Total Merchant Services is expanding north of the border. The Woodland Hills, Calif.-based ISO has hired a veteran of the Canadian acquiring business to head a new Toronto office.

But TMS is not moving north to fit in with the Canadian way of doing business, says Tom Dolan, general manager of the ISO’s Canadian office.

“We’re taking our U.S. model and applying it to Canada – essentially breaking the mold,” Dolan says.

In his view, the TMS approach differs fundamentally from the methods of the six to eight significant American ISOs already operating in Canada.

“They entered Canada and consciously made the decision to fit the existing Canadian mold for this business,” Dolan says.

Much of the difference between two nations’ ways of operating stems from the American acquiring industry’s greater maturity, he says.

ISOs have been at work in the U.S. since the ‘80s, but were outlawed in Canada until 2003. That’s when the Canadian government deregulated the industry and began allowing companies other than bank-affiliated processors to compete, Dolan says.

Much of the old system remains in place. Two of Canada’s largest banks, Bank of Montreal and Royal Bank of Canada, are competitors but put aside their differences to work together in a joint acquiring venture, the industry-leading Moneris Solutions .

More commonly, banks are affiliated with acquirers. That’s the case with Global Payments and Canadian Imperial Bank of Commerce, Dolan says. It also works that way for the Bank of Nova Scotia, or Scotiabank, and Chase Paymentech, he notes.

The banks pick up the sales leads when business owners start accounts and then pass them along to the acquirers, Dolan says.

That concentration of power and Canada’s late start at an independent approach to acquiring has been a lag in marketing north of the border, he contends.

“The types of marketing campaigns you see in Canada are similar to what you would have seen in the States 10 to 15 years ago,” Dolan says.

TMS considers the situation an opportunity.

“We’re bridging that gap immediately and trying to be as disruptive as possible in doing so,” Dolan maintains. “We’re going from zero to 60, so to speak.”

Unlike Canadian competitors, TMS offers free terminals, won’t charge setup fees for new merchants and won’t assess cancellation fees if merchants switch to another merchant services provider, Dolan says.

“All three of those are brand new concepts in Canada – as far as know, nobody is doing any of those three items,” he says.

Besides offering those incentives to merchants, TMS is offering a favorable deal to ISOs and agents, Dolan claims.

“Channel partners are really our bread and butter because we have no direct sales force,” he emphasizes.

The company is offering ISOs and agents upfront bonuses equal to the first five months of residuals they would expect to receive from each merchant, he says. That’s in addition to the regular monthly residuals.

One reason for the bonus is that Canadian ISOs rely on the income from terminal leasing, which no longer exists with TMS free terminals, Dolan says.

The deal, combined with the services TMS provides, means the company may not make a profit for up to the first 20 months of a new contract, but it should attract resellers, he believes.

“We’re probably talking about a total pool of 200 ISOs countrywide and that includes large, medium and small,” Dolan says. “I actually have relationships with probably 80% of them.”

He wants TMS to sign contracts with as many as 150 of Canada’s ISOs and predicts that could happen within next 18 months.

To accomplish it, Dolan, a Montreal native, will draw upon his 15 years in the Canadian acquiring business.

In 2004, to take advantage of Canadian deregulation, he started an ISO called Monitex. He sold the company two years later to a Toronto-based ISO and became its global sale director.

He helped found Conquest Financial in 2007 and shepherded it on its way to becoming a $20 million company in 18 months. It is now being purchased by a public company.

Dolan served as Everlink Payment Services Inc. POS channel director from 2008 until joining TMS early this year. In his role at Everlink he signed contracts with 50% of Canada’s ISOs.

For now, the Canadian office will consist of Dolan and one or two support people. TMS employs more than 300 in its California headquarters and more than 100 in other parts of the U.S.

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