By Dee and Emily Karawadra
Recent questions we received sparked this article. Here's the query: If someone wants to start up a payments enterprise/ISO but has never owned or run a business, what are good ways for that person to become educated? What things when it comes to starting up a business do people tend to forget to their later detriment? How do you make sure you have all the basics covered?
Having owned and operated our ISO for 19 years, we have a different perspective than we did when we opened our doors. Having been in the industry previously, we had industry experience going into this. But being young entrepreneurs, we weren't prepared for all aspects of running a successful ISO.
How important is knowledge of the payments industry when planning to open an ISO? Being educated in the industry you are entering is crucial. Understanding the payments industry can be intimidating to newcomers. Here are things that helped us make better decisions in operating our ISO.
If you pick up an industry publication like The Green Sheet, you will see articles and ads with a wealth of relevant topics, products, legislation, compliance and ISOs. And that doesn't scratch the surface of what's done behind the scenes to solicit merchants; set up merchant accounts with the processor; download and deploy terminals; support merchants' daily needs; understand card brands' interchange, which leads to pricing and how to price merchants; understand a merchant statement; and much more.
To gain this knowledge one must walk the walk of a merchant level salesperson (MLS) and hit the road to sell merchant accounts. This will allow you to fully understand the merchant application process, how to coordinate equipment and downloads and support merchants' needs, and what goes on at the ISO or processor you're reselling for.
Many ISOs and processors will allow you to work with them as a 1099 sales agent. This gives you experience in the whole process and is what you should emulate. Consider their strengths and weaknesses when creating your business plan. Whomever you decide to partner with will offer education and training. Take advantage of it. The more you learn at the ground level, the better you will be able to build your business and take advantage of your partners' resources.
Also, engage other active agents. A great way to do that is to become a member of the MLS Forum on The Green Sheet's website, www.greensheet.com. There, you gain knowledge and network at the same time. It's a great resource where veterans and newbies can collaborate.
Also, attend the regional acquirers shows held annually in four U.S. regions. In addition to the benefits of networking and education, you'll come back motivated from all the shop talk that happens at these shows. An association for women in payments, Wnet, mentors and supports women's leadership.
It's another place to get an education through meetings, seminars and periodic training. Initially, there's no need to attend large national shows like the ETA's Transact, which can be overwhelming. The big shows are something to work toward as you learn and grow in your journey toward opening your ISO.
Owning and running a business in any market isn't easy. You must understand not only your market, but also the mechanics of opening and running a business. When starting an ISO, the primary dual concerns are merchant boarding and housekeeping. From structuring your business, tax planning and payroll taxes, to keeping the lights on, you wear many hats as an ISO owner. We've had to be the IT person, as well as the plumber. Some parts of running a business aren't glamorous. You have to be prepared for what this journey may bring. You'll find areas where you haven't planned adequately. You need to weather it all.
Looking back, we would have done a few things differently. For one, don't be afraid to outsource tasks that are not your expertise. One area for us is accounting and bookkeeping. We tried to keep this in the house for years, and it was a big expense. At some point, we hired a CPA firm to do our accounting and taxes. This was a big relief. We previously struggled to keep trained employees in this role. Ultimately, we saved money by outsourcing this, and we were able to sleep at night knowing it was all taken care of.
Another area we would recommend outsourcing unless you have this talent is the creation of marketing materials and advertising campaigns. If you weren't trained in or don't have a natural ability in this, you'll spend hours trying to create a basic flyer or advertisement. We know because we've done this ourselves in the past. Websites like freelancer.com will allow you to submit your needs for design work, and you can pair up with someone who will get it done to your specifications at a good price.
The importance of having professional marketing materials is a high. This is how your prospective merchants or sales agents will view your company. If your collateral looks like your child created it, it's time to outsource. Your reputation in this industry will make or break you.
Which brings us to our last part of the query: How do you make sure you have all the basics covered? There is no magic checklist to ensure you have all the basics covered, but in running an ISO, service is what will build your business reputation. Superior service to your sales agents/MLS and your merchant customers will set you apart from your competitors in your area.
This is one area you cannot forget when opening an ISO. The way you assist your customers, specifically your communication skills and the speediness of your remedies, are what will build the business. If you don't focus on this, it won't take long for dissatisfied customers and MLSs to complain on sites like Google and BBB.
You want to protect your ratings. It's invaluable to be able to inform merchants that you have an A+ BBB rating. We know, because we do. When you look up your competitors in the merchant service world, you will see that people do complain and that many processors have poor ratings. Avoid this by making your service model a top priority. Your good reputation in this market will assist you in growing valuable industry contacts and gaining credibility to fuel your growth.
Dee Karawadra is president and CEO of Impact PaySystem, and Emily Karawadra is the company's chief financial officer. Since 2001, Impact PaySystem has been a leading provider of payment processing technologies and services to merchants throughout the United States. Through alliances with payments industry leaders such as Chase Paymentech, First Data, Buypass, Sage and more, Impact PaySystem offers tailored solutions to meet the unique needs of each merchant. Dee and Emily will welcome your questions and comments at firstname.lastname@example.org and email@example.com, respectively.
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