Tranzlogic LLC is using ISOs to promote transaction data and analytics to merchants.
“Instead of delivering directly to merchants, we could reach a larger number of merchants by enabling ISOs to make credit card data available to its merchant clients with a white-label platform,” says Charles Hogan, Tranzlogic CEO.
Tranzlogic supplies ISOs with consumer transactions data. The data does not carry the names and addresses users, and the company aggregates it to show merchants consumer patterns based on demographic, economic, psychographic and geographic features.
Observers agree the company can more of that data to merchants by calling upon acquirers to tout it.
“ISOs can act as a distribution channel for Tranzlogic allowing [the company] to reach a larger number of end users,” says Arkady Fridman, senior analyst at the Aite Group. “This model seems to strive for scale by shifting the sales channel to ISOs as opposed to individual sale efforts.”
Two ISOs or about 10,000 merchants have rolled out the platform so far with 10 more, representing hundreds of thousands of merchants, almost ready to begin, Hogan says. He declined to name the ISOs the company has signed on, but he announcements may come toward the end of April.
ISOs can differentiate themselves from competitors by offering the data as a added-value product, offering it for free or turning it into a profit center, Hogan notes.
The product could provide welcome relief in a tough market, Fridman contends.
“ISOs, especially ones that focus on value-added services, have another capability to sell to merchants,” he says. “Merchants that are looking to consolidate the number of providers hey have may welcome new analytics features.”
It can satisfy customers and thus reduce attrition, Hogan says, adding that “because of competition and shrinking margin, ISOs that aren’t differentiated are sold on price alone.”
Big data and transaction analytics has become an important part of payments player’s business model. Companies ranging from marketing firms to mobile wallet startups are touting easy access to consumer data to make merchant ads and offers more effective.
“Most merchants don’t know much, certainly not empirically and certainly not anecdotally, so their marketing is less efficient as a result,” Hogan says.
But merchants are demanding the data and are willing to switch credit card processors at margin to get it, he warns.