The Green Sheet Online Edition
June 6, 2019 • 19:06:02
Choosing the right ISO partner - Part 2
Choosing a partner is one of the most important decisions a payments professional makes. As a recruiter for a super ISO for the last 18 years, I've written a two-part series containing tips that may be helpful to you in choosing the right partnership. In Part 1, published May 27, 2019, in issue 19:05:02, I covered features to look for when choosing an ISO partner, including products, compensation, service and integrity. I also mentioned important things to include in the sales partner agreement.
What to look for
This article focuses on what to look for during the initial months of your new partnership.
- Executed sales partner agreement: Once you have signed and submitted the sales partner agreement, request an executed version of the document. Many partners do not ask for this, but it's a good idea to possess a copy of the agreement executed by both parties.
- Initial support experience: At the beginning of your partnership, you will have many questions. The response time and attitude toward your questions will say much about the priorities of the organization you're working with. If the ISO fails to recognize the importance of a good initial experience for new sales partners, it might be a warning sign of other problems.
- Pricing: Before submitting a deal, try to gain a complete understanding of all pricing, including how to fill out the merchant pricing section for the type of pricing you're trying to achieve. Also, make sure you are clear on all monthly fees that will be billed to the merchant, for example, account on file, statement, PCI or regulatory, non-PCI, non-TIN match, and annual fees. All of this is key to setting the expectation correctly with your merchants.
- Test deals: When you are ready to submit your first few deals, it is a great time to assess the average approval times and underwriting approval leniency. Deployment: Once the account is approved, how long does it take for a VAR to be provided? If the new partner is providing equipment, how quickly does it ship out?
- Hold times: As you call different departments for services, note the average hold times. Assess the overall experience your merchants would likely have when calling in.
- Checking residuals: This is the big one and essential to assess. When your first residual payment comes, review your residual split. Unfortunately, ISOs often promise splits that aren't a true revenue share. As an example, you may have been promised 70 percent. However, your residual could be 70 percent of what the ISO made not 70 percent of net profit on the account.
False advertising seems to be increasingly prevalent. For companies offering true revenue sharing, it is frustrating to see competitors advertise big splits and then not live up to their promises. This seems to be even more rampant with cash discount programs. All partners should always check their splits.
How to analyze your residuals
The easiest way to check residuals is to board a merchant with iterchange-plus pricing. Take the total the merchant was charged, minus interchange costs and any association fees. This leaves the mark-up above interchange. Then deduct your Schedule A costs. Usually, this is your transaction fee charged minus your costs, leaving true profit. You can also do this with monthly fees.
This should leave you with the real 100 percent net profit on the account. Then, multiply your 100 percent profit dollar amount by your split. This should give you a rough idea of whether your payment is close to the split you were promised.
I would be happy to help guide you through the process of analyzing your residuals. It's hard work selling merchant services. You should be paid what you were promised. 
Hawkins Siemon is the founder and CEO of Elevate Payment Alliance. Elevate is an ISO founded on doing business the right way and building strong, long-lasting relationships. Our mission is to grow Elevate based on the success of its sales partners, merchants, and employees. This is why we have created the first ISO in the industry that offers ownership to both its Sales Partners and Employees. Contact him at hawkins@elevatepaymentalliance.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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