By Elaina Smith
After a busy merger and acquisition season for payments companies, the industry giants may have attained ginormous status. Many ISOs are left feeling like a little fish in the big pond of payments, unimportant compared to the mega companies that dominate the industry. However, being small can work to an ISO's advantage if played strategically.
The downside of growth can be bureaucracy. Big companies are notorious for allowing small tasks to get caught up in layers of red tape.
Consider the scenario where the small fish is a payments software provider, and a new technology has come along that the company would like to integrate into its software. For a small fish, it is quite easy to decide this technology can be a game changer and move to implement an API in weeks if not days. For bigger fish, there is a long process that includes strategic assessment and management buy-in before this change can even be presented for inclusion in the development calendar.
Things are changing quickly across the payments landscape, and I would argue that if being small leads to speed to market, it's a huge—possibly the biggest—advantage over the payments competition.
Perhaps the area where the little fish can shine the most is in providing excellent service to their clients. Clients appreciate having direct access to someone who can resolve issues immediately instead of having to call a generic customer service number or a rep responsible for a large book of business.
Also, the one thing a small fish can almost always provide that the big fish cannot is direct access to company executives. Don't underestimate the value of such access. It's a seal-the-deal selling point for many small businesses because they pride themselves on providing the same level of service to their own customers.
Many payment companies have a certain level of admiration for private equity firms and going public. While others celebrate these investments, as a small business owner, I have a hard time joining in on the festivities. We cannot dispute that private or public equity investment brings opportunity through the investment itself, publicity and networking potential. But private and public equity shareholders have one goal: to make a return on their investment. The small business owner no longer completely calls the shots or sets the priorities. The number one priority becomes making money, many times at the detriment of the company's original mission.
If payment companies want to stay true to their original mission, they must carefully consider the impact of outside investment. Yes, growth might happen more slowly without that investment, but it also maintains the company's integrity and mission.
There isn't a direct correlation between marketing spend and effectiveness. Think about television ads. They are an expensive form of advertising, but they've become less effective as fast-forward and streaming subscription services have become the norm.
The same might be said about event sponsorships or giant booths at tradeshows. Can the companies that make these investments show a direct return? With little to no budget, small companies are forced to use more of a guerilla marketing strategy. These types of efforts often result in the most creative campaigns that initiate valuable engagement with their desired audience.
Do not underestimate the power of professional networking, both online and in person, or educational outreach using tools like podcasting. Be authentic and don't be afraid to have a little fun with it.
The payments pond is large and vast. Smaller ISOs only need to focus on carving out a tiny market share to enjoy success. By using these strategies, smaller ISOs can use their size as an advantage to differentiate themselves in a marketplace seemingly dominated by industry giants.
Elaina Smith is the CFO of Secure Bancard, a wholesale ISO based in Alpharetta, Ga. Most recently, she helped develop and implement Pioneer by Settlement Data Systems, an SaaS solution that enables ISOs to run their businesses more efficiently. She can be reached at firstname.lastname@example.org.
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