Thursday, October 25, 2012
"For more than 20 years, business owners have been getting all their payments needs met by banks or processors," Jones said, reiterating what he said at the conference. "Why should we assume that they will move away from this one-stop-shop model and look outside for mobile solutions?"
Jones elaborated this point in the interview by first noting new mobile payment players often choose a distribution model that goes directly to market. He conceded this approach has worked for a company like Square Inc. that has made real inroads into micro-merchants and some big-box retailers. But he believes the future for ISOs is in the middle between Square's two target segments.
"If you look at everyone other than the big-box retailers they have all of their loyalty, processing, gift card, ACH, and check processing through ISOs," he said. "Do you really think they are going to break away from that relationship?"
Jones believes new industry players such as online and mobile payments processor BrainTree Payment Solutions LLC are choosing ISO distribution channels because they "want to be able to grab a lot more of the market at a faster pace and eliminate a lot of problems" by leveraging ISO sophistication and experience in payments. ISOs are the hub and spoke at the center of the distribution channel, and the solutions that succeed will be the solutions that capitalize on that channel, he added.
Jones is not, however, forecasting a cloudless sky ahead for payments. Indeed, he predicted as many as two-thirds of the ISOs and MLSs now in the business could be gone in five to 10 years as a result of attrition due to increased competition and the increasingly complicated nature of the business.
"You have to decide what role you will play in the ecosystem if you are going to move forward," he said, adding that SignaPay's focus is on the core goal of acquiring and maintaining merchant/customer transactions. The company's strategy is to use technology to acquire transactions, sometimes reselling equipment at cost, he said.
He also foresees value-added reseller channels growing in importance as they become recognized as "a high tech boutique" of payment software and services and an important revenue source for successful ISOs.
"To succeed, you need to negotiate great deals for your partners" to make better, cheaper options available, Jones said. Later, at the conference, he elaborated on the idea. "The time is now," he said. "We are looking for solutions now. The companies that offer us simple solutions backed by training, marketing and excellent customer support will be the ones that succeed." 
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