By Mike Camerling
AEVI International GmbH
For decades, success for most ISOs and merchant level salespeople (MLSs) rested on being able to place a payment terminal on as many merchant countertops as possible and keep them there for as long as possible. Today, any merchant with a smartphone is unlikely to be impressed by that single-purpose device cluttering up the counter, so it's time to get serious about selling true business solutions.
Merchant churn has been a perpetual problem for ISOs and MLSs. Merchant attrition is estimated to be between 20 and 30 percent. It's only going to get worse for those who don't start thinking outside of the box.
Our industry is at an inflection point similar to the situation when consumers switched from basic cell phones to smartphones. Today, 82 percent of cell phone users have smartphones, up from 33 percent in 2011, according to Pew Research Center data. Those old flip phones used to be primarily for voice calls, but today's smartphones are used for keeping up with news, online shopping, research and mobile payments, along with a variety of services and social media apps.
In the past, most merchants likely viewed payment terminals as a necessary evil. With consumers increasingly preferring card payments over cash, few merchants could forgo the devices. Instead, they put up with an often-confusing monthly bill as the cost of doing business. Now merchants have options, and the single-use payment device is going the way of flip phones. ISOs and MLSs as a group must change along with the times.
Merchants aren't dumb. They know that if they can buy a fully functional smartphone for as little as a couple hundred dollars and gain access to a virtually unlimited universe of consumer-oriented apps, there's no reason to settle for the limitations of over-priced payment boxes.
Payment facilitators such as Square are trying to gobble up the low end of the market and build a foundation that will allow them to move upstream to traditional small and midsize merchants; meanwhile, value-added resellers and application developers are trying to figure out how to capture a healthy slice of the pie for themselves by integrating payment gateways and leveraging the Internet sales channel.
To compete, ISOs and MLSs must transform from pushing boxes to selling value-added business solutions. That means more than selling a juiced-up payment terminal that can complement the basic payment application with another app or two for loyalty or phone card top-up.
In the past, value-added apps were dependent on the constraints of the payment app, which was very much constrained by the limited choices available from terminal vendors.
Now it's time to think of payment as one of a suite of business applications the merchant can use to serve consumers and build lasting loyalty.
The way to win in this rapidly changing market is to provide multifunction solutions that combine apps and services in more tailored propositions to merchants. By delivering quick-boarding access to a full range of business-management apps, ISOs and MLSs can create true business value while providing choice and flexibility to their customers. That also means providing choice of devices that will accommodate different uses as well as provide customer-facing services.
ISOs and MLSs have compelling advantages for success: a face-to-face presence in local markets; unique insights into the needs and challenges of the merchants in their target markets; experience in vertical segments. With these assets, ISOs and MLSs should be able to home in on particular sets of apps that will appeal to those merchants.
Let's face it, most merchants don't have the time or patience to cull through and experiment with hundreds of apps to help them run their business. There are too many choices, and there is too much complexity in compiling a suite of apps that can be integrated into a solution set. ISOs and MLSs have the insight and expertise to come up with bundled solution sets of pre-selected apps that are relevant to the needs of their merchant base.
As a trusted adviser to your merchants, you might package solution sets encompassing POS, online appointment scheduling, an app to capture customer business cards, digital receipts for customer expense account tracking, electronic menu selection, customer surveys, and so on. In addition, you could provide valuable business apps for document management, performance management, workforce management and collaboration, and much more
The ability to make this transition is dependent on your ability to leverage a platform that provides consolidated management tools across a diverse set of devices, gives you access to a compelling marketplace of apps and services for different vertical segments that are fully integrated into the POS, and enables merchants to create new engaging customer experiences to accompany payments.
The other key consideration is in educating and empowering your sales force, or you personally, to sell these business solutions. That comes through coaching and training as well as leveraging the expertise of application developers who are more than willing to help you sell their apps. It also means adapting support services such as your help desk to deal with this new environment.
Just about every industry is undergoing some form of digital transformation as the consumerization of technology disrupts traditional markets and escalates the expectations of consumers. The challenge is in learning how to leverage key strengths as markets change, as well as to create sustainable business models that will allow you to adapt to more changes ahead. In future articles I'll examine disruptive forces and how to turn them to your advantage.
Mike Camerling is an advocate for choice and freedom in payments, a passion he injects into AEVI as CEO. He has over 15 years' experience managing companies providing technology to every type of retailer and merchant solution provider. He became convinced that what everybody needs is more choice and flexibility. Mike established the fundamental principles of openness and collaboration that are central at AEVI, and his passion continues to inspire his team and drive the company's mission forward every day. Contact him at + 49 5251 693 3630 or at firstname.lastname@example.org.
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