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Table of Contents

Lead Story

Long live the check

Patti Murphy
ProScribes Inc.

News

Industry Update

Ruling a window to hot legal topic

NFC not paramount in expert testimony

NRF will try to block settlement

PCI SSC offers IT accreditation program

Features

GS Advisory Board:
Views on Visa's FANF

Research Rundown

Meet The Expert: Rick Slifka

ISOMetrics:
Consumer payment habits

Why advertise?

Selling Prepaid

Prepaid in brief

Is direct deposit the secret to prepaid's future?

Players profit from open currency

Views

Check fraud is the problem, RDC is a solution

Patti Murphy
ProScribes Inc.

Education

Street SmartsSM:
Start with a strong foundation

Jeff Fortney
Clearent LLC

Stage set for expansion of mobile payments

Henry Helgeson
Merchant Warehouse

The mobile app's role in marketing and sales

Ron Tunick ('Coach')
Nations Transaction Services

New era, same old game for MLSs

Dale S. Laszig
Castles Technology Co. Ltd.

Prepare for the mPOS wave

Rick Berry
ABC Mobile Pay Inc.

Health-care fraud: Back with a vengeance

Nicholas Cucci
Network Merchants Inc.

Company Profile

Central Payment Co. LLC

New Products

A POS for Main Street merchants

POS-itivity!
CardWare International

Bringing social order to business

The Social Merchant
The Social Merchant

Inspiration

A lesson from the Greeks

Departments

Forum

2012 events Calendar

Resource Guide

Datebook

Skyscraper Ad

The Green Sheet Online Edition

September 24, 2012  •  Issue 12:09:02

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Street SmartsSM

Start with a strong foundation

By Jeff Fortney

Shortly after I moved to Texas, my fence needed three new posts. To simplify the process, I rented a post-hole digger. But after about two feet into the first hole, I hit what I thought was rock. After 45 minutes of the digger bouncing back, I moved to the next hole. I thought I could dig down the second hole and then reach the stone from the first and remove it.

However, again, at two feet, the digger bounced; it felt as if I'd hit rock. I soon learned that where I live, clay hard as rock begins two feet below the surface. The only way to dig a hole through it in the summer is to flood the hole with water to soften it.

Later that summer, I came home from work to find the glass in my French door had shattered. The door had been sticking, but I had no idea what had caused it to shatter. The glass repairman arrived and asked if I had been watering my foundation. I had never heard of such a thing. He explained that Texas soil shifts all the time. In summer it compacts; in winter it expands. This puts significant pressure on your foundation, and if you don't water it, shifting can cause sticking doors, broken windows and, ultimately, a damaged foundation.

A learning curve

Thereafter, I set up soaker hoses and started watering my foundation each spring. Even so, this year my foundation required major repairs due to the settling. My house had settled two inches at one spot, causing damage to the overall structure. To fix this, we had to dig under the edge of the foundation and install nine piers, each 12 feet deep.

These experiences amplified what I'd known all along: no matter how strong your house is, if you don't have a solid foundation and maintain it, your whole house can be at risk. Thirteenth century monk and writer Thomas à Kempis put it succinctly: "The loftier the building, the deeper must the foundation be laid." This applies to any venture that involves building an asset, including payment processing. For ISOs or merchant level salespeople (MLSs), the asset is our merchant portfolios and the residuals they generate. The foundation we build upon is critical to the short-term success and long-term health of our portfolios.

It must be built with a proper depth, using the correct materials. It must be maintained, and action must be taken when serious issues arise. If not, external pressures, along with faulty construction, can lead to permanent - and potentially fatal - damage.

Soil conditions

Before building your foundation, you must know and understand the soil conditions. In payment processing, soil conditions are the contract and the partnership with your provider. GS Online MLS Forum member 1SLICK67 listed four elements necessary for a solid partnership:

  1. Trust in the partnership. If one of the parties does not trust the other, everything suffers.
  2. Technical support (when you really need it).
  3. Open communication, so if a problem arises you can talk to your ISO and work through the problem so that no one has hard feelings.
  4. A little flexibility so that you can pull in deals that are not the norm.

Yet even the best partnerships can experience rocky situations. Before pouring the foundation, contractors remove the rocks. You should do the same. The easiest way is to clearly review, understand and address the "rocks" before you sign the contract.

If you have questions about a particular clause or any wording, ask for clarification before signing. It is also prudent to seek a legal review. No matter how promising the partnership, the only thing that will prevent your foundation from cracking is a solid agreement.

Pouring the foundation

The next step is to prepare and pour your foundation. The key to a strong foundation is in the ingredients. Without the right ingredients, no matter how deep you pour, the foundation will be prone to failure - even before you start building. These ingredients include knowledge, sales skills and interpersonal skills - in the right portions. Being knowledgeable doesn't mean you know everything. Indeed, too much knowledge can lead to paralysis by analysis. You just need to understand the basics, beginning with a grasp of math.

You don't need a degree in calculus, but a working knowledge of percentages and basis points is necessary. As Forum member ADUNN said, "If your mathematical skills are not fundamentally sound, succeeding in this business will be quite challenging."

