If independent sales organizations want to stand out in the acquiring industry as an indispensable partner to merchants, they have to bring something valuable to the table something that will deliver a lasting edge in terms of competitiveness or efficiency.
While creativity, service and expertise go a long way, the industry is too crowded, commoditized and price-driven for even those assets to guarantee success. To thrive, ISOs need a game-changer, something so transformative that it transcends the latest point of sale device and affects the merchants underlying business model.
The buzzword for the notion is disruptive innovation. And while it has as many definitions as there are agendas, it essentially refers to an idea or technology that emerges to upend the norm.
Of course ISOs would want to be on board for such a revolution. But how do they identify what offerings are going to be disruptive technology versus merely sustaining or evolutionary products? What will create an entirely new value proposition for ISOs and their customers?
Clearly, the answer isn't simple. Case in point? Near Field Communication and mobile wallets. A few years ago, many observers would have tagged that combination as truly disruptive. Yet, NFC-based mobile payments have yet to take off. There's a continuous stream of technology that has the potential to shake things up, but market adoption is the final measure of success.
The good news is theres no shortage of innovation in the market, great ideas and smart technology are coming out all the time. The hard part is discerning which emerging technologies to place bets on. A few examples to consider:
Gateways Theyve indeed transformed users transaction experience and expanded the product lifecycle of Internet transactions, but can they fundamentally change the transaction process itself?
Cloud-based POS Its a quantum leap over a local phone line and hardware, but is it a new concept or just a new configuration?
Card-linked loyalty It brings the benefits of a proprietary card to any card in consumers' wallets. Ground-breaking or just a good idea?
Mobile payments, bitcoin, smart cards Theres plenty of beneficial innovation going on in the acquiring industry for consumers and merchants alike. But as an ISO, survival requires something beyond the ordinary.
Evaluating emerging trends to find unique value for ISOs' customers is a crucial and challenging part of success. ISOs that put energy and investment in the wrong idea become just another vendor in a crowded field or worse, the investments made are so large that repositioning isnt an option.
Finding the answer thats right for ISOs and their customers requires a deep understanding of what sustainable value means to merchants. Remember that transformation isnt about the interface or the form factor. Its about the market ramifications.
Is the trend resonating in other industries? Is it one technology or a paradigm that affects multiple processes? Is it one innovation or a capability that will drive ongoing innovation? Is it something ISOs can leverage without diluting their core competencies? Does it solve a real problem?
Looking at emerging innovation, especially the rise of big data, its crucial for ISOs to keep these questions in mind and always view them through the eyes of the merchant. Disruption is out there, but its not always found in the most obvious places.
Charles Hogan is co-founder of Tranzlogic.