Note: transcription provided by Otter.AI, which is a technology company that develops speech-to text transcription and translation applications using artificial intelligence and machine learning.
Christopher H. Loo, MD-PhD: So welcome, everybody to this week's podcast episode for the Financial Freedom for Physicians Podcast. And I'm your host, Dr. Christopher Loo. And as you know, we talk about four types of freedom: financial, emotional time, and location freedom. And as usual, I'm always trying to bring guests that are on the cutting edge and that are doing things outside of the box, to give you a flavor of what's going on, so you can be empowered to make better decisions and to live life on your own terms. So today, we have Dr. Jennifer Mogan. And she's a physician, but she's also an entrepreneur, especially in the FinTech space. And it's quite interesting what's going on in FinTech and crypto, DeFi, blockchain, all these areas, NFTs. So I'll let her tell her story and everything. And so we'll get down to it. Jennifer, welcome.
Jennifer Mogan: Thank you so much.
Christopher H. Loo, MD-PhD: Yeah. I know, I think we saw one of your posts and one of the groups and you were talking about how you were creating this FinTech business. But before we get started, tell us more about yourself, your background, and what led you down this path.
Jennifer Mogan: Yeah, so I am an anesthesiologist, I've been in private practice for the past 15 years. You know, COVID kind of threw a wrench in everyone's worlds and kind of made us rethink things, reexamine our values, and how we spend our time, and how we spend our money. And it was the same for me. And I kind of learned a little bit about the payments industry through a very good friend who had helped to start Park Place Payments, the company that I'm working for. And the more I learned about the payments industry, the more I was like, Well, this is something that no one in medicine really knows anything about. And certainly something that can be a value to my colleagues. And so I kind of started out on this journey to share that information, everything I learned I wanted to share so that I could help my colleagues in this part of their business.
Christopher H. Loo, MD-PhD: Yeah, that's a really fantastic story. And you know, what intrigued me about the post is that you're being a connector, and in this day and age, we're knowledge brokers, so you're connecting, you're using your skill and expertise as a physician. And we have physician audiences, and you're trying to bring them into this new space. So, it's really fascinating, especially in the world of FinTech. So, tell us more about what exactly you do. I know you're in the payments space. But tell us more about what are some of the frustrations or pain points in the space for physicians, and how your company and your role fits in?
Jennifer Mogan: Yeah, absolutely. So payments is something that prior to doing this, I knew absolutely nothing about and probably most of you really don't either. And basically, it's kind of the world of accepting payments for your work. And in order to accept payments via credit cards, you need to have a credit card processing company. It's a piece of business that probably 95% of people know absolutely nothing about. So as physicians, we're not alone. It's not just us. And I think that it was somewhat by design. The payments processing companies, the less people know, the more they can take advantage of you. And so to try and reverse that power struggle, the most important thing is knowledge and understanding how the payments work and the process and the payment structures.
And really, I was trying to come at this from an education standpoint, because none of us like to be sold to, and I really had a challenge with that at the beginning. Because when I learned about this, it's a sales thing, you're trying to sell your service, you're trying to sell your processing company, and you know, I was never very comfortable with that, because none of us want or trust what someone is telling us. And so I wanted to be that voice that had credibility that could explain the payments industry to you so that you understand as a business how to make a good choice for yourself. And hopefully, it's a win-win situation. And with that knowledge, you're able to work with me, which is great. Because we can save money, give you transparency, give you integrity, and provide great service. And I get to benefit from that as well.
Christopher H. Loo, MD-PhD: Yeah, that's a really unique business proposition. And it's really just taking something very fundamental and simple and creating and monetizing it. So I just came back from giving a speech about how I invest in you know, crypto and DeFi, where this whole space is going and we can't. We were talking about payments. And I think the traditional I think standard is the big players take 3%. And it's really, they don't really do anything, they just stand in the middle and you know, take 2 or 3%. So tell us more like, who the big players are? Someone who doesn't understand payments, I want to buy a Starbucks coffee, what happens when I go to the point of sale, and I buy it, what all happens on the back end?
Jennifer Mogan: So that 3% that you're talking about, that actually the majority of that 3% actually goes to the credit card brands. So Visa, MasterCard, Discover AmEx, they are charging a percentage to use their credit cards. And all of us as consumers use their credit cards and get rewards every time we use our credit cards. So we're like, Well, this is great, I'll use your card, it doesn't cost me anything, and I'm getting a free flight out of the deal. The problem is that the merchants are bearing the brunt of all of this. So the credit card companies don't actually process the payments, they just provide the card. So you do need a payment processing company to do all of those transactions to make sure that it's secure, to follow up on things. So you can't do it alone, you need to have a payment processor.
