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Table of Contents

Lead Story

Economic hang-ups: Will payments wilt?

News

Industry Update

Visa shoots for largest U.S. IPO ever

Vermont interchange bill a cry for help

Interchange act coming back stronger

TSYS joins the mobile fray

Data Treasury: Billions in the balance

Features

AgenTalkSM:
Jim McMahon

ATMs and a changing biz model

Travis K. Kircher
ATMmarketplace.com

Optio Solutions LLC. - Kinder, gentler collections

ISOMetrics:
Recessing, depressing economy

Views

Card stripes, prison stripes - security required

Biff Matthews
CardWare International

Education

Street SmartsSM:
Biting the ISO that feeds it

Dee Karawadra
Impact PaySystem

Shower candidates, grow your ISO

Curt Hensley
CSH Consulting Inc.

Secret's out: How to snag merchants

Maxwell Sinovoi
United Bank Card Inc.

PIN-ing profits

Scott Henry
VeriFone

Annihilate attrition

Jeff Fortney
Clearent LLC

Setting the stage for stupendous sales

Daniel Wadleigh
Marketing Consultant

Company Profile

Cutter LLC

New Products

Brand protection the Teleblock way

Teleblock Do-Not-Call Blocking System
Call Compliance Inc.

Software for streamlined processing

NitroSell
Company: NitroSell

Inspiration

Here comes the sun - and the dust pan

Miscellaneous

POScript

Departments

Forum

Resource Guide

Datebook

Skyscraper Ad

The Green Sheet Online Edition

March 10, 2008  •  Issue 08:03:01

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Arizona POS's Maine man

Jim McMahon, a merchant level salesperson (MLS) for Arizona POS LLC of Arizona, was so devoted to his wife and daughter that he acquiesced to his wife's desire to move nearer to her family in Maine.

Nine years with the company as an MLS and Regional Sales Director, and suddenly he was left wondering how he was going to make money.

Arizona POS is a subsidiary of CRS Texas and a value added reseller for Digital Dining, a PC-based restaurant POS solutions provider.

McMahon's dedication, loyalty and drive to succeed with Arizona POS are nearly as strong as his commitment to his family. Consequently, his boss made him an offer he couldn't refuse.

Rather than resign, McMahon was given the opportunity to stay with the company and spend 10 days in Arizona every month following up on leads, checking in with his merchants, and giving hands-on training to his sales and tech staff.

For the remainder of the month he conducts business from his home 3,000 miles away. The arrangement is clearly a win-win for both he and Arizona POS.

The Green Sheet: What adjustments or additions did you need to make with staffing when you accepted this unusual offer?

Jim McMahon: It's worked out well. We've got two more people coming on board in Arizona in addition to the present staff.

We still have our presence in Arizona and, thankfully, I've been doing this long enough that I have enough accounts and references to keep busy.

I still have to come here once a month just to let them know I'm still alive, but nobody knew where I lived before anyway.

GS: Has setting up your leads changed now that you're based in Maine three-fourths of the year?

JM: Well, it's weird. The longer you sell anything, the easier it is to sell. A lot of my leads now for the past four years have been warm leads.

I have more time to do cold calls, but I'm also lucky enough to close a couple of deals a month just from the company's reputation.

My client database is my greatest resource for new leads. I network with a few food service salespeople and a business insurance broker.

A couple of accounts a month are from people who call us. It's nice to get leads where prospective new clients know merchants you already have an account with and say, 'They love your stuff and we want to get it too.'

GS: Did someone mentor you in the early stages of your career?

JM: I worked with a sales director who convinced me I didn't know everything. He broke down the sales process into 10 steps and constantly beat the basics into me. I owe him big for helping me get out of my own way by focusing on the basics of the sales process.

GS: How has the industry changed since you started?

JM: Short and sweet: much more competition and far better educated merchants, combined with thinner margins, have made it imperative that I sell ROI [return on investment] effectively.

GS: What has Arizona POS done to stay current with marketing innovations, and how does this create additional revenue streams?

JM: We are a value added reseller for Digital Dining, so our streams were limited to the software sales, service contracts and any billable software upgrades.

We couldn't sell service contracts because the merchants knew they would be upgrading every one to two years and Digital Dining's product was stable enough so they didn't feel justified spending $1,200 [for service] - it wasn't cost effective.

So, about two years ago my boss hooked up with POS Card Processing. They're an ISO like Heartland Payment Systems, but because my boss was connected with them [POS Card] he has a little control and can effect change.

He has about 1,600 Digital Dining sites in his portfolio, so there's a lot of money to be made if he can get those accounts switched over. He brings them in and gets a percentage of the profits.

He said we need to sell the credit card processing. The independent POS dealers - the standalone salespeople in the processing business - are becoming less effective, so partnering with a processing company is a great additional revenue stream.

GS: How does that work exactly?

JM: Basically, the vendors control the technology. The beauty of working with POS Card Processing is they [processors] know you can't switch your processor without the POS vendor getting involved.

'You wanna change?' I'll ask. Well, it costs $695 to change processors and takes us a couple of hours to redo the profiles.

This usually keeps people from switching. We offer merchants discounted rates on any credit card related issues and 24/7 tech support. Also, by using our processor, if a batch doesn't go through because someone gave them a bad card and it has corrupted the data, we don't charge them.

Our processor makes money based on credit card volume; consequently, my boss is trying to convince clients that they should go with POS Card Processing.

So he's bringing them business, and I'm bringing them business because I work for him. And I get a piece of my boss' piece, so there's every reason for me to talk people into it.

