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ISOs take note: The value of operational

expertise is skyrocketing

By Adam T. Hark Sales channel
Preston Todd Advisors Let's assess an ISO sales channel past and present. A
1099 sales channel selling merchant processing 10 years
he value of operational expertise in the ISO ago didn't require particular expertise in software-based
world is skyrocketing, taking on new import as business management solutions, data security or multiple
the business paradigm for merchant acquiring payment schemes (e-commerce gateway or mobile) ‒ at
T has transitioned away from transaction pro- least not beyond a stand-alone terminal or rudimentary
cessing and toward delivering robust, all-encompassing, POS system. Payment processing was the product. ISOs
technology-based business management solutions for mer- competed with one another on pricing and customer
chants. support. Working knowledge of extraneous technologies
that do more than is required wasn't foremost in the minds
As such, the fundamental nature of the ISO's personnel of agents and owner/operators.
makeup is changing as well. It's no longer viable for an
ISO to exist purely as a sales platform providing Level 1 Fast forward to 2017, and the 1099 sales channel of 2007
support. Because the products and services that ISOs sell is a non-starter. The products and services ISOs sell
today are more expansive and sophisticated, the sales today aren't comparable to those sold 10 years ago. An
channel, support platform and ability to manage both all ongoing ISO enterprise cannot realize success in today's
require a higher degree of business acumen. business environment offering payment processing alone.
A brief look back Merchants expect and demand more.

It wasn't long ago that the inherent value of an ISO was Whether it's a multifunctional POS system, data mining
its merchant processing portfolio and its ability to grow and reporting, marketing tools, data security, omnichannel
the same. The ability to sell merchant processing was the capabilities, and the like, an ISO and its sales force must be
primary function of an ISO. selling business solutions that provide value to merchants
beyond payment processing.
I would argue that if you were to survey ISO owners 10
years ago on which skill set was more valuable to the To this end, a sales channel (1099, W-2 or hybrid) needs
continued success of their operation, sales or operational to be properly managed by highly trained personnel
wherewithal, the percentage of owners who would have to effectively sell these new value-added products and
ascribed a greater value to sales would have approached 100 services. Thus, it's more important now, more than ever,
percent. True to their name, ISOs were sales organizations, for ISOs to employ competent, knowledgeable personnel
and their proficiency at selling drove their value. for the sales channel ‒ often in the form of experienced
operations executives.
Though it remains true today that the inherent value of an
ISO is largely a function of the quality of its underlying Customer support apparatus
merchant portfolio, as well as an ISO's ability to grow Following the same logic, if an ISO's core products and
and support that portfolio, the calculation for assessing services have changed over the years, so too, must the
an ISO's worth is changing. Today's merchants want and requirements of an ISO's customer support apparatus. The
expect more value from their payment providers, and this range of merchant issues requiring support has expanded
has come in the form of new product and service offerings. well beyond payment processing related setbacks. End-
to-end business management solutions, data security and
These new product and service offerings have driven ISOs multiple payments schema have all but ensured this.
to reinvent themselves by hiring, educating, and managing
a new wave of sales and customer support talent with the As such, today's ISOs require highly trained and properly
breadth and depth of knowledge capable of selling and managed support personnel necessarily comprising
supporting a new, robust and expansive product suite. management with operational expertise and expansive
Thus, there exists the need today for ISOs to find highly product knowledge.
capable operational personnel to run a successful business.
As such, the value of personnel with this skill set has
never been higher. This phenomenon is playing out in the
sales channel, customer support functions and partner
relationships.

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