Your John Hancock just got less important.  

American retailers are in catch up mode to become compliant with their merchant credit card processing from “swipe and sign” to “chip and pin”. Why the switch? And how does your club or pro shop reach compliance against fraud with as little headache as possible?


First the bad news, the compliance deadline was Oct 1, 2015.  In theory, if fraud happens on the machine in your tennis club without being compliant the bank will hold the merchant (club / pro shop) liable for the mess. If you are compliant, as before, the bank will handle the fraud and refunds to the affected parties.  Naturally, as a club or pro shop operator you don’t want that new burden.


The good news is there are a lot of benefits and upside to becoming compliant while upgrading your merchant processing ecosystem that will save you money and potentially increase your cash flow depending how savvy you want to be.

Here are 6 tips to assessing and upgrading your merchant processing:

1. Contact or find a sales rep to help you understand your merchant status and form a game plan to become compliant.

2. See if you can find a processor that offer next day deposits to help your cash flow.  Most offer two days, but next day deposits are possible to find.

3. Upgrade to a chip reader with ‘chip and pin’ and traditional ‘sign and swipe’ feature to make sure your business is compliant and you can offer both services to your customers.

4. Make it easy for people to give you money. Upgrade to Mobile Cloud based Point of Sale (POS) systems.  As consumers become more comfortable with paying on their mobile device, a “frictionless experience” makes life more efficient for you and your customers.  Business owners can now conduct admin tasks anywhere outside the office with or without internet access and track daily or weekly sales.

5. Marketing Power:  A lot of companies now offer small businesses the ability to collect data to acquire and retain new customers within their payment gateway.  This is a great way to increase your brand exposure without major advertising cost.

6. Integrate Quickbooks with your payment processing gateway so bookkeeping is in sync and up to date for internal reports and the tax man.


CreditCard.com calculated banks paid off $6 billion dollars in POS sale fraud in 2013 so they are motivated to lower this liability and want merchant and retails stores to be compliant.

Grab a hold of your last month’s statement and find a sales rep to help you assess your merchant solutions and most importantly reach compliance.

Written by:

Brian Lutz / “Come Play In My Group Tennis Lessons



Is tennis ready to utilize its vast data resources to reflect it’s revenue (prize money) allocation?

Tennis most supportive sponsors (IBM, Nike, ESPN to name a few) all compile massive amounts of data to run their business and adapt to the ever changing market place.  Most modern business decisions use data to assess risk in developing their product and services to estimate costs and sales forecasts.

Historically, tennis has done a great job in progressive gender equality issues regarding “equal prize money”.  With all of this new information available to grow their own products (WTA and ATP) are both sides ready to maximize their potential growth with differentials that may increase or decrease their earning power year to year with an eye on long term sustainability.

Publicly, the WTA brand ambassadors seem reluctant to start this dialogue.  It makes sense from their perspective combining events with the men’s tour (ATP) has steadily grown their product.  Their fear, and it’s a valid one, by separating revenue by data (attendance, tv ratings, sponsor sales etc) they will dilute their value and lower their income.  Better to bundle it with the men’s game with dual events such as the Miami Open.  It would be like the NBA and WNBA suddenly having equal pay scale as a symbolic gesture and games being played side by side or on the same nights.

So what is the compromise? How do you allow data to reward a currently hot Men’s tennis game while not burning bridges with the WTA tour and avoiding a PR debacle?  Already the Women’s Tour has launched their cyclical argument with very little data to support their claim.

An olive branch was extended by current World #1 Novak Djokovic who used his influence to start the conversation.  He spoke fairly about both tours using baseline information to allocated revenue (prize money) and was met with defiance.  WTA pioneers such as Chris Evert and Billy Jean King citing cultural influences and cyclical arguments as the reason to stay with the current system of socialized prize money allocation.  In fairness to the WTA their current revenue pie is not the same size as the men.  Of course, neither is the WNBA compared to the NBA or female models to male models in the fashion business where women out earn their male counterparts exponentially.

Djokovic, under public pressure from the equal prize money advocates including Andy Murray, has backed down quickly from his proposed “performance model” not wanting to get into a public debate at the height of his career earnings potential.


So the question is on the table:  How do both WTA and ATP both get what they want?  How can we create a win-win scenario that incentives the ATP while allowing the WTA to not lose potential earnings during its current downturn in popularity?  How long should one tour curb its value while “subsidizing” the other lagging brand?

Is tennis ready for and open marketplace?  The NFL has a socialist model to create parity with an injection of capitalist incentive.  The Tampa Bay Buccaneers benefit from the aggressive brands in Dallas, New York and now Los Angeles without taking significant risk.  Does this subsidy help the NFL brand as a whole? Their growth seems to validate this thinking.  In the 90s NFL started allowing risk taking teams to keep larger portions of their sponsor revenues to themselves as an incentive without driving down the value of small market teams in Tampa and Green Bay.  They equally shared TV revenue league wide as well as expansion revenue.  But when Jerry Jones leveraged his brand with his Pepsi sponsorship deal in the 1990’s he didn’t have to split it with 31 other owners. Note, he fought to get it that way.  Of course, there was no gender issue underlying his ambitions only sales incentive.

Can tennis use a similar hybrid performance model without being labeled sexist?

Brian Lutz / Backhand City



Not everyone can fly first class like Roger Federer. But what if you have reward miles?


