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StreetSmarts

I agree that software, SaaS and integrated POS systems
are great for cultivating long-term merchant relationships.
ISOs and MLSs who sell these systems can offer local,
ISOs, ISVs and the merchant personalized service, which gives them a competitive
relationship – Key takeaways advantage over big tech. Many merchants that use self-
service and cloud-based systems miss having local service
As more ISOs recruit independent software vendors and support. ISOs and MLSs can fill that gap.
(ISVs) instead of traditional agents, the structure of Choose your business model
merchant acquisition is changing. The shift can accel-
erate growth, but it also raises new strategic concerns I see ISOs invest in software that they sell directly through
for ISOs and merchant level salespeople (MLSs): their salaried salesforce. I see other ISOs fail to monetize
Software partners can quickly become competitors investments in SaaS and integrated POS systems and go
ISVs often describe themselves as processor-agnos- back to selling legacy POS technology. Don't let this happen
to you. Decide early on if you want to provide or outsource
tic, but ownership changes can alter that stance. support and choose your business model wisely.
When a software provider is acquired by an ISO,
investor or competitor, payments monetization of- • Dealer model: ISOs that are dealers do their own
ten becomes a priority. Merchants using the soft- training and onboarding, which can be costly
ware may be encouraged—or pressured—to switch and complicated. It takes skill, time and money to
processing relationships. install POS systems. MLSs who sell SaaS or high-
Merchant portfolios can become vulnerable end POS have to learn the products before they
When software controls key parts of a merchant’s train merchants and their staff. Training alone can
take a few days or a week. Margins may be better,
operations, the balance of power may shift away but how much time and capital will in-house sales
from the ISO or MLS that originally brought in the and support require?
account. In some cases, merchants may face higher
fees or incentives to migrate to a new processing • Partner model: ISOs that prefer to move fast
partner. and sign new accounts can outsource service
Aggressive recruitment models are not always and maintenance and focus on making more
sustainable sales. I would prefer to outsource technology to
Over the past two decades, commission splits for a knowledgeable partner so that I can focus on
what I do best, which is selling and acquiring new
agents have steadily increased as ISOs compete for accounts. And I only partner with companies that
talent. Sign-on bonuses, free equipment and high fully own the software and don't look like low-
residual splits may help attract agents, but they can hanging fruit to investors and my competitors.
also create financial strain for ISOs that try to main-
tain those incentives long term. One ISO recently asked me how they can get agents to sell
ISOs must define their business model early software when all they want to do is sell terminals. The
Some organizations invest heavily in software and short answer is to make selling software as easy as selling
integrated POS platforms, building internal teams POS devices, and level up the commissions by giving
to train and support merchants. Others focus on agents more than a 25 to 50 percent split.
sales and outsource installation and support to
technology partners. Each approach has different AI-powered software is making it easier for merchants
capital, staffing and operational requirements to personalize the customer experience, and adoption
is growing. ISOs and MLSs need to catch up. With the
Local service remains a competitive advantage right technology partner, we can be dealers that provide
Large technology platforms such as Toast, Square programming, installation and support or specialists that
and Stripe offer powerful software ecosystems. But consult, refer and sell.
many merchants still value personalized service
and local support, areas where ISOs and MLSs can Want to know more? Keep reading The Green Sheet and
differentiate themselves. consider following me on LinkedIn, where we can share
As the payments industry continues to evolve to- ideas and support each other.
ward software-led commerce, ISOs face a central
question: how can they benefit from software part- Allen Kopelman, a serial entrepreneur, is co-founder and CEO of
nerships without losing control of the merchant re- Nationwide Payment Systems Inc. and host of B2B Vault: The Biz
lationships they worked to build? to Biz podcast. Email him at allen@npsbank.com and connect on
LinkedIn https://www.linkedin.com/in/allenkopelman/ and
X @AllenKopelman.

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