A new way for ISOs to do business

Vision Payment Solutions LLC no longer relies solely on other ISOs and merchant level salespeople (MLSs) to chase down most of its business. Instead, the Portland, Maine-based ISO now signs most of its merchants by capitalizing on savvy Internet strategies and following up on referrals from merchant cash advance (MCA) providers and e-commerce partners.

Viewed another way, four sales channels have emerged for the ISO, said VPS Chief Executive Officer Eric Hannelius, who started the company 12 years ago with Thomas Stone, its Chief Operating Officer.

Two sales channels involve e-commerce

In one channel, VPS spends "a fair bit of money" on search engine optimization and pay-per-click advertising, Hannelius said. An inside sales team of 20 employees works the phones to close deals on the resulting leads and make outbound telephone sales calls.

The company performs underwriting, customer service and risk management in-house, which has enabled it to take on "more challenging" e-commerce merchants that other ISOs might turn down for card services, Hannelius said. "We've become very good at bringing those merchants on in the correct way," he added.

In addition, VPS has made friends with numerous sales partners that do business online, such as web-hosting companies and product-fulfillment firms. Referrals from those entities have grown so significantly that they constitute a sales channel for VPS, Hannelius noted.

MCAs: a third sales channel

Another channel got its start in 2006, when VPS became one of the first ISOs to participate in split-funding of merchant cash advances and factored small-business loans, Hannelius said. "We were fortunate to get into that before the financial crisis struck in 2007-2008, and we've been doing it ever since," he added.

VPS sends cash-advance business to about 10 of the major funders – including CAN Capital Inc., Merchant Cash and Capital, RapidAdvance and OnDeck Capital Inc. It also works with smaller alternative finance companies that form when sales groups leave the major players.

Hannelius said that offering MCAs has enticed merchants to switch to VPS for transaction services; moreover, the cash-advance funders send merchants to VPS for card services.

The old-school fourth channel

That leaves the fourth channel, the classic business plan of relying on MLSs and other ISOs to promote transaction services to merchants, Hannelius said. "We still have some legacy traditional agents sending us business as well," he added.

Some of those salespeople have been working with the company almost from the beginning. Between 50 and 60 sales groups consistently submit business, perhaps closing one to five deals per month.

We're always bringing in new ones," Hannelius said of the company's relationships with outside salespeople. "Our director of sales just sent out agent packages to five new groups." Salespeople have a large number of ISOs from which to choose; thus ISOs compete to sign up representatives, he noted.

"It helps that we've been in business a long time," Hannelius said of the advantages VPS holds in the competition for outside salespeople. "People know who we are." ISOs and MLSs also find VPS easy to work with because the company keeps functions in-house. That speeds up on-boarding and deployment, Hannelius said.

He noted that VPS offers competitive splits of the profit margin for salespeople and competitive rates for merchants. "It's a win-win situation for everybody," he added.

Origins and operations

Hannelius and Stone started VPS as a registered ISO of Chase Paymentech Solutions and later switched to HSBC Bank. Four years ago, VPS aligned itself with Deutsche Bank, Hannelius said.

In addition to the inside sales staff of 20, VPS has 27 other people spread across the customer service, deployment, underwriting and risk management functions. In keeping with the company's "one-stop shop" theme, which describes its determination to keep operations in-house, the ISO published a pamphlet to help salespeople and merchants prepare for Europay, MasterCard and Visa implementation.

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