Acquirers and independent sales organizations have long heard a similar refrain: Adjust to the fast pace of technology or perish.
It was a blunt way of saying the days of simply pulling point of sale hardware of out a box, plugging it in and moving on to the next customer, are over. But some acquirers and ISOs have found a way to prosper by collaborating with partners to help clients navigate the confusing world of payments technology.
"If we are going to be successful as a typical ISO in this space, we have to partner, whether it is with a point of sale company or a bank," said Phil Acree, principal at Veritas Payment Advisors.
The day-to-day business owner is "done with our business [model] for the most part," Acree said. "They are tired of hearing we are going to save them money, and they are tired of feeling confused about where they fit in the space and why they pay all these fees, and what is what with new technology."
An ISO has to approach a potential client with a partnership that showcases "a trusted advisor," whether that is a bank, a CPA or a technology company, Acree said. "If you don't come in with that, it is really hard work to just come in as a local ISO or agent and make that work."
Oxnard, Calif.-based technology provider linked2pay has positioned itself as a partner that can help guide ISOs and agents through the technology maze, hook them up to a banking partner and funnel needed services through one platform.
“We built our bank-centric payments platform over a long time frame to provide a single point login for financial institutions, ISOs, and merchants so all parties might access a technology environment that was, first of all, neutral and secondly, highly secured," said Richard McShirley, linked2Pay's chief marketing officer.
McShirley sees opportunity in large processor mergers that left some ISOs unsure of their place in the payments ecosystem, such as Global Payments' purchase of Heartland Payment Systems Inc. late last year and Vantiv's acquisition of Mercury Payments in 2014.
These deals tightened the market for ISO sales talent, McShirley said, adding bank/ISO partnerships have consolidated credit card, Automated Clearing House and remote deposit capture, which had previously been delivered as separate solutions.
"Simplifying the adoption of payments as a service is critical for financial institutions to remain competitive in the future," said Rayleen M. Pirnie, owner of RP Payments Risk Consulting Services, LLC.
A bank-centric approach solves the problems and complexity of putting the systems in place for all parties in the payment process to access the tools and solutions they need in a scalable manner, Pirnie said. "A single, fully integrated platform can replace what would normally require three vendors and an integrations project in order to launch."
ISOs are always looking for something "hot and new" and finding out they can't just be a "one-trick pony" in today's payments ecosystem, said Marc Beauchamp, president of Warsaw, Ind.-based Payment Processing Technologies, LLC.
"You can't just say 'let me look at your processing statement and see how much I can save you,'" Beauchamp said of interaction with business or merchant clients. "You have to turn into a solution sales person and have many different products available."
Payment Processing Technologies adopted a bank-centric platform mainly because of the library of application interfaces it offers, allowing the ISO to delve into other services like payroll, consumer finance and data analytics, Beauchamp said.
"What the ISOs and the feet on the street are looking for is something that can draw distinction between them and the competition," he added. "It has to be something that serves their customers and that they can make income on. If it has those three things, you'll have a successful product."
From an ISO perspective, merchant services and payments remains a "relationship business," Beauchamp said. "The more complex the industry gets, the better it is for ISOs, in my opinion."
Such a scenario means "human beings have to sit out there with the business owner and explain how these products can help their businesses in an effective manner," Beauchamp added.
The consensus within the industry is that ISOs and acquirers have to spend more time getting well-versed about payments technology, security compliance and card network rules to better serve their merchant accounts, so any collaboration on payments technology that can streamline these efforts is helpful.
In making that partnership with a bank, the benefits can have the look of a two-way street.
"Even though banks have lost a little credibility over the last 10 years, they still have a lot of it and hold a lot of positive influence over their clients," Veritas Payment's Acree said. "They are in strong partnerships with their clients and help them build buildings and capital expenditures."
But banks "haven't done anything on the payments side" to provide a service that works for these customers, and that opens the door for ISOs to connect," Acree added.