By Dale S. Laszig
Partnership models between merchant level salespeople (MLSs) and their customers are changing. At a time when most business owners can easily set up payment processing, merchants are seeking partners with tools and resources that can help them compete with large retail chains. Payments analysts have observed that processing is a small component of trending products and services.
The Green Sheet asked leaders from various payments industry sectors how they choose partners and create profitable, long-term relationships. In the first article of this series, published Aug. 13, 2018, in issue 18:08:01, executives discussed how partnerships address merchant requirements and accelerate growth. In this second and final article of the series, they provide insights into their unique partnership models and philosophies, with practical advice on how MLSs and merchants can forge mutually beneficial partnerships.
Before cloud-based and mobile technologies gained mainstream acceptance, merchants who changed processors frequently had to rip out old systems, install new equipment and train staff. Many merchants delayed making changes as they weighed benefits against operational expenses, down time and uncertainties about data security and product life cycles. Today it's far easier to make changes. Technology is simple, requiring little staff training. Subscription models have replaced heavy upfront investments; continuous updates have removed concerns about data security and product longevity. Gateways dynamically route transactions to different processors. Customer databases are easy to migrate. Massive merchant portfolio conversions can be managed remotely with minimal inconvenience.
"We've reached an inflection point in our industry for new entrants and incumbents alike," said Ruston Miles, co-founder and chief strategy officer at Bluefin Payment Systems LLC, a payment security company. "Quite a bit of these changes occurred during the recent EMV migration, when service providers looked under the hood and identified other [technology] areas in need of improvement."
As processing takes a backseat to vertically focused, mobile-first solutions, merchants rely on MLSs to help them delight customers and navigate the ever-changing payments landscape while enjoying an uninterrupted processing experience, Miles noted. "As advanced POS and practice management systems replace yesteryear's clunky old machines that dialed out, it's important that innovation not overrun or pass up security innovation," he said.
Miles cited Bluefin's partnerships with Transaction Network Services, Ingenico Group, Verifone and NCR Corp. "We appreciate the connectivity, telecom services and global reach that TNS provides to our partners," he said. "And partnering with large, prolific organizations like Ingenico, Verifone and NCR enables Bluefin to bring point-to-point encryption to a wide range of merchants. This primary security technology helps them fight the biggest threats while making compliance easy."
MLSs, who may have previously closed a sale and moved on, are finding their jobs begin when a merchant account goes live. Some industry veterans can recall when the prevailing wisdom was having multiple "hooks" in a merchant to increase customer stickiness. Agents used "tie downs" when closing a sale. This jargon seems outdated now. In the new paradigm, merchants recognize they have a choice in processors and look for partners with industry knowledge and service excellence, according to Marc Gardner, founder, president and CEO of North American Bancard Holdings LLC.
Gardner likened being a good partner to baking a cake. "We need to add ingredients at the right time to create a beautiful, finished product that everyone is interested in trying," he said. "There is a multilevel approach that includes us working with the community, strategic organizations and our own people to create value for our merchants."
Gardner recommends vetting prospective partners thoroughly. Use the wrong ingredients and the cake will be lacking in flavor; scrutinize potential relationships to ensure there is a proper fit, he noted.
Partners need to have an equal stake in a relationship, added Chris Baird, president at OptConnect, a managed wireless solutions provider. "A partnership is much more than just a business arrangement across two organizations to support the advancement of products, services or technologies aimed at resolving customer's needs," he said. "True partnership is exemplified when we care more about what we build together that what we want as individuals."
Lisa Shipley, general manager, fintech solutions at Transaction Network Services Inc., said companies that value each other equally make the best partners. "You have to feel you're getting as much as you're giving," she added. "Each partner must value the relationship equally while providing the right pricing and services."
Industry leaders emphasized the need to anticipate industry trends. Most agreed that staying ahead of the curve is just as critical for MLSs as it is for companies that design products and services. Merchants need timely solutions that help them improve efficiencies, stay ahead of ever-changing threats and gain actionable insights into customer behavior, said Matthew Katz, CEO at Verifi, a risk mitigation company.
Verifi works with reseller partners that provide chargeback and fraud management services, Katz said. These companies offer predictive intelligence and services designed to help merchants accept more good transactions and boost transaction volumes.
"In the competitive payments space, chargeback and fraud prevention are a natural complement to any chargeback mitigation company looking to help their clients provide a safer experience," he stated. "Our partners bring two things to the table when promoting Verifi solutions – our experience and name recognition in the space and technologies that are successfully used every day on a global scale."
Todd Linden, CEO, payment processing, North America at Paysafe, emphasized the need to maintain a business-first perspective. New technology is cool, but necessity is what brings these solutions to life, he said, adding that there is a high inventory of ideas and choices in the payments industry; leaders must choose wisely and focus on the business case for products and services.
