By Dale S. Laszig
Whether they write a few or a thousand deals a month, most merchant level salespeople (MLSs) agree that theirs is a relationship business. Changing technology and consumer trends have led many to consider what the future may hold for their hard-won bonds with merchants and acquirers. Will automated, self-service models replace the personalized service that has historically defined merchant services?
"Super ISOs may technically own a merchant account and take the risk, but keeping that merchant depends on the downstream and merchant," said Nancy Austin, Vice President of the Northeast Acquirers Association and co-owner of Continuum Card LLC. "When sub-ISOs don't receive good service, they will submit the next deal to a different ISO."
Austin, a former Verifone executive who has worked with numerous ISOs and agents in her career, noted that many MLSs work with multiple ISOs, navigating various levels of service, product offerings and risk management policies to find the best fit for their merchants. "The super ISO's primary customer is the partner, not the merchant," she said. "These partners are on the front lines of implementation and service, whether it's managing an EMV [Europay, Mastercard and Visa] migration or helping them adopt mobile and cloud-based POS solutions."
ISOs need to provide tailored support services to help sub-ISO partners perform optimally, Austin added. For example, some sub-ISOs appreciate ISOs contacting merchants directly; others prefer to run their own help desks, relying on super-ISOs for Tier 2 service and support.
The Green Sheet interviewed payments industry leaders on how ISOs, sub-ISOs and MLSs can improve partner relationships in the 21st century. They offered numerous insights and recommendations.
Henry Helgeson, Chief Executive Officer and co-founder of Cayan LLC, said customer service began as an afterthought in payments. "We weren't initially trying to solve problems upstream," he said. "Help desk representatives were trained to pick up the phone and knock out a problem quickly. Sub-ISOs, aware that larger acquirers had poor levels of service, would fill gaps with their own enhanced service levels."
Helgeson noted that as the industry matured, acquirers became more focused on net promoter score (NPS), the index used to measure customer approval rankings and their willingness to endorse a service provider. "At Cayan, we live, breathe and die by these numbers and constantly question how we can improve," he said. "Eighty percent of our calls are answered in 20 seconds or less. Our tactical staff measures performance and monitors 5 percent of calls."
Building trusted relationships begins and ends with service, Helgeson added. "If a merchant isn't happy with a $10,000 POS system, you could lose a channel partner relationship," he said. His focus on service led to rebranding the company formerly known as Merchant Warehouse to Cayan, an effort Helgeson said was more than a name change. "We migrated our call center to Belfast, a friendly place with highly trained personnel who excel in attrition management and independent software vendor [ISV] retention," he said. "Partners still tell us, 'You guys are so much better than Merchant Warehouse.'"
Michael Cowart, Vice President and General Manager at Worldpay US Inc., called ISVs the new ISOs of the 21st century. He said payments are just part of the innovative solutions these entrepreneurs bring to market. "They know hardware and software, and they're learning how to sell merchant services," Cowart said. "They tend to specialize in boutique verticals." He provided examples of nail salons that assign merchant identification numbers to each independent contractor and doctors' offices that receive 90 percent of payments from insurance companies and 10 percent from patient co-pays and deductibles.
"Worldpay's Solutions Consulting Team works with ISVs to determine their needs and assist with credit, debit, virtual terminal and recurring billing solutions," he stated. "ISVs are skilled in technology and tend to focus on how to get payments from their systems to Worldpay."
Kevin Sisk, Senior Vice President, Partner Solutions at First Data Corp., said, "Over the years First Data has followed the movement of technology from countertop terminals to integrated solutions, software verticals and ISVs. In the end, if you're not partnering, you'll be iced over in this business." Sisk said ISVs want modern technology and a friendly face, and First Data is committed to delivering. Making it easy for ISVs helps them make it easy for their customers and partners. "We view our partners as franchise owners, and help them price, sell and deploy merchant solutions," he added. "Our internal culture is wrapped around the franchise model. Being big isn't the goal; being excellent is the goal."
Retention specialists, assigned to specific accounts and territories, have been a mainstay of merchant services. Austin and others have seen positions eliminated in recent years. "Some super ISOs have replaced relationship managers with toll-free numbers," Austin said. "MLSs who call a help desk pool may get different answers from different representatives; some will only speak to merchants, but merchants are busy running their businesses and depend on MLSs for support."
