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The Green Sheet Online Edition

November 12, 2012 • Issue 12:11:01

Jones predicts ISOs will remain at payments hub

ISOs and merchant level salespeople (MLSs) will remain at the center of the payments hub even as the tent surrounding that hub grows to include more players, SignaPay Ltd. President Kevin Jones said in an interview with The Green Sheet shortly after he spoke at the Mobile Payments Conference in New York City in October 2012.

"For more than 20 years, business owners have been getting all their payments needs met by banks or processors," Jones said. "Why should we assume that they will move away from this one-stop-shop model and look outside for mobile solutions?"

Jones noted that new mobile payment players often choose a distribution model that goes directly to market. He conceded this approach has worked for Square Inc., which has made inroads into micro-merchants and some big-box retailers. But he believes the future for ISOs is in the middle between Square's two target segments.

"If you look at everyone other than the big-box retailers, they have all of their loyalty, processing, gift card, ACH, and check processing through ISOs," he said. "Do you really think they are going to break away from that relationship?"

Jones believes new industry players such as online and mobile payments processor BrainTree Payment Solutions LLC are choosing ISO distribution channels because they "want to be able to grab a lot more of the market at a faster pace and eliminate a lot of problems" by leveraging ISO sophistication and experience in payments.

ISOs are central to the distribution channel; the successful solutions will be those that capitalize on that channel, he added.

Complications, attrition ahead

Jones is not, however, forecasting a cloudless sky ahead for payments. He predicted as many as two-thirds of the ISOs and MLSs now in the business could be gone in five to 10 years as a result of attrition due to increased competition and the increasingly complicated nature of the business.

"You have to decide what role you will play in the ecosystem if you are going to move forward," he said. He also foresees value-added reseller channels growing in importance as they become recognized as "a high tech boutique" of payment software and services and an important revenue source for successful ISOs.

"To succeed, you need to negotiate great deals for your partners" to make better, cheaper options available, Jones said. Later, at the conference, he elaborated on the idea. "The time is now," he said. "We are looking for solutions now.

"The companies that offer us simple solutions backed by training, marketing and excellent customer support will be the ones that succeed." end of article

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