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Street SmartsSM:
Advice to newbies: Take it slow, think big picture

By Michael Nardy

The mission of "Street Smarts" is to educate merchant level salespeople (MLSs), answer some of their most frequently asked questions and voice opinions on current industry trends. The column is for new and veteran MLSs alike.

So far, this series under my authorship has covered:

  • Registration processes of Visa U.S.A. and MasterCard Worldwide
  • Pros and cons of taking on liability
  • How to work with agent banks
  • How to network
  • Explanations of specialized interchange categories (QSR and Small Ticket)
  • Some tales from the trenches.

Recently, much discussion has occurred about being a "newbie" MLS in the merchant services industry. GS Online MLS Forum member Slick Streetman wrote:

"The majority of us as newbies, unaware of the very powerful tools that are available, have to attempt to reinvent the wheel, and, of course, this results in a very high attrition rate. I would guess that well over half the folks who enter our industry don't make it for the long haul."

I was once a newbie, too, and I want to share what I have learned with you. When I started working in the industry, the business seemed very elusive. I had virtually no information about how to become involved in this profession. It was, or so I thought, only for banks and processing companies such as First Data Corp.

How Electronic Payments Inc. (EPI) would grow from a business run out of a college dorm room to a major payment processing company was the furthest thought from my mind.

I just wanted to learn how everything worked: how a transaction was processed, what was behind a network, how banks interacted with customers and which businesses were best to target for building large residuals.

Sharing lessons learned

Every industry has something that attracts new people to it. Ours is particularly enticing because you can slowly build a steady residual stream to depend on as a significant source (if not the only source) of income.

The biggest mistakes most people make when they get into this industry, however, are 1) trying to do too much and 2) giving in to the overwhelming notion that they are getting a raw deal when it comes to residuals.

For example, a newbie MLS (let's call him "Jack") recently signed up for EPI's program. Jack immediately wanted to register with the card Associations, market under his own name and even take on liability. Of course, I discouraged him - someone with little to no experience in merchant services - from doing any of those things.

Jack's comments weren't unlike many others I'd heard before. He said, "I've looked around, and it seems the only way to make a lot of money is to do everything."

Not so.

Thinking about the big picture

Many one- or two-person "shops" are paid monthly residuals higher than $50,000. And these salespeople have been in the business, steadily signing deals for 10, even 20 years. Lack of foresight is what causes most salespeople to be blinded by many of the upfront bonuses and get-rich-quick programs out there.

I said to Jack, If you had worked for 15 years in a career and achieved an annual salary of $600,000, did you do so poorly? Well, what about working those same 15 years and not only earning a salary of $600,000 but also earning an additional $150,000 in annual and conversion bonuses, lease commissions, and terminal sales?

Upfront bonuses, conversion bonuses, annual bonuses and other types of signing bonuses aren't bad at all. They help get you through a period when you are trying to build that residual. Without them, many salespeople certainly couldn't continue on after signing a few accounts and receiving their first small residual check.

The point is, Jack was looking for a way to earn the largest residual in the shortest amount of time, but I wanted him to focus on the bigger picture.

It shouldn't be about a short-term windfall - I tried explaining to him - but rather a long-term career serving as a payments consultant to merchants. And this career would provide for his family for a long time to come.

Looking for a fair deal

A popular question on GS Online's MLS Forum as of late has been, Which is better: A 50/50 split or a 100% over a buy rate or interchange program? This column is too short to debate this issue in its entirety. I will say that there are many different compensation models and programs from which to choose.

The first deal I ever signed brought me only $18 in monthly revenue (but it was a restaurant processing over $50,000 in credit card transactions per month). I was definitely in a bad situation, but I ultimately got the bug for this business.

I wanted to sign more and more accounts. From Boston where I attended school, to my home in New York, I tried to solicit merchants and drum up new business.

But for me, residuals were never needed to pay a mortgage or rent, buy groceries or cover everyday living expenses. (If you are like I was just starting out, this is definitely the ideal situation to be in because residuals build slowly. They seem to build even more slowly when you need to cover everyday living expenses.)

I like that more and more young people are entering the industry. Those just finishing college or those embarking on their first careers have ample time and opportunity to make mistakes and very little need for capital. It makes for a great combination.

Finding a win-win situation

Do I think the first deal I had was a mistake? Certainly not. After all, it got me into this business.

However, getting back to Jack, who feels he needs to "do everything" to make money in this business, I'll share something I often tell other potential ISOs:

You must choose your partners well, but you can still use multiple vendors for your processing, for gift and value cards, check services, leasing, etc.

What's important is that at the end of the day we (in this case EPI) need to be comfortable with the level of profitability we have on your accounts, and you need to be comfortable with the level of residual payout you receive from us.

Comparison shopping

The best advice I can give to newbies is to start slow. Build your residual stream and pipeline, and spread your residuals around. There are no "raw deals," just learning experiences.

If you become involved with a company that you don't think pays you well, don't just up and quit. Try another processor and see how the residuals compare.

Processors always want an ISO's or MLS' business. Chances are they would relish the opportunity to be pitted up against the competition rather than have you quit their program for good.

An example of this: advertisements in our industry's trade publications. There is always an "us versus them" mentality when it comes to which company has the better program. As an MLS, you can certainly take advantage of that.

Michael Nardy is Chief Executive Officer of Electronic Payments Inc. (EPI), a founding sponsor of the National Association of Payment Professionals and one of The Green Sheet magazine's Industry Leaders. EPI is one of the nation's fastest growing privately held payment processing companies offering ISO and MLS profitable partnership programs and cutting-edge tools to help their portfolios grow. To learn more about partnering with EPI, visit or e-mail Michael at

Article published in issue number 060802

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