By Allen Kopelman
Nationwide Payment Systems
What does it mean to be a "trusted partner"? Whenever I see that term, I wonder what the person or company is trying to hide. It reminds me of other sayings, like "to be honest" and "no offense, but." You know what's coming next will be a zinger, and probably not the least bit true or flattering. As Shakespeare would say, "Methinks thou dost protest too much."
Companies that provide the best service, pricing and customer-friendly policies rarely have to shout about it. They're too busy focusing on their customers to care about how they look. By the same token, why would a processor, ISO or merchant level salesperson (MLS) have to tell you to trust them? Wouldn't we expect a partner, vendor or sales agent to treat us fairly?
As most ISOs and MLSs would agree, some top payment brands are trusted partners in name only. These tech startups asked for our help when no one knew their names. We opened doors, made introductions, promoted their solutions, closed sales, babysat their beta tests, and reassured our merchant customers when their apps and devices were having a bad day.
Thanks to our efforts, these companies became some of the biggest names in our business. They scaled because of us, and when they gained sufficient critical mass, they dumped us. Instead of saying thank you for your service, they cut out the middleman and went after our customers, directly. Trusted partners indeed.
I'm not the first to point out that payments is a relationship business that is built on collaboration and interdependence. It's also a small industry. When companies behave badly, news travels fast, and the backlash can be devastating. History is filled with examples of empires and enterprises that felt invincible, or this era's "too big to fail," a flawed concept that got some banks and brokerage firms in trouble a few years back.
The bullies that attempt to steal our merchants are finding out the hard way that what we do is not Easy Street. Winning and retaining merchant accounts takes talent, skill and willingness to understand customers. Know Your Customer isn't some algorithm; it's understanding a business model and the people behind it, something a big tech company that moves fast and breaks things doesn't have the patience to understand.
Speaking of patience, big tech would prefer to cut a merchant customer loose than attempt to understand a particular niche or chargeback event. A flurry of reports have surfaced in recent weeks of merchants that were deemed high risk and cut off by tech companies, in ways eerily similar to how they summarily dismissed us, their former partners. Merchants receive an email or letter, out of the blue, stating that they no longer have a merchant account and funds are being withheld pending further review. Yes, they're holding their customers' money, just like they held onto their former partners' hard-won merchant accounts.
These companies may have great apps but they are sorely lacking in service and support. These shortcomings create opportunities for ISOs, acquirers and MLSs, but only if we have the patience to rehabilitate these merchants, many of whom are damaged goods. It will take time to regain their trust in payment processors. No one likes to be on the receiving end of a bad deal. The Consumer Financial Protection Bureau is right: we must hold big tech companies accountable for their actions.
Fortunately, plenty of companies in our industry operate with a high level of integrity. I am fortunate to have formed long-term relationships with sponsor banks, processors, value-added service providers and other ISOs that have endured.
The best partner prospects should be similar to our companies in size, culture and values. The best partnerships occur between equals who bring each other different but complementary skill sets and assets. As the best matchmakers in our industry would say, don't rush. Take your time. Do your due diligence and get a good attorney.
Allen Kopelman, a serial entrepreneur is co-founder and CEO of Nationwide Payment Systems Inc. and host of B2B Vault: The Payment Technology podcast. Email him at allen@npsbank.com and connect on LinkedIn https://www.linkedin.com/in/allenkopelman/and Twitter @AllenKopelman.
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