Mr. Green (or to whom it may concern):
I believe we are all upset with compensating Discover Reps for the labor of our hard work. How about the merchant that contacts Discover's 800# and is charged an enrollment fee of $75.00 to simply add the Discover Card to their existing equipment? I'm surprised that a field sales rep working for Discover will enroll a merchant at no cost to accept Discover, however if the merchant calls their 800# the enrollment fee is applied.
In addition, when a merchant contacts Discover's customer support line for administrative changes, such as enrolling the merchant to accept AMEX, Discover will charge the merchant a mandatory fee of $50.00. In my opinion, Discover has taken an adversarial position in establishing a relationship with the merchant. In the end, Discover will most likely change their way of operating their sales activity. Hopefully there will not be too much damage. If not, Discover will ultimately lose the battle with merchant signings and will continue to be disliked within the ISO industry. Come on Discover, take a partnership approach! Hey, if AMEX can tailor a program to the ISO that works and makes sense, why don't you?
Name Withheld
Dear Mr. Green:
I'm presently considering becoming an ISO. I've been in the business for seven years and have a pretty good understanding of how things work. My question is: What is the advantage of registering with V/MC and paying the $10,000 fee other than being able to use your own business name? The people I ask don't seem to have a definitive answer. Additionally, several people told me the risk is entirely mine. How does one protect themselves from being personally liable in the event a merchant goes bad? Is there an insurance company out there that will cover a claim for a premium? Your input is most appreciated. The Green Sheet has taught me one thing over the years and that is that you seem to have a good answer for everything.
Sincerely,
Seeking Opportunity
P.S. I agree with all the negative feedback regarding Discover. It's been a terrible experience trying to work with them over the years. They are out for themselves and think nothing of stabbing you in the back. I personally lost several accounts because of them under-cutting me.
Dear Seeking Opportunity:
Registering with the associations is necessary for two reasons. Generally, you cannot get a deal with a bank without fraud unless you are registered. You cannot contract an agreement in which your income stream is protected to survive the sale of the bank or upstream organization unless you are registered. The insurance you are looking for to protect the ISO against merchant default is available through LMA (612) 332-6200. We have done a few articles on this company. To read these articles please visit our Web site http://the.greensheet.com and use the search engine to get a list of all the articles. Our backlist since September 1995 is available on-line.
Good Selling!
Paul Green
Editor-in-Chief
To: The Green Sheet:
I would like to learn as much as possible about the various credit card processing equipment that is available to merchants. In particular, please identify the new products and their advantages. What products are becoming obsolete in the marketplace? What products, in your opinion, are the best?
If you have already written an article that can provide this information, please send it to me at the above address.
Thank you very much,
Larry Stewart
Dear Mr. Stewart:
Thank you for your fax of July 12. Enclosed is the premier issue GSQ: The Payment Systems Quarterly. This report on the POS industry should have all of the information you requested. Additionally, I have enclosed a sample copy of our bi-weekly newsletter, The Green Sheet.
I have also included a subscription form. Your annual subscription will include 26 issues of The Green Sheet as well as our quarterly magazine. To begin your subscription immediately, simply include your charge card information and fax the completed form to (707) 586-1738.
Good Selling!
Paul H. Green
Paul:
Recently read your article on smart cards entitled "Smart Card Update" [Issue 98:01:01]. Just prior to your most recent article on Smart Cards I received the following email from MasterCard International on the subject:
The Mondex card is being selectively tested in the U.S., Canada, the UK, New Zealand, the Philippines, and Hong Kong. It has the potential to be accepted around the globe. As to when it will reach you, bookmark this site (http://www.mastercard.com/smartcard/faq.html) and check back for information on further market introductions.
Best Wishes,
MasterCard International
Customer Service
My response to them was the following:
Is it possible that this product will be driven by consumer/user acceptance?
Can you admit the likely scenario that the previous possibility, if not accepted, means that the Smart Card, at least in North America, will never be seen or used by 90% of the purchasing population?
