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Table of Contents

Lead Story

The worldwide fraud web exposed

News

Industry Update

Acquirers await final draft of IRS rules

First Data shuffles it up at the top

Retailers push for interchange reform - again

Features

GS Advisory Board:
Positive economic signs and actions - Part 2

Selling Prepaid

Prepaid in brief

GPR cards to bridge 'plastic gap'

The 'fun money' company

Education

Street SmartsSM:
Let's interact and be inspired

Ken Musante

Creating sales with good collateral

Peggy Bekavac Olson
Strategic Marketing

Grow your business by branching out

Jeffrey Shavitz
Charge Card Systems Inc.

Digging into PCI - Part 10:
Track and monitor all access to network resources and cardholder da

Tim Cranny
Panoptic Security Inc.

Say less, sign more

Jeff Fortney
Clearent LLC

Company Profile

Elite Merchant Solutions

New Products

Automated, but not ignored, billing

Slim CD Enterprise
Slim CD Inc.

Beyond your basic value-add

National Benefit Programs
National Benefit Programs Inc.

Inspiration

Plan today for results tomorrow

Departments

10 Years ago in
The Green Sheet

Forum

Resource Guide

Datebook

Skyscraper Ad

The Green Sheet Online Edition

April 12, 2010  •  Issue 10:04:01

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Positive economic signs and actions - Part 2

Economic tides seem to be turning, albeit slowly. So The Green Sheet asked members of our advisory board for their thoughts on the following questions:


The first portion of their responses was published in The Green Sheet, March 22, 2010, issue 10:03:02. This article contains the second segment. We will publish the final group on April 26 in issue 10:04:02.

Allen P. Kopelman
Nationwide Payment Systems Inc.


  1. One thing for sure is that pricing compression has not stopped, and there are companies popping up that will help merchants negotiate their pricing or find them a new home. The light at the end of the tunnel is that merchants who were on the edge of being out of business are out of business, so future drop-offs will not be as great.

    There are a lot of people who are unemployed or underemployed, and those people are striking out and opening up small or home-based businesses. So that sector is starting to grow. The other thing is that since businesses have reduced their workforce size, they are looking for new technologies that can help them work faster and smarter. So if you are selling software or POS systems, this is an area where businesses are spending.

  2. Technology sales to existing and new businesses have picked up.

  3. We are planning to focus on more partnerships and integration partners, as this is one of the biggest growth areas where pricing is not that much of an issue, and the merchant is looking for convenience over pricing.

  4. We have stayed in touch with our customers and tried to help them where we can.

    Everyone wants to pay less, and they have to understand that we can only go so low and still provide them with the service they want and need.

Tim McWeeney
WAY Systems Inc.


  1. We are seeing our customer base getting more active in selling wireless POS hardware. This indicates an uptick in the economy and the availability of funds for new merchants to purchase low-cost wireless POS equipment. Another key indicator for WAY is product activations, and we have seen a substantial increase in new activations.

  2. In the WAY model, we have two indicators: 1. equipment sales and 2. equipment activations (which lag a little behind equipment sales). As equipment sales increase, 30 to 60 days later, we see those sales begin to activate. Both areas have shown growth in the last 45 to 60 days.

  3. Bringing the news to the millions of new merchants that a fully functional, multi-application wireless product is available at an affordable price.

    The merchant's decision is not limited to spending high dollars on a wireless POS device or spending next to nothing to activate something on their cell phone. There is a significant choice, and we continue to drive home that WAY is that difference to the trade and the wider merchant market.

  4. We have stayed tuned to our clients' needs, and as the wireless experts, we are the ones who deliver the message to our customers that there is a market out there that needs to be cultivated and exploited. When our customers tell us what they need to help them gain control of that market, we deliver.

Justin Milmeister
Elite Merchant Solutions


  1. Elite Merchant Solutions has seen its merchant acquisitions increase by just over 30 percent over the last three months alone, including December, which is historically pretty low for new merchant acquisition. We have also experienced an unusually high number of adlocs (additional locations) being opened by our merchant base.

    Adlocs have been pretty low over the last few years as a percentage of our portfolio. This indicates that businesses are expanding, which is a good sign for the overall economy.

  2. We have a strong presence in the auto dealership business. Obviously, we saw a tremendous spike during the Cash for Clunker days, but that has subsided; however, overall sales for this sector have begun to pick up.

    Additionally, our hardware sales have increased tremendously, as merchants are looking to get into the 21st century and get new hardware that will better support their businesses.

    Merchants are dumping their Tranz 330s for high-speed Payment Card Industry (PCI) Data Security Standard (DSS)-compliant terminals that will actually lower their operating costs.

