The Green Sheet Online Edition

May 08, 2017 • Issue 17:05:01

Street Smarts^SM

Finding the right ISO partner

By Aaron Nasseh
Finical Inc.

As an independent sales agent or merchant level salesperson (MLS), you have the ability to choose which ISO to partner with. And in today's market, you are in a very good position, because dozens of ISOs compete for your business. Over the years, I have met thousands of wonderful sales agents who have worked with various ISO partners. I have also had the privilege of working with many ISOs throughout the industry, both as an executive and as an MLS.

Unfortunately, during the same period, I have also heard and witnessed countless horror stories about sales agents losing their residuals; however, in spite of widespread awareness of this unfortunate reality, I am still amazed at how quickly some MLSs will execute an agent agreement with an ISO just based on the compensation plan that they are being offered, and prior to knowing much about the ISO, or worse, prior to having the agreement reviewed by a competent attorney.

I believe that while the nature of our industry attracts some less than ethical characters, the vast majority of salespeople who work within our industry are honest, hard working individuals with good intentions. This is why they assume that the ISOs whom they are partnering with have the same intentions. I have seen enough of these incidents in my career to report to you that it doesn't always work this way. While in our industry there are many good ISOs, unfortunately, there are also some with less than ethical management. If you are serious about your career in the merchant services industry, it is imperative that you protect your future income by vetting any potential ISO partner. After all, you are in this business for residual income, so you must choose your ISO partner wisely. The good news is that it's not as daunting a task as it may seem; it just takes some effort on your part and good judgment.

Five tips to the wise

Here are five simple tips to keep in mind:

1. Don't fall in love with the compensation plan: Let's face it: most of us pick up the phone and call an ISO because we saw an aggressive compensation plan being offered. While that may be a great first step, don't be blinded by an enticing compensation plan. You must evaluate the entire package and not just some numbers on paper. There is no question that the compensation plan is important, as it may improve your bottom line and help you to grow your business. But who you are partnering with is even more important. Remember the old saying: A contract is only as good as the person who is signing it.
2. Bigger is not better: A larger ISO is not always the best fit for you. Many larger ISOs are geared toward servicing larger agents, so they are not always able to provide a high level of service and support that is necessary for a smaller MLS office. Unfortunately, you usually won't find this out until it's too late, and you have submitted deals to them. So it's very important to ask them specifically what type of training, services and support they provide to their agents. In my career, I have met countless agents who complained about the lack of support from their ISO partners.
3. Do your due diligence: Thanks to the Internet, you can be a private investigator and do some due diligence on the potential ISO partner. Learn as much as you can about the company and its practices. Find out whether the company has a high turnover in management. That's generally indicative of poor leadership at the top, and for me, that's enough of a reason to walk away.

   If the company is public, be sure to review its financials. You will be surprised to learn that some of the largest ISOs in our industry are deeply in debt and are financially unstable. Also, be sure to review any past or pending lawsuits against the company. This usually provides you with a quick peek inside the company.

4. Get to know the CEO: The chief executive officer of a company is the captain of the ship, and the company is only as good or as bad as its CEO. Do a search online on the CEO, and learn as much as you can about him or her. Request a call with the individual, and see what type of a person you are getting into business with. If the CEO's ego supersedes his or her judgment, then it would be wise to look elsewhere. If the CEO won't take your call, it is safe to assume that your business will not be valued much in such an organization.
5. Legal review: When you find an ISO partner that you are comfortable with, be sure to have your agreement reviewed by an attorney specializing in the payments industry. I cannot emphasize enough the importance of this step. Your entire financial future may depend on it, so you must make sure that your interests are protected. I have also found the initial review of an agreement to be very telling about the company I may be getting into a relationship with. If there are countless provisions in the agreement designed to take away your residuals, that may be a sign of trouble ahead. Be sure to have your attorney negotiate terms that are fair to both sides.

SIDE NOTE: Do your merchants offer cash discounts?

As author of Street Smarts^SM this year, Aaron Nasseh is using the moniker "Street Smarts" in GS Online's MLS Forum. Within the forum, he will be seeking input about issues of concern to the payments community throughout the year. When this issue went to press, MLS Forum members were responding to his question about cash discount programs. They discussed such questions as: What's the difference between surcharging and a cash discount, how do these programs work, and are they legal?

You can add your voice to the discussion thread titled "Cash discount program!" at www.greensheet.com/forums/viewtopic.php?f=1&t=43542. If you aren't a member of the Forum, follow a quick registration process by clicking on the login link in the upper right-hand corner of our home page, www.greensheet.com.

You can also contact Aaron at anasseh@finicalinc.com with your responses to questions he poses or with ideas for future discussions.

Aaron Nasseh is the founder and Chief Executive Officer at Finical Inc. His extensive sales and management experience includes having previously served as the General Manager of CardPayment Solutions and Vice President of Sales at iPayment Inc. He may be reached at  anasseh@finicalinc.com or at 818-330-4055.

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