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Article published in Issue Number: 070302

Street SmartsSM:
An ISO bill of rights

By Michael Nardy, Electronic Payments Inc. (EPI)

Editor's note: After a year of contributions, this is Michael Nardy's final Street Smarts article. Beginning with the 07:04:01 issue, and continuing for one year, Dee Karawadra of Impact PaySystem will write the column. I started writing this column over a year ago, first as a Director of the National Association of Payment Professionals and then under the auspices of my company, Electronic Payments Inc. (EPI).

Under my watch, this series of articles has provided in-depth coverage of many issues facing the ISO/merchant level salesperson (MLS) community: registration, working with agent banks, becoming an ISO, sales tips and techniques, and direct sales.

It has even explored topics that are not specific to bankcard sales but have affected EPI. Thus, I felt they were important to address: moving an office, taking liability and even the key attributes of entrepreneurship.

Most recently, I responded to discussions on the GS Online MLS Forum about the commoditization of transaction fees and the increased acquiring costs and overhead ISOs face. These are crucial issues.

One of my earliest articles was entitled, "Top 10 contract pitfalls: A simple guide to ISO agreements." It appeared in The Green Sheet Oct. 28, 2005, issue 05:10:02.

Many potential ISO/MLS partners have referenced that article, even while they were talking to EPI for an ISO agreement. I'm excited that I was able to affect (and hopefully improve) the negotiating position of those entering this industry.

That article pointed out some key tenets most ISO agreements should include. In this, my last article as author of the Street Smarts column, I am going to explore things I feel are crucial for ISOs and MLSs to receive as they advance in the merchant services industry.

ISO bill of rights defined

I've been thinking about the basic and fundamental rights ISOs and MLSs should expect when working with processors. Controlling pricing and having access to merchant statements are two ideas that come to mind.

I did not develop this ISO bill of rights in response to the actions of any particular processor. It came from the notion that you, as MLSs, should enjoy certain basic rights as your preferred vendors' representatives. Following are several points I think are appropriate to list in my final article in this series.

Ability to control pricing

No matter which program has piqued your interest or which ISO you currently work with, you should always do what is right for your business. I have heard too many times of situations in which an ISO had to call the processor to request a rate review or override so it could offer a certain rate or fee.

When it comes to this business, opinions differ. But in the acquiring market, it truly is a partnership between you, as the MLS, and the processor you represent.

MLSs representing EPI in bankcard sales are the link, the veritable backbone, between EPI and merchants. Not permitting EPI's MLS and ISO partners to control all aspects of merchant pricing would make it difficult for them to feel like part of the team. If your opinion isn't valued by the processor you represent, are you likely to continue using it?

Online access to merchant statements

MLS access to merchant statements shouldn't be a privilege of working with a particular ISO or processor; it should be a given. So often, I hear of merchants calling in their "front-line of defense" or "call-me-first ISO" to request merchant statements, but to no avail.

To not provide online access to merchant statements seems counterproductive from a merchant-attrition and customer-service standpoint. Each time a customer calls a sales representative and is then referred to a processor for customer service is a case in which the agent's ties with that particular customer are lessened.

Accurate residual reporting

The other day, an MLS who just started working with EPI told me about asking for a breakdown of earnings from the company she used to represent. She had not been given a Schedule A.

She was told only that she would earn 20% of the revenue generated from merchants she signed. She received no reports on the rates and fees driving her revenue share and earnings.

This may be an extreme case. However, such abuse is surprisingly common.

Another salesperson working with a boiler-room telemarketing ISO told me his commissions were capped at $10,000 annually. And, if he didn't install an account within 10 days of approval, the new customer became a house account.

The thousands of registered ISOs (and unfortunately even more noncompliant, unregistered ISOs) marketing merchant services create plenty of room in which these types of situations can arise.

Access to online or another suitable form of residual reporting is essential for auditing your monthly earnings in addition to understanding the rates and fees affecting your monthly net residual.

On-time residual payouts

In addition to lack of residual reporting, I have heard of ISO/processor relationships in which no established payout dates exist. A schedule might seem academic when it comes to payouts. But, whether on the 1st or the 31st of each month, you should have a dependable date when residuals and commissions are paid.

Telephone audit trail

In keeping with the idea that you should be able to provide support for your merchants _ or at the very least know your processor isn't making customer support more difficult _ access to telephone logs or notes from tech support or customer service is a big help.

Trust in your ISO

For many, a successful relationship comes down to trust. Trust in your ISO or processor is a big deal; it shouldn't be taken lightly. If, for the most part, you enjoy working with your ISO or processor and occasionally get into sticky situations, which are resolved quickly and favorably, your situation is pleasant.

If, on the other hand, working with your ISO is like pulling teeth _ to get paid, to get answers, to get results _ perhaps it is time for a new relationship. In your search for the right home, asking questions, referring to articles you've read in The Green Sheet or discussions on the MLS Forum, and even occasionally testing the waters of a new ISO are all perfectly acceptable.

This is your business. Take it seriously, and choose only those partners you feel are going to be the best.

Parting is sweet sorrow

While this article brings me full circle in this series, I hope you will continue reading this column and gain insight from future writers.

It brings me tremendous satisfaction to know that fellow readers of The Green Sheet have archived my articles or have written kudos and words of encouragement to me after a certain article was useful to them. (Street Smarts articles, past and present, are posted online at

In signing off, I can only say it has been a pleasure to write these columns. I hope that in addition to learning more about the industry, you will achieve all the success you deserve for the hard work and energy you devote to your career.

Until the next time my prose hits these pages, feel free to continue to e-mail or call with your questions.

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 ISOs and MLSs 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 070302

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