Now, payment processors run the gamut. There are so many poor practices out there in the payments industry, and trying to figure out what is a fair rate, and am I getting taken advantage of, and what is flat rate pricing versus tiered pricing versus interchange plus pricing? It's all kind of a foreign language to most people. And so a lot of the time the default is well, I'll just go with my bank, because I trust them right. Or I will go with the credit card processing company that's linked with my EMR because it's easy, or I'll go with Stripe or Square because it's a flat 2.9 or 3.5% and it's easy to understand. Easy to understand and easy to utilize don't necessarily mean the right choice. And so trying to navigate through that is the challenge. And so that's what I've been trying to help people with.
And so understanding at the outset that if you're paying just a flat rate, for every transaction that goes through, you are likely overpaying for a large percentage of those transactions, especially in medicine, because we take a lot of debit cards, right? We take FSA cards and HSA cards or people will pay their co-pays just on a regular debit card. Debit cards, or have a very low interchange rate from the credit card brands. And so everything over and above that is what your payment processor is pocketing. And so when you pay a flat rate, it's like you know, everything on the menu has the same price: the lobster Maine, the salad, the glass of Chardonnay. But you know for a fact that they didn't really all cost the same at the baseline. So that's the important thing to understand about flat rate pricing, it's not always in your best interest.
So then you look at things like tiered pricing, a lot of banks use tiered pricing. And that's where it's essentially like three different flat rates. So, you're probably overpaying for a large percentage of the transactions in each bucket, in each tier. And very often, they will only quote you the lowest tier, they'll say, hey, I'll give you 1.9%. And you're like, Wow, that sounds great. But what you don't understand is that is 1.9% for qualified transactions. There's a whole list of other ones. So if it's Card Not Present, if it's online over the phone, if it's a rewards card, whatever, it doesn't qualify for that 1.9%. But you don't know, you just think 1.9% sounds so much better than 3%. So let's just do it, and no one's explaining it to you.
And then there's interchange plus pricing, which typically is the most economical model to use. And that's essentially where you're paying wholesale pricing for every transaction that comes through. So you pay that interchange from the credit card brands, and then you pay a small markup to the processing company. And so if a debit card comes through, that's super low, you get that really low rate, and then you pay the processor to do that transaction. So that's usually the route that it's best to go. And you know, prior to this podcast, I'm guessing that 90% of people didn't know any of that. So that's just kind of the baseline where it starts.
But then even if you get interchange plus pricing, and you've got this processor that says hey, I'll give you this rate, you are like, Well, how does that compare? I don't know. There's no Kelley Blue Book value to tell me if that's a good rate or not. They don't tell you about other fees that they're going to add on, they don't tell you about any of the other things. So you need to not only know the pricing models but you need to understand the rate that they're quoting you, and you need to trust that they're not going to change things on you. Because far too often, it's kind of like the cable company, they give you a rate and then a year later, why is my bill double? I don't know. So it's all of these practices out there that just drive me insane. The reason I've stuck with this is so that I can be that voice of reason, that voice of education and advocacy for my colleagues.
Christopher H. Loo, MD-PhD: Yeah, that's a really great overview. And for the listeners out there, what Jennifer is talking about is just so many middlemen and just so many rent seekers, and they just place themselves in the middle of something so that they can get some, some monetary value out of it without giving any value. And that's why I'm so passionate about FinTech and where the whole payments is going. So you offer education, and you're educating clients, and you're trying to get them the best pricing for their payments, which is really interesting. And I know, we're in this podcast. What are your thoughts about, for example, how crypto or DeFi or any of these with payments, how they can potentially place themselves in these new paradigms and regimes?
Jennifer Mogan: Yeah, I think that as payments change over time, as new payment opportunities arise, as crypto becomes more mainstream, the payments industry is going to have to modify things. Right now, it's challenging, because there are so many cryptocurrencies out there. So if you can imagine there's like, what, 400+ different cryptocurrencies out there. So imagine if there were 400+ credit card companies out there that's a lot to have to deal with.
The other thing is the volatility right now. So it's not that it just changes small amounts at any given time. So if you go to McDonald's and buy some fries at 9am it's going to be 27 Bitcoin or whatever. I don't know the numbers. But then you go at 3pm. And it's double the price. So, until all of that is sorted out, I think that there's going to be a lot of challenges to overcome. But again, I mean, the world of payments is constantly changing and adapting to everything that's coming out that's new. You know, there have been recent changes, as far as surcharging, and cash based discounting and dual pricing. And there's struggles between the credit card companies and the credit card brands and the government to see what's regulated and what's not. So all these things that come up, there's so many little details behind the scenes that need to fall into place before it becomes mainstream, I would say.
