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Presumably, most of these were micro businesses. But let's
Insider’sreport say just 1 million of these were micro merchants that want
to accept credit and debit cards, and that each of these
received $2,000 a month in card payments. That's $2 billion
on payments a month in card payments in search of processors/acquirers.

True, a lot of new businesses fail. Data from the Bureau
of Labor Statistics suggests 20 percent fail within the first
two years. But then, most ISOs/agents have merchant
churn rates of 20 percent or more a year. At least when a
micro merchant goes out of business the hole in an agent's
portfolio is small.

A pitch for pitching One bright spot

The challenge for ISOs and agents is to find a way to
micro merchants service micro merchant accounts without going negative.
Dustin Magaziner, managing partner at Paybright, told me
recently that he's meeting the challenge.
By Patti Murphy Paybright took a page from Square's playbook and
ProScribes Inc. developed what it calls a "mini merchant solution." It uses
a pay-as-you-go model and provides these merchants with
recall the first time I saw Jack Dorsey, co-founder of free terminals/dongles. Agents earn money on transactions
Block (nee Square). He was a 30-something upstart, but aren't left holding the bag on Schedule A costs.
his rolled up sleeves revealing an armful of ink, pre-
I senting at a regional acquirers association meeting "We absorb all fixed costs—monthly, annual, PCI,
his vision for providing payment processing services to minimums—on our end," Magaziner said. "We find that
micro merchants. although we may be negative on a few accounts, the
program as a whole is overwhelmingly positive."
Few in attendance seemed all that threatened by Square. I
wondered why, until a few years later reports started flying Where Paybright differs from Square is that it offers these
about Square's balance sheet. At one point, the company was merchants a local solution with a local person, the signing
losing tens of millions of dollars a quarter. The naysayers agent, to turn to if and when there is a problem. Magaziner
seemed to have it right: it was not economically feasible to was quick to note that he seldom gets complaints from
support card acceptance at these small businesses. micro merchants. Most of the headaches associated with
these small accounts involve complaints about billing, like
But Dorsey was onto something: even really small $10 monthly PCI compliance fees, processing minimums,
businesses can be big business. Sure, Square isn't just a etc., he noted. "You can eliminate a lot of the headaches by
small business payments platform anymore. Neither is it a eliminating these nuisance fees and the disgruntled calls
money loser. In the 10 years it's been in business, Square has they generate," Magaziner said.
built a technology stack that supports all types of financial
services. But micro merchants formed the foundation upon Merchant services is about relationship building. Micro
which the business was built. merchants, if successful, aren't going to remain that small

$2 billion a month in card payments for long. As one of these merchants grows, so does its
processing volume. When the volume gets large enough,
Micro merchant can mean different things to different the merchant can be moved to a different pricing model,
people. Generally, in the ISO/agent community, it means a and value-added services like merchant cash advances can
merchant account generating less than $5,000 in monthly get added to the mix.
purchase volume. The residuals from these accounts barely
cover costs, I've been told. But here's the thing: micro Another upside to forging relationships with micro
merchants don't always stay that small. Amazon and Ben merchants is that they can provide an entree to other, more
& Jerry's are two examples of just how big micro merchants profitable relationships. Magaziner related during a recent
can become. Merchant Sales Podcast how he landed one of his first big
accounts after a referral from a micro merchant that was
The U.S. Census Bureau reported nearly 5.4 million new generating just $10 a month in residuals.
businesses were created in 2021. Some of the largest
numbers were recorded in accommodation and food Patti Murphy is senior editor at The Green Sheet and self-described pay-
services, retail trade and healthcare and social assistance. ments maven of the fourth estate. Follow her on Twitter @GS_PayMaven

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