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MLS Disclosures

If you are a regular visitor to the MLS Forum on The Green Sheet's Web site, then you are probably aware of the ongoing conversations regarding "merchant education."

We thought this topic would make a very interesting article in The Green Sheet, so we asked members of our Advisory Board to share their insights by responding to the following questions:

  • What do you believe an ISO/MLS should tell merchants during the sales call?

  • How much merchant training do you expect your sales staff to complete when "closing" the deal?

  • Does your customer service staff handle your merchant training?

  • If there were 10 things to tell a new merchant about processing, what would they be? Below are some ideas that were posted online regarding merchant training during the sales close:

    1. Price/service should be considered
    2. Terminals/warranty policy
    3. Types of payment accepted (credit/debit/checks, etc)
    4. Verbal/written contract facts
    5. Referrals
    6. Swiped/keyed transactions
    7. Average ticket/monthly volume expectations
    8. What they get from you
    9. What they don't get from you
    10. The contract completed to sign

  • Please tell us what you think and how you train your sales professionals to educate the merchants.

We received numerous responses from Advisory Board members, and the group consensus is that full-disclosure of the terms of the agreement is necessary for numerous reasons, especially concerning legal requirements.

Explaining the exact nature of the merchant agreement is the foundation of the ongoing business relationship.

However, one of our Advisory Board members took exception to this latest set of questions:

"[You] may be going too far [by] asking some of these questions as it leads to competitors giving training information to the competition. Unless you are writing a general sales manual for the industry, some of the information is none of any body's business."

Following are the responses we received from Advisory Board members.

Adam Atlas, Attorney at Law

"Pricing disclosure should be open and full. This will help with not only integrity of the sales organization but also with the legal effectiveness of the merchant agreement. The language of contracts should be very well understood by the salesperson. . .

"Setting earnings expectations at the right level is a very good start to a healthy contractual relationship. [Additionally,] make sure names are printed clearly.

"Make sure the agreement is dated and keep good clean copies for your records. Contracts are often relied upon for large dollar amount disputes. You might add to the top 10 list something about liability. Merchants should be well informed that in most cases they are to carry liability for fraud committed via their POS devices."

Robert Carr, Heartland Payment Systems

"We believe the sales professional should tell the merchant the following in a sales call:

  • All of the fees that will be charged at all levels for everything both upfront and ongoing
  • When the merchant should expect to be paid and by whom
  • When fees will be collected
  • The local telephone number of the sales professional and the telephone numbers for customer service
  • What to do if the card does not swipe, if a card is not present and/or if the system is not working for any reason
  • How/where to purchase supplies
  • The term of the contract and the important provisions of the contract including rate guarantees and termination fees
  • How to evaluate low-ball and undisclosed rates that will be offered by the competition
  • Whom to call in their area for references both individually as well as for the company
  • What they need to do if they sell or close their business or a location

"We expect the sales professional return to the merchant location after the sale is closed and teach the merchant how to process transactions and how to close the terminal at the end of the day including running all of the reports.

"We also expect the sales professional to teach the merchant how to handle transactions when the card does not swipe or when the card is not present as well as educate the merchant about fraud prevention steps and what to do in case of receipt of a draft retrieval request or chargeback documentation.

"We train our sales professionals in various new hire classes, orientations and boot camps as well as annual sales meetings and road shows and with a comprehensive Internet training program including our 'Exchangeopedia' toolkits."

Steve Christianson, Transpay-USA

"[The salesperson] should not tell lies. It makes the industry look bad. I am not sure we should be training the industry on how to approach a merchant. That would be the responsibility of the ISO itself. The approach should be professionally oriented. Getting to the decision maker is primary.

"Training is not done until the conversion/installation is done. Closing the deal is a separate meeting. Install and setup are at a later time from 3 days to several weeks depending upon circumstance.

"At closing you can discuss with the merchants the caveats and risk of acceptance of cards, including the importance of imprints, etc. But once the deal is closed I recommend leaving the merchant to his own business ASAP. Too many reps make a successful sale, get the OK, and then proceed to talk until they talk themselves out of the deal. Perhaps what should also be disclosed are rates for all downgrades.

