Tom Nitopi, Chief Executive Officer of payment processor NXGEN Payment Services, was a stranger to the payments industry until the early 1990s. Nitopi was a merchant who owned a small chain of restaurants in the Sacramento, Calif., area. He hadn't given much thought to switching careers until he noticed his merchant level salesperson (MLS) upgrading his car and wardrobe year after year. His curiosity forced an invitation to lunch with his MLS.
When he discovered the unlimited earning potential of a career in the payments industry, Nitopi sold his business and began selling card processing for Bancard Inc. in 1992.
After rising to Vice President at Bancard, Nitopi started NXGEN in 1999. The ISO is a comprehensive payment processor based out of Whitefish, Montana, and is registered with Elavon Inc., Cynergy Data LLC and First Data Corp.
GS: Has becoming an ISO made you more effective regarding merchant solvency? If so, in what way?
TN: That's interesting. What we've done is really taken bank card philosophy - which was service, service, service - and have tried to modernize it using technology. For example, we just came out with a new feature for our reps. They can now go on to our Web site, log in, and see all their merchant account data.
They can see monthly volumes, all the statements, fluctuations in transactions and the last time the merchant made a deposit. We keep trying to feed them more information so they can better service the merchants. We also get reports here that do help with retention.
GS: Do you have a different philosophical approach to your business model as an ISO than you did as an MLS or a manager?
TN: The biggest things that I see between owning an ISO and being a sales rep is that now I can make the changes accordingly. I mean, I control the steering, and so I can develop what I think is important to be able to help the merchants and the reps.
Before, I was just being given policies and procedures. Now I'm the one creating the policies and procedures that I believe best reflect our business model.
GS: Have you found this has raised your comfort level when dealing with merchants and other ISOs and banks, even training new merchants?
TN: Definitely. Because what I say and promise I know I am going to do. Before, I had to depend on someone else. And every time we have to depend on someone else where there are more people between us and the merchant, the less control we have. Now I have complete control, which is great, but it is also a very big responsibility.
GS: What types of processing does NXGEN offer, and what vertical markets are you looking to expand into?
TN: We sell all the card types including credit and debit, but we also sell ATMs now, we sell back-office check conversion and we're developing a gateway that has all these processing products integrated into that gateway.
GS: What types of merchants do you focus on?
TN: Well, we've been with brick-and-mortar and very traditional-based businesses. We do some Internet, not a whole lot of future delivery stuff.
We've always tried to be very conservative in our approach to the types of merchants we accept. We have also partnered with attorneys to the extent we have developed a Web site to attract bar associations. And we're just in the process of signing up three or four major bar associations in big metropolitan areas.
GS: Are bar associations an untapped market in your opinion, and is this an unusual vertical for the payments industry?
TN: You know it's interesting; there are not a lot of people doing that sector. I think one of the reasons is that lawyers are very tradition based. They're still billing people, waiting 30 to 60 days for the check to be mailed.
I mean, they have a lot of outstanding accounts receivables, so we're going in and trying to help them clean that up. The greatest thing is that we're being sanctioned by their bar associations and we're very close right now on signing a number of them.
GS: Are there other professional sectors you would like to expand into?
TN: Yes. We've recently partnered with the National Association of Doctors (NAD).
We're doing a number of mailings with them to hit the medical market because we're trying to explain rates as well as get them into a fully integrated system.
All these professional offices have Internet and computers and a terminal. But what they really need is a gateway where they can process credit and debit cards, process checks, and do ACH [automated clearing house].
We're also very strong right now in the government sector, and I think we're one of the few that got into government processing three or four years ago in the revenue neutral environment. We do property tax, things like that.
GS: It seems that you have picked three verticals with some of the toughest gatekeepers. Why did you do that?
TN: Well, that's why it was vital for us to create partnerships. Our attorney partners have helped us design Web sites for legal departments. We've worked with the NAD, and so we really try and partner with referral groups or associations that can help us break that tie and get in behind the gatekeepers, so to speak.
GS: Are you facing new challenges in the current economic situation, legislative environment or with implementation of new practices or standards like the Payment Card Industry (PCI) Data Security Stan-dard (DSS)?
TN: Well, we were always about Capitol Hill, because in one fell swoop they could strike a major blow to this industry. And I don't think they really totally understand this business.
Since the meltdown, I wake up in the morning, turn on the television and get depressed. But I come into work and I'm happy because I see our sales, volumes and transactions are up. And those are not due to same-store sales. They're up because we keep adding merchants year over year.
What concerns me most right now is PCI liability. There's going to be a lot of noise there over the next three to six months with all the merchants in the United States.
They're going to be hit with, in my mind, a surcharge because they're all going to have to become PCI compliant, especially with the software.
And depending on the processors, terminal-based merchants are going to get hit with a fee that's going to be a tough one to explain.
GS: Have you had to ramp up your company's efforts to get your merchants up to speed with the PCI DSS?
TN: Yes, definitely. I mean, we're reaching out to the merchants as well as our sales agents and internal staff so they can understand and answer questions intelligently when these calls start coming through.
GS: What kind of advice do you have to offer MLSs who are looking for an ISO?
TN: There are a number of things. One, try and talk to people that work for them, people that have been with them for a long time.
If you find that an ISO only has salespeople that have been with them for less than a year and the ISO is, of course, older than that, that's an issue.
Try and find an ISO that has long-term relationships. And it all depends on your willingness to work and learn and be professional. Just find a company that you can trust.
GS: What kind of person are you looking for in an MLS?
TN: I'm looking for somebody that I can trust, someone that has long-term vision. This is not a get rich quick industry, so I look for people that are motivated and want to make a lot of money.
It's not hard to do if you work hard enough for a few years. You can make it, but it does take a lot of fortitude.
GS: What do you like best about the payments industry?
TN: That the carrot is out there, no maybes. You might have to bury your head in work for the first year, but then you come out and start making the kind of money you believed you could. But more than money is the freedom involved with the business, and very few industries will allow that. You can be an attorney and make a ton of money, but guess what? You're tied to your desk and your billing machine.
GS: What does a typical day look like for you now, and how different is it than when you worked for someone else?
TN: I have the luxury in that I do have a president of the company, so I can function as a CEO, and by that I mean I mainly deal now with our vendors and our processor and the bigger issues like PCI.
I also sit in on sales and product development meetings and try to help steer some of the developments in ways that I think are needed in the field. So I don't deal as much as I used to with the sales rep in the street, and I miss that.
GS: What keeps you inspired and motivated?
TN: I love this business because we are not just the middle man. We're the liaison between all of the moving parts in this industry. It also helps that I have what I think is the hardest working and most professional staff, and that stimulates me. We're up to something like 10,000 merchants now, and I couldn't do that without those individuals. My wife thinks I'm crazy, but we have no strategy at this point other than to grow, service our merchants and stay abreast of the industry.
GS: Has The Green Sheet been helpful to your business, and if so, in what ways?
TN: The first memory I have of The Green Sheet is that when I first started, the Internet wasn't very big and sales reps didn't even know what interchange was. The Green Sheet was the first publication that really laid out the truth about the industry and about pricing.
If you want to learn the secrets of this industry read The Green Sheet, because even with the Internet now and the ease of access to information, you all are still out there telling the truth about this industry, introducing new products, doing all the things that are on the cutting edge of this business. To that end, I feel you still serve this industry well, especially to the independent sales agent on the street.
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