By Jeff Fortney
Signature Payments
There's an old joke that goes back to the vaudeville days. A man goes to the doctor, lifts his arm and says, “Doctor, it hurts when I do this.” The doctor responds, “Then don’t do that.” What made that funny (even then) is that doctors never give a diagnosis without asking many questions first. They know pain is a symptom of a condition, not the condition. Without locating the cause of the pain, and treating that cause, the pain will continue, or worse, escalate.
I was reminded of this because recently I have been asked why I emphasize the need for merchant level salespeople (MLSs) to identify the cause of the merchant’s pain. When you identify a merchant's pain correctly, you can maximize potential revenue while creating a long-term relationship. This has been one of my basic principles for many years. But it does call for further explanation.
Some who agree with this approach still don’t ask enough questions and don’t diagnose the cause of the merchant's pain. Instead, like the joke I just shared, as soon as a merchant voices a problem, they say a variation of, "Don’t do that" and then add, "And sign here.”
Before the pandemic, MLSs generally found it challenging to identify the causes of merchants' pains. It was (and continues to be) important to learn how to avoid merchants' default source of pain: feeling they are paying too much for processing. This is because once conversations shifted to cost, MLSs knew they had lost control of the sale. Merchants stopped listening unless you saved them money. Then, if you signed them at a reduced cost, they would later sign with the next MLS who offered a lower price—the proverbial chase to the bottom.
In today’s new normal, it’s more difficult to identify root causes of merchants' pains, as conditions that arose in response to the pandemic present new challenges, difficulties and ultimately pains—all because of merchants' pressing need to address consumers' new buying habits. Nevertheless, the requisite changes in merchants' marketing create new opportunities for ISOs and MLSs if they are equipped to diagnose the root causes.
Previously, the common causes of merchant pain were various processing and support issues, unkept promises, added costs, and confusing data. Today, we can add online sales setup, proper risk protections, increased loss potential, more added costs and confusing rules. Before you make any initial calls in the new normal, you must gain sufficient knowledge of these new pain points if you want to address them with your merchant prospect and identify them as potential causes.
It begins by knowing what hosted payment pages (HPPs) are and understanding interchange impacts on online sales and phone sales, as well as the additional underwriting concerns raised by processors. Following is a brief overview of areas to master. I encourage you to research all of them deeply, including the options for shopping carts and HPPs.
You must understand the components that make online sales work, for example, why shopping carts are needed and how they work. Many come with modules to support a range of options. They may also communicate with POS systems.
Online card acceptance likely runs through an HPP, which redirects card acceptance on the merchant’s webpage to a page provided to submit payment and obtain approval. The HPP will respond to the webpage with a one-time token. A compelling plus: since merchants using HPPs are not seeing or capturing payment data, they limit their potential breach liability and find PCI compliance easier to obtain.
The biggest likely pain for online and other card-not-present transactions is the higher cost associated with this acceptance process. Interchange is higher. It can range from as low as 30 basis points higher to as much as 150 basis points higher than face-to-face categories. In addition, there normally are costs for the HPP and third-party shopping cart. These may include a monthly fee and a per-transaction cost. (Online transactions do cost more; be careful how you position this expense or you may find cost taking over the conversation.)
Lastly, selling online inherently brings added risk to the transaction. If the merchant has been processing predominantly face to face, an increase in remote transactions may trigger a red flag with the processor's risk department, which may lead them to ask questions and raise concerns. It is also possible the processor will decide to hold deposits.
For a merchant, these issues may be uncomfortable or frightening. This is true even if they are not shipping products but instead delivering purchases or having items picked up. It’s a good idea to ask an underwriter or risk expert to help you understand the basics behind these types of concerns. You don’t need to be a subject matter expert, but you do need to know the basics of each factor before you can discuss them with merchants. It would also be beneficial to have an HPP solution in your toolbox (the lower the cost the better).
Once you are comfortable discussing online commerce, you can help merchants identify potential areas of future pain. And to do so you must begin with a general open-ended question. If you have researched a merchant, you should know whether the business is offering some form of online ordering and/or delivery.
If so, one sample question may be, “I am visiting merchants like you to help them address today’s challenges. I noticed you offer online orders. Is this new? If so, how have you addressed the higher expense and the added risk?” Be prepared for them to not be aware of these issues. A follow-up question may be, “Were you made aware of the higher interchange expenses?” or “Were you made aware of the higher risk?"
If your research shows a business has no online component, you could ask, “I am visiting merchants who have survived the lockdown to see what they have done to survive—and to share information about ways they can leverage today’s buyers’ new habits. Many have seen a loss in sales since consumers now prefer to buy/order online. Have you tried to address these, and has it worked?”
Again, the goal is to get them talking. You may have to pull the answers out by acknowledging their answer and asking them to elaborate on it. One simple way is to respond with, “And?" Most will expand their response.
It is important not to jump at the first opportunity to present a solution. Ask more questions and gain more information. Jumping in too soon may keep you from identifying a bigger reason for them to sign with you. And isn't gaining their business the goal? 
Jeff Fortney is vice president ISO relations for Signature Payments. A long-time payments industry executive and mentor, Jeff is focused on strengthening and developing partnerships and evaluating new business opportunities. He can be reached at 214-458-1379.
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