Regulation hovers over the payments industry like dark clouds on a spring day. It is easy to predict rain will come soon, but nobody can say if the rain will bring floods or flowers with it.
Payment processors are getting proactive on self-regulation. The industry is moving to head off more government regulation by setting up its own training and certification programs. Yet many in the industry worry that industry certification programs aren't enough. Some are calling for the kind of licensing programs states require for the insurance industry.
The industry emphasis on training is becoming pronounced in 2011 in the wake of legislation like the Durbin Amendment to the dur Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 that increase government regulation and oversight.
For instance, in April, Central Payment (CPAY), a San Rafael, Calif., company ranked by Inc. magazine at No. 18 on the list of financial services companies and named to Inc.'s 2010 lists of the fastest growing companies, announced it is immediately starting an in-house training and certification program for its more than 700 merchant level salespeople (MLSs).
This follows the Electronics Transactions Association's plan, announced in March, to launch the first industrywide professional certification testing program later this year. Successfully passing the 125-question ETA test will earn ISOs, MLSs and other payment professionals a Certified Payments Professional certificate.
Both CPAY and ETA certification programs target professionals with minimum experience in merchant level sales. Both organizations told The Green Sheet their certification process will demand basic knowledge of the industry.
Castle Worldwide is assembling the ETA testing program. The multiple choice test will be given twice a year in hundreds of testing centers around the country.
MLSs must have at least one year of industry experience and a degree (bachelor, associate or high school) or three years' industry experience to be eligible to test for ETA certification. Testing begins this fall.
CPAY elected to develop its own in-house education programming and testing. The program will have three courses, each with its own test. CPAY Director of Business Development Tommy Chang said his company's courses will cover basic merchant services information, rates and fees, and ethics.
CPAY hopes to have its first testing done before June 1, CPAY Managing Partner Matthew Hyman told The Green Sheet. Hyman said he hopes most of CPAY's agents will have at least passed the first course "by the time they sign their fifth to sixth account."
While the industry is making this turn toward certifying agents, many payment professionals don't see the value in certification programs unless certification is accompanied by a state or federally regulated licensing program.
Bill Pirtle, a partner in Merchant Processing Consulting & Training LLC and a columnist for The Green Sheet, commented, "What I personally think is that the industry needs certification and registration.
We need to approach government agencies and get them to mandate training and licensing for merchant processors like they have for the insurance industry. Certification is not going to do it. Certification has no teeth." Pirtle believes oversight of agents through licensing would bring real regulation to the industry because unethical behavior could result in the loss of the agent's license and his or her ability to work.
Hyman isn't so sure licensing is the way to go. "We didn't start [the certification program] as a marketing ploy," he said. "We started this program as an ethics play. We want our sales partners to be happy but we also want our merchants happy. When we certify our [MLSs] we are letting our merchants know we have high ethical standards.
"I can't go on the record and say yes or no to licensing right now. The industry as a whole has to do a better job of self policing. Our agents will get a nice plaque showing they are certified but what does it mean when we tell you they are certified?
"I'll be interested to see where this all ends up. Right now I tend to think 'no' when I think about licensing. But licensing is something that has been on my mind since I got into this business.
"I think licensing might slow down our process." Hyman added if, eventually, there is industrywide regulation that calls for all sales partners to be licensed, "we are going to have to adapt."
Nashville Attorney Kevin Kidd is Vice Chair of the ETA Government Relations Committee and has more than 10 years' experience in payment processing and financial transactions. He supports certification also but is cautious about legislating ethics.
"It is difficult to create ethical structures that apply to all areas of the industry," he said. "There are lots of people in this industry doing lots of different things.
The value of the certificate depends on what you are trying to accomplish. A lot of the industry sees the need for certification as long as it is not too expensive."
Kidd acknowledges much of the movement toward certification comes from the industry reacting to renewed government interest in regulation.
"If you have no certification program it's harder to show the industry is policing itself," he said. "It makes sense to have a general sales certification program that sets standards for salespeople. It makes sense for there to be a general ethical obligation for people to follow.
"Most merchants may not know the difference if someone is certified or not, but it does something for the industry because companies would rather hire people who have certification because they have some basic knowledge that saves on training costs."
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