The Green Sheet Online Edition
December 08, 2014 • Issue 14:12:01
Leveling the playing field for the not-so-super ISO
As technology drives the payments industry to evolve faster than ever, payments businesses recognize they can't do it all themselves. For those without the resources to purchase or create solutions on their own, partnering becomes a necessity.
As Curtis E. Sahakian, Managing Director of the Corporate Partnering Institute, said, "Partnering is the quickest, most effective way to re-engineer a business … few companies have everything they need. You may need money, customers, or product. No matter what you need, there is someone who has it."
We've known this for years. We've partnered with providers of gift cards and cash advances to enhance our product offerings. We've partnered with trade associations to penetrate vertical niches, and with chambers of commerce to deliver geographic niches. Financial partners, like banks and technology partners, like software-as-a-service developers have given us additional distribution backed by the weight of reputation.
In this era of disruption and change, small to midsize sales offices must identify and forge partnerships. Those that don't will find it difficult to survive.
Partnerships that add value
We can no longer succeed simply by offering payment processing; instead, we must be commerce consultants who can improve our merchants' operating efficiencies, as well as enhance the buying experience of their customers.
When ISOs offer a broader mix of products and services that accomplish these goals, attrition rates are virtually cut in half. Rick Oglesby, Senior Analyst at Double Diamond Group LLC, said, "Many ISOs and acquirers report attrition rates among their payment-only merchants that more than double the attrition rates for merchants that have a more comprehensive suite of services. This essentially confirms value-added services as a market necessity."
Adding value led to the creation of National Benefit Programs, according to its President Diane Vogt Faro. "We have created a single platform from which ISOs can deliver dozens of necessary products and services that merchants use every day to run their businesses, and offer them all at significantly discounted rates," Faro said.
To support its partners, NBP offers turnkey and customized programs, as well as marketing and sales support. In just weeks, "ISOs can add more than 50 new benefits to their offerings," Faro said. "There is no better, faster way to show merchants how quickly and easily they can reduce their expenses and operate more efficiently."
Knowledge is power
In addition to helping their clients save money, many major acquiring organizations are "investing heavily in proprietary products that provide analytics, customer engagement and security solutions, so smaller ones need to answer the call in order to keep up," Oglesby said.
That's been good news for companies like Womply, which was founded in 2011 to offer merchants a simple platform of analytics, insights and loyalty. "We've seen the industry shift from a cost-based pitch to a value-based sales approach," said Cory Capoccia, Womply's President. "Because of this, solutions like ours have become critical for ISOs that want to remain competitive and avoid being displaced by other more forward-thinking organizations."
Tom Lineen, the new President and Chief Revenue Officer at US Merchant Systems LLC, is partnering with a Utah-based analytics company to redefine his ISO's brand in just that way.
"Merchants need knowledge and solutions, and that's where mid-sized ISOs like USMS can really make a difference," Lineen said. By offering a wealth of data and insights, USMS will "help merchants identify needs, and then offer a marketplace of solutions for any problems we identify," he added.
Partnership as a differentiator
While companies like USMS differentiate with data, Virginia-based ISO Direct Connect LLC differentiates itself by focusing on the breadth and quality of its partnerships. "We are not only a payments processor; we are a sales organization," said Direct Connect President Matt Clyne. "And we share that expertise and know-how with our customers."
Clyne has directed his company's resources toward building a true sales and sales support division that identifies leads, makes outbound calls, sets up appointments and even closes sales – not for Direct Connect itself but for its financial institution, software and merchant partners.
"We guarantee our clients a minimum number of warm leads, and we devote a generous amount of sales and marketing resources to help the client close those leads and develop sticky relationships with their customers," Clyne said.
Boosting ISO efficiencies
Sometimes partnerships in payments are forged not by ISOs adding value to their merchants, but by companies seeking to add value to ISOs. That was the case recently when POS Portal joined forces with alternative financing company RapidAdvance to create an online tool that makes it simple for agents to apply for loans and cash advances for their merchant customers.
"Without leaving their CRM tool, these agents can prepare and submit a funding application in minutes," said Mark Cerminaro, Chief Revenue Officer at RapidAdvance, adding that the program "responds immediately with pre-approvals, pre-qualification feedback and even estimates of agent compensation."
Once a loan or MCA is approved, agents have simple access to a variety of features that "save them time and empower them to be maximally responsive to their merchants," Cerminaro said. "The P2/RapidAdvance application simplifies every step of funding and monitoring."
Danny Neal, Associate Sales Director at TSYS, views his ability to truly partner with his ISO clients as the key to his success. "If my clients need something, my job is to help them find it," Neal said. "That depends on my ability to provide services, which in turn depends on my relationships with vendors." Having spent years building these relationships, Neal is confident that he can offer partners a solution to any problem they might confront. "If I don't have relationships with people who can solve a specific need, I know someone who knows someone who does," he said.
Finding the right partner
In many cases, ISOs and agents sell only what their processing partners make available to them. But for those with the resources to form their own relationships, the lure of additional profits and complete control can be too tempting to ignore.
For those seeking their own partnerships, Reliance Star Payment Services Recruiter Joe Kraslen recommends that, "each side has skin in the game. Without a mutually beneficial relationship the partnership becomes one-sided and tends to fall apart."
Aaron Johnson, Chief Technology Officer at Retriever of Chicago, advises agents to find a company "that aligns with your long-term direction while filling the immediate need."
Womply's Capoccia suggests limiting partnerships to those who have "demonstrated a strong track record of success in adding value while protecting the ISO's most valuable asset, their merchant relationships." He encourages prospective partners to seek multiple references, and vet them carefully.
Kraslen added, "Knowledge is key. Make sure your partners provide the adequate training on operations as well as the sales side. If you can't support the product, failure is in your future and we know what happens when you can't sell the product."
Direct Connect's Clyne provided a fitting conclusion. "At the end of the day, what differentiates and drives business is not technology, but people," he said. "When you develop the right relationship, the power of two can more than double the power of one."
Nancy Drexler is the President of Acquired Marketing, a boutique marketing firm for businesses in the payments industry. To learn more about what Acquired Marketing can do for you, visit www.acquiredmarketing.com, call 917-743-5258 or email email@example.com.
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