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Insights and Expertise

StreetSmarts SM

Steer clear of the race to subzero

By Allen Kopelman ISOs buying, wrecking portfolios
Nationwide Payment Systems Inc. ISOs buy portfolios and come in with a giant wrecking
ball, purging accounts that don't meet their risk crite-
he payments industry prides itself on being ria and assessing new fees on those that do. This makes
self-regulated, but some individuals and com- the agents and our entire industry look bad. It also takes
panies are detouring our guidelines and best agents away from selling by putting them in damage con-
T practices. We can't allow unscrupulous pay- trol mode as they rescue merchants and move them to
ment professionals to hurt our merchants and undermine new processors.
our credibility. It's time to rise as a unified community
and put an end to these subpar practices: Here are a few examples of this:

Reps paying merchants residuals • ISO A sells to ISO B, and a week later, ISO B says 20
merchants have unacceptable risk profiles and must
Congratulations to the desperados who pay people to use go. Never mind that these customers had been with
merchant services. Thanks to your contributions, the race ISO A for more than seven years.
to zero has just become the race to subzero. Ever hear the
saying, "Desperate times call for desperate measures"? • Another common scenario is when an ISO sells to
Don't believe it. ISO C, and three months down the road the new
ISO decides to raise rates. Merchants who were
Anyone can have a bad day, even merchant level sales- promised locked-in rates get angry about this.
people (MLSs). Do you think Toast, Square and Stripe are
giving kickbacks to businesses that use their services? • An ISO buys a troubled asset and loses money on
Sharing hard-earned processing revenue with merchants the deal. This kind of stuff drives me crazy, espe-
is a fool's errand. cially when clauses in contracts prevent us from
finding better homes for merchants.
Not being transparent:
Unethical leases:
There are a lot of ways to be more transparent in our busi-
ness, such as presenting all rates and fees to a business Leasing a terminal for $99 a month for 48 months means a
owner. Processing is a two-way street; make sure your merchant is paying $4,752 for a terminal that sells for $500
merchants understand what you are doing for them and to $800. Add sales tax and a state leasing tax to that, and
explain what you expect from them. the total cost rises above $5,000.

Let them know who to call for support, how to log into Some companies have a buyout at the end of the lease;
their merchant portal to get reporting, how to respond to others continue to draw payments indefinitely. Leasing
chargebacks and what they need to do to be PCI-compli- terminals or POS systems at exorbitant prices and with
ant so they can avoid paying noncompliance fees. unconscionable terms to merchants who never even use

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