Would you or I ever give $400 cash or more to a bank or financial institution, on the notion that I might spend it in a week or two? Is that not the premise upon which the Smart Card works? It sounds like bad money management to me. Correct me if I am wrong. I personally would rather invest money where it will earn any kind of return. I believe most other consumers feel the same way. What will propel the economic engine of America to reverse the trend of hold money instead of a reverse float ?
Dear Mr. Green:
The article "Hitting Infinity" in your issue 98:06:02 regarding our new Infinity 2000 ATM resulted in us receiving 76 calls nationwide in a three-day time period. Calls are still "trickling in" daily and we are signing distributors nationwide as a result. We probably could not have gotten such a quick response with an advertisement in 10 publications!
We've read The Green Sheet articles for the past year, enjoying the diversity, but more importantly, the variety and accuracy of each article.
By informing sales groups and ISOs nationwide of our "new, lowest-cost on the market today Infinity 2000 ATM," we are able to provide small to mid-sized merchants with the ability to finally afford an ATM. Your article helped pave the way for us. It also showed us exactly how much readership you DO have! For all of this, we thank you! (And you can be guaranteed we WILL be advertising very soon!)
Best regards,
Bob Donohue
Electronic Financial Systems
Dear Paul:
As per our conversation that we had in Orlando at the seminar on May 14, 1998, we have a business in Tampa known as JNT located at 6712 Benjamin Rd., Suite 600, Tampa, FL, telephone 813-885-7592 or Fax 813-882-9567. The owner is Jim Ide.
The reason for this letter is to pay the ultimate compliment to this company. They have always been courteous, prompt, and more than reasonable with their prices. I don't think 25% of our market know about them. If you take a piece of equipment there without an appointment, in most cases they will repair it while you wait. Your merchant really appreciates this type service from their processor. We spoil them and we retain them with good service. I count on JNT and they always come through for me. Mail in repairs usually are done in 24 hours.
They have been serving the area since 1998. They repair the entire line of VeriFone equipment and various printers. The repairs are warranted by them of course. addition, JNT has designed and developed hardware modifications to take advantage of the emerging Cellular Digital Packet Data (CDPD) technology. It enabled than to use Tranz460s and Tranz 380/380s to operate in the Mobile environment without a phone line. The modified Tranz 460 operates on traditional AC power, car battery, or vehicle cigarette lighter. They also have developed the capability of the Tranz to operate in the CDPD environment using a single IP address. The merchant pays only for the actual packet transmission even though the unit is in constant communication. With a local tower. CDPD represents a major cost savings over a typical cell phone where airtime fees accumulate over the entire connect time. With typical transaction speeds of 5 seconds, or less, this application is great for taxis, kiosks, road shows, delivery vehicles, etc. Today about 70% of the U.S. is covered by CDPD. GTE, AT&T, Ameritech and Bell Atlantic provide the bulk of gateway services.
JNT is not a dealership, nor are they connected with any processors or ISOs. They just do a tremendous job at what they do. If you find someone as good as these guys, call me!
Thanks,
Joseph R. Flynt
Paul:
Thank you for a well put together and very upbeat conference. Looking back, I can't believe I stayed wide-awake for a meeting that long. I was truly fascinated and involved in all that went on. I also would like to thank you for considering the areas of my concern. Your publication is well read and possibly influential enough to make a real difference. As I said in our conversation, I feel that the industry is changing in ways we should address. Healthy competition is good. Cutting each other's throats is counterproductive. When the software developers cut us out of profits, it muddies the water even further. I think these trends are creating an environment of part timers in our industry. When you do this for a living, it is disheartening to be competing with a kid who works a forty-hour job cooking at The Waffle House or pumping gas at a quickie mart. When that guy makes fifty dollars on a merchant account, he thinks he is a winner. Except for the Visa/MasterCard regulations, our industry can be unprofessional and unethical. Doctors have the AMA. Lawyers have the Bar. Perhaps it's time that we unified in some way. One of the things I learned in college is that if you sell a product, you must sell your product for at least twice your investment to stay in business. Selling at three or four times your wholesale costs can keep you in the black. I love sales. I believe that if you want to sell something, sell something people need. Credit card processing is a career I can be proud of and I actually like bumping into my merchants at public places with my family. When I started in this industry, it was us (the ISO) or the banks. Merchants could usually save a fortune on discount rates and service fees with an ISO but have to pay (sometimes through the nose) for equipment when the banks practically gave it away. The marketplace was black or white for the merchant to choose. I found my "niche" in providing for the high risk, low volume merchants. In time, I forged alliances with local banks for referrals. Nowadays we all want to build portfolios, and the "buy rate" has become ultra important for a comfortable margin of profit.