We become the sales force, and being connected with the processor means merchants aren't going to need their processor rep to come and see them because the POS guy has all the answers. So we get the stream instead of the independent processor salesperson.

We also don't lose clients since we have the option of coming back and matching the competitive rate. It works because it's good synergy.

GS: And how do the credit card processors feel about that?

JM: They just start having fewer reps on the street. They'll form alliances with different POS sales companies, so they will still have the business - they just won't have their own sales force with accompanying expenses.

They'll have the POS company do it for them and just kick them down the residuals.

GS: How do you win over the skeptics?

JM: OK, let's say I'm going to put a POS system somewhere, and the merchant has been using XYZ processor. We look at their last month's billing statement and find ways to cut costs.

And people switch because they don't necessarily have any allegiance to their processor.

Why? Because they don't see anybody and they don't think about what happens in the background. So we can save them money; we're there when they need us. Consequently, they're happy and they switch.

GS: Are you having trouble with merchants getting Payment Card Industry (PCI) Data Security Standard (DSS) compliant and how much of the onus is on you as an agent to get them up to speed on all the steps?

JM: It's interesting because our new contracts allude to the fact that, by signing, they understand there's all this new system compliance.

We tell them the things they need to know and keep track of, and that we are not liable for any compliance steps that are not met.

It's anybody's guess who someone would try to sue if something happened, you know? Ultimately and realistically, though, if someone wanted to be totally system compliant they'd have to have a senior tech on property 24 hours a day. Some of the best practices are almost impossible to adhere to.

There are stiff penalties for merchants who are brought up on some fraud or infringement case.

All of us vendors are trying to cover our tails because merchants invariably say, 'Well, you're the guy who installed it, why didn't you do that?'

We could set up for 100% compliance, but we can't stop people from misuse, theft or incompetency.

GS: What happens to the little guy who doesn't get compliant?

JM: Most people are doing 70-plus percent of their business on credit cards. If there is an instance of fraud and they [the brands] think that you're not compliant, they could pretty much put you out of business.

It's unbelievable what they can do. There's a mandated $10,000 forensic audit plus a minimum fine of $50,000 for any fraud cases.

If you still don't do anything, they won't let you take credit cards, then guess what? You're out of business.

Nine out of 10 times the individual merchant hasn't read the letters that Visa has been sending out the past couple of years explaining what's going to happen. So when they get compromised, they say, 'What? My POS system did that? Oh, it must be their fault.'

Small merchants that are compromised, however, haven't taken the steps to become compliant.

They're still using terminals that store every number or old POS systems they don't want to upgrade.

Heck, up until two years ago, you could go into any system and run a report with a full number for every credit card you ever ran, print it out, go home and have a party.

GS: Does the interchange rate affect the way you do business? How?

JM: What our processor does is quote interchange 'plus' pricing. The interchange rate is mandated - that's the pint of blood that Visa and MasterCard are getting.

Obviously, as a processor, if you charge straight interchange rates you will make nothing.

So our processor sets a fee at interchange plus three points (.03%), and to augment that we don't charge monthly fees nor do we charge extra for manual swipes.

Merchants will argue, 'Hey, this other processor is only charging interchange plus one' but then I tell them they'll be charged 75 bucks a month for administrative fees and a dollar for every manual swipe.

Those processors charge what I call fine print fees and make their money on the back end.

GS: Is security the biggest problem facing the payments industry and have you had any problem with security breaches?

JM: Absolutely, security is the biggest problem. So many merchants believe nothing could happen to them and continue to conduct business as usual.

Getting merchants to believe they really are at risk if they don't follow Visa's Cardholder Information Security Program bulletins [which provide instructions for PCI DSS compliance] is the biggest hurdle.

Knock on wood: We have had no client security breaches. One of the security features we offer is remote port scanning. For $10 a month, we have software that scans activity on the system and brings you to the next level of security.

It's another feature that our processor is offering to ensure data security. These port scans make sure nobody's messed around. Once we've set something, it doesn't mean somebody's not going to come in and change it after we've gone.

GS: So, what do vendors need to do?

JM: The top 10 or more systems are already compliant and all have the stamp of approval.

What behooves vendors to become compliant is that banks will no longer process with you if you aren't.

So you better get compliant, or you won't be able to sell your products.

I also believe that outsourcing companies that remotely monitor compliancy will be the norm sooner than later for most merchants.

GS: As an agent, what new technology are you excited about?

JM: I think tableside processing, where the customer swipes the card instead of the server, is going to be popular. This keeps the card information in the customers' hands at all times and should reduce card number theft and increase customer confidence.

GS: Do you have your own method for resolving conflict?

JM: Communication between all parties involved while in the same room at the same time. Agree to disagree and move on.

GS: What keeps you successful and what is one thing you should never do as an agent?

JM: I think keeping it simple is best. You have to keep your sales funnel full. You need to keep new people in the hopper.

If you stop for two weeks or two months, you're going to have an equally bad time with no sales down the road. I think my success comes from my desire to keep customers happy. It's never the system - it's the people they are dealing with.

One thing you should never do is slam the competition. There is enough out there for everybody. You want to sell yourself. Even if the merchant is denigrating another vendor, keep it positive.

I point out why our system is better than the competition and what makes our products unique. But, if pressed, I just say 'Well, if you don't like them, why not come over to us?' Just sell what you've got and everything else will take care of itself.

Many top-notch agents have inspired others by sharing their perspectives in AgenTalk. Will you be next?

If you'd like to participate, please send an e-mail to greensheet@greensheet.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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