Innovation is the payments industry's middle name. Fueled by consumer demand, purveyors of technology continue to roll out faster, safer and more dynamic ways to pay electronically for goods and services. Meanwhile, merchants are concerned with getting more consumers through the door or to the Web site, increasing sales and, especially in today's economy, reducing overhead.
With so many other things demanding the attention of small to medium-sized business owners, credit card processing may not be a priority for them. Or perhaps when they think of it at all, chargebacks and interchange are what come to mind. And when their POS systems are working well, they may simply have a laissez faire attitude. However, upgrading equipment and systems, for some, is no longer just an option. All noncompliant, stand-alone PIN entry devices must be phased out by July 1, 2010. Some early integrated devices with internal PIN pads must also be eliminated by that date. In addition, the sunset date for wireless equivalent privacy (WEP) for encrypting data over a wireless connection is June 30, 2010.
Many merchants don't know what WEP is, let alone how to switch to Wi-Fi protected access. Alex Kehayias, Product Manager for Comodo Group Inc., said agents need to relate their technical security solutions to merchants' ability to keep their businesses and customers safe in addition to their desire to ease the pain of meeting regulatory obligations.
Whether it's to meet regulatory requirements or improve business efficiency, merchants have problems for which payment technology is the answer. Maybe they need a faster connection or a way to link inventory tracking to transactions. But how do ISOs or merchant level salespeople (MLSs) market integrated POS systems, contactless payment terminals or Wi-Fi connectivity to merchants who might not even know what a firewall or gateway is?
Todd Ablowitz, President of Double Diamond Group LLC, suggested ISOs and MLSs relate new technology "to something that they're already using." He pointed out that many people who aren't technologically savvy will still use the self-serve kiosk at the airport rather than waiting in a long line. This could be brought to the attention of retailers who are leery of using self-service payment methods in their stores.
Mohammad Khan, President of ViVOTech Inc., recently surveyed five merchants who weren't accepting contactless payments. He said most didn't know what a contactless card was. One store manager fished one out of his wallet. The others, not having one of their own, didn't grasp the concept until Khan explained that it's a card that you touch - rather than swipe - to pay. Then they understood.
Khan stressed the importance of simplifying the technology for the merchant or consumer. To illustrate his point, he said when the magnetic stripe card was new, merchants didn't call it a mag stripe; they called it a swipe card.
Ablowitz said the decision-making process for selecting payment processing solutions differs from the process used when purchasing consumer products. He added that whether they are considering a technological product, service or bundle of both, merchants want to solve business problems and improve their return on investment.
The level of detail you provide depends on the merchant's needs, Ablowitz noted. Kevin Colaço, President and Chief Executive Officer at InvenTrak agreed. "Most merchants who are not tech savvy don't want to understand how it works; they just want to know it's going to work," he said, adding that he believes in "giving people information when they want it, where they want it and how they want it."
According to Kehayias, selling merchants on technology is "not really about the technical implementation or technically what it does."
He said Comodo's approach is to tell the merchant a remedy story because what matters to the merchant is the end benefit. If the technology creates more revenue for a merchant, there's no need to go into technical details "until or if the merchant is ready to hear them," he said.
Kehayias also cautioned ISOs and MLSs to not overload merchants with more technical detail than they're ready to hear. He said ISOs and MLSs "need to provide technical information when technical information is asked for."
Kehayias added that sales agents need only know enough of the technology to make the sale; they can go to their ISO's or processor's technical support team on a merchant's behalf for questions that are outside of their knowledge base. Failing that, a specification sheet can be helpful for the tech-savvy merchants or tech department people of larger organizations, he said.
In addition, ISOs should not dispense information they do not comprehend, Kehayias noted. When agents step beyond their own understanding, merchants can see through it. Then trust - and, in turn, the sale - will be lost, and it reflects poorly on the brand itself, he said.
How much knowledge is enough for the ISO to sell the product or service? Ben Goretsky, CEO for USA ePay, stated, "If an ISO does not understand the product, they can't sell the product."
He said that sales agents should thoroughly test drive the products they offer. Otherwise, they won't be able to provide even the simplest answers when technical questions come up, he said.
Ablowitz stated that ISOs and MLSs must understand enough to field merchants' questions and explain what adopting a given technology will mean for merchants and how it can help them.
Payments industry consultant Gregory Holmes said ISOs and MLSs "need to realize that the small business owner cares not so much about the technology. They care about the benefits to their business; they care about the bottom line."
When consumers purchase products or services that require technical knowledge they lack, they search for providers they can trust.
Examples of this would be car repair shops or electricians. Even if you watched such technicians while they worked, you probably wouldn't know if they were doing a job correctly or if a particular part really needed replacing. You have to trust them. It's the same with merchants looking for technological solutions to their payment processing problems. They have to trust you.
Ablowitz said a merchant who doesn't trust you won't grasp the benefits of your offerings, no matter how clearly you outline them. "People trust you if you appear to have knowledge and are confident about the knowledge that you have," he said.
Holmes stated that building trust means taking time to understand what merchants' top issues are - not just payment issues, but all of their business concerns. "Trust is built by having that kind of relationship of consultative discussion, awareness of needs and awareness of new technology that perhaps they need to introduce or at the minimum make the person aware of," he said.
