When Signature Card Services was trying to help one of its merchants learn more about its customers, the ISO went in looking for the typical clientele of a West Coast e-tailer. The merchant operated as an e-commerce kitchenware business based in San Diego.

So when Signature started analyzing data from the merchant’s transactions, it came as a surprise that the business’ best sales were coming from Minnesota.

Based on that information, the merchant refocused its marketing efforts to target that region. Meanwhile, Signature has been gaining clout among merchants for its data analysis services, says Anush Amiryants, executive vice president of the West Hollywood, Calif.-based ISO.

"There is huge interest from prospective merchants, she says. "It’s much easier for us to sell a merchant account through this business intelligence tool because it’s a unique service,"

With the advent of mobile commerce, ISOs like Signature are capitalizing on the massive amount of transaction data that’s there for the taking, and approaching this new practice as a game-changer for differentiation.

For Signature, having the ability to help merchants capture and analyze customer data is transforming the way the ISO does business.

"If were a merchant, this would be what the money I put into paying for credit card processing was giving back to me. The data is the real value," says Amiryants.

To perform its analysis, Signature equipped its client with access to an online portal created by Tranzlogic, a Westlake Village, Calif.-based company that helps ISOs gather and analyze data for merchants. Signature has been working as Tranzlogic’s beta partner and became one of the first ISOs to offer the product nearly two years ago. Merchants that use it can log on to a secure desktop portal to obtain information that’s collected whenever a customer pays with a credit card.

"In our industry, on our level, nothing like this has ever been available to merchants," Amiryants says of the midsize ISO.

 Many are referring to Big Data as the new oil, says Charles Hogan, Tranzlogic CEO. 

"I think everyone’s known for years that they’re sitting on important data. It’s just now becoming a trendy topic," he says.

Companies like Tranzlogic are hoping that ISOs will use third parties. Hogan insists that unless an ISO is willing to make a big investment, it’s better off finding partners to help them use the data.

"They risk trying to come up a steep learning curve in a short period of time for an outcome that they may never achieve, just because they are not equipped to achieve it," he says.

As ISOs continue their quest for differentiation, Hogan suggests that the latest trend is for them to venture into new technology spaces.

"We’ve had the opportunity in the past few years of talking to a lot of people in the payments space, and it’s very interesting to see the range in the sophistication level out in the market," he says.

Amiryants, who specializes in marketing, notes that merchants pay a hefty sum to large marketing firms to harvest, sort and analyze customer data. Now, with the swipe of a credit card, merchants can obtain that information at a fraction of the cost. All a merchant then needs is a basic understanding of how to market to customers.

"It seems to me that this is the most innovative mix of credit card processing and marketing," she says. "What it does for our merchants is absolutely unparalleled."

 After learning about the data-mining tool, Signature made three observations that piqued the firm’s interest. First, Signature concluded that if the product could help merchants process more, the ISO’s revenues would also increase.

Second, the product had the potential for reducing merchant attrition. Although it’s still too early for Signature to compile figures, Amiryants says she has seen fewer merchants leaving the portfolio.

"We believe it’s one of the most essential tools for merchant retention."

Third, Signature believed the tool could help reduce agent attrition. Because the product is still brand new, it’s still gaining traction among Signature’s agents. But those who have started using it have found it appealing in terms of opening a conversation with a potential client, Amiryants says. She believes the tool could help agents close more deals.

"This is a conversation changer," Amiryants says. "It’s a fresh message for merchants, particularly those in retail, who are growing weary of agents walking into their storefront and promising better pricing."

For now, Signature does not charge its clients for its data mining services, which come standard with a merchant account.

 

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An expanded version of this article is scheduled for the September-October print edition of

ISO&Agent.

 

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