"At Paysafe, we study new technology and whether or not to buy or partner and what we see as becoming a more commoditized product or service," Linden said. "We think years ahead about where things are going and where Visa, Mastercard, Discover and American Express will want to push things. We work hard to understand all the pieces and touchpoints."
Payments industry leaders and MLSs alike need concise definitions for the solutions they sell. Having access to an array of technologies and expertise is only good if you can effectively harness that power to address specific requirements, executives stated. Focus on customers' needs, pain points and problems technology can solve, they advised.
"As a global technology company, it's difficult to be everything to everyone, so by working with our partners, we're able to provide merchants with more industry and use case specific solutions that leverage our technology, especially for small and medium size businesses," said Jennifer Miles, executive vice president of North America at Ingenico Group. "Additionally, since every business is unique, even when in the same vertical, it's important for us to work with our partners to ensure that they're able to cater to these needs, which in turn allows us to provide a variety of solutions for different use cases."
Miles said Ingenico works with a variety of partners, including acquirers, gateways, independent software vendors (ISVs), ISOs and MLSs, among others, and is not restricted to a single partnership formula. By closely collaborating, Ingenico ensures partners are educated about the solutions they're selling and have the necessary marketing materials to put their best foot forward, she said.
"The term 'co-opetition' describes how companies work together in this environment; there's no one company that's big and bad enough to do it alone," added Bradford Giles, senior vice president, marketing and sales enablement at Ingenico Group. "The industry has created a foundation that simplifies interoperability and integration."
Lynn Holland, vice president, merchant solutions at ACI Worldwide, said it is not unusual for competing MLSs to offer the same solution because their companies have partnered with the same service provider. "Our competitors sell through our network," he said. "The IBM model was 'be blue from top to bottom'; digital has blown that up. On the digital side, one web platform with a single integration may run on 100 servers."
Another consideration when partnering with merchants is finding the right business fit. ISOs, acquirers and ISVs frequently represent multiple gateways, processors and solutions to enable channel partners and sales agents to deliver targeted, right-sized solutions. Ben Goretsky, CEO of USAePay, said it is better to support multiple gateways, payment facilitators and payment schemes than to "put all your eggs in one basket."
It's always interesting to me when ISVs lock themselves down to one solution, Goretsky noted. "There's usually a reason why an ISV would only stick to one solution," he added. "Maybe they are getting an incredible deal or working with a payfac [payment facilitator] that is gunning for exclusivity."
USAePay integrates with numerous ISVs, promoting their services to ISOs and banks, Goretsky pointed out. This can benefit all partners and enable ISVs to focus on the software side without having to specialize in payments. "The ISO partnership model is our sales channel," he added. "We do not sell directly to merchants. The model we have with ISOs and banks is to provide fintech solutions, such as APIs, backend forms, mobile and EMV solutions."
Mark Schulze, co-founder, Clover and vice president of business development at First Data Corp., observed that early tablet POS companies were formed by people who were passionate about a particular vertical. "These were new platforms that solved problems such as high-cost upgrades," he recalled. "But they still took a page from the traditional POS playbook by building vertical solutions that were closed, without enabling partners to plug in."
Having access to open-source app marketplaces facilitates strategic selling, Schulze said, adding that MLSs can talk about business productivity and how Clover can help. For example, they could introduce a time and attendance app by questioning merchants about their time clocks or wall charts. MLSs who offer services and are more consultative reflect an industrywide shift in mindset, he said.
If you're successful, I'm successful. This mantra and universal partnership model can be heard throughout the entire payments industry value chain, according to industry leaders.
Joe Mach, president, North America at Verifone said helping partners make money is the company's highest priority. "We have to make sure that we as a partner are helping execute on two objectives: grow revenue and decrease costs," he said. "When channel conflicts occur, we have to be real about these things, by focusing on mutual goals and by not competing in their core areas. For example, we aren't getting into the acquiring business."
Another essential aspect of building trust is making solutions channel-ready, Mach said. This means complete solutions, not parts, are ready, with training materials, pricing and support in place. It's all about support; multitiered support can combine automation, online chat and phone, he noted. The key is being responsive and having the depth to support your partners.
As he reflected on industrywide changes in payments, Mach acknowledged it is sometimes necessary for individuals and organizations to reassess their priorities and partnerships. In doing so, they may find it necessary to change their focus and business models to remain relevant. "As Verifone transforms from a hardware to a solutions business, we've had to internally change our muscle memory to build up a true professional services organization," he said.
Dale S. Laszig, Senior Staff Writer at The Green Sheet, is a payments industry journalist and content provider. She can be reached at firstname.lastname@example.org and on Twitter at @DSLdirect.
The Green Sheet Inc. is now a proud affiliate of Bankcard Life, a premier community that provides industry-leading training and resources for payment professionals. Click here for more information.
Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.Prev Next