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Bankcard 101 Equipment Sales Versus Building a Portfolio

By Lazaros Kalemis

Most of us starting out in the industry become blinded on commissions made from selling equipment and forget about the future. A day doesn't go by when one of our agents or friends in the industry isn't on the phone with either Dimitri or me asking our opinion on this very subject.

In the ideal world we would all still be in 1990, making $2,500 per sale and also earning residual income on 1% of our accounts. Merchants would still thank us for making their lives easier and we would all be happy.

But, my friends, times have changed. Now it seems you have to choose between making big dollars on each equipment sale and giving away the rate, or vice versa.

Everyone reading this article is probably thinking the same thing right now: "I have car payments, house payments and other bills I have to pay every month. I need to make at least $5,000 a month to pay for these things, or I'll be living on the street."

So you go out and give away the rate and sell the equipment. And whenever you come across a nice potential merchant account, not only does it take you two weeks to get a quote for the merchant, but then you lose the merchant anyway. The reason I know this is because I've been there.

When Dimitri and I started Alpha Card Services, Inc. we worked with a sales rep-we'll call her Amy-who sold about 12 accounts a month. Amy averaged $10,000 in sales a month but earned only $3 dollars a month in residuals from each of those accounts.

We kept prodding her to sell the rates higher and try to go after bigger accounts, but to no avail. Amy-as would any merchant level salesperson (MLS)-thought she could keep up the high number of sales forever.

However, eventually she grew tired and her sales volume fell-and so did her income. Her 200 accounts brought her residuals of only $1,000 a month. That was nowhere near enough to live on, and eventually she moved into another line of work. Amy is a perfect example of an MLS focusing too much on equipment sales.

Now, let's take a look at what Amy could have done differently. If she had set goals to make $25 per merchant per month, she would have earned $5,000 a month in residual income. She could have sold only five accounts and still have made the same amount.

Amy would not have become burned out and could have focused on larger, more lucrative accounts without changing her lifestyle.

There is a strong contingent of MLSs who are selling just like Amy. I've heard the stories, and their arguments for doing business this way make perfect sense. The main point in their reasoning is: What if my ISO stops paying me my residuals?

Years of hard work get flushed down the drain because an ISO is sold or it stops paying residuals because of certain violated clauses.

Most MLSs feel they have to sell as many pieces of equipment at the highest profit possible and move on to the next merchant. These reps make a nice living and bring in $10,000 or more a month in commissions.

I try to instill in my reps the following: Yes, make money with equipment-sell as much as possible-but also build a future for yourself. Otherwise, burnout will eventually set in. I don't care if it is one, five or 13 years down the road. You want to build something that can pick up the slack for your lost sales.

We are all in this industry for a better future and the road to the brightest future is by way of building your residual stream.

We consistently train our reps not only on new equipment but also on building their portfolios through conversions or the value-added services we offer.

I would highly recommend that you ask your ISO as many questions as you can in order to help you build your residual stream.

If your ISO is not willing to help you or tells you to focus on smaller accounts or selling equipment I think it's time to find an ISO that is willing to help you grow.

Lazaros Kalemis and Dimitrios Tsikoudis founded Alpha Card Services, Inc. to be an agent- and merchant-friendly ISO. To learn about partnering with Alpha Card Services contact Lazaros at or call him at 866-253-2227 ext 13.

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