IRS TIN matching and residuals
As a merchant level salesperson, I'm wondering about when the IRS 1099-K reporting kicks in next year. If my merchant's business name and TIN [taxpayer identification number] don't match, and the processor withholds 28 percent of the merchant's proceeds, will I still receive my full residual payments on that account?
Ellen Piven
Independent agent
Ellen,
As far as The Green Sheet knows, nothing in the regulations requires processors to withhold a portion of agent residual payments if a merchant's TIN and business name do not match IRS records. However, decisions regarding this may vary from company to company, so we advise checking with your ISO and with an attorney specializing in the payments industry on this matter.
Thank you for your question; other payment professionals would probably like clarification on this as well.
Editor
Who stole my merchants?
I've been in the business for a while now, and I've learned a lot, worked hard and even signed some retailers with several locations-and then had them swept out from under me by competitors who claim to have cheaper rates. Why are these merchants, who appeared to be satisfied doing business with me, so willing to jump ship? I do my best to keep in touch, but I have to spend time building new business, too. What gives?
Ernie Robilar
Broadway Processing Inc.
Ernie,
Merchant retention is one of the greatest challenges ISOs and merchant level salespeople (MLSs) face in today's competitive payments environment. Given that card processing has become a commodity, it is essential to avoid selling on price and instead become an asset to merchants by providing them appropriate value-added services and superior customer service. The aim is to be seen, not as a vendor, but as a knowledgeable consultant who can help merchants improve their bottom lines.
You will find much information about how to accomplish this in our archives. For example, enter "merchant retention" (without the quote marks) in our Fast Finder search field on the left-hand side of our home page, www.greensheet.com, and you will see a long list of articles containing that phrase. You can also pose questions about this topic to members of the MLS Forum, which can be accessed via the Forums link at the top of our home page.
Best of luck to you,
Editor
The ISO/MLS relationship
A few years back, I spent quite a bit of time as an agent for a respected ISO. Once I outgrew my agent shoes, I wanted more. I wanted either to become my own ISO or to have some form of ownership in an ISO. I chose the latter. After wearing both MLS and ISO hats, I gained "double vision," and I realized there is a major problem in our industry: the negative perception agents tend to have of most ISOs.
I have respect for MLSs who must roll their sleeves up every day and be on the front lines. I also have respect for any CEO, CFO, or president of an ISO who has to hold the fort down and manage the back office. However, I realize the communication and expectations between company and agent are often way out of synch.
As an agent, I found too many behind-the-scenes items I wanted to know about but that never got disclosed. Agents become resentful when they think an ISO does nothing but collect 40 percent of the revenue; however agents typically do not realize all the costs and risks associated with running an ISO.
There is a common perception of ISOs being shady, not giving true revenue splits, being misleading through the application and boarding process, and more. ISOs should first think about MLSs and second thinks about themselves. Agents are the backbone of the industry. if you're an MLS, I reccomend aligning yourself with with an ISO that will help you prosper in the long run. I hope, as I progress in growing my own business, I can add much more insight about the industry for readers of The Green Sheet. I'd love to hear other payment pros' insights about the agent/ISO relationship.
Jeff Brodsly
Chosen Payments
Jeff,
Thank you for sharing your perspectives on how the ISO/MLS relationship can be improved. The Green Sheet wishes you great success in your business endeavors.
Editor
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