The rapid speed with which the payments landscape is transforming requires ISOs and merchant level salespeople (MLSs) to be nimble so they can remain competitive. With that in mind, we asked members of The Green Sheet Advisory Board the following questions.
Following is a portion of the responses we received. Additional answers will be published in future issues of The Green Sheet. Many thanks to those who took the time to share their knowledge via these questions.
AmeriMerchant - CanaFunding
Payment businesses are targeting small merchants in the following ways:
1. I believe the payment business is shifting from being a "financial service" to a technology business, the old way of selling on rate, reviewing and analyzing statements, etc. is getting harder and harder to be successful at; today merchants are looking for integrated solutions where payments are part of a total business system, specifically POS systems for retail and restaurant merchants.
The stand-alone credit card terminal is going the way of the fax machine: everyone has one, but nobody uses it anymore, as whoever controls the POS system today, in many cases, controls the payments. So we have embarked on marketing cloud-based POS systems that integrate our payments with complete software and hardware solutions that control retail and restaurant merchants' operating costs, and improve customer service and accountability. It is a longer sales cycle and more involved, but the rewards are higher volume merchants with less attrition and upfront income to our sales partners on POS system sales, replacing lost revenue from the decline in terminal sales and leases.
I believe the paradigm shift from stand-alone terminals to integrated systems has been in place now for the last few years and the new "agent bank" is now software developers and POS resellers, as many ISOs are marketing exclusively through these channels for payment processing. ISOs like ourselves who primarily use the traditional MLS and ISO/agent channel need to focus our sales partners into selling the total solution, including POS systems, to compete against VARS, POS resellers, etc. eroding our merchant base.
2. I believe today offers exceptional opportunities for progressive ISOs to grow their business by not only acquiring smaller ISOs and sales offices but also evaluating technology companies that complement payment processing to offer a "total solution" to gain market share. Many ISOs are in the POS business today, either reselling other people's product or selling their own solution, and acquisition opportunities today in this industry include purchasing other sales organizations so that you can leverage their technology infrastructure, existing customer base and products to grow your merchant portfolio. In my opinion there is no concrete answer to this question, other than to be open to evaluating other opportunities to grow your merchant portfolio with complementary products, with the focus always being on growing your merchant base and increasing processing volume.
3. I believe we always need to be open to change, especially in this industry with integrated systems, mobile payments and new players entering the marketplace including Square, Google Wallet, PayPal, etc. The new technology has put new players into the payments business, and if we ignore them now, they could be eroding our merchant base a few years from now.
I believe no one can be all things to all people; however, we need to focus on growing and keeping our merchant base, and if we need to enter a new business to protect our current business, then we have to make that move. We need to make sure this is a product or business venture that is sustainable for years, not just a few accounts; we need to make sure our staff can be trained to operate this new model or technology and we can market and, most importantly, support it - if the answer is yes to the following questions:
If the answers to the above are all yes, then we can move forward with expanding our product line, or tweaking our business model to grow our core business: payment processing.
1. The time to sell a business is:
2. The time to buy a business is unique for each buyer and business situation. (If the person reading this does not know when to buy a business, then he or she should not be in business, period.)
Buying a business is:
3. Having successfully completed four reinventions of the company, what caused me to adopt new models were:
Signature Card Services
1. I prefer to stay away from generalizing since each business is unique and adapts differently to changes in the payments marketplace. As for Signature Card Services, we frequently evaluate what worked for us in the past and what did not. We let go of strategies that were not successful, and we try to enhance the ones that worked.
For instance, we had to eliminate the upfront compensation when everybody around was offering it. It was a risky move but it allowed us to offer higher residual splits and lower cost. As a result, we were able to attract serious agents who are interested in growing and maturing their portfolio with us. That allowed us to focus on involved players who were looking for not only quantitative expansion, but also for quality growth, that is, evolving their operations into an ISO-level firm. We foster these ambitions and have all the necessary mechanisms to support them.
Additionally, investing into emerging payment technologies outside of merchant services works well for us. We believe that it's important to fearlessly embrace innovation even if at first it presents a threat to your model.
2. When you buy low and you sell high.
3. Agents should be able to rely on their ISOs as a resource for providing informational support and tools in evaluating their business models. At Signature we offer cutting-edge business intelligence to analyze effectiveness and profitability of these models.
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