homas A. Wimsett is a happy man. National Processing Company (NPC), the Louisville, Ky.-based transaction-processing company he heads, just reported its 13th consecutive quarter during which net earnings exceeded 20%. In a year when the stock prices of scores of technology companies plummeted, NPC's stock price at the end of 2001 ($32.50) was up 91% over year-end 2000.

Earnings per share were up 36% over the previous year. And, in a business line that is clearly dominated by one competitor (First Data Corp.) and its bank alliances, NPC maintains a respectable second place, handling 20% of acquired merchant card transactions and 13% of all card payments in the U.S. last year.

Many of these accomplishments would not be possible were it not for NPC's cadre of independent sales organizations, insists Wimsett, NPC's President and CEO. "Indirect sales is one of the most important channels for NPC today," Wimsett said in kicking off a recent two-day run of meetings with ISOs.

The meetings, organized as part of NPC's Annual ISO Partners Conference, were at Caesar's Indiana in Bridgeport, Ind. But the 170 or so attendees had little opportunity to dally at the adjoining riverboat casino - both days were crammed full with informative and inspiring business presentations by NPC executives and invited experts.

[Admittedly, it wasn't all work. On day three of the conference, attendees could choose to participate in a golf outing or a trip to nearby Churchill Downs. It was Derby Week, after all, and Churchill Downs was just across the Ohio River. But first things first.]

Putting a Face on Best Practices Regulators and litigators are looking closely at payment services these days. And this fact was not lost on NPC's conference organizers, who invited Mary Dees, President of creditranz.com, to kick off a round of sessions on best practices. "We consider this topic to be extremely important," said Randy Sagar, NPC's Senior Vice President for Independent Sales.

Dees is an industry veteran who has been appointed to the receivership team for Certified Merchant Services (CMS). CMS management, you may recall, was ousted earlier this year after the Federal Trade Commission (FTC) took the company to federal court, alleging unfair and deceptive practices in the selling of merchant acquiring services. It was the first federal action ever taken against an ISO, but Dees warned it won't be the last.

"The entire industry is being scrutinized," she said. "The FTC has put this industry and industry practices under a microscope."

The survivors, Dees suggested, will be those companies that are committed to educating sales reps in this ever-changing business. "Business will be better than ever for those companies that are ethical, customer-focused, and those that hire honest sales reps who understand the requirements of full disclosure," said Dees.

NPC also brought in its own attorney to address the group. She explained initiatives under way at NPC to enhance application disclosures and to develop best-practices standards for ISOs and their sales forces.

"This is going to be an ongoing process," Sagar said.

Focusing on New Opportunities Wimsett and his team understand what it takes to keep salespeople selling: a pipeline full of moneymaking products, backed by excellent customer service. They dedicated the requisite PowerPoint slides to customer-service statistics and employee-motivation programs. The main attraction of the conference, however, was the showcase of new opportunities for ISOs to attract and retain merchant accounts.

Small Business Advantage is one new undertaking that advances merchant-account management to an entirely new level of service. Developed by NPC in association with FISI-Madison Financial, Small Business Advantage is a cooperative buying program that offers huge discounts on business services such as telecommunications, travel and check collection. It's available for a modest monthly fee and offers a great customer-retention technique. And ISOs that sign on to sell this new service get to use it themselves for free.

It's a great deal. I've been listening to sales pitches in this business for longer than I care to admit. This was one of the rare ones that really caught my personal attention.

The small-business market is huge and growing. Every new merchant account you sign is in all likelihood a small business, and the owner-operators could realize significant savings on these group-buying arrangements.

"Stickiness" is a word I often hear used to describe customer retention. Small Business Advantage seems to have stickiness. It also highlights the value NPC places on diversification. Chris McNulty, NPC Senior Vice President and General Manager for Regional Sales, explained it to the company's sales partners this way: "We're more than a processor - we're a true small-business partner." Recurring Payments MasterCard was there, urging the ISOs in attendance to seize on opportunities in the $16-billion-a-year recurring-payments market. MasterCard offers several incentives to increase sign-ups for recurring payments, including low interchange rates.

Recurring payments can be an attractive card option, especially in the service industries. MasterCard estimates that businesses that use recurring payments to collect fees from their customers are likely to be your customers 15% longer than those that don't.

Stored-value Cards Stored-value card programs are a hot ticket item in merchant acquiring. This was especially evident during the Vendor Showcase at NPC's Partners Conference when the crowd around the Valutec booth, which specializes in supporting gift and loyalty card programs, dwarfed those at other vendor set-ups. Valutec has off-the-shelf packages that support electronic gift and loyalty card programs, large and small. Valutec says its solutions have been shown to increase customer loyalty and average tickets by substantial amounts.

Leading by Example Diversification has served NPC and its customers well. Until 1996, national accounts were the guts of NPC's business strategy. But growth in that market is stunted; there are only so many national chains, and pricing is extremely competitive.

So NPC diversified its focus, and today most of its merchant card revenues come from regional markets. Wimsett describes this approach to the business as a "dual market" strategy. Today, just 40% of NPC's revenues are derived from national accounts compared to 79% in 1996.

NPC's corporate aim today, said Wimsett, is to "raise the bar" for customer service. "We're migrating the service culture developed for large national merchants and pushing it down market," he told the group. It's a strategy that should serve NPC well - and its ISO partners, too. Patti Murphy is Contributing Editor of The Green Sheet and President of Takoma Group. She can be reached at pmurphy@takomagroup.com.