Expertise becoming more valuable to ISOs than products
Payments technology is advancing at such a rapid pace, the most valuable asset for those in merchant acquiring is expertise.
It was clear even two years ago that ISOs and agents were not keeping up with rapid innovation in many instances. Those in the acquiring industry say that has to change now, as merchants increasingly demand the presence of an expert who can make sense of the tsunami of new technology and ideas.
"My message for an ISO is that you don't have to be the technology provider," said Mark Passifione, vice president of partners at payment processor Clearent. "The ISO in the future has to be an account manager, the approved expert, trusted advisor and handle customer service support."
Such an approach will help an ISO reduce customer churn in a time when merchants are intrigued by new technology, but don't know much about it.
"The partner channel is really important for an ISO," said Jake West, director of Vend, a cloud-based point-of-sale provider. "The ISO has to be a consultant in this process, being able to show a merchant how easily they can learn how to use the system (they are selling)."
ISOs discussed the topic of integrated payments technology and its effect on acquiring last week with merchants and technology experts at the annual Midwest Acquirers Association conference in Chicago.
With payments technology integrated into the POS and throughout the other business tools in a merchant's network, it becomes far easier for the merchant to obtain reports on pricing and costs, inventory and customer spending habits connected to the payments data channels.
And the merchants want that explained to them in detail when pondering a new system or an upgrade to current POS and back-office terminals.
For merchants, it is a matter of thinking about what kind of reports you want out of an integrated payments system and what you are willing to pay for — and then finding an ISO to explain it and build it for you, said Sean Payne, general manager of Clearwater Outdoor in Lake Geneva, Wis.
"If we have customers who have a store credit, we can remind them to come in, as that information is integrated into our system," said Payne, whose store used ISO Cayan to help build up the network. "We also can have a history of what the customers bought and how much they spent, and then send our best customers tokens of appreciation or special deals."
Companies are hiring full-time payment experts to their staffs, a signal they are seeking this kind of expertise, Clearent's Passifione said.
"A payments expert in software-as-a-service (sector) is hard to find," Passifione said. "If an ISO is going to partner with an independent software vendor, they have to be able to speak their language," he added. "It's a consulting partnership and you become the payments expert able to relieve pain points for your partners."
They are all steps that ISOs must consider now, otherwise they may continue to feel as if they are on the outside looking in regarding some of the most current and technology-advanced payment processing opportunities.
It is why they are watching closely as the payment facilitator model, in which one provider with a single Merchant Identification Account represents groups of sub-merchants in marketplace-type settings, continues to grow. They also wonder what role, if any, they could ever garner when something like the new Apple Card is deployed.
ISOs are also waiting to determine which shoe will drop in the aftermath of several mega-mergers deals in the payments industry. Will those mergers weaken the position of an ISO or agent, which is essentially to be the contact person or the go-between for a bank or processor in serving merchant accounts?
Or would it fuel this notion that the ISO role is now changing, and possibly for the better, as it morphs into the role of a payments expert who can educate merchants, facilitate technology change and be the glue that holds it all together simply by being the reliable contact for service?
Integrated payments and other technologies are such that providers for large banks' core systems are having the same conversations with mid-size banks to bring the latest upgrades to the table, William Treciak, president and CEO of Electronic Data Payment Systems, said. That opens the door for experts, he added.
"For the ISO, they have to ask how they fit in now in the wake of these mergers," Treciak said. "The opportunity is in getting to know these people and finding areas they need assistance with."