The Green Sheet Online Edition
April 4, 2012 • 12:04:02
Street SmartsSM
Lessons for a lifetime
The summer of 1964 became known as The Great Game of Tag in my neighborhood. It began right after school had ended. Several of us were already complaining there was nothing to do. Then one of us reached over to the guy next to him and yelled "Tag! You're it!" Thus, a summer-long game was born.
Initially, five of us were playing the game, but after several hours the whole neighborhood was involved. You see, my neighborhood had 12 kids ranging in age from seven to nine - of both genders and all shapes and sizes - within a three-block radius.
During that first day, some were called home by their mothers; others quit, declaring the game wasn't fair. It seems the same people were tagged repeatedly, mainly because they were slower. Others objected because they would tag someone and be re-tagged before they could get away. At that point, the game could have ended. Instead, someone yelled out, "New rule: no tag-backs." The game went on until dark.
The game continues
The next day, several of us talked about the fun we'd had and wanted to resume playing tag. However, one friend said, "I am the slowest, and I don't want to be it all the time." We decided he could create a rule to add to the no-tag-back rule. His rule identified a base where, if you were on it, you couldn't be tagged. And the game was on - for the entire summer.
As the game evolved, we would change some rules and add new ones. We formed teams and incorporated a bit of "capture the flag" into the game. Each winning team was then able to change or add a rule to the next game.
No matter what new rule was added, the basics remained the same, "Tag! You're it!" The rule changes didn't affect that, but they did impact how and whom you tagged. Yes, it could get confusing, and arguments would ensue when someone would violate a rule. Some would whine about any new rule, claiming it wasn't fair. They would threaten to quit, but few ever did. At times, people ignored the rules, and we didn't let them play the next time.
The lessons still apply
The summer came and went, school started, and some people moved away - including me. Our game was over, yet the memories remained. That summer taught me much about fairness and rules, although I didn't know it at the time.
- Rules change, but the basic game remains the same.
- Some rules aren't fair, but they are still the rules.
- Complaining about a rule doesn't help you win the game.
- Breaking the rules will get you kicked out of the game.
- Rules will change again.
These principles apply to everything in life, including payment processing. We primarily sell a service, and the rules of that service change. We deal with data that, if mismanaged, can result in significant loss to consumers. Our income is dependent upon others, namely merchants, following the rules and adapting to changes when they occur.
Change is part of payments
Our industry has experienced ongoing changes since its inception. Consider the following 20th century developments:
- In the 1990s, changes to our underlying wholesale pricing structure brought on changes in how we operate. Transaction fees were added to interchange, as were a number of new categories requiring additional data to qualify for lower rates.
The 21st century also brought a slew of changes:
- The Wal-Mart Stores Inc. class action suit impacted how check card rates were set and changed the requirement that merchants had to accept all cards.
- Data security became critical, with the implementation of rules from the PCI Security Standards Council.
- The Durbin Amendment to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 changed how debit card costs, through both interchange and network fees, could be charged.
- Today, we have new fee structures, like Visa Inc.'s Fixed Acquirer Network Fee, and new data requirements for processing.
Adaptation can be positive
Not all of these changes have been negative. Indeed, one could argue that most changes created positive results when handled correctly. Yet these rule changes required us to adapt our business practices. I believe the five lessons learned from The Great Game of Tag answer the question, What do you do when they change the rules?
1. Rules change, but the basic game remains the same
Michael Levine said the three things that children ought to know are "who is in charge, what are the rules and who is going to enforce them."
It is often said about baseball that once you strip away the rules it's still a game of throwing, catching and hitting. A similar concept applies to payment processing. We offer a merchant the ability to accept alternative forms of payments. We facilitate the movement of the money from the card companies, debit networks or check services companies to merchants' accounts. Sure, there are other moving parts, but the basics remain the same.
2. Some rules aren't fair, but they are still the rules
Life is not supposed to be fair. Jonathan Huie said it well: "Demanding that life meet our expectations is a surefire recipe for a miserable existence." Change isn't comfortable. It can be downright painful, uncomfortable and even seem unfair. But we must remember that change is inevitable. And rules are not personal. They affect everyone in our profession; we accept them or leave the game.
GS Online MLS Forum member JMATHIS spoke specifically to this need to adapt. "Personally, I think that you have to see the change happening on the horizon and prepare the best you can and respond very quickly," JMATHIS wrote. "If you are boarding accounts with a Super ISO, sometimes this is more difficult to obtain. The reason being that they are like a cruise ship traveling the seas and cannot make a 90-degree turn for miles, when we can make one as if we are on a speedboat.
