Editor's note: The following letter to the editor addresses a growing breed of ISOs who do not understand the cost of being a registered ISO office beyond the cost of Visa and MasterCard representation.
Subject: Uneducated Greed
Dear Paul,
I wanted to address the sales representatives who think they should buy equipment and processing buy rates for the same cost as the legitimate ISO. These reps are usually unwilling to bite the bullet and make the financial commitment necessary to be in this position.
To become a legitimate ISO, it is necessary to invest $45,000-$50,000 in office equipment, computers, phone systems, and inventory. You must also be willing to commit to $8,000-$10,000 per month in overhead business expenses. These expenses include an office lease payment, Yellow Pages advertising, utilities, UPS & Airborne or FED EX fees, business licenses, legal contractual expenses, printing costs, employee payroll, insurance, and federal and state employer taxes. There is also thousands of man hours creating a sales program, hiring and training the constant flow of reps that can't make it in our industry, and the costs of processing and tracking applications from these representatives.
With all of these costs to do business, 99% of the reps I talk to think they should be buying equipment and processing buy rates for the same cost as our company pays for them. They're not satisfied with $500-$600 commissions plus a piece of the residual income. They want to make $1000.00 commissions and all of the residual income. When I suggest to these reps that if they want to earn that amount of commission and residual income, that they bite the bullet and commit to the investments I have mentioned above, they are unwilling to do that. I spoke with a rep in Georgia the other day, and he said he was leaving too much money on the table. He felt that the ISO he represented was making money on the equipment & he should be making all the money over the cost, which he was familiar with, and the ISO should pay their bills from their residual income.
This "UNEDUCATED GREED" is a big part of the reason that 8 out of 10 ISOs go broke and out of business within 5 years. If you have no concept of what is involved to run a business, pay your bills and make a profit, then you shouldn't be considering trying to run a business. If an ISO doesn't make a profit on equipment sales and isn't earning residual income, how do you suppose we are going to pay these expenses and stay in business? If you're unwilling to commit to the daily stress of having to meet a payroll, and all of the other expenses that go along with owning a business, then do us all a favor and stay content with being an Independent Sales Representative. Banks must also share in the responsibility of this ongoing problem. If banks did not allow every rep who makes a few sales to become an ISO, when they don't have a professional office and a sales force, this wouldn't be the HUGE problem that it has become.
Thomas P. May
National Marketing Director
California Bankcard Systems
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Hello Paul,
Just read the article for small ISOs to receive scholarship money to attend ETA conferences through, I believe, the Wyatt Baxter Scholarship Fund and would like to find out eligibility requirements to attend the March 1998 Conference in New Orleans. I was at the fall show in Long Beach and learned a great deal as well as made a lot of business contacts which have enabled me to start off on my own! Please let me know.
Ron Gamm
Editor's Note: Ron did receive the Wyatt Baxter scholarship to attend the ETA show. We wish him luck in his business and hope the show proved benenficial.
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Attn: Paul Green,
I want to start out by thanking you for putting out such a strong publication for our industry. It is not only filled with current issues regarding us all, but also some selling points for the offices and reps around the country. This publication goes a long way to making our industry more professional and one of integrity. Hats off to you and your staff!
Secondly, I would like to address the old issue of Artex leasing which you covered in your past publications. For the record, CBS and Joe Bertucci, President, had no ties to Artex except as a vendor. We did not fund the leases, Artex did. All we did was to fund/pay our offices/reps when we received funding. Artex was started by a gentleman named Art. He alluded to all that he had money to run an extensive leasing operation, when in fact he had only some $250,000 to $300,000 in liquidity. Get the picture. In stepped a company called Etrans. They took over operation and handling of Artex in the hopes of securing financing to continue to hand the program. Since then, Art of Artex passed away in November of 1997 and Etrans has not come out with a new program. How do I know all of this, because we stayed in contact with all principles in this matter in an attempt to find funds to put this program out for Etrans. I have (CBS and Joe Bertucci) come under the fire that I was responsible for the Artex/Etrans failure, but all we were doing was trying to find them a solution.
My company, CBS, has a working relationship with a totally separate company-ATM-USA, which is a division of American Lease Professionals, LLC (Nevada). ATM-USA has come out with a dynamic lease program that rivals the big boys! They are funded by one of the POS field's industry leaders, whose parent company is a billion dollar corporation. ATM-USA has gone to great lengths to secure this deal, for not only today, but the future!
There seems to be a effort by several ISOs/offices/reps to want to derail this venture due to the association in the past with Artex/Etrans. This is unfair and people need to know and understand the truth behind what is going on. It hasn't been easy for myself to sit through all this name calling the past year or so, but I have had enough and needed to sound off to our industry.
Sincerely,
Joe Bertucci
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Dear Paul:
I flew from Florida to attend your seminar in Long Beach, CA, and wanted to give you some feedback on the seminar.
The Green Sheet seminar was excellent. We got a lot out of it and were able to make some good contacts.
The equipment companies were very informative. I enjoyed Bob Carr's presentation. I think the day was well spent.
Kevin Winter
First Bankcard
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Send Letters to: The Green Sheet, P.O. Box 6008, Petaluma, CA 94955-6008 or greensheet@greensheet.com.
