By Bill Pirtle
MPCT Publishing Co.
In September 2011, I attended the Holiday Food & Beverage Show produced by the Associated Food & Petroleum Dealers. I was invited by my brother, an assistant manager for a small grocery store chain.
His reason for attending was to sample liquors for his holiday ordering; mine was to be his designated driver. I went to help him out and to see the hundreds of independent retailers, and a few chains, the show caters to.
The reasons to attend tradeshows differ depending on your focus. Industry tradeshows allow attendees to meet others within a certain industry, including potential partners. For me, the AFPD's Holiday Food & Beverage Show provided a look not just at the food and beverage merchants, but also at their vendors. If you are a merchant level salesperson (MLS), this sort of exposure can allow you to discover topics of interest to the merchants you are pursuing.
There was one area of great interest to me and perhaps to others in our industry. The AFPD works as a voice for its merchant members (convenience stores, groceries, restaurants, gas stations and auto repair shops) and offers great deals from select supplier members.
Four bankcard processors are members of this organization, along with three ATM companies. Chase Paymentech Solutions LLC offers AFPD members pricing at interchange (IC) plus 6.5 cents per transaction with "no other fees," provided the merchant accepts statements via email; otherwise a $5 statement fee per month is charged.
This rate is so low that I cannot touch it. So why are other ISOs paying to be members when they cannot compete with the pricing? Why doesn't Chase have the group locked in? GS Online's MLS Forum offered some answers.
CARDPLAYER wrote, "This [rate structure] is not uncommon if the 'merchant organization' is a franchise group. Chase has salaried national salespeople who don't earn residuals and chase these franchise deals. The price is low, but they will make money.
Poor participation in the Chase program is likely due to: a) Chase doesn't get a table at these types of events and get the word out, b) the 'organization' does a poor job of publicizing the program to its members, or c) Chase has a poor track record servicing these merchants and the word is out among the members to avoid them."
"Although IC + 6.5 cents is really low, you might want to check the disclaimers about minimum billing, enhanced billback, enhanced IC+ [where basis points (BPS) are added to the downgrades], and the average ticket," said BIGRED_DAVE. "I would write a $5 to $7 average ticket all day long if I had a hard cost of, say, $0.05 cents. The extra $0.015 cents equates to .30 BPS on a $5 average ticket. Not great, but I'd take it on thousands of transactions a month."
CLEARENT said, "Chase Paymentech has had for years a division called 'Proactive' Sales. This division specializes in associations and merchant groups. Yes, these employees are salaried with smaller bonus programs, and expected to market to the association membership.
"They do all this over the phone and via mail, etc. As a result, they will make some money, understanding that their overall costs are diluted by the elimination of higher paid, commissioned salespeople.
Since they are all direct, they probably have a true cost closer to 3 cents before any overrides. So they can do what they're doing, and can be successful.
"They probably are not penetrating the association due to a failure in some form of their marketing. It isn't working, and they likely need to change the approach."
Andy Patros (known as PATROS on the MLS Forum) called me regarding my forum post about this topic. Andy is a member of the AFPD, and his organization competes with some success. He believes several factors are involved in the lack of penetration into the AFPD.
First, they are not offering free equipment, he said. Second, the cultural makeup of many business owners is such that personal contact or an established relationship is required. Finally, only an 800 number is provided, with no indication of whether there is a local contact.
The cultural makeup idea makes sense. The association handles the states of Michigan and Ohio, but only has one chamber of commerce member, The Chaldean American Chamber of Commerce. Personal experience has shown me that some cultures greatly prefer to deal with people they know.
STEVE NORELL believes members of the AFPD think Chase Paymentech's pricing is "either too good to be true or it is so low that sooner or later they would be raising the price. So even though Chase can operate the way they do and still exist, they don't always get the business."
STEVE NORELL later added, "Mr. Merchant, you are asking me to provide you with quality, price and service. I really want to give you that, but you need to pick two since no one can do all three and survive." That is a great point.
Attending a tradeshow aimed at a merchant group also allows you to meet vendors serving merchants. Vendors can be clients, but they can also be great referral partners. The key to remember here is that vendors are there to gain new clients. Introduce yourself briefly if there's an opportunity. Otherwise, use the directory of vendors to introduce yourself later.
Remember, this is a two-way street. If you cannot or will not find vendors referrals, the arrangement will not work.
I discovered another tool for my sales toolbox at this event: the Validator100. This device features a magnetic ink detector and an ultraviolet light. It can detect counterfeit bills, distinguish between a bank-issued check and one printed on a printer, quickly spot holograms on legitimate credit cards and spot fake state identification.
The Validator100 was invented after a man had his credit card skimmed and discovered someone was swiping his card number through a building supply store almost 1,500 miles away within hours. It is perfect for convenience stores and many other businesses.
There is a new trend of removing the ink from $1 and $5 bills and then printing the image of a $100 bill onto the bills. When presented to a cashier, this kind of counterfeit bill will be accepted as genuine if tested only with a counterfeit detection pen because the pen only verifies the type of paper used. (To research the trend, I googled several related terms and I found this link, among others: www.youtube.com/watch?v=gflB9hO4ZuE.)
When the Validator100 is scanned over the face of a bill, it will beep if the ink is magnetic ink, the type used in printing currency. The ultraviolet light will help the user detect the vertical strip on currency that spells out the bill's denomination.
While I was in the showroom, the device's owner actually found a counterfeit $50 while a store owner was buying his products. The tool also illuminates the holographic images on a genuine credit card.
Visa Inc. reported that 74 percent of fraud could be eliminated if cashiers verified the cards at the POS. The Validator100 can be used to quickly illuminate the security features on credit cards, which can help validate the card, as well as the last four numbers against the number swiped.
I've been asked by several MLSs why I consider the Validator100 a valuable tool. On the credit card side, the ultraviolet light illuminating the security features saves only a few seconds over tilting the card at various angles. But the magnetic ink detector is a great tool for MLSs. Most merchants accept cash and credit.
By getting this tool into your clients' hands, you will provide value that other processing agents may not. If you deal with convenience stores, getting this tool into their hands will let them spot fake IDs quickly.
The site for Validator100 is www.validator100.com. It's worth a look. There are plenty of other tools available to MLSs for use in landing and keeping clients. I highly recommend reading the The Green Sheet cover to cover.
Fellow forum member Steve Norell is now contributing articles to help with marketing. Come to the MLS Forum and ask questions; most members will be glad to help you. LinkedIn also has groups that allow members to share ideas.
Attend payments industry tradeshows, as well as those sponsored by chambers of commerce and those catering to specific vertical markets you're pursuing. You never know where you will find tools to put into your toolbox.
Also, even if a processor is offering a dynamite deal that you cannot match, it is possible to find common ground where you can fill a need that the big processor cannot. Never let a big company keep you from attending a tradeshow. And always be open to new ideas.
What you do today determines your tomorrow.
Bill Pirtle is the President of MPCT Publishing Co. and author of Navigating Through the Risks of Credit Card Processing. He is also a merchant level salesperson for Clearent LLC, Electronic Payments Inc. and Electronic Merchant Systems Inc. Bill's website is www.creditcardprocessingbook.com, and his email address is billpirtle@yahoo.com. He welcomes all connections on Facebook and LinkedIn.
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