Gary Rutledge, President of International Bancard Corp., added, "Super ISOs serve two masters, our sales partners and our merchants. Both are equally important; taking care of them requires two completely different skill sets." MLSs do not have to track down key individuals in different departments, Rutledge noted. "Their liaison representatives do that for them, by driving service issues through the system," he said.
Cowart stated that Worldpay's relationship managers view themselves as "extensions of the ISOs they serve, escalating, advocating and answering calls on behalf of XYZ ISO. It may sound corny but sometimes it comes down to picking up the phone."
Allan Lacoste became Director of ISO at Total Merchant Services Inc. in March 2016. A former ISO owner, Lacoste is familiar with many challenges confronting super ISOs and channel partners. "Our in-house retention team is very sales oriented and knows how to save deals," he said. "Our CPP-certified Partner Support team takes care of partners, with multiple solutions including EMV, NFC and high-end integrated POS."
TMS helps partners migrate merchant portfolios from countertop terminals to intelligent, integrated POS systems, Lacoste added. "Instead of trying to make older MLSs into POS experts, our in-house team trains merchants," he said. "Letting partners leverage our capabilities gets us closer to our shared goal of getting more transactions and generating more revenue."
Austin believes sub-ISOs need to be alerted when merchants experience phone line or processor outages. "An alert system that sends out tweets or emails would keep downstreams in the loop and help them manage expectations," she said.
Dimitri Akhrin is founder and President of Integrated Reporting is Simple LLC, a customer relationship management (CRM) platform designed to provide enhanced tracking, transparency and process improvement to merchants and ISOs. "We deploy an ISO management platform, IRIS CRM, that enables ISOs, agents, sub-ISOs and merchants to interact and drive efficiencies," he said. "Merchants can track their deposits; ISOs, MLSs and support teams can create tickets to report and track service issues."
Not all CRMs and self-service portals are alike, Akhrin stated. "Technology must be well designed and continually maintained and improved," he said. "Features need to evolve; those that sufficed in 2012 will not be good enough in 2017."
Employees are a critical asset, and lean, efficient ISOs that invest in team members are the industry's future, according to Akhrin. He emphasized the need to back up automated systems with knowledgeable and well-compensated client service specialists. "Support teams want to do well and be praised for measurable success," he said. "The employees you treat well will be around when you retire, enabling you to sleep through the night and enjoy a good quality of life."
Jared Isaacman, CEO and founder of Harbortouch Payments LLC, agreed super ISOs should manage service issues and let partners focus on what they do best. "We can't push support back on our partners," he said. "When a Harbortouch restaurant needs to update its POS, the product itself will steer merchants to our support department."
At Harbortouch, things that were formerly considered "nice-to-have," like online apps, tablet apps, alerts, auto-underwriting and video training, are now standard offerings. "We go to work every day with the mindset of empowering our partners to capture merchants they would not otherwise be able to get," Isaacman said.
Worldpay partners use an online portal to manage hardware, access online apps and receive updates from card brands and financial institutions. "ISOs control the process," Cowart said. "Keying their own merchant apps can significantly reduce margin of error."
MLSs receive confirmation when Worldpay onboarding systems receive a merchant app; they can track its journey through boarding and underwriting queues, Cowart noted. Once approved, a download notice for a terminal, virtual terminal or whatever was keyed, is sent to the agent.
TMS's back-office Groovv Partner Portal provides MLSs with service updates and training materials. "On Motivational Mondays, our book club highlights books on gratitude and how to get ahead," Lacoste said.
Isaacman and others have seen industry-wide improvements. "Super ISOs are taking better care of their agents than they were 10, 15 or 20 years ago, and individual compensation is better than ever before," Isaacman said. "The Green Sheet ads from 10 years ago promoted 50-50 splits, without big upfront bonuses, free terminals or equipment."
Agents may assail processors for not doing enough and praise others for anticipating trends, but payment processors face multiple challenges, from changing consumer behavior to EMV migration, Isaacman said. He described technology as a mixed blessing that has both complicated and simplified payment processing.
"When everyone used dial-up terminals, tens of thousands of terminals used reliable, copper phone lines, and there were no DDoS [distributed denial of service] attacks," he stated. "And merchants didn't need to choose between integrated and semi-integrated solutions."
On the other hand, many things ISOs used to do themselves are now done for them, Isaacman noted. "Fifteen to 20 years ago, agents were performing multiple downloads at home, preparing welcome kits and dealing with endless paperwork," he said. "Online reporting has made life easier for our partners; they have more tools, less administration and better compensation." Isaacman feels there has never been a better time to sell merchant services. "Where else can you create recurring revenue streams that pay the bills month after month, year after year?" he said. "Unlike other sales careers where you're only as good as your last order, the payments industry enables MLSs to create recurring revenue streams."
