No longer can most ISOs sit on the sizable revenue streams that once flowed in from high-volume merchant portfolios, said Linda Grimm, who in March 2011 launched the merchant services consulting business, Linda Grimm Consulting.
Grimm said margin compression caused by new payment acceptance forms, like mobile, and increasingly stringent regulations are the main reasons ISOs are broadening their sales strategies to include an array of revenue sources. Grimm's business has the dual focus of finding new revenue channels and streamlining operational tasks for ISOs and other payment entities - processors, acquiring banks and software providers among them - that seek her help.
"ISOs need to be aware of what's going on, and they need to start proactive measures," Grimm said. "As margins compress, ISOs need to find alternative ways to keep merchants and generate revenue. I can assist a processor or ISO by saying, 'Let's look at your portfolio and what makes sense for your business,'" she said. "Maybe there are other things we can add."
She pointed out that the expanded service component her company provides largely revolves around providing top-flight risk management and compliance services. She partnered with a software company to develop a risk management and underwriting program that provides transaction parameters and monitors work flows. She said the program's fraud filter is based on "standard industry exceptions," but the program can be adjusted to fit particular businesses or verticals.
Regarding Payment Card Industry (PCI) Data Security Standard (DSS) compliance, Grimm advises merchant service providers to remove all customer data from a merchant's environment whenever possible. She also helps make sure ISOs provide merchants the proper assistance for completing Self-Assessment Questionnaires, as well as appropriate resources for POS system scanning and compliance level monitoring.
Grimm added that, while the PCI DSS is a crucial tool, merchant service providers must recognize the pieces it doesn't cover. For example, within certain verticals like health care, the protection of personally identifiable information, such as Social Security numbers, driver's license numbers and birth dates is essential.
Grimm began her merchant services career 14 years ago with Humboldt Merchant Services in California, where she oversaw the company's risk management, underwriting, compliance with card brand and government regulations, and customer service operations.
"When I took over the customer service area, we had all of our employees doing everything," she said. "They'd take an incoming call, and if it needed research, they'd do all of that. The learning curve was about six months for employees to function autonomously.
"So we moved the job duties into smaller chunks, and the [entry level] learning curve went from six months to a month, and the other benefit was employees had another level to get to for career growth. I think we had been answering 65 percent of calls within one minute, and we increased that to 85 percent."
Grimm said she works with ISOs to find ways of "improving efficiency, so you can take on more volume without having to hire staff at the same rate." That also includes examining whether a company's operations are in line with its mission. For example, making sure that the portfolios taken on are in keeping with a company's underwriting policy - a common problem in the industry, Grimm noted.
Based in California but providing services to businesses across the country, Linda Grimm Consulting offers a personalized service at a much lower cost than what big consulting firms typically charge, Grimm said.
"I'm going to be able to give them very targeted and personalized service at a rate that's going to be far lower than the larger players out there," she said. "My niche is the smaller ISOs that don't want to pay the fees of a large consulting firm, but I bring to the table the same level of professionalism and expertise."
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