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CoverStory

But beyond necessity, what also makes this industry so card brands, the sponsor banks, the ISO programs, the
resilient is its collective of problem-solvers—banks, pro- agent networks. There is significant momentum in how
cessors, fintech startups and merchants—all working to- things have worked. Nearly every owner of an ISO has
gether, often competing, but ultimately driving progress. made a lot of money in the last 20 years, and the current
The constant influx of new technology, from EMV chips valuations of merchant services businesses are still high.
to contactless payments to AI-driven fraud detection,
keeps us on our toes, and rather than fearing disruption, But times are changing and we have to adapt. There are
we have seen the most success when we've embraced it as storm clouds on the horizon.
part of the job.
First, the agent networks are a bloody ocean. ISOs are pay-
Looking ahead, our strategy for success remains the same ing out 75 to 90 percent residual shares. That means the
as it has in the past: staying tech-agile by embracing AI, ISO either makes very little profit for new merchants or
automation, enhanced security measures and whatever pads interchange and their costs to shelter more of the
else peeks up over the horizon; staying ahead of new laws profit. I don't see how the agent model continues to work
and regulations—like the Illinois Interchange Fee Prohibi- with these numbers.
tion Act—so we're leading the charge rather than playing
catch-up; and, most importantly, staying client-centric. Second, younger business owners are making buying de-
cisions in a different way. They are used to taking out their
We must keep merchants at the center of everything we smartphones, doing a quick search, locating a few suppli-
do, listening to their needs and providing the appropriate ers or providers, and choosing the one that makes buying
solutions. When our merchants thrive, so does our entire easy, seamless and frictionless. These owners buy based
ecosystem. on how best to manage their entire business.

Payment processing is a built-in feature that's part of the
Mark Dunn overall package but not a leading factor. (Think about
Field Guide Enterprises LLC how spell check used to be a stand-alone application from
word processing.) These owners don't care to talk to or
We, as a group of dedicated salespeople in payments, have
succeeded because of several factors. First, sheer persis-
tence, size of our workforce and being on site. We are an
army of salespeople calling, emailing, walking into places
of business and meeting owners face to face. Payments is our Business

Business owners have been comfortable doing business • Expert Witness Consulting Testimony
face to face for years. When faced with a buying decision, • Experience in Criminal & Civil cases
being local and physically present works. But there has
to be value, transparency, honesty and day-to-day great • Payment Facilitation
functionality to make the local, face-to-face sales appeal • RFP services
work. • Integrated Payments
• Least Cost Routing
Second, business owners don't really like to change. When
their POS systems, virtual terminals, payments integra- • Card Network Rules
tion, processing and funding are working – and don't cost • Payment Gateways
an arm and a leg, business owners will most likely stay • Processor Selection
where they are. This means that good retention programs • 'Hard to Place Merchants'
work if we fix what isn't working. Retention is a key factor
in valuing merchant services businesses and portfolios.
Let us demonstrate how our our Experience
Third, there are still significant opportunities for good and Knowledge can work for you!
profits in niche markets. Among these niche markets
where ISOs are making good money are ISVs and devel- Napa Payments and Consulting
opers, B2B companies, healthcare businesses and hard-to-
place merchants (high risk). These niche markets require
specialized solutions and specific experience, but there is (707)601-7656
less competition and more opportunity than retail/restau-
rant markets. Generally, it is worth the investment of time, kenm@napapaymentsandconsulting.com
money, research and learning.
napapaymentsandconsulting.com
Fourth, despite all the challenges we have faced so far,
there hasn't been a really fundamental challenge to the
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