Like wildcatters drilling for black gold, ISOs are beginning to harness a gusher of data and offer it to merchants as a value-added service.

“Data is the new oil,” says Charles Hogan, CEO of California-based Tranzlogic, a company that helps ISOs gather and analyze data for merchants.

The availability of “Big Data” that may prove as valuable as Texas tea has grown with the emergence of mobile commerce.

Now, the acquiring industry faces of the job of analyzing and packaging Big Data in ways merchants find useful.

In its March report on Big Data, consulting firm Celent advises financial institutions to use the data to support established services and develop new ones.

But Celent cautions that not everybody defines Big Data the same way, tagging it as anything from social media data to predictive analytics to “data volume that is beyond our organization’s capability to analyze.”

Ross Federgreen, founder of Florida-based CSR, or Compliance Solutions and Resources, considers the term “Big Data” nearly “ubiquitous”in the payments industry. “Almost anything now is considered Big Data,” Federgreen says.

How ISOs use that data in the near future will determine their long-term success in a payments business that has undergone swift ad significant change because of mobile technology, Tranzlogic’s Hogan says.

How are they doing so far? The larger the ISO, the more likely it is to have a grip on the use of data in value-added services, Hogan suggests.

He views his company’s role as helping ISOs of all sizes bring data together and provide insight into that data to help merchants create marketing and inventory programs that grow their business.

“You have to assimilate that data [and] with varying degrees of sophistication, present the data to the client and make it actionable,” Hogan says of the tasks ISOs face.

But the job doesn’t end there. Once an ISO has embraced data-based services, it’s not always a sure sale.

“Move downstream to the smaller merchants and mention Big Data, and they may look at you cross-eyed,” Hogan says.

That means ISOs should reposition their sales pitch by saying, “Are you interested in knowing who your customers are, and getting more of them?”

Some ISOs may choose to provide data as a value-added service without collecting fees, making it a differentiator, Hogan says.

“Others are charging more for various data-based services, with the potential to add 10% to 15% to the bottom-line net revenues,” he notes.

Hogan envisions a time ISOs will present themselves to merchants as data consultants who also provide card processing.

Banks and acquirers will rely on ISOs to deliver that kind of expertise, along with capitalizing on their relationships with merchants, says Richard Crone, chief executive of San Carlos, Calif.-based payments consulting firm Crone Consulting LLC.

“The big ISO opportunity is for them to hook their wagon to someone who will allow them to do actionable-based offers and coupons,” Crone says.

ISOs can find new revenue at three levels of helping online merchants decipher and package data to reveal cost per click (with packaged goods companies), cost per acquisition and cost per thousand impressions, Crone says.

“There is more potential revenue in data than in processing fees or interchange fees,” he contends.

CSR’s Federgreen agrees, saying ISOs “can’t keep beating themselves up over offering an interchange at 1/10 of a cent cheaper than the other guy.”

“For an average-size ISO, Big Data is most important for marketing purposes, and that’s the key issue to use it for,” Federgreen says. “If they have this in their quiver as additional services, it is an extremely important value-added.”

An expanded version of this article is scheduled to appear in the May-June print issue of ISO&Agent magazine and on


Subscribe Now

Authoritative analysis and perspective for every segment of the payments industry

14-Day Free Trial

Authoritative analysis and perspective for every segment of the industry