Cowart added, "Competitive pricing and discounts and promotions for hardware and software make it easier for agents to sell merchants, improve margins and build a lucrative career."
Rutledge concurred, noting that agents have pushed for bigger and bigger share splits, which today favor the agent. He said MLSs need to stop complaining about handling service calls and remember that promising great service was how they landed the merchant in the first place. "If you've made a career out of being the advocate who handles the dirty work, then don't complain about getting your hands dirty," he added. "I have a high regard for these MLSs because most of them have high retention rates and keep their customers for life."
As he reflected on the last 20 to 30 years of payments, Sisk said MLSs and ISOs have built empires by filling the service gap between processors and merchants. Average small business merchants weren't thinking about payments; they just wanted their processing systems to work. They wanted one phone number to call to distill information that is mostly automated and publicly available today, he said. "Today's merchants can google everything, and they're getting smarter," Sisk said. "Empowered mom-and-pop merchants know who's shopping at their stores. Data analytics and digital tools provide easy access to that information."
"Driving efficiencies is our mantra," Rutledge said. "I manage operations by thinking about how I can keep customers from calling me, because if I treat them right, they don't need to call me. If I've answered questions, disclosed information and proactively anticipated their needs, then things only hit the fan when something breaks."
Merchants appreciate our personal touch, live support and calls that are answered promptly, Rutledge added. However, it's not always easy to get personal when you're onboarding thousands of new merchant accounts every month. In the face of this extraordinary volume, Rutledge suggested the only way to make money is to move merchants to self-service support.
"Merchants are people and oftentimes prefer to pick up the phone than look up an answer, but when they work with third parties, there's no one to call, or they don't get back to them for three or four days," Rutledge said. "At the end of the day, it's hard to provide world class service at K-Mart pricing."
Worldpay treats each prospective partner with a strategic and consultative approach, reviewing solutions that address specific requirements and verticals, Cowart stated. Sometimes partners prefer not to deal with the Payment Card Industry (PCI) security standards, so Worldpay provides gateways that take PCI out of scope, tie in to their systems, and ensure they never hold or store a credit card.
"Some ISOs have a provision that partners producing under X number of contracts per month can be cut off," Cowart said. "They prefer to support partners that consistently add accounts than unproductive partners who may cost more to support than the relationship is worth."
Worldpay sets new partner expectations upfront during the sales process, exploring solution fit and defining a clear path for how they will work together, Cowart noted. "We do that first, because if we can't work together, pricing doesn't even matter," he said. Many large ISOs are focused on cost of acquisition and degrees of efficiency, but this isn't a business that is built around price increases," added First Data's Sisk. "The card brands may raise interchange, but we're not raising rates the way gas and electricity prices continually go up. In this business, you derive profits based on customer longevity and lifetime service."
Lacoste said that unlike ISOs that try to limit calls, TMS encourages partners to call and brainstorm. "Return on investment and cost of acquisition tend to balance out in our extended family of agents, regardless of how many or how few deals they write each month," he said. "We realize that even one deal can put gas in your car." What's your end game? Author and motivational speaker Stephen Covey wrote, "Begin with the end in mind." Many ISOs and MLSs are looking ahead to the day when they sell a portfolio or pass it down to family members.
"I am a big believer in building long-term, sustainable relationships," Akhrin said. "We personally meet most of our clients face to face at least once a year at tradeshows." Personal meetings, even short ones, can build rapport and give people the opportunity to communicate things that they may not want to communicate by email, he said, adding that when you know someone personally and can look them in the eye, you tend to do right by them.
Lacoste said TMS's weekly calls are "open and available," whether you write one deal a month or 1,000 deals a month. "We put programs in place that allow agents to have an end game in mind and not worry about claw-backs and maintenance fees," he said. "We've been in the field; we know how to close a deal and we want to be the ones to service that deal.
"We also want to know the ISO's exit strategy. Do they want to cash out? Or do they want to build a generational plan, passing the portfolio down to their family so they can continue to grow the portfolio?"
With technology evolving at breakneck speed, Lacoste believes it's essential for super ISOs to continually educate their teams, help them achieve goals and aspire to new heights, and build strong portfolios to pass down to the next generation. And that's something super ISOs, sub ISOs and MLSs can all endorse.