The illusion of travel rewards is so prevalent in our society consumers believe that travel rewards are as good as cash or simply better. Some even proclaim it be free money, the proverbial “no brainer”. Like picking Roger Federer at Wimbledon.

The popular saying goes something like this: ‘I have to buy groceries so I might as well charge it to get the points’. Then repeat in every transaction you do all day long. Building up these “valuable” reward points. This is music to the card issuers ears. Now Liu Yiqian has taken it to the next level.


Liu Yiqian, a former cab driver now Chinese billionaire recently bought a piece of art at an auction in NYC with his American Express “Black Card” for a tidy sum of 170 million dollars. Not only does he want the painting for his museum and utilize a loophole China’s banking regulations by using his Amex card. He and his wife also wanted the benefits of accruing rewards points for travel. The press and social media has been giddy about this perceived brilliance and a life time of First Class travel benefits.


“We are on a one-year payment plan for the painting. If we had to pay cash upfront, that would be a little difficult for us. I mean, who has the money for that?” Wang Wei (Wife of Mr. Liu)


This popular mantra feeds right into the Issuer’s marketing plan. You are going to buy it anyway you might as well build up your rewards points. Psychology in consumer spending in strong. I need it for my state of mind. I need it for my lifestyle. I need it to feel good about myself. I need it because I have to eat. I need it because I have to wear something.


Keep as little friction as possible between the card holder and the merchant.

Imagine for instance if Mr. Liu had to secure a cashiers check at the bank. Or had to run a wire transfer. Or better yet produce 170 million dollars in cash. This would require time and energy filling out forms and a verification process. All of these barriers might cause someone to have second thoughts on a purchase. Feel the money in your hand. Smell it. Recall the labor to acquire those earnings. Or just swipe.

Both the issuer and the merchant are aware of this phenomenon. Mr. Liu’s heart rate barely elevated. It was if the experience had no consequence or friction. “Why are you so nervous? I’m the one paying”, Mr Liu exclaimed to his Hong Kong bidder, “and I’m not even nervous. Just buy it.”

Rewards points. It’s like eating celery. I’m losing weight while I chew.


Initiation and Annual Fees

In the US this card has an initiation fee of $7500 and an annual fee of $2500 no matter what you buy. There is an annual purchase expectation around 200k. In China the banks have a licensing agreement with Amex and the conversion come out to slightly less. Since the owner in this purchase is a billionaire this is pennies to you and me so we won’t even consider the impact as more than pocket change. I’ll let it slide. $0 effect.

Reward Redemption Fees

He and his wife can ask to waive these or use their abundance of awards to pay for these so they don’t have to reach into their pocket. You and me. We pay out of pocket. They are between $20 and $50 for this “free money”. Just be ready to book your flight 1 year in advance and remember the block out dates. Also, remember the issuer can change these terms anytime they want to suit their needs so keep logging into your credit card account for stimulating reading on their Terms of Service for the bank you do business with and the airline you are flying on.

Foreign Transaction Fees

This one is killer. It’s between 2-3% on your purchase. Who can do the math? That’s $5.1 million dollars in fees. And if you think they will give him a break because he is a billionaire think again. What sane person would loan someone 170 million dollars passing through a Chinese and American banks and not want their cut. Think about it. 170 million just in inflation over 1 year of time. Put it in the most conservative Treasury Bond and you would make a few points. Conclusion no discounts. Banks have bills to pay. Cost: $5.1 million dollars to Mr. Liu

Interest Rate

As noted by his wife Ms. Wang. They don’t have 170 million dollar lying around so the wise thing to do is pay this off in a year. 12 months makes our calculations quite easy then. Lets hope they aren’t late on a payment. As I type this blog entry the average credit card rate is 15.1%. I’m feeling generous I’ll shave off .1 for a round 15%. After all Mr. Liu seems like a regular guy. He smokes cigarettes and used to drive a taxi.

If he pays it off in one year without late fees his interest will be $25.5 million dollars.

The Cost

He will have paid out a total of $30.6 million dollars in fees and interest rates a year from now just on one purchase. I don’t know what they spend on groceries. If I’m American Express I’ll waive his annual $2,500 fee for this year. No problem

The Holy Grail: Reward Miles Breakdown

Let’s break down the miles. He spent $200 million dollars to get these rewards points. $170 Million Purchase and $30 Million in fees and interest. With 2 weeks notice you can fly First class from Miami to Sydney on American Airlines for $15k in cash. In this scenario he could fly half way around the world and back. To get value from his rewards he will need to fly 2000 times to pay off his $30 million dollars in interest and fees.

If he flies around the world once a week for 52 weeks it will take him 38 years to get his moneys worth. By the time he is adjusted for jet lag he will have to fly again to his next destination. At that rate he might as well get a job with the airline. He will be ahead of the game since he will be collecting a salary.

Oh you say but it is for his family. So divide that by wife, kids and grandchildren. Because we all know how pleasant it is flying long distances with young children who are jet lagged. The kids will have no time for school or friends since they will be busy redeeming their good fortune over the next 4 decades.

One Last Thing: The Artwork

If he stays true to his word and does not sell the art in the future. Add another 180 years of year round travel to his travel regiment. Mr. Liu and his wife are 52 years old. They will have travel miles in their family for generations. Unless of course one of these airlines goes out of business or merges with anther airline and drops their rewards programs. Nah, that will never happen. Right?

All this leaves me with only one question: “What’s in your wallet?”

Brian Lutz / Backhand City / Business