The Green Sheet Online Edition

July 24, 2016 • Issue 16:07:02

Street Smarts^SM

Time to treat MLSs right

By John Tucker
1st Capital Loans LLC

Our discussion on rebranding the merchant level salesperson (MLS) over the last couple of months has spotlighted the realities of today's increasingly complex marketplace for MLSs. The new challenges merchants face require in-depth analysis and higher levels of technical competence than ever before.

To address said challenges, MLSs must be able to design, prescribe, negotiate, implement and support highly complex solutions. On top of this, MLSs must do business in a more demanding arena, where marketing costs are skyrocketing and regulations are more burdensome.

That said, it seems strange to me that the majority of ISOs and merchant services providers (MSPs) in the country are not discussing these marketplace changes with their MLSs. In addition, many ISOs employ dull operating practices that further hinder the probability of success for their MLSs.

So for this article, please allow me a moment to step away from the rebranding discussion to speak to ISOs directly, with rants that I believe are much needed (and long overdue).

Help me help you

ISOs and MSPs, please help me help you. We all know that MLSs comprise what I call your mom-and-pop networks. For this discussion, a mom-and-pop network is a group of MLSs you recruit to resell for you for free (we cover our own expenses and pay for our own health insurance, for example). Your goal is to sign hundreds to thousands of us to collectively produce hundreds of millions in annual bankcard processing volume for your organizations.

However, some of the things you do make it difficult for us to help you profit off of our activities. This, in turn, hinders us from building our bankcard portfolio residual streams, which is, after all, the reason we work with you. So allow me to list some pet peeves that I hope you can fix going forward.

Incompetent risk management team

Following are scenarios exemplifying risk management concerns:

• Slow approvals: We have a restaurant that's 100 percent card present, has a 720 FICO, started in 1995, processes $40,000 a month, and has no chargeback or fraud related history. Why have you had this file now for two days and not issued an MID on it? Please speed up your approval process.
• Too conservative: You decline merchant accounts that 98 percent of other ISOs/MSPs in the country would approve within 24 hours, or you ask for an unnecessary amount of documentation or you approve accounts with very low processing limits. Please stop being so conservative.

Drastic, arbitrary account changes

The following scenarios point to major concerns about actions taken with no explanation or warning:

• Randomly shutting off accounts: Without warning to the MLS or the merchant, you shut off a merchant's account over minuscule situations. Please provide a warning before shutting off a merchant account unless there's major fraud involved.
• Randomly changing the fee schedule: As an MLS, I'm selling not just solutions, but also my integrity to merchants. When I say the pricing on an account is interchange plus 25 basis points and the fees are X, Y and Z, that is exactly what should appear on the merchant's pricing schedule (unless the card brands or government bodies make major changes occur related to interchange or regulations). But routinely, I have endured ISOs/MSPs changing the fee schedule out of the blue, for no reason other than just to increase profit. Please stop doing this.

Unprincipled residual practices

Following are scenarios exemplifying issues pertaining to residuals:

• No lifetime residuals at day-one, without minimums: For going on 20 years now, many ISOs/MSPs have provided their MLSs vested lifetime residuals for the duration of a merchant's processing relationship, starting from day one, and with no ongoing new deal minimums, no monthly residual amount minimums, etc. So if you, as an ISO/MSP, are requiring any minimums, you need to eliminate such an outdated policy.
• Not properly calculating residual reports: Either your team can't do basic math or you are trying to get one over on me, but why is it that nearly every other month I have to argue with you over the proper calculation of my residual reports? What is the issue here? Can you not properly calculate the reports right the first time?
• Ripping off an MLS on residual payments: Improper calculations alone are bad, but how about having to be an MLS that worked hard to sign new accounts in an overly competitive marketplace, just to have your ISO/MSP flat out rip you off by not paying your residuals at all?

Incompetent customer service, terminal deployment

Here are scenarios pertaining to lack of good service:

• Merchant "service" department: When out of town merchants are having billing or technical issues at 7 p.m. EST right before the evening rush, they have to call an 800 number, where they reach people who can barely speak English, can barely find the account on file, behave in a rude manner, and who take far longer than usual to resolve issues at hand. Please provide your MLSs and merchants better service.
• Inefficient terminal deployment: Terminals are shipped out with incorrect or missing tracking numbers, sent to the wrong addresses, shipped with the wrong download/programming information, or sometimes the wrong terminal is shipped. Please improve your terminal deployment processes.

Poor sales training, marketing support

I've discussed this in prior articles, but I'm covering it again because it is vital to the survival of our industry's feet on the street.

It's time to stop encouraging untrained reps to use robotic sales scripts and cold call in person or by phone. Instead, equip your MLSs with the resources that will allow them to succeed in today's complex market. These include information on complex issues, innovative solutions, market segmentation, market research, innovative marketing, strategic networks and creative financing for their own offices.

MLSs also need instruction on how to sit down and conduct a diagnostic, consultative conversation with a merchant by asking a series of pertinent questions. Without any real instruction or discussion about available tools and resources, your so-called sales training sessions are a waste of time. Even worse, anybody following your methods stands no chance of enjoying career longevity.

The final word

So, ISOs and MSPs, please help me help you. Along with other MLSs, I'm pretty much alone in terms of navigating our complex market. I'm on my own in trying to understand my merchants' challenges, customizing or innovating the best solutions, and marketing to merchants using methods that are more complex than methods of a prior era.

So, give us the systems, support and training we need. It will boost the production of your mom-and-pop networks. And that's in your best interests.

John Tucker is Managing Member of 1st Capital Loans LLC, as well as an M.B.A. graduate and holder of three bachelor's degrees in accounting, business management and journalism. Tucker also has over nine years of professional experience in commercial finance and business development. You can contact him by email at tucker@1stcapitalloans.com or by telephone at 586-480-2140.

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