The Green Sheet Online Edition

July 08, 2019 • Issue 19:07:01

Street Smarts^SM

What MLSs should expect from ISOs and processors – Part 1

By Dee and Emily Karawadra
Impact PaySystem

This is the first article in a two-part series by Emily and Dee Karawadra on what merchant level salespeople (MLSs) – also referred to as agents – can expect from their processors or ISOs. In this installment, Emily shares her views. Dee will convey his thoughts in issue 19:07:02, which will be published July 22, 2019.

From Emily

MLSs should spend most of their time in the field prospecting, closing deals and building relationships. This isn't the case for many agents. They spend significant time and effort managing the processors or ISOs to whom they board business. From start to finish and at all stages of boarding a merchant account, it's imperative for the MLS to be informed. This allows them to properly prepare merchants for the set-up process.

When deciding where to place a merchant account, an MLS can go directly to a processor or go to an ISO. Each alternative has its strong points. If you are a big sales office and have staff to manage the boarding process, merchant deployment or terminal setup, working directly with a large processor may suit your needs.

If you're a sole proprietor MLS or have a small office, going with an ISO may fit your needs best. ISOs often have the systems of the processors they board with in-house and may also have access to more than one processor. The ability to board with multiple processors can be a critical factor when trying to board a merchant whose business needs require access to a specific platform. This is when ISOs become a better choice.

Most reputable ISOs have strong support staffs that walk MLSs through boarding a new account from start to finish. This is what an ISO's main function is, as the ISO is not responsible for moving transactions or billing merchants. Unless the business is a wholesale ISO (an ISO that does its own risk and underwriting) the ISO outsources all of that to the processor. The ISO's sole focus is on service and support, so if you're with an ISO, you can demand service. If you're not getting specialized service from your ISO, plenty of other ISOs can provide it.

Nine tips for securing the right partner

If you are an MLSs new to the industry, have worked in payments from a support role, and/or have taken steps to become an ISO, the questions and points below will help you secure the right partner. Keep these in mind during negotiations with a new partner.

1. Boarding communication: Clear communication is essential from submission of an application for a merchant account to deployment and merchant setup. Ask what the channels are for submitting new merchant applications.

   If e-signature is an option, what are the requirements and does it work 100 percent of the time?

2. New sales opportunities: Know who to communicate with for new opportunities. Is it a specialized group for MLSs or a dedicated account manager?
3. Integration and terminal application support: Determine how to make changes to terminal IDs if required. And have a clear understanding of what is certified on the platforms you are able to board to.
4. Merchant account maintenance: Find out the requisite timeline, necessary paperwork and other requirements for making changes to bank account information, entitlements, physical address, pricing, etc.
5. Timing: Know whether a standard turnaround time is set forth in your contract for boarding new merchant accounts, account maintenance or escalated merchant-related issues. This can help ensure faster turnaround on requests or, at least, keep your partner accountable.
6. Pricing: Determine if you have access to specialized pricing for large opportunities with slim margins. What is the turnaround time on those types of requests? This access can greatly assist in being competitive in your market when a big-fish opportunity comes along.
7. Point of contact: Ask where your point of contact is for merchant-related issues. Do you call in to a specialized team or do you have a direct contact? How are these issues tracked? Do they assign a case number you can reference when you call or send in communication regarding the issue?
8. Residual reports: Find out whether you can read your residual report. Are the reports you have access summaries of your merchants' monthly residual or do they provide full details. A detailed report will allow you to see the cost per line item on your schedule A. If you can't find it, ask where you can see it. Knowing your costs and how they pertain to your merchant accounts will greatly assist in auditing your monthly residual reports. This will allow you to pinpoint any discrepancies in your monthly payout.
9. Contract terms: Read your contract's fine print; know what is expected of you and from you. Is your contract an exclusive? Some processors and ISOs require exclusive deals where you can only board directly with them. Today, this is harder to manage and harder to expect, as the industry has increasingly become more competitive. However, if a processor or ISO is giving you a low buy-rate and high split, the company may require an exclusive with minimums built in.

   From a production standpoint, do you have monthly or yearly numbers to hit? If you don't meet those, how will that affect your book of business, buy-rate and/or split? Some processors and ISOs will then revert you to a different buy-rate and/or split, which can significantly affect your bottom line.

To be continued

In the next issue, Dee will take you through negotiating your contract and schedule A with your ISO or processor. In addition to knowing what you want from a support standpoint, the ability to negotiate a contract that works for your business will make a world of difference. No one likes surprises. Getting a notice from your processor that you haven't met your minimums or that you haven't fulfilled your end of the bargain can be very frustrating. And that notice usually comes along with bad news that you no longer qualify for the great buy-rate and split you signed for.

All of this can be avoided by knowing what to look for in your contract and making sure you can meet the processor/ISO's expectations. Something as easy as asking for a ramp up period of 12 to 24 months to get to the volume expected from you can significantly aid you in m

Dee Karawadra is president and CEO of Impact PaySystem, and Emily Karawadra is the company's chief financial officer. Since 2001, Impact PaySystem has been a leading provider of payment processing technologies and services to merchants throughout the United States. Through alliances with payments industry leaders such as Chase Paymentech, First Data, Buypass, Sage and more, Impact PaySystem offers tailored solutions to meet the unique needs of each merchant. Dee and Emily will welcome your questions and comments at dee@impactpays.com and emily@impactpays.com, respectively.

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