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Winning the Merchant Services Game

By Matthew Swinnerton

For this month's "AgenTalk," I interviewed "Coach" Bob Schoenbauer of Greenbelt, Md.-based Capitol Payment Systems Inc. If you spend any time on GS Online's MLS Forum, you've probably seen his comments posted.

Schoenbauer has had quite a career in the credit card processing industry and in life. Between coaching his sons to victory in sports and his sales reps to get the sale, he has found many successes. Keep reading to find out how.

Matthew Swinnerton: Why and how did you enter this business?

"Coach" Bob Schoenbauer: Before entering the merchant account business, I owned a few other successful companies: a Subway franchise, a building maintenance company and a home improvement business.

When I decided to start accepting credit cards in the home improvement business, it was nearly impossible to find someone offering this service. (This was the early 1990s.) No one offered this in the phone book, so I started calling local banks.

Finally, I found a manager at a small bank who said someone had been by and left a card. I called the number and a Cardservice International office sent an agent who leased me a Trans 330.

A few years later, I sold my last business and took a little time off to consider what I would like to do in the future. I always thought that I would like to be in a business like insurance where you collected ongoing residuals.

I had read somewhere that companies selling merchant services were also paid residuals. So I looked very hard at insurance and at merchant services. Also, I kept going back to how hard it was to find merchant services.

For me, the difference between the insurance business and merchant accounts was that I did not want the evening hours associated with insurance. I felt that most business owners would keep more traditional hours, which would allow me to attend my three sons' (Chris, Brad and Ryan) games.

I did some research and decided to watch the paper for a sales ad to try the merchant services business out first. I answered a local Cardservice ad and went in for an interview. (I swear the owner was wearing a chartreuse suit and purple tie.)

Anyway, he hired me and gave me some sort of training, which consisted of "The rate is 1.59% plus $0.20. Here's a lead." I went out and sold the first lead. A few days later I sold the second one.

Soon after that I answered an ad for USB and went to work for Ted Ware, with whom I am still friends. Ted had in-house telemarketing, and I really wanted to see how that worked. I ran some leads and sold them.

At the same time, I'd made my decision about which company to become an agent for. This guy recruiting out of his house in Florida for a company in Texas had answered all of my questions and helped me choose Retriever Payment Systems. His name was Joe Natoli. MS: What has kept you in the industry?

Coach: Residuals ... It is still exciting to see the residual report every month, although I still enjoy training new agents and merchant level salespeople (MLSs), along with talking to and selling to merchants. There is always something new every day. MS: Do you focus on a certain market?

Coach: My primary focus is still the new business owner. I am able to help nearly all business types, although my portfolio is mostly retail.

MS: What's the story behind your title of "Coach"?

Coach: The name "Coach" comes from coaching [my sons in] Little League Baseball on and off for 10 years. My oldest son, Chris, played shortstop and pitcher and was clean-up hitter on our first team, which won the city championship that year ...

My middle son, Brad, played on a few city champion teams starting at shortstop, batting clean up and doing some incredible pitching. Ryan is my youngest at 11.

His team has been county champion the last three years. Ryan plays first base [lefty], centerfield and pitcher and is our lead-off hitter.

Coaching is also what the development of new MLSs and agents is all about.

MS: What do you see on the horizon for our industry?

Coach: Check truncation is no longer new, but it's becoming more exciting every day. For me it has become an easy up sell, creating more revenue on both sides: equipment and residuals. Merchants are finally aware of and asking for it. As far as new [solutions], I see contactless as the coming wave. Everyone that has a contactless card or device loves it. From the reports I've read, the major merchants using it have deemed it a huge success.

In the near future, smaller merchants will need to follow suit, opening up an entirely new market. This should create a scenario in which existing merchants see a legitimate need to trade up to newer technology.

MS: How do you choose a processor?

Coach: This is a tough one. I think a big part of this is just the feeling I get from the owner. I have only dealt with a few companies over the years on an ongoing basis. In most cases, I negotiated with the owner, not a recruiter.

The programs and contracts were all similar. My decision ... came down to three things: "feel," customer service and checking the owner's background as closely as possible.

How could I really judge the service from the outside? I called the switch board and asked for the agent and merchant support numbers.

Over the next few days, I would call both numbers a few times to see how fast they would pick up and if merchant support could answer a simple question.

If they passed this test, I would then look into the owner. Has he been involved with another merchant account business before? How did that end? What business did he come from? I would also call the processor he uses to see if he is direct or going through someone else.

Over the years this process led me to Retriever, Cardservice, Total Merchant Services and Electronic Exchange Systems. Joe Natoli, Steve Duniec, Ed Freedman and Jamie Garfield have all had a positive impact on my business.

Although I haven't [worked] with Steve in five years, I can still count on him for solid advice when I need it.

MS: How has The Green Sheet helped you?

Coach: Way back when I first started out, I had no idea how to find a company to represent. I went online and stumbled upon The Green Sheet Resource Guide. Without that, I never would have found Retriever. It also led me to Ed Freedman.

I saw an article [in The Green Sheet] about how Ed had worked his way through college cleaning boats; he built up his boat cleaning business and then sold it when he graduated. He even lived in Annapolis, Md. for a while. I could relate!

MS: Do you attend any industry trade shows?

Coach: I have been to the [Electronic Transactions Association's (ETA) Annual Meeting and Expo], and I think everyone should attend. I also hope to attend one of the regional shows in 2005.

MS: What would you like to see more of in our industry?

Coach: Integrity. I would like to see our business governed in the way the insurance industry is. With the incredible stories you hear from merchants of what salespeople have told them, I think we are badly in need of rules with strict enforcement.

This would, of course, include governing the ISO community to alleviate the always-present fear of not getting paid that seems to permeate our industry.

MS: What is the biggest mistake you've made in this business?

Coach: The closet thing to a big mistake was selling off most of my residuals in 2000. Don't ever do this if you don't have to.

MS: Describe a typical day in your life.

Coach: A day in my life is very ordinary. Remember, my family was a big part of my choosing this business. I usually [get to the office] at 8:00 or 8:30 a.m. and leave at about 4:30 or 5:00 p.m. If Ryan has a game, I leave at 4:00 p.m.

I spend my day talking with or training agents, dealing with merchants and my processor, and shuffling papers. It's better than it sounds.

MS: What goals do you have for your business?

Coach: As far as goals, mine have always been the same. I don't have the need to be a mega ISO. I want to continue building a solid, medium-sized organization that can take care of its agents and merchants and that my kids can grow into and become a part of.

MS: Is there anything else you'd like to add?

Coach: For the newcomers to this industry, I would like to end on a positive note. I have seen many people write about how hard it is to make it in this business. They also wonder why they got in it or why they're still here. I couldn't disagree more.

We continually have new agents come on board who are able to make a good living starting without residuals. There is still money to be made in equipment while you are waiting for your residuals to grow.

As with thousands of other ISOs, we still lease or sell equipment at a good profit.

You will also be very surprised how fast your residuals will grow with the right company. Whether they are new businesses or large accounts, either way they add up fast. Before long, the importance of the equipment sale will decrease and residuals will become the backbone of your business. I love the business, and it's been a great venture for me and my wife Joy of 22 years. Thanks again to Joe, Steve, Ed and Jamie.

Thanks, Bob for all of your insight. I always enjoy meeting people in our industry who balance family time and work well. I know this has contributed to your success.

Matthew Swinnerton of Merchant Services Direct has sold credit card processing solutions for the last seven-plus years as an independent agent. To find out more about Merchant Services Direct, visit or e-mail Matthew directly at or call him at 512 255-9791.

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