How much can ISOs and merchant level salespeople (MLSs) expect to earn when they promote value-added products that help merchants prosper? Tranzlogic LLC claims its payments-oriented data, analytics and customer engagement tools can boost margins on merchant accounts by 30 to 50 percent.
Business owners willingly pay that premium because the company uses big data to help them identify and stay in contact with their best customers, said Charles Hogan, co-founder and Chief Executive Officer of Westlake Village, Calif.-based Tranzlogic. It's a matter of providing small and midsize merchants the sophisticated powers that the big guys employ, he stated.
So far, approximately 50,000 merchants nationwide are getting to know their shoppers through the service, and that number will double in the next year, Hogan predicted. Such prodigious growth means opportunities for resellers, he added.
Shoppers don't have to sign up for loyalty programs to get into the loop of a merchant's communications, Hogan pointed out. Tranzlogic automatically captures the clientele's names, addresses and habits, enabling merchants to reach their best customers with emails, text messages and postcards, while also targeting them with Internet advertising, he said.
In addition to helping to refine marketing and growth plans, the product can assist in healing wounds a company suffers when its affairs go awry, Hogan stated. Take the example he provided of a Florida business that experienced a 20 percent decline in sales over a six-month period because management had made serious mistakes.
Tranzlogic helped that company send apologies to alienated shoppers and provide "welcome back" coupons to entice them into the stores, Hogan said. At the same time, the company added to its customer base by expanding the marketing push to include potential customers with characteristics matching those of its best, lapsed customers.
Tranzlogic uses wholesale and retail approaches. First the company compiles information from payment transactions through integrations with larger ISOs, acquirers, gateways and POS companies. In its wholesale approach, the company sells the data back to those same entities, and they can mark it up and make it available to merchants. Information is gathered in the same way for the retail approach, but agents and smaller ISOs market a Tranzlogic-branded version to merchants. Resellers receive either residuals or an upfront payment. Merchants pay for the service in various ways determined by the companies that sell it, Hogan noted. "There are a number of flavors in the market – as you can imagine," he said, adding that resellers most often charge merchants a licensing fee of about $30 per month for each merchant identification number.
Tranzlogic entered the market in earnest in 2013, Hogan said. He foresees change in his company and the industry overall. "We are looking for additional ISOs and acquirers, although we've penetrated that market deeply," he said. "We're beginning to expand beyond that to focus on point of sale companies, gateways, VARs – even loyalty companies because we're complementary to traditional loyalty." Meanwhile, some payment companies have become more tech-savvy in the last three to five years; others continue to lag, Hogan stated. "We're at the precipice of this big transformation of payments to value-add, technology and big data," he said. "But it's very difficult for a zebra to change its stripes."
At one end of the spectrum, acquirers have purchased tech companies and greatly expanded their product offerings; at the other, companies have stayed on the sidelines or tried to develop their own technology with limited success, Hogan noted. But it's not just a matter of finding the right technology. ISOs and MLSs should make the cultural shift required to learn how to promote the technology to merchants, Hogan said. He cautioned that "the barriers are many and large to making that transition" but emphasized it is imperative to make the effort.
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