"Another big area of abuse is sales reps selling on debit savings saying that if they use PIN-based debit, they will save big bucks. Reps tell the merchant they can expect to convert up to 50% of the transactions on credit to debit therefore saving the merchant big bucks.

"The truth is only 10% of all transactions are on check-type cards, and most of those cardholders do NOT want to use the debit side. So the savings is misleading and these aggressive ISOs are using these inflated savings to convince the merchant to buy new equipment at outrageous prices, which in the long run cost the merchant money rather than saving the merchant money."

Mitch Lau, Money Tree Services

"We believe in full disclosure to the merchant. Obviously things will be missed and/or misunderstood, but you do your best. Regarding merchant training, we offer free deployment and training to all of our partners as training is better controlled and our partners have more time for selling. You can add the following to this list: termination fees."

Douglas Mack, Card Payment Systems

"One word . . . Everything!"

Doug McNary, First Data Merchant Services

"Given the increasing complexity of the payments industry and the variety of products and services we offer to our merchants, sales people are finding that a quality deal requires more of a consultative sales approach. Merchants want to believe that a salesperson is finding solutions to their business needs, not just making a sale. This approach requires that the salesperson educate the merchant about the product and service benefits during the sale.

"The most important thing to remember is that salespeople must fully disclose all the details of our relationship with the merchant before asking a merchant to sign an agreement. We cannot allow merchants to go into a relationship if they do not fully understand all the details of that relationship.

"Cardservice is currently rolling out programs to greatly enhance our merchant training programs within the first 45 days of the new merchant relationship. This proactive approach includes traditional training techniques and a welcome call to confirm that the merchant fully understands all the details of our relationship. We fully disclose:

  • All rates and fees (i.e. transaction fee discount rates and customer support fees)
  • Downgrading fees (mid-qual and non-qual rates)
  • All terms of any equipment or gateway product purchase or lease programs
  • All terms of any entitlement programs (i.e., American Express, Discover, Diners, etc.)
  • That we will conduct a merchant background check
  • We investigate the MATCH or TMF file (terminated merchant file) to determine if the merchant is on the list
  • Term and termination provisions
  • Compliance with MasterCard/Visa rules and regulations
  • Compliance with all laws and regulations (i.e. anti-money laundering, U.S.A. Patriot Act, etc.)
  • Chargebacks and chargeback-processing policies and procedures"

Dave Siembieda, CrossCheck, Inc.

"We've found that some of our agents prefer to work with the merchant all the way through training while others appreciate that we will handle everything for the merchant after the sale is complete.

"Our 24/7 customer service department calls the merchant to discuss the service, goes over how to use it and answers any questions right at the outset. We are also available to provide training and supplies as new locations come on board down the line. We feel this way the merchants get the attention they need, and our agents don't have to spend time training after the sale is made if they choose not to.

"In regards to a check service, the merchants must be told about the fee structure that applies to them and the basics on how the service works. They should be informed on training and availability of customer service and reminded that they can call anytime with no fees for customer service calls. And of course, they need information on how a check can be authorized via phone, terminal and Internet, in our case.

"Number one, though, is how our service can increase sales for the merchants. If they don't understand that, it's going to be a short-lived relationship."

Dan Wolfe, Barons Financial Group

"We have always been a full disclosure company. With that said [here is] what [the merchants] should expect from us:

  • Service hours and the phone numbers
  • Pricing on all services and fees
  • Terminal function and warranty
  • Full contract disclosure
  • Types of payments they can accept
  • Explanation of how our systems work
  • What would create problems for their account
  • How to use their payment programs to drive more income
  • Referrals-now and on-going
  • What to expect next"

As always, we want to thank the members of the Advisory Board who responded to our questions. This cross-section of the payment processing industry gives back to the sales community by answering questions and sharing their knowledge for articles to be published in The Green Sheet.

This enables us to share with our readers a vast array of opinions and a significant depth of knowledge. We truly believe that "knowledge is power," and our mission is to give you, the ISO/MLS, as much knowledge as is humanly possible.

Strengthening your power to create wealth for yourself and the companies you represent is what The Green Sheet is all about. If you have questions that you would like us to post to The Green Sheet Advisory Board please send them to

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