Apple Pay is poised to foment a technology revolution that could force acquirers to rewrite the job descriptions of their salespeople, says a prominent ISO chief executive.
The new payment system from Apple Inc. makes it imperative that ISOs and sales agents become technology advisorsnot just salespeople, according to Jared Isaacman, CEO of Allentown, Pa.-based Harbortouch.
"The ISOs and sales personnel of our industry cant just talk to merchants about credit card processing rates," Isaacman said. "They have to talk about point of sale technology and mobile loyalty and mobile rewards."
For several years, the payments industry has anticipated the dawn of the mobile payments era, as evidenced by tech acquisitions and major investments by Google Wallet, Softcard (formerly Isis) and PayPal, Isaacman said.
But until the Apple Pay announcement, no one seemed able to say exactly when mobile would gain momentum. Some even argued that cards with magnetic stripes still worked well enough, meaning that the old system wasnt broken.
"But its not about it being broken or not," Isaacman said. "Its about it being better." Becoming better means improving the consumer experience and tying in loyalty and rewards, he noted.
Many in the industry have been waiting for Apple to make its move into mobile payments to bring those improvements to the masses. Until now, the public has been either uniformed or unimpressed with the idea of paying with their phones, but Apple can change that, Isaacman said.
"Apple has the power to shift consumer behavior," he said, referring to phones and computers. "Theyve done it before in a big way"
And it appears that Apples also changing the behavior of the payments industry. As Apple prepared to enter the industry, it validated its presence by persuading the established companies to sign on as partners.
"Have you ever heard of any of the card issuers like Bank of America and Chase going out of their way to rebate interchange just to ensure that theyre able to participate in a payment method? Thats unheard of," Isaacman said.
Besides those discounts, Apple has pried loose advertising dollars from major retailers, he noted.
What the industry will receive for those concessions goes far beyond the Near Field Communication technology that Apple is including in its phones to facilitate mobile payments, he continued.
Apple Pay enables consumers to use a thumbprint to complete a transaction, which has implications for card-present and card-not-present purchases. The apps will tie to mobile rewards and loyalty initiatives.
"NFC is not just Apple Pay," Isaacman said. "The magic of Apple Pay that is going to change the consumer experiencewhats going to make people want to use it over and over againis not going to be the NFC. Its going to be the in-app functionality."
But someone has to alert merchants to those capabilities and help them adopt and adapt.
"Thats not something that happens on its own," Isaacman said. "The sales personnel of the industry are going to have to explain how that works. How do you generate campaigns at your business to drive customers in? How do you analyze this customer data that you now have available because of what Apple Pay brings you?"
ISOs and agents will have to become a lot smarter about mobile payments, he said.
Meanwhile, Isaacman said he finds Apple Pay exciting as a consumer, an Apple fan and the CEO of a company thats part of the "great process" thats taking place.
Confidentiality agreements prevented him from providing many details about how Harbortouch collaborated with Apple in the Apple Pay launch, but he acknowledged that some of his software developers spent time preparing in Apples California offices.
In addition, 40 or 50 of the more than 100,000 Harbortouch merchants participated in tests of Apple Pay.
Details of the Apple Pay launch aside, Isaacman also said his company has been preparing for a technical revolution for some time.
"It was obvious for the last couple of years that the old ISO way of doing things by knocking on doors, mailing postcards and sending emails to say, Ill lower your rates, was becoming a dying method of doing business," he said.
His company embraced the transition six years ago when it developed point of sale systems for its merchants and changed its name from United Bank Card, which conjures images of plastic cards, to Harbortouch, which is intended to suggest technology.
Meanwhile, the company hasnt abandoned its core business of processing credit cards but instead uses technology to make its processing more attractive to merchants.
Apple Pay represents a "gargantuan leap" in the direction of technology, and Harbortouch had already traveled far on that path before the Apple announcement. Harbortouch also expects to continue that process with new Apple Pay-related products it anticipates introducing late this month.
Those products, which Isaacman declined to describe, will demonstrate that working with Apple in advance of the Apple Pay introduction put Harbortouch ahead of many payments companies, he said.
Does that mean that ISOs working with Harbortouch are well-grounded in the new technology?
"We analyze our ISO partners constantly," Isaacman said. "We look at thousands of ISOs. We have a lot that partner with Harbortouch that focus on technology. Technology is the tool to get the core competency of credit card processing. Thats still why were in business."
Then, too, a "good chuck" promote technology but still hold onto the "lingering terminal world" business model of 30 years ago, he said, noting that an "unfortunately large chunk" still work the same way they always did.
Isaacman sends the old-fashioned ISOs letters, email messages and pop-up alerts, while also admonishing them at meetings about "how scary that is" to remain committed to the past.
Of that latter group, some will change and some wont, he predicted.
For those who make the transition to a more tech-oriented industry, rewards will follow, he asserted.
"Its a very exciting time for those that embrace it," Isaacman said. "This is certainly not a time to relax."