This article appears in the July 16, 2009, edition of ISO&Agent Weekly.
Many merchants are feeling financial stress from decreased transaction volumes and compressed margins brought about by the difficult economy. Their stress is leading to an increase in reviews of merchant rates and fees and, in some cases, "volatile" customer-service interactions between an ISO and the merchant, according to industry professionals.
"Their business is not as good as it had been in the past. They are stressed," says Debbie Bowles, a partner in Advanced Payment Solutions LLC, a Nashville, Tenn.-based ISO. Transaction volume has dropped roughly 15% from April 2008 to April 2009 among Advanced Payment's clients, says Bowles.
Dealing with merchants experiencing financial difficulties requires sensitivity from ISOs.
When merchants are stressed, their interactions with service providers "may be more volatile," she says. "We all have to be sensitive to how they are reacting" to their financial situations, says Bowles. When a merchant is upset, it is important to let them express their concerns and to not make them defensive, she says.
ISOs also should exercise sensitivity when a merchant is going out of business, Jimmy Shin, executive vice president at Applied Merchant Systems Inc., a Chicago-based ISO.
"If there's a financially stressful situation for [merchants], it's not worth it for us to send collection agents after them for $150 to $300 in [contract] termination fees," says Shin, who lets customer-service representatives judge whether to waive cancellations fees for merchants on a case-by-case basis.
As more merchants face financial stresses, many have been contacting their ISOs and service providers to request rate reviews to determine if other providers can offer them better pricing or to negotiate better rates with their existing providers, says Michael Langfield, vice president of MersaTech LLC, a Centennial, Colo.-based ISO.
Merchants tend to contact their providers when "budgets are tight and they are looking for ways to save money" or when competitors are promising money savings, says Langfield.
Competing ISOs frequently solicit merchants, agrees Shin. "The requests for rate reviews have increased in the past year," he says.
To improve customer service and better address merchants' financial concerns, many ISOs are being proactive about acquiring pricing data for their merchants, notes Michael Cottrell, vice president of business development for TriSource Solutions LLC, a Davenport, Iowa-based merchant-processing company.
Many ISOs with which TriSource works are requesting merchant pricing data. "There are more attempts [from ISOs] to be proactive and interact with their merchants," says Cottrell.
The customer-service tactics at Applied Merchants Systems are "always evolving, regardless of a recession or not," says Shin. Handling customers service in a recession, however, is different from handling it in prosperous times, he notes.
"Customer service has had to improve" to emphasize merchant retention, says Shin. "In our industry, customer service hasn't had a great reputation. It's what we need to focus on to be different from competitors," he says.
The customer-service representatives at MersaTech are trained to look for "red flags" that indicate a merchant is considering switching providers, says Langfield. A merchant request for a copy of a processing statement is an example of a red flag, he says.
"We tell our staff that if you are getting that request, it's a red flag that someone is shopping" around for other providers, says Langfield.
It is helpful for ISOs to always "put yourself in the shoes of the client," recommends Langfield. "Merchants right now are more sensitive to price and cost because of the economy," he says.