"My point being, change will always happen and you have to adapt quickly to make it work for you. For ourselves, we always look at these changes as opportunities to gain more business. We believe that being a very transparent ISO to our merchants that we are always in a win-win situation."
3. Complaining about a rule doesn't help you win the game
Leo Durocher once said, "I made a game effort to argue, but two things were against me: the umpires and the rules." When the Durbin Amendment was passed, and enforcement was forthcoming, many in our industry screamed about the regulations. Some felt this one change would make it impossible to make a profit in this business.
The actual effect was not nearly as terrible as naysayers feared. In fact, many saw a significant increase in revenue, while others found the effects to be, at worst, revenue neutral. Members of the MLS Forum spoke to this issue.
"We are not worried about attrition from this announcement any more than when PCI, Walmart, debit, Durbin and many, many other things were announced," JMATHIS said. "We look at it from the other approach, What can we do to educate our merchants and board more accounts?"
Some change the way they sell for various reasons; others change their pricing models. AMSPROCESSING posted the following: "On new merchants, I am trying to roll the fees into my pricing. Instead of billing 30 BPS over cost and statement fees, PCI fees and IRS fees, I am billing 40 BPS with no monthly fees. It gives the appearance of a cleaner statement."
CCGUY said, "With all the changes in pricing, the only way to price a merchant is cost-plus, IMHO. We adapted this way of pricing over seven years ago and it has been a success, and I have won a few bets with merchants who can't understand why something so complex costs them less money. The fees go up, or another one is added on. We just explain to merchants that these fees come directly from the card companies."
Instead of complaining, these members of the MLS Forum moved forward.
4. Breaking the rules will get you kicked out of the game
Dianne Feinstein said, "You have to learn the rules of the game. And then you have to play it better than anyone else."
History includes many examples of those who chose to ignore the rules and suffered the ultimate penalty. There are also many examples of rule breaking that have cost people money and even caused businesses to fail.
One example of this is Payment Card Industry (PCI) Data Security Standard (DSS) compliance. Many merchant level salespeople (MLSs) still struggle with PCI, its importance and their role in the compliance process.
A sales rep may see the Self-Assessment Questionnaire as a mere piece of paper standing in the way of getting a merchant's application approved.
To "help" the merchant understand and complete it, some MLSs even fill in the answers themselves. They figure their ISOs charge PCI fees, and maybe even offer "breach insurance," so they aren't at risk, right?
The challenge arises if the merchant has a breach. In today's litigious society, a lawsuit may follow, affecting everyone involved namely the person who "helped" the breached merchant fill out the questionnaire.
It's tempting to avoid rules. It's also common to walk the line between compliance and violation. However, in so doing, the risk of missteps is great, and those missteps can be very expensive.
5. Rules will change again
Rahm Emanuel said, "You never want a serious crisis to go to waste. And what I mean by that is an opportunity to do things you think you could not do before." History shows the only thing constant is change. We are already hearing rumblings of further changes to the industry's rules.
As CCGUY so aptly stated, "Just roll with the changes!" Things are going to happen, and they may affect how we sell in the future. They may also affect what we sell in the future, but we can't allow worry or fear of future changes affect our success today.
Accept that today's rules may not be the rules tomorrow. Find a mentor who stays abreast of the rules, so that he or she can help you foresee critical changes and advise you on how to abide by the rules while profiting from them at the same time.
The value remains
Throughout the years, I've often thought about my friends from 1964. Even though I lost touch with them after I moved away, they each became a part of who I am today. I look back at The Great Game of Tag and remember that summer as a highlight of my childhood. We didn't see it then, but I bet we all learned something from the experience.
Jeff Fortney is Vice President, ISO Channel Management with Clearent LLC. He has more than 17 years' experience in the payments industry. Contact him at jeff@clearent.com or 972-618-7340. To learn about how Clearent can help you grow faster and go further, visit www.clearent.com.
Whether you want to upgrade your POS offerings, find a payment gateway partner, bone up on fintech regs or PCI requirements, find an upcoming trade show, read about faster payments, or discover the latest innovations in merchant acquiring, The Green Sheet is the resource for you. Since 1983, we've helped empower and connect payments professionals, starting with the merchant level salespeople who bring tailored payment acceptance and digital commerce tools, along with a host of other business services to merchants across the globe. The Green Sheet Inc. is also a proud affiliate of Bankcard Life, a premier community that provides industry-leading training and resources for payment professionals.
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