Christopher H. Loo, MD-PhD: Yeah, I've been following and I've been really active in space, and really the next utility of. I only focus on the top five or top 10. It's always changing, but you know, the top two, but it's really interesting to see how the payment space is evolving, because that's how crypto and you know, these cryptocurrencies are going to actually be of use later on instead of just speculation. So Square and Block are doing a lot of things, and Stripe, and in the country of El Salvador, you can now pay for things in Bitcoin using Cash App, and different things. So I think what you're doing is really, fundamentally, interesting, and very, very insightful. So, one question is, I know a lot of people, they're interested in this, and they want to start saving their money on fees and payments. How can people start, either talking to you, or go on a website or book? What are some resources that they can start looking at?
Jennifer Mogan: Yeah, absolutely. So they can reach out to me, connect with me on LinkedIn, I'm happy to connect with people that way, you can go to our website, ParkPlacePayments.com. And you can fill out a form to request to speak to someone you can put down that you heard me on this podcast, and I would be the one getting to talk to you about it. You can reach out to my email Jennifer.Mogan[at]parkplacepayments.com. And I don't charge anything, there's no cost to looking into your payments. We do what's called a payment checkup, where we find out about your business, your needs, and your current situation. We look at your merchant statements. And then we use the rate card to determine our rates, so we can show you a comparison against a fair standard. And what you'd be paying with Park Place versus what you'd be paying elsewhere, along with the education about how it all works. And so with that information, if you're armed with that information, then you can make the choice for yourself. And as physicians we want the data, right. I want to make the decision for myself. I don't want someone telling me what to do. I don't want someone selling me on something, I want to make the decision. And so that's our goal, our goal is to give you that information so that you can make that choice for yourself and understand what's out there for you.
Christopher H. Loo, MD-PhD: And what are some savings that clients have been telling you either percentage, or just some reviews or some ballpark figures?
Jennifer Mogan: Across the board, it's different. I'll say that there are some payment checkups that we do, where we look at and say, hey you know what, you have a good setup, you've got good service, you've got up to date technology; based on our rate card, you really wouldn't be saving much by making a change. So you know, don't do anything at this point. But there have been some practices that have come to us. And when we do the analysis, they're looking at saving $30,000 over the course of the year. So, I mean, it runs the gamut from zero to 30,000+, you just don't know unless you look. And even if you look and you're like, you know what, I've got a good deal.
I'll tell you a very interesting story. Recently, I had a practice that I had spoken to about a year ago, they were very hesitant to make a change. Because they've been with their company for years, even though there was significant savings involved. They went back to their company, they said, Hey, listen, this is what we've been told. They said, Okay, well, we'll match that rate. So their company matched their rate, they decided to stay with what they were doing. Now, it's a year later. And they came back to me and said, all of a sudden, my merchant statements, the fees have doubled. Can you help me tell me what happened? And we looked at it and between April and May, their rates did more than double. And so they were looking at another $25,000 in savings again, because the company had just increased their rates. They sent them a letter and said, our rates are increasing starting in May. And what are you going to do about that?
You can call again, and you can say, hey, can you sharpen your pencil again, for me, but you know, who needs to do that? Our company guarantees our rates, when we quote rates, you never have to worry about it over again, they're guaranteed for the life of your account. You know, unlike the cable company, or whomever, that you feel like you have to call every year and say, Hey, why is it doubled? You shouldn't have to do that, you don't have time for that. You have to focus your energies elsewhere. So you know, really, we all talk about passive income, we all talked about putting our investments in so that we can get money coming in on a regular basis. Well, this is kind of like the easiest passive income you can have, because it's just savings every month, you don't have to invest any money. You don't have to do anything other than just become knowledgeable, make a wise choice, and all of a sudden, you're saving $1,000 a month. That’s the best passive savings you can come by.
Christopher H. Loo, MD-PhD: Yeah. So you're, you're achieving financial freedom, not through passive income, but you're through savings, so that's great. So this has been a really fantastic conversation and really, really insightful. It's how you're taking an existing problem and pain point and creating a solution out of it. And it's really fascinating.
And so, for all the listeners out there, Jennifer's resources will be in the show notes, and we look forward to hearing about your progress and your successes in the future.
Jennifer Mogan: Thank you so much. It was great to talk with you.
Christopher H. Loo, MD-PhD: Many thanks again for being here. If you’re new, you can find me online at Christopher H. Loo, MD-PhD, where I have links to other episodes or links to online resources that will support you on your financial literacy journey. I’ll see you there in on next week’s show. While I bring you thoroughly vetted information on this show regarding a variety of financial topics, I cannot promise you a one size fits all solution. This is why I caution you to continue to learn. Educate yourself and seek professional advice unique to your situation. If you want to talk to me, I welcome it. Please reach out via my website or email at Chris@drchrisloomdphd.com. I read and personally respond to all of my emails. Talk soon!
Editor's note: This transcript has been edited for brevity and clarity.
Comments