Most people have tech support horror stories. Bad tech support can break a business relationship, while good, solid tech support can cinch the deal. Goretsky said price will matter far less when people know they have knowledgeable and thorough tech support readily available.
Part of support is education, which will raise merchants' comfort levels and ease their fears, Goretsky noted. Khan was of the same mind, saying, "the more facts the merchant has about a new technology, the more they'll start believing in it and trusting in it."
Deciding how much technology a merchant is ready for is also important. Colaço cited Dr. Everett M. Rogers' Innovation Adoption Curve, in which Rogers assigns the following categories to people based on their willingness to adopt new technologies:
"As a solution provider, we have to figure out where that merchant is," Colaço said. "You may have a solution for a merchant that gives them everything that they want, but by nature they're not early adopters, so you probably want to step them into that solution." He added that you have to identify the merchants' pain points and where they fit on the curve.
Most people want the technology they are using to be stable. Similar to many people's reluctance to upgrade to the latest operating system for their computers (before the inevitable bugs are worked out), many merchants need to know how many other companies have purchased the product you're offering, how long it's been on the market, et cetera. Goretsky suggested steering merchants to what is known to work, which isn't always the latest and greatest. "I think one should always recommend things that have a level of vetting," Ablowitz said. However he noted that there are some cases in which emerging technology makes perfect sense for a merchant.
He said something very new is OK when there exist references of previous sales, and, more importantly, when the product meets a merchant's needs.
"Some people are really into technology," Ablowitz said. "They don't know anything about technology, but they ... have an idea of what they think that their business should be like." He said ISOs and MLSs should take these innovating merchants all the way to the latest technology available. He added that sometimes they want things just for the "wow factor." For merchants on dial-up, who aren't thrilled about technology, taking them beyond DSL to Wi-Fi or a GSM (global system for mobile communications) wireless terminal can make perfect sense, Ablowitz pointed out.
"If they're in a good coverage area, 15 bucks a month, let's say, is less than they're paying for their phone line, and they don't need to mess around with integrating into their Internet connection," he said. "Now that's a perfect example of just a complete leapfrog that isn't scary or complicated or unproven."
According to Holmes, ISOs and MLSs need to know "there are two fundamentally different types of technologies that merchants increasingly are being made to choose between: those where you buy the software and have to pay for upgrades and maintenance, and software as a service (SaaS), which is an on-demand solution requiring an Internet Protocol connection to the Internet. SaaS typically involves a license fee and a monthly service charge."
To sell the technology, ISOs and MLSs don't need to know coding, developing and programming, but they need to know what options are available to merchants and what vendors are prepared to sell them, Holmes said. Khan agreed that agents need to be aware of industry trends.
"I think that ISOs or salespeople by nature will probably have some baseline understanding of technology," Colaço said. "But if you're really creating a technology solution that's complex for a merchant ... who might have three or four points of purchases and two or three different stores ... that salesperson has to be backed up with a department or a support group within the organization that has technology expertise, which most ISOs and processors have."
Holmes believes agents need to be technologically aware as they're engaging their customers. "And it's not just new customers," he said. "It's existing customers because those existing customers are being approached all the time by maybe more tech-aware people who are offering a variety of solutions." He pointed out that some such solutions could be an overall business solution that has a payment element.
You've heard of brand recognition. It's easier to sell a brand if your prospect has heard of it before. The more times someone has heard the name, the more trust he or she will put in it, even if all the mentions were from the company's own advertising rather than from peers who have recommended it. It's called the halo effect. It applies to technology.
If a technological innovation is so new that a merchant has never heard of it, selling it will likely be more of a challenge. Kehayias said even hearing of a product or service only once before a sales call primes a customer, making it "easier because they already have a prior knowledge bias towards it. If there's no baseline awareness, you're starting from scratch."
He added that the ISO or MLS in this case is also "battling all the previous knowledge that they've acquired about the existing systems."
Kehayias said references and case studies illustrating how a product fits with a particular merchant's business are often more critical when agents are pitching a technology the merchant has never heard of. He said it's a way to conquer that fear of the unknown. "You don't want to be doing things so painfully out of the ordinary because then it almost feels like you're going at it alone," he noted.
Colaço and Holmes both believe cost is the biggest hurdle for merchants to overcome in adopting new technology. "We hear a lot of people who say, 'Yeah, I want it, but can I do it in the third quarter because I don't even have the bandwidth to deal with it,'" Colaço said.
He mentioned that InvenTrak had recently reviewed bids it had lost. He said close to 75 percent of the merchants who declined to sign with the company understood they needed to do something about their payment processing, but said they didn't have the time, energy or money to devote to it at the time.
Holmes mentioned that merchants equate new technology to new costs. "If it's a new cost and they can avoid it, they won't do it," he said. "If it is a cost that they feel that they have to do, it's a necessity, they have to do it to keep pace, or they have to do it because it will help them do better inventory tracking or better customer service or better employee [supervision], then it doesn't become a cost; it becomes a benefit.
"It's actually costing their business the longer they delay in embracing this new technology."
Explaining technology to merchants who barely know how to send an e-mail may be challenging, but the benefits are enormous. As ISOs and MLSs, you're bringing merchants better tools to make their businesses run more efficiently or reduce their overhead and increase their bottom line. Maybe even all three. And improving their businesses, in the end, will improve yours.
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