You also must understand the underlying processing costs, which begin with interchange, dues and assessments. You don't need to master all the fine points of interchange. However, you do need to understand the basics - and have an interchange chart handy. If you are concerned about these basics, ask your mentor or ISO partner how to get up to speed.

You also need to comprehend your partner's costs and how they affect your merchant pricing. You need to know when a fee is assessed, and for what purpose. Failure to understand your costs results in inept merchant pricing and lost revenue, which makes building a sound portfolio even harder. Although knowledge is paramount, adding sales skills to the mixture strengthens the overall foundation, as long as a healthy balance between the two is maintained.

Sales skills need not be industry specific, but they do need to be centered around business-to-business and service-related sales. And three areas must be developed: the ability to listen and not just hear, the ability to recognize the need, and the ability to find a solution if one exists. TPSS//TIGER added one more, "You have to have a creative mind." The best resource for evaluating and honing your sales skills should be your mentor or ISO partner. This is another reason why your choice of partner is critical to your success.

Interpersonal skills are difficult to pinpoint. Some believe they are just personality; others feel they consist of confidence, wit, and charm. MARINESTEBAN defined them thus: "It is always good to have strong financial and technical knowledge.

"However, knowing how your customer's business works and truly understanding their world is an excellent way to relate to their pain and thus be able to match the options with his needs."

Central to interpersonal skills is being able to work with people. "The ability to negotiate, understand the negotiation process and learn from each negotiation is a great part of a solid foundation," LADERA BUSINESS SOLUTIONS said. "Realizing that in a negotiation the other party needs to win a little is very valuable."

When you're examining sales and interpersonal skills, the individual rep is the key component. Skills can be improved and will grow long after the foundation is poured. But without the basics, the foundation won't cure, and there will be nothing to build upon but sand.

Foundation maintenance

Even if your foundation is built soundly, external factors can cause it to shift. If they are not addressed early on, they may cause significant damage. So it's crucial to act quickly to preserve what you have and protect your foundation. Ask the following questions to pinpoint symptoms of potential damage:

These can all be symptoms of problems with your partner. Act quickly to identify any issues and determine the best way to address them. Be sure to speak with your partner about your concerns. Ask direct questions and expect direct answers. Our industry is constantly changing, so staying informed of new developments is essential. When did you last familiarize yourself with industry changes? Are you comfortable answering merchant questions about recent changes?

Unless you stay on top of the industry's evolution, you might soon meet merchants who ask questions you cannot answer intelligently. Seek information. Stay connected with others in the industry. Share what you know with them, and they will likely share with you.

Your processing partner should also keep you abreast of industry changes and be the first source of information on any adjustments to interchange, dues, assessments or even rules. Be wary of rumors; they are often wrong or only partially true. Know the source of all your information before taking action.Are there new products, solutions, or opportunities that could prevent your merchants from leaving? Are there changes in the rules that require more input from you? Seek opportunities to learn about new products and services. Remember, if you're not on top of current solutions in the marketplace, merchants will look elsewhere when they have specific needs you can't fill.

Along with staying aware of new products and opportunities, remain in contact with your merchants to ensure you are the first to know when a new need arises. Remember, you don't need to be the expert on all products and solutions. Know the basics, and if a need arises, research the subject further.

Foundation repair

Even with your best efforts at maintenance, something significant could happen that would make foundation repair necessary. One common cause is a change in your ISO partner. For example, what if the ISO or a portion of its portfolio is sold? Initially, the change may affect you indirectly, but later it could have a significant impact on your business. In these instances, you don't need to rebuild your foundation, but you do need to do everything possible to repair it, or you may see your structure collapse.

The repair process begins by identifying the cause of the damage. Has there been a change in the soil (that is, your partner) or a change in the ingredients that make up your foundation?

Once you have identified the cause, act quickly because time is your enemy. You may need to seek another partner or even slow down sales while you work on merchant retention. If the choice is between foundation repair and adding new merchants to your portfolio, adding merchants should come second to your efforts to save what you have today.

If the issue is partner-related, review your contract provisions relating to the issues that have arisen. Don't hesitate to address any issue that comes up and, once again, expect direct answers. Remember, once you complete the repair, you may find that your foundation is stronger than before. However, be prepared for some pain during the repair process - it's inevitable.

Yes, a sound foundation is that important. TSTREET provided a unique perspective. "The foundation has to be your dream, your dream of a better life. Your dream allows you not to settle for a cubicle job. Your dream encourages you to do whatever it takes to reach your goal.

"If you are going to build something from nothing with no salary, no benefits and just a promise of straight commission, you have to have a dream and a vision of a better future to sustain yourself for the first six months to get you over the hump."

A proper foundation is critical to your success. If built well and maintained, you will find your sales efforts rewarded by large residuals and happy merchants.

Jeff Fortney is Vice President, ISO Channel Management with Clearent LLC. He has more than 17 years' experience in the payments industry. Contact him at jeff@clearent.com or 972-618-7340. To learn about how Clearent can help you grow faster and go further, visit www.clearent.com.

Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.

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