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A Thing

Street SmartsSM:
The agent bank relationship - Pt. 1

By Michael Nardy

When growing multiple sales channels, it's beneficial to think about the needs of specific industries when establishing or reinforcing relationships.

Banks and credit unions are an especially lucrative source for any ISO or merchant level salesperson (MLS) looking for reliable, targeted leads: Bankcard processing is as essential to these financial institutions as demand deposit accounts (DDAs) and commercial lines of credit.

Knowing how to work with this referral channel is an important part of building a successful sales pipeline. This article discusses different aspects of agent bank relationships and what you can do to solicit a bank's merchant processing business. (An agent bank offers its business customers bankcard processing services through a processor/acquirer.)

Other factors affecting the agent bank relationship, including bank liability; underwriting approvals and rejections; bank size and scope; customer service responsibilities; and the differing roles of ISOs, MLSs, MSPs and processors, will be covered in future articles in this series.

It's about more than merchant services

Keep your focus on the big picture. An obtuse view of your relationship with an agent bank will limit your effectiveness. I once attended a conference in which a self-proclaimed agent bank guru advised sales agents to just add their paperwork to the stack of papers merchants already have to sign when they board.

"Slip in a high dollar lease," he said. "The merchant won't notice, and you'll be able to make a nice commission."

Your success as a sales agent isn't in achieving high-dollar commissions on leases that you slip in surreptitiously. To be a referral source, your agent bank needs to see you as a reliable and trusted provider of bankcard services.

In addition, it's important to see agent banks as opportunities not just for referral partnerships with leads flowing in your direction, but also as venues where you can show your value by helping to further their business interests.

This is especially true when working with smaller banks and credit unions, those with just a handful of branches.Ask yourself some questions when thinking about a particular agent bank relationship: Do you bank at that location? Do you actively try to recruit potential customers for that bank's services and not just feed off the leads that the bank generates for you?

Do you want this financial institution to grow as your business grows?

These issues are all integral to successful bank partnerships. In offering your merchant and sales services to banks, try to put a value on yourself as not just a sales agent, but also as a valuable source of knowledge, information and access.

For example, you could offer a book of potential clients to a bank that wants to grow or acquire customers in industries in which they currently have little or no market share.

Be the go-to source for important information

There is an art to selling that involves listening and advising as much as getting customers to sign paperwork. As sales agents working with banks, it's also crucial that you are up to date on new technologies emerging in the marketplace and are able to offer the latest products to banks and their customers without appearing as though you're simply trying to up-sell at every opportunity.

New technologies are introduced almost monthly, whether they're related to wireless processing, charge-by-phone, electronic checks or gift cards. Attending trade shows and bringing back new products to your bank partners is one element to success as an ISO or MLS. So is being knowledgeable about processing rules and compliance issues.

Take a proactive approach to keeping the bank's customers happy. Let the agent bank know when a customer calls about wireless processing or when a new competitor in the marketplace offers a lower rate. This will ensure that the bank knows you are looking out for its interests as well as your own.

If a new bank enters the market and tries to lure customers with promotions such as eliminating statement fees or offering free gift cards, you need to be flexible enough to show the ramifications of these promotions on a portfolio level, should the bank wish to compete head-to-head with these types of marketing campaigns.

Strategically, any agent bank relationship must be an equal partnership for both the ISO or MLS and the bank or credit union. A one-sided relationship will not work. Thinking the bank is there solely to benefit you and giving nothing in return will quickly sour any bank on the prospect of working with you.

Brand 'em and hold 'em

A bank is like any other company in a crowded marketplace: Having a clear brand identity is essential to separating it from the crowd. Most bank branding resources are devoted to radio ads, marketing pieces and print media, all of which can get very expensive.

A lot of time and energy is spent on marketing campaigns. After all, finding a great catch phrase or hook can elevate a bank clearly above the local competition in the eyes of new businesses that are looking for banking services.

As an ISO or MLS, are you a marketable entity as well? How much time do you spend thinking about the best way to market your services? If you are working with an ISO, does it provide marketing pieces (such as statement inserts, stickers, ads, slicks, etc.) for you and your potential bank partners?

Why not give an agent bank the opportunity to choose a branding campaign that focuses on the bank as the single-source solution for DDAs, loans, mortgages, commercial lines of credit, savings plans, bill payment and merchant services?

I like the idea of branding a merchant program in the bank's name and applying its unique marketing approach to the merchant services business.

One agent bank that focused on a local, small-town approach to banking used a statement stuffer we developed at EPI. It emphasized the local aspects of our sales agents who were working with that bank.

We wanted to show the bank's customers that EPI provided the same hometown feel and service that the bank did. We wanted to show potential customers that we knew their names, frequented their businesses and cared about their unique needs.

Some banks, however, choose a very hands-off approach to merchant services and other peripheral services. They prefer to be unbranded for a variety of reasons. One is to distance themselves from problems that occur when funds are placed on hold or a customer is having technical difficulties with credit card equipment.

It's no surprise that a processing partner can cause problems with a bank's customers, and many banks would prefer not to be tied to them in their customers' minds.

I, on the other hand, see a seamless connection between our agent bank customers and our merchant processing services. Should problems arise, it's our responsibility to assist our banks and their customers in finding acceptable resolutions. Private-labeled or not, nothing we do should ever damage the primary relationship between merchant and bank.

Helping the bank helps you too

An agent bank's local advertising is typically its responsibility, should it choose to market merchant services to its banking customers.

However, inserting that bank's collateral into merchant statements or supplying merchants with paper that is boxed with the bank's logo or that contains other marketing materials inside is a great tool for private-labeling the bank's merchant program.

Additional items may be branded as well including overlays (die-cut vinyl keypad coverings for terminals), welcome kits, reference cards, processing guides and help desk phones.

Such branding helps reinforce the bank's image and brand identity. This enhances merchant retention and attracts new merchants when they see that another business is utilizing the bank for its merchant services.

Every effort you make on behalf of your agent banks will ultimately help you as well.

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 EPI, visit or e-mail Nardy at

Article published in issue number 060601

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