The Green Sheet Online Edition
May 14, 2018 • Issue 18:05:01
What it takes to thrive in payments today – Part 1
In today's complex payments world, where simple terminals and competitive pricing are no longer enough to attract, let alone retain merchant accounts, industry leaders have emphasized the need for merchant level salespeople (MLSs), ISOs and other payment professionals to transform into consultants who not only provide ever more powerful POS systems, but also offer a host of integrated business services tailored to help individual merchants achieve their goals. A tall order.
With this in mind, we asked members of The Green Sheet Advisory Board to share their thoughts on the following:
- What top three tools of the trade are most critical for MLSs to succeed in payments today?
- What about ISOs working with MLSs? Do they need the same ones, or are other types of aids more essential to them?
- And for equipment, software and systems providers, what might their most critical needs be in terms of tools of the trade? Are these different for long-time payment players than for startup payment facilitators and independent software vendors breaking into payments?
- Finally, given the degree of cooperation needed in today's payments biz, what top three qualities must all of these essential players on the payments value chain bring to the table to foster success for themselves, their partners and merchants? Please explain.
Following is a portion of their responses; the remainder will be published in a subsequent issue of The Green Sheet. Thank you to the industry leaders who carved out time in their demanding schedules to share their insights here.
Brandes Elitch, CrossCheck Inc.
The first point to note is the change in the sales process and culture surrounding the sale. Ten years ago, the ISO sold or leased terminals, sold the lease paper and generally never saw the merchant again. The ISO was usually a W-2 employee or 1099 independent contractor for the processor or acquiring bank. The sales process was driven by the salesperson's tonality, emotion and certainty around the phrase, "I can get you a better rate than you are paying now." ISOs who had those three things nailed down got the sale, because they were better at closing than the other ISOs.
Today, the top acquirers are also the top six or seven card issuing banks, and the salesperson is more likely to be a bank employee. Yes, these banks have sales quotas, but they also have a huge base of small business customers who are banking with them, and when you have the loan, you have the entire business relationship.
Because these are the largest banks in the country, they will typically have best of breed products as well, and are now working with fintechs to enhance their product range and mix in areas like insurtech, for example. Maintaining the customer relationship is paramount for the bank.
Today the emphasis has switched from terminals to point of sale systems that integrate to an accounting package or an ERP solution. There is a lot of talk about working with ISVs, and even today, only half of the ISVs have an embedded payment processing solution, so there is still a lot of opportunity there.
Merchants are more likely to trust their bank than a third party whom they have no relationship with. But sometimes the bank will not have a solution specifically tailored for that merchant vertical, such as integration to payroll, time and attendance; scheduling; job timekeeping; memberships; subscriptions; analytics; and remote location management. One of the latest trends is for the acquirer to offer a small business loan to the merchant and make it easy to apply for it, which is typically a very arduous process for the SMB now.
The salesperson also needs to offer some assistance and explanation around EMV and PCI and security compliance. One example of how not to do this is the poorly handled EMV rollout. The card brands mandated that this had to be done by October 2015. Here we are over two years later and probably half of the merchants have complied, and an entire industry, petroleum, has had their date moved to October 2020. Talk about a credibility gap. Who will believe the next pronouncement from the card brands now?
As far as tools of the trade, this will vary by merchant SIC code. Some merchants will focus on in-store, and others will focus on online, mobile and phone orders. Some merchants will have massive issues with chargebacks, returns and friendly fraud. Some will be focused on an omnichannel solution that will encompass rewards and loyalty. Some will want a payment portal for their B2B customers to get them to pay from their bank account and not with an interchange based product. The salesperson has to understand each merchant vertical to really provide a tailored solution.
As far as the top three qualities, the main quality is to be a good salesperson. This means listening to the customer and thinking like the customer, and understanding the vertical. Most salespeople just want to talk, talk, talk, but the good ones want to listen, listen, listen.
Jared Isaacman, Shift4 Payments LLC
1. As the industry continues to evolve, it is more important than ever that MLSs become true business consultants for their merchants. The top three tools of the trade that are most critical to succeed in payments all reinforce that role:
- Integrated POS systems: The convergence of payments and POS/software technology has been underway for a number of years, but at this point there is no denying that an integrated POS solution is critical for any MLS to succeed in today's marketplace. POS systems run a merchant's entire operations, becoming an integral part of their business and delivering unmatched retention benefits.
POS systems are the best way to build a stable and profitable residual portfolio, but it takes more than just marketing a product, but complete understanding of the entirety of the technology solution and its accompanying ecosystem. For example, an MLS that just wants to be able to sell a POS offering, but doesn't dedicate the time to understand online ordering, loyalty, pay-at-table, EMV, security, analytics, etc., will face considerable challenges. It's essential for MLSs and ISOs to completely reinvent themselves within the integrated payments space and not think of POS as "just another product."
- Business intelligence: One of the biggest selling points of a POS system is the valuable business reporting that it provides for merchants, but really that is just the beginning. The capabilities of cloud-based systems go well beyond reporting. Offering actionable data to your merchant customers further reinforces your role as business consultant. You can provide them a top-level view of their business to make more informed decisions about their operations.
- Payment security technology: Between high-profile data breaches, the upcoming TLS deadline, and the ever-changing PCI guidelines, security has become one of the most salient topics in payments. Merchants are becoming more aware of the ramifications associated with security, so you must be knowledgeable about these topics and provide the security solutions that they demand.
2. The same tools that have become critical for MLSs are also essential for ISOs. ISOs and MLSs should both be offering these solutions and looking for providers who offer the support necessary for maintaining these technologies, but they have to go beyond just treating integrated payment technology as "another product." To embrace this evolution of our industry it requires a complete overhaul of how ISOs and MLSs approach the market in every respect.