  3. Our focus throughout this economic downturn has been to acquire tremendous talent that would otherwise not be available. Many people were laid off, or parts of businesses were either gobbled up by competitors or closed their doors outright.

    We were in recruitment mode, and this downturn yielded us some excellent talent. This new talent will allow us to focus on attracting the best merchant level salespeople (MLSs) and top agent offices to expand our business.

  4. We have always been a customer-focused business, but over the last year or two we have had to really shine and adapt to our customers' needs. Over the last year alone a very high number of calls were coming in, compared to years prior, regarding rate reviews and threats that they were going to switch processors unless we did this or that.

    We implemented a few programs that helped in our customer retention. And in several cases, we would actually proactively call selected merchants and lower their rates. This program went over very well. I know it is not the norm, but this was based on a query we ran, through which, based on certain criteria, we determined we had room to lower the merchants' processing fees but still maintain a nice healthy profit margin. This was a total win-win situation for both the merchants and our company.

Steve Norell
US Merchant Services


  1. Simply put, we have not seen an increase in new business startups, and the existing business closings still appear to be higher than average. However, the merchants that we do have appear to have increased their monthly volume, albeit small.

  2. The areas of tobacco, medical and sales of POS systems to restaurants have all remained strong and appear to be healthy.

  3. More restaurant POS systems as well as electronic cash registers (ECRs) for the retail sector. We recently signed an agreement with a national ECR company and expect it to be very successful.

  4. Mandatory in-person visits and phone calls, based on monthly volume.

Michael Petitti
Trustwave


  1. We have seen a pickup in demand for PCI DSS-compliance services and more interest in data security services beyond PCI. This trend maps to the overall trend of continued demand for technology and technology-related services despite the weak economy.

  2. More and more companies are seeking to test their environment with diagnostic solutions such as vulnerability scanning, penetration testing and core security services such as data encryption and endpoint security.

  3. Endpoint security will be more and more of a focus for us.

  4. Mostly surveys, but also webcasts and social media.

Jeffrey Shavitz
Charge Card Systems Inc.


  1. Our sales partners and our company as a whole have seen the positive shift in the economy help significantly over the past six to nine months.

  2. We have preached to the Charge Card Systems' sales personnel for years to keep adding merchants and to focus on a healthy blend of merchants from many business sectors - with a blend of retail, MO/TO and Internet merchants, and of all different processing volumes. CCS has its fair share of very large merchants that process in excess of $1 million per month, with some processing greater than $10 million per month. But I have always advised our partners that the small to mid-sized merchants (defined by me as $7,500 to $50,000 per month) will add critical mass and financial stability to your portfolio, especially with the uptick in the economy.

    Why? Assume that over the years you have developed a portfolio of 500 merchants each processing on average $10,000 per month for $5 million in monthly volume; assuming profitability of 50 basis points and a 70 per cent residual split, our MLS would earn $12,500 per month. With the economy getting stronger, the same 500-merchant portfolio is now processing $15,000 per month for which our salesperson (for doing no extra work) is now earning $18,750 per month or $75,000 in additional annualized income. Not bad money for not doing any additional work.

    Of course, we all love winning the large merchants, but in my opinion, with margin compression, banks wanting to handle these merchants' processing at cost in some cases and the vulnerability of losing the larger merchant can and will greatly affect your earnings. I would argue that it is much healthier to have hundreds of smaller merchants than a few large merchants.

  3. With regard to staying tuned to our customers' needs, we try to listen. So many times in the past we used to have strategic brainstorming sessions at staff meetings without the benefit of merchants' insights and feedback. Now, we have quarterly conference calls with merchants (representing many industries, sizes et cetera) and ask them specific questions.

    They feel vested and, in essence, they are part of the "CCS Merchant Advisory Board." It's amazing what you can learn from just asking your customers what they want - and then, doing what they tell you. Some top-line topics include understanding interchange, reporting, mobile devices and many others. Given the economic conditions, we have seen and continue to see merchants in need of cash advance opportunities, as well as sales partners looking for capital to grow their portfolios and offices (whether that means hiring an administrative assistant, getting bigger office space or a myriad of other reasons). In both cases, CCS has financially supported both our merchants and sales partners, whether it means helping cover a reserve requirement or offering a line of credit to our agents. Of course, this will only be done after we have done thorough due diligence.

    Like all businesses, there are ups and downs, and let's all just pray we continue to see the economy get stronger, as it will greatly benefit our merchants and, of course, all of us in the payments industry.

Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.

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