By Bill Pirtle
C3ET Credit Card Consortia for Education & Training Inc.
Recently, someone on Facebook posted the picture of a jar lid that read, "Integrity is doing the right thing when no one is watching." I thought that would be a good topic to discuss and asked GS Online MLS Forum members how they define integrity and ethics and how they apply them in their own businesses.
The dictionary in Microsoft Word defines ethics as "a system of moral principles governing the appropriate conduct for a person or group." It defines integrity as "the quality of possessing and steadfastly adhering to high moral principles or professional standards."
JMATHIS offered this quote from retail executive Wayne Sales. "Making a decision usually means taking one of two roads," Sales said. "One is doing the right thing. To take the other road, you have to sit back and spin a story around the decision or action you are taking. If you find yourself thinking up an elaborate justification for what you are doing, you are not doing the right thing."
Have you ever seen a 48-month lease at $110 per month on a VeriFone Vx570, with a PIN pad for an additional $29 per month? The merchant level salesperson (MLS) will claim everything was fully explained to the merchant and it is perfectly legal and proper, and besides he "needs to earn a decent living."
Though it may be legal, what the MLS failed to disclose was the fact that the terminal and PIN pad could have been purchased by the merchant for a few hundred dollars. By leasing it the MLS will earn a $4,000 commission. "Caveat emptor" (let the buyer beware) is generally the excuse for such extravagant pricing, but this type of MLS sidesteps responsibility by saying the merchant should have known better.
"May be corny, but doing what you would want someone to do for your family," BER said. "My parents-in-law had a business and I think about ethics in terms of 'would I or wouldn't I' do business a certain way with them."
RCONLEY added, "I think [the] Facebook find, 'Integrity is doing the right thing when no one is watching' is the key to success. When both you and the merchant abide by this rule you will have a good relationship and a good customer."
While searching for an expert to cover ethics for this article, the one we approached hesitated. His concern was how others view ethics and whether or not his beliefs would match those of the readers. The definitions of ethics and integrity seem straightforward, but the terms are subject to personal interpretation.
The topics of ethics and integrity need to be covered as part of the curriculum for any industry training program. If you cover the topics in training new agents, you better be certain your own dealings with merchants and agents are ethical. If you are padding interchange or not sharing revenue as the Schedule A calls for, it sends a clear message to agents that misleading customers and underwriters is permissible in your organization.
Ethics can also play a role in developing better MLSs. Consider the possibility that an underperforming MLS might undervalue his or her knowledge and service and convey this to merchants. In the MLS's mind, the low pricing is justified because the agent is unable to see any value beyond interchange fees, dues and assessments.
Whether the split is 50/50 or 80/20, the ISO and MLS must take into account not only the costs of time and energy expended but also the pivotal role industry knowledge and ongoing consulting play in providing merchant services.
A business has the right to earn a fair profit. By showing the ethical agent the genuine need for charging higher rates, you gain an honest agent who understands and believes in the pricing of your services, which in turn will result in higher margins to share.
Although I believe training in ethics is essential for the industry, I do not believe ethics can really be taught. What can be taught is that certain expectations for ethics and integrity exist within the organization and there will be consequences for failure to meet set standards.
If your ISO has an ethics clause, you need to fully understand the types of behavior that will and won't be tolerated. While I was training for an insurance license in Michigan back in 2000, one trainer's ethics talk was limited to "don't screw with old people" concerning health insurance and selling policies that duplicated the Medicare they already had.
When most people discuss certification or registration for our industry, they genuinely seek to clean it up. As of this writing, the first group of forum members has taken the examination for the Electronic Transactions Association's Certified Payment Professional (CPP) program.
They are reporting that the examination is very difficult and anyone new to the industry would be unlikely to pass it. To me, this reinforces the idea that training is needed and ethics should be part of it.
Knowledge of the industry is a wonderful thing. Passing the ETA CPP certification demonstrates industry knowledge and that you have either three years of experience or one year with a college degree. The idea behind the certification was to establish a way for business owners to identify knowledgeable and trusted professionals.
There is one issue that has not been addressed as part of the certification program. If not given proper training and an ethical compass from day one as a payments industry professional, how can anyone be assured that in three years the MLS will have adequate industry knowledge to pass the exam or certification?
If you unknowingly join one of the rogue ISOs, which enrollment in the CPP program will certainly ferret out, you would be trained to get contracts at any cost. You would also likely be shown how to convert leased terminals into the financial bonanza that it has become for some individuals.
Then three years down the road, you would take the CPP exam and find that you did not pass, and you may not understand why.
Training an agent in unethical ways to sign merchant accounts will eventually come back to sully the reputation of the entire industry. The unethically trained agents will leave their original ISOs for greener pastures and take their bad training with them.
If an ISO that encouraged the unethical behavior pays signing bonuses instead of residuals, the ISO will soon discover the agent is actively churning accounts.
Churning occurs when an agent leaves one ISO for another one that pays an upfront bonus for new accounts. The agent then proceeds to re-sign his entire portfolio for the new ISO, only repeating the process again.
Normally, by the time the unethical behavior has been detected, the agent has already re-signed the same accounts several times, leaving merchants with multiple active accounts and, in some cases, multiple active leases.
Having a well conceived training or certification program available means little unless it instills an understanding that ethics and integrity play key roles in the long-term success of an agent.
I ask that ISOs and MLSs consider the training they've offered or received over the years and to reflect on the concepts of ethics and integrity that should be included in training moving forward. Teach new agents the right way to do things and why it's important to do so. For example, while training new agents how to complete an application, focus on why it needs to be as complete as possible. Don't just focus on problems with application delays; rather focus on how to give underwriting all of the facts pertinent to expediting approval or denial of the application.
Last month, I was called by a business owner I had met at a friend's networking event. He had several websites and mentioned he wanted different processors for each website to "prevent crippling my business due to holds on processing receipts." He also said his websites bring in over $100,000 each month.
Now, as much as I liked the idea of residuals on this amount, I had concerns about the conversation. One website sold his book, and the others featured webinars and training products related to finances. I called two of my processing partners and fully disclosed the entire conversation.
I wound up not writing the account. One might have approved the application with financial records, but I decided not to write the account and told the business owner why.
One of my partners was surprised by my full disclosure. I explained that I risked cutting my own throat by signing a merchant I had doubts about; a huge loss could cripple my ISO partner, thus stopping my residuals.
It is possible I could have signed the business to three separate accounts without issue, as each website was owned by a separate company. But the words expressed by the merchant told me I was asking for trouble. In the end I passed on the deals. Although some agents would have ignored the warning signals and signed the accounts anyway, the real point I'd like to make here is that each deal needs to be viewed from the ISO's perspective with full disclosure, even if it means we must occasionally turn one down.
Though agents may view ethics and integrity differently, adherence to basic standards will only serve to elevate the industry as a whole. Teaching agents the ethical standards they need to observe and enforcing them is just as important as improving the industry through proper training and certification.
What you do today determines your tomorrow.
Bill Pirtle is the President of C3ET Credit Card Consortia for Education & Training Inc., a joint venture with Theodore Svoronos of Merchant University. Created to establish a comprehensive training program for ISOs and merchant level salespeople, C3ET is working with industry experts to produce a training guide to be published in early 2012. Bill's email address is firstname.lastname@example.org. He welcomes all connections on Facebook and LinkedIn.
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