 --> 00:36:30.765
the phone payments today, are they just breaking the merchant processing agreement
00:36:30.765 --> 00:36:32.425
and putting themselves at risk?
00:36:32.725 --> 00:36:36.745
That's, that's something I bet a lot of contractors would not be aware of.
00:36:37.265 --> 00:36:44.545
No, no. I've actually looked at your Facebook group, people discussing this and it's a big thing.
00:36:45.245 --> 00:36:50.725
A lot of people talk about this, and it's not solved.
00:36:50.885 --> 00:36:54.565
It's actually one of the reasons why I got inspired into doing something like
00:36:54.565 --> 00:36:59.985
this is because people struggle with it, and they try to do it right.
00:37:00.225 --> 00:37:04.865
But because the rules are constantly changing, it's really hard to keep track.
00:37:04.985 --> 00:37:08.885
It's not like you do the PCI compliance document before bed.
00:37:09.805 --> 00:37:15.965
Sure. The latest 300 pages that they put out and, you know, things people don't
00:37:15.965 --> 00:37:18.845
know that and they can be on the hook for that. Absolutely.
00:37:19.165 --> 00:37:22.685
Wow. That's interesting. That's it's scary to find that out.
00:37:22.785 --> 00:37:27.525
And I'm sure that that most of the contractors want to follow the rules.
00:37:27.645 --> 00:37:31.865
But if you don't know what the rules are, you obviously can't follow them.
00:37:31.985 --> 00:37:35.765
And then once you know the rule, it could be massively inconvenient for your
00:37:35.765 --> 00:37:38.005
business to implement that.
00:37:38.185 --> 00:37:42.385
Right. So that's very important information that I'm sure that the group and
00:37:42.385 --> 00:37:44.885
the contractors will benefit from.
00:37:45.105 --> 00:37:49.805
That's great. Thanks for being on the show. I learned a lot about FinTech payment
00:37:49.805 --> 00:37:52.525
processing and some of the cool new technology out.
00:37:52.845 --> 00:37:54.785
So, Jim, thanks a lot.
00:37:56.565 --> 00:38:00.805
Thanks for listening to the Home Service Hacks podcast. Be sure to subscribe
00:38:00.805 --> 00:38:04.625
on your favorite podcasting platform so you never miss a future episode.
00:38:04.625 --> 00:38:09.445
For more information or to connect with Bill, you can check us out on Facebook
00:38:09.445 --> 00:38:14.785
at Service Titan Hacks or visit our website at servicetitanhacks.com.
00:38:14.825 --> 00:38:16.405
We'll see you next time.