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Insights and Expertise

StreetSmarts SM

Winning and keeping residual income

By Allen Kopelman The new business model creates problems for stakehold-
Nationwide Payment Systems Inc. ers all the way down the line:
• ISOs: Businesses have been losing as much as
magine how boring merchant services would be $30,000 to $50,000 a month over the last 2 years
without its long line of game changers. Every time
someone smashes a cherished business model, when other ISOs or private equity firms take over
I naysayers declare that merchant services is over. POS systems. Most of these companies do not want
Surely, the sky was falling when Mercury Payments start- to share revenue, and they do not have to. This
trend is not stopping.
ed their Data Cap program and we slowly lost accounts to
POS dealers. And who could possibly survive the adopt- • POS dealers: The software companies have also
or-die antics of software companies during the massive been cutting out their own distributors, reducing
2015 EMV migration? their dealer footprints to very few or no dealers
at all, and selling direct to merchants. Remaining
But we’re still here, and we’ve got what it takes to weather dealers must split revenue with the software com-
this new storm! pany.

As I’ve said before, a former technology partner can be- • Merchants: Businesses are getting locked into con-
come a predator in the blink of an eye. This has happened tracts not only with software and hardware, but
to me and other ISOs and agents around the country. In payment processing. Most of these contracts would
the last several years, I’ve lost residual streams to software require a merchant to pay thousands of dollars in
companies that reneged on standing agreements and had penalties for switching software or processing.
no interest in sharing revenue. When a large enterprise
acquires a POS dealer, payment processing revenue shar-
ing is usually the first thing to go.
I look forward to discussing this
This trend has been around since 2015 but has recently evolving threat at SEAA 2025 at
become a bigger threat. These companies saw the value
of combining payments and software-as-a-service (SaaS) the JW Marriott Orlando Bonnet
revenue and changed their business models. Creek Resort and Spa. Join me and

In 2001, software companies made money from software Jim Battista on Tues., June 3, 2025,
licenses, hardware sales and service contracts. In 2025,
these companies make money from SaaS, hardware-as-a- from 3:30 to 4:20 p.m., as we share
service (HaaS) and payment processing revenue. winning strategies for ISOs and
MLSs.

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