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Education

The race from amounts to the sales channel through higher signing
bonuses and greater revenue-share percentages, while
zero to hero also constantly lowering price schedules.

Is there an antidote to this madness? There is. A handful
of tech innovators, business process implementers and
companies with underwriting leniency have created
more viable business models that have reclaimed some
of the margins lost by traditional ISOs. These innovative
companies cater to a different kind of clientele, or cater to
different needs that are not subject to price sensitivity.

Shame on many of us for letting our industry get to this
point. I'm not a fortuneteller, shaman or guru, but I did
predict a number of the difficulties the industry faces
today. I can point out some obvious flaws that many
companies are experiencing because I've experienced
them myself. It comes down to basics, and in this case, it
comes down to salesmanship, the lost art replaced by a
robotic need to give more stuff away.
The antidote

ISOs have superb resources at their fingertips and rarely
capitalize on them. The greatest of these is a massive
By Stu Rosenbaum client base. Today, the antidote to a race to the bottom is
Prodigio LLC to redefine the term "merchant services," expanding the
definition to include value-added products and services
ore than 10 years ago, through a series of that help businesses grow. Growth in your clients' sales
comical ads, I warned our industry about the equates to growth in your processing portfolio. You all
doom that would result from providing free know now it's not enough to be just a payment service
M terminals. These ads had titles such as "Real provider. Many of us are exploring how to sell value-added
Pros Never Use the 'F' Word" (Free), "Don't be Freekin products and services, but very few have made significant
Nuts" and "Depressed, Suffering from ED" (Economic inroads with this.
Dysfunction)." I had fun writing the ads, but had serious
concerns about the fate of an industry where competitors And, what are the other resources? The customer service
routinely cannibalized each other's client bases. teams, risk teams and, most definitely, sales teams – even
if made up of a seemingly lazy bunch of independent
When industries become fully commoditized, essentially contractors who only sell price. What's been occurring in
almost every sale is about price, the euphemism "race to the industry also affects sales reps, as they have to work
zero" supplants the applicable real term "death spiral," harder for the same relative income.
and only a handful of players remain viable. Giving
away terminals was a flawed marketing plan lacking Products and sales strategy
uniqueness: anyone could do it, and just about everyone
did. Many ISOs have included cash advances and loans in their
offerings; others have expertly transitioned into providing
Some ISOs continued to lease equipment, but their sales POS solutions. It's therefore proven that ISOs can expand
presentations were constructed to confound merchants their offerings. They can change. The best value-added
into believing they were getting a better deal. So, many products or services are ones that have near-universal
in our business either actually handed free terminals application to all businesses.
to merchants and ate the cost (which turned out to be
much greater than the price of the terminal) or sacrificed Many such products are Internet and online marketing
integrity to make things look free where they weren't. tools. Imagine demonstrating that 62 percent of a prospect's
An industry of poachers online presence is incorrect – meaning it contains a wrong
address, wrong phone, wrong anything – and telling the
Today, ISOs and sales representatives have, in the main, client you have the tools to fix this cheaply and efficiently.
become poachers, swapping accounts with each other by With a 100 percent correct online presence, a company's
dropping price. And ISOs now must pay ever-increasing search engine results are likely to increase, resulting

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