3. The most important goal for any equipment, software, or systems provider is aligning the success of their business with the success of their customer. This can be accomplished by listening to the needs of the market and delivering solutions that address these needs. This goal should be universal among all providers, regardless of the size of the organization or whether it is a start-up or established player in the industry.
4. Understanding the needs of their customer and providing the necessary tools to address these needs in a simple and effective way; offering a complete solution that reduces expenses, improves efficiency, and increases profits for business owners; and possessing knowledge and the ability to educate business owners on cybersecurity and the technology available to help protect their data.
Justin Milmeister, Elite Data Processing Inc.
1. The MLS today is far different than yesterday, to say the least. The top three critical tools MLSs must possess to be successful in the marketplace today are as follows:
- The old saying "knowledge is power" couldn't be more applicable in our industry. MLSs that have a deep knowledge of the various products and services offered in our industry have the best chance of success. We have experienced a race to the bottom with respect to pricing so those who can consult merchants on various products that will help their business grow will ultimately win the business even if the savings isn't material with respect to their credit card processing.
- I have always said likeability wins more often than not when it comes to sales and just about everything in life. If merchants like the MLS they are dealing
with their chances of winning that business increase exponentially, even if there is no real savings on their fees.
- MLSs have a wide variety of companies to choose whom to submit their hard-earned business. It is imperative to partner with a company that is constantly innovating and keeping ahead of the curve versus simply following trends.
2. ISOs need to provide their MLSs differentiators to help them win business aside from just pricing. ISOs should be constantly looking to stay ahead of the curve with new offerings that can arm their MLSs with tools and resources to increase merchant acquisition. Ideally, the ISO would have offerings that are proprietary or exclusive to them that are highly beneficial to businesses.
There is nothing like having a product or service a merchant wants, or better yet needs, and the MLS can explain the processing must go through them to utilize this particular product or service. In addition, ISOs must be able to board and service the accounts MLSs bring in without hiccups, which can easily cause hard-earned deals to go south quickly.
ISOs need to have an open-door policy, from upper management on down, for the MLS to reach to voice any issues or concerns. I am a big fan of holding conference calls and roundtable discussions with our MLSs to get their feedback and ideas, which have been invaluable over the years. MLSs are the ones in the trenches so to speak, so it is vital to get their feedback.
3. Hardware and software vendors can no longer afford to be one dimensional and survive in the payment space. They must produce systems that offer a wide variety of functionality that merchants require in the marketplace today. There is no difference, in my opinion, whether you have been around for decades or whether you are a startup. There are many well-funded startups that are changing the payments space as we know it, and the long-term players need to constantly be evolving as well, or they will lose the market share they once had.
4. The three qualities all players in the payments value chain must have are as follows:
- They must be innovative and separate themselves versus the competition. If you are just doing what everyone else is doing you will be average at best.
- All must be nimble and make appropriate adjustments as the market changes or better yet spot opportunities ahead of everyone and quickly adjust.
- Everyone should know their consumer and understand their needs and wants. Determine what is missing and fill that gap.
Cliff Teston, Signature Card Services
1. What top three tools of the trade are most critical for MLSs to succeed in payments today?
- Knowledge: Comprehensive knowledge of payments and its ecosystem is as critical nowadays as it was 20 years ago, except the complicity of the subject matter is much broader and requires serious technical expertise in order to do well in today's complex electronic payments environment.
In addition to maintaining one's mastery in the standard payments mix ‒ pricing and interchange, operations, products, risk and compliance ‒ MLSs must understand how technologies like mobile commerce and wallets, biometric authentication, voice-enabled payments, machine learning, and AI, to name a few, could impact various areas of payments and be prepared to integrate them in their conversations and offerings.
- Customer experience: The ability to deliver the most premium customer experience is another critical attribute of a successful MLS. To keep merchants happy, an effective salesperson needs to practice active listening in order to fully grasp their merchant's needs and wants, and to be a good project manager to follow through and to keep any promises they've made.
- Relationship management: Going back to the basics ‒ caring genuinely about your merchant and putting their interests first ‒ could go a long way and help an MLS form solid and long-lasting relationships.
2. Do ISOs need the same tools as MLSs, or are other types of aids more essential to them?
Yes, we do. We believe that the same three apply to the ISO-MLS relationships.
3. What are the most critical needs for equipment, software and systems providers? Are these different for long-time payment players than for startup payfacs and ISVs breaking into payments?
Integration is the key. In the endless sea of different types of equipment and multiple system providers, seamless integration, perhaps at no cost to the end user, will set you apart and provide merchants and/or agents with more options and flexibility.
We think that it's critical for a startup company to make a splash quickly. The larger, long-term players can afford missteps here and there as their reputation precedes them and grants some degree of forgiveness. If a startup vendor comes out of the gate with a software or piece of equipment that isn't competitive, relevant and memorable, they may not have a second chance.
4. What top three qualities must all of these essential players on the payments value chain bring to the table to foster success for themselves, their partners and merchants?
- Transparency: In an industry that isn't always looked upon in the greatest light, it is imperative to be transparent with your merchants and partners. Whether that be with pricing, the services you offer, etc.; if you are seen to be anything other than transparent, that relationship is essentially over.
- Dedication: Given the level of competition in our space, there is really only so much you can do from a savings and equipment standpoint. What often sets you apart is your willingness to support and commitment to be the best. While many people claim to be, it is only in our actions and follow-through that merchants and partners can truly see your level of dedication and desire.
- Relevance: In the ever-changing payments landscape it is vitally important to stay relevant. Knowledge is power; your partners and merchants will appreciate your knowledge and willingness to stay abreast of card brand changes, vertical updates, etc. It shows a level of professionalism and puts your partners at ease, as they know you are always working to stay ahead of any potential issues or changes.
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