When I signed on with Merchants' Choice, the retail and MOTO buy rates were very competitive and I saw a future with Woodforest. Then a prospective merchant pointed out that I was selling at 2.45% when all "my other offices" were advertising 2.23% MOTO on the Internet with ICVERIFY or PC-Charge for $395. After a little surfing, I had to ask myself if I was missing something here. If we are not making a profit on the discount rate or the equipment software sale "where's the money?" Even if the software was free (as in bootleg copies), $395 is a far less profit than a $39/48 month lease will give me.
Over the past few years some new players have come into our game the software "profiteers." Just about any electronic product you can think of was more expensive last year and the year before than today, except our product lines. I keep switching suppliers to save a few bucks on products that seem to be getting more expensive each year. Yet ICVERIFY and PC-Charge are publishing prices on the World Wide Web forcing us to sell for less and less. Selling above the published prices makes us look like crooks. As of this time Go Software's pricing page is unchanged.
In his presentation at the convention, the ICVERIFY spokesman went on about all of the wonderful features and ease of use of CyberCash. If they are charging transaction fees and monthly service charges for it, where do we profit? Getting a salesman pumped up about features & benefits is easy. Removing his profit (commission) just lets the air out of his sail. Very little effort was directed to help us make money. As long as we are the sales force, this is still our game.
I didn't know many of the folks at the convention and I didn't want to be negative. I have done public speaking in the past, but here I felt that it would be smarter to present these issues to people like you who are more knowledgeable about our industry for an opinion. Besides, I'm sure you know the old expression about first impressions. When I speak openly, I want to be seen by my colleagues as a long awaited ally because of what I can do for them, not as a whiner or complainer. Part of my "niche" is turning competitors into allies. Paying my competitors for accounts they previously put in the trash has to be the fastest way to make new friends. That's one of the reasons I signed on with ECS. As a salesman, I want to be able to write accounts for all merchant types. ECS Nationwide does not want to compete with other ISOs for merchant accounts.
The merchant is the only winner in any kind of price/rate war. Electronic Card Systems specializes in risk management. We enjoy the same types of accounts everybody else does, but we also offer merchant services to the types of businesses on their "unacceptable" lists. In fact, I solicit referrals from ISOs all the time. I put one of my form letters on the main table at the convention. Had I known the advertising space would be available, I would have done something more appropriate. At ECS Nationwide, we can place even the highest risk merchants.
Travel, Inbound Telemarketing, Seminars, Trade Shows, Used Car Dealers, Auto & Home Security Companies, Tour Operators, Advertising Agencies & Services, Detective Agencies, Health Food/Vitamin/Nutrition Products, Import/Export, Multilevel Marketing, Financial or Computer Consultants, Bail Bond, Quasi Cash Establishments, Computer Sales, Cellular Phone/Beeper Services and Travel Agencies are among the most often referred. ECS Nationwide opens these types of merchant accounts daily. Other agents could give these prospects my card and tell them that ECS Nationwide specializes in these types of businesses and offers reasonable rates. We will be happy with the equipment/software sale. I know that if you want to dance, you have to "pay the fiddler". I offer (monthly) a share of the residuals or a portion of the profit when we make the equipment/software sale.
There are a considerable number of merchant accounts my colleagues pass up daily because their criteria are much stricter than mine. Passing them on to me can be profitable. Occasionally, I can even get a merchant an account from the terminated merchant file. With cooperation, these leads are a terrific starting point for an alliance.
Edward Kaye
