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Partner relationships ship needs to be carefully curated and, as such, requires the
skill set of a capable operator.
Another sign of the changing times are the extensive
partner networks and distribution channels that refer-in or The big picture
resell payment processing on behalf of ISOs. Admittedly,
high-value partner relationships existed 10 years ago, Winding the clock back 10 years or so, the majority of
often taking the form of agent bank referral channels or merchant portfolio and ISO merger and acquisition
POS dealers, and these types of partner relationships still transactions involved an asset sale of the portfolio and the
exist today. The difference, though, is that the nature of the sales channel ‒ that's if the selling party was willing to part
partners has changed, and the partnerships have become with it. Buyer interest in acquiring the operational assets
more valuable. of an ISO, such that they were, was relatively nonexistent.
Why? Because back then the only product was payment
Nowhere is this more clearly illustrated than in the current processing ‒ and it was a simple product that did not
high demand ISOs harbor for independent software vendors require sophisticated product training or customer support.
(ISVs). ISV partnerships are the most highly sought after
relationships in the merchant acquiring space, whether Looking at the marketplace today, the experienced buyers
by an ISO operator, agent office, or third-party processor. acquiring payment properties have assigned real value to
Why? Integrated payments. an ISO's operational capabilities. I can further attest that
for some buyers, the operational component has been put
Unlike a decade ago, the software solutions available on equal footing, in terms of importance, with the sales
to merchants today are exceptionally robust, providing component.
business owners with operational efficiencies, reporting,
security, rewards and loyalty, and an increasingly This change in how operational expertise is viewed
frictionless purchasing experience for the consumer. and valued should serve to validate how critical quality
operational assets are to an ISO's ability to thrive in today's
As such, when a merchant elects to incorporate a software marketplace. The new products and services that ISOs must
solution along with integrated payments into his or her embrace today are dictating what ISOs need to properly
business, the merchant is making a major business decision, and effectively conduct their operations.
evidenced by an appropriation of valuable resources (time
and money) to bring the solution online. The net result is Adam T. Hark is co-founder of Preston Todd Advisors and a leading M&A
the creation of a very sticky, high-value merchant. advisor in payments and payments technologies. With over a decade
of experience, Adam advises clients in M&A, growth strategy, exits, and
ISOs that have cultivated relationships with these software business and portfolio valuations. He can be reached at adam.hark@
providers need to ensure that these ISV partners are ap- prestontoddadvisors.com or 617-340-8779.
preciated for the value they provide and are comfortable
with the competency of
their payment process-
ing partner. ISV partners
need to be happy with
the business terms of
the partnership (revenue
share/compensation) and
how responsive the ISO
is to the ISV's end-user's
needs.

ISVs also need to know
that their payment pro-
cessing partner has the
competency to speak
intelligently about their
software platform and
possesses the wherewith-
al to manage issues at the
payments/software inter-
face.

This high-value, high-
touch ISO to ISV relation-

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