By Jeffrey Shavitz
Charge Card Systems Inc.
For many years, merchant level salespeople (MLSs) made money upfront by leasing terminals and then building up their residual streams over time. This practice has taken a full 180-degree turn, however. Free terminal offers have flooded the market, cutting into leasing income. And interchange rates are now public.
As a result, margins have declined, and merchant accounts are often given away in favor of bonuses.
So what does an MLS do to counter this trend and return to earning residuals? Why not consider selling in other countries such as Canada? You may be surprised to learn that this market is very accessible and lacks the level of competition now existing in the United States.
What does this mean for ISOs and MLSs? It means there is a great opportunity to target new merchants, provide real value and earn well-deserved profit margins.
For me, getting into a bidding war on a merchant processing $10,000 per month and earning 10 basis points doesn't correspond with my many years of experience within the industry. I prefer to target merchants in a less competitive market, where I can earn fair profitability for my efforts. Canada fits that model.
Sales agents embracing this new frontier will reap the benefits and rewards in the months and years ahead. Colleagues ask me, though, How you can identify a Canadian merchant without living in Canada? My answer is, How do you prospect to a business in California when you live in New Jersey?
Many U.S. companies are now opening branch or satellite offices in Canada and need new merchant accounts. By expanding their horizons, MLSs now have the ability to provide merchants with a turnkey solution for processing both in the United States and Canada.
Other ways to capitalize on this marketplace include:
Use your imagination on how to target this new marketplace.
Charge Card Systems began considering Canada more than two years ago and recently became registered in Canada to accept swiped, MO/TO and Internet business. "We needed to complete our agent offering and have been very excited about the opportunities north of our border," my colleague Adam Moss said. He is our company's National Sales Manager.
How does opening a Canadian merchant account work? It is similar to a U.S. merchant account, but with some distinctions.
One such difference is that, based on my experience, a merchant's account is funded in 48 hours in Canada versus the traditional next-day funding possible for U.S. merchants.
On the other hand, interchange in Canada is much less complicated than in the United States. It also has fewer fee classes (unlike domestic Visa Inc. and MasterCard Worldwide, which have hundreds of rates).
In addition, equipment is handled differently, and the introduction of the Europay/MasterCard/Visa chip in Canada has created a promising opportunity to earn income on equipment.
By expanding into this new territory, you have the potential to double the profit margin you typically realize with your U.S. merchant accounts. Having worked with many agents nationally, I have seen in all cases that the basis points of profitability in Canada far exceed those of our domestic accounts.
If your selling and marketing techniques are working in the United States, don't change them. But do spend a percentage of your day also targeting Canadian merchants with the same successful techniques.
Jeffrey Shavitz is one of the founders of Charge Card Systems Inc. He is also an active member of The Green Sheet Advisory Board and the First Data ISO Advisory Board. He can be reached at jshavitz@chargecardsystems.com or 800-878-4100. For additional information on CCS, please visit www.chargecardsystems.com/gsadvisoryboard or the company's corporate website at www.chargecardsystems.com.
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