By Allen Kopelman
Nationwide Payment Systems Inc.
Editor's Note: From the GS archives For additional articles in The Green Sheet related to this topic, see the following:
When my partner Dave and I opened our ISO in 2001, we signed on with Imperial Bank of California. We had a good run, with year-over-year increases in our residuals and great mentors, many of whom are still friends and partners today. Then one day, Comerica took over Imperial Bank, and there was trouble in paradise.
After a few months of business as usual, we had to move our merchants to a new processing platform. That nightmare took us away from selling to working in the field with hundreds of customers.
We quickly learned that our new processor required more than just a VAR sheet to reprogram POS systems and did not even support the numerous Lipman terminals in our portfolio. We had no choice but to look for a new home.
After moving our portfolio to Comdata, we had a good relationship for years. When Comdata exited credit card processing and sold to PAI, we found inconsistencies in our residual payments.
The new owners investigated and recovered $40,000 in funds on our behalf. This was the beginning of another great relationship. PAI's open-door policy helped us close big deals and grow the ATM side of our business. We prospered in our partnership until another company, with a very different outlook and culture, acquired PAI.
This is the part of the business that frustrates me the most: when Company A buys Company B and the new owner blows up the whole thing for one reason or another. The acquiring company usually wants to change everything, from Schedule A and back-office procedures to underwriting guidelines and help desk support. The people you know are now gone or have new bosses, and things can change.
I have lived through every scenario possible when it comes to companies being sold. Here are a few examples:
I recall a new partner giving us three days to shut down a large group of merchants in our portfolio. These merchants had been processing with us for about seven years; we weren't comfortable just cutting them off, so we appealed the decision. "We understand that you do not like this type of merchant," I said. "But we need at least 30 days to migrate them to another company."
The processor grudgingly agreed, and we bid farewell to these merchants, who hadn't done anything wrong. The following month, our new processor noticed a significant dip in our residuals. Well, that's what happens when you offload $2 million a month of "undesirable" merchants from your portfolio.
When you negotiate your contract, pay attention to the clause that covers what happens when a company sells. Make sure you will continue to get paid when that happens.
There is no guarantee that you can write new business unless they continue to honor your contract. Some companies will want to give you a new Schedule A following an acquisition, and Dave and I will only agree if terms are favorable. Consolidation is a reality in this business. The circumstances can be difficult or a blessing.
When residuals go awry, you must be a good businessperson and address the situation in a calm yet firm manner. Make sure the new owners are committed to resolving the issue, whether it's a residual discrepancy or equipment failure. These situations may push your buttons, but yelling and angry emails will only show your new boss that you are not a team player.
And finally, make litigation a last resort. An attorney once told me to stay away from legal actions because the one with the most money always wins. Try to resolve your issues in a gracious and professional manner. You may not get the desired outcome every time, but most of the time, you can work things out.
From an ISO perspective, I get that vetting thousands of accounts can be challenging and time consuming, but have some empathy when asking an agent or office to part ways with clients that don't meet your brand reputation. Those activities take time away from selling.
Want to know more? Keep reading The Green Sheet, and consider joining my Facebook group, where we can share ideas and support each other, at www.facebook.com/nationwidepaymentsystems. 
Allen Kopelman, a serial entrepreneur, is co-founder and CEO of Nationwide Payment Systems Inc. and host of B2B Vault: The Payment Technology podcast. Email him at allen@npsbank.com and connect on LinkedIn https://www.linkedin.com/in/allenkopelman/ and Twitter @AllenKopelman.
The Green Sheet Inc. is now a proud affiliate of Bankcard Life, a premier community that provides industry-leading training and resources for payment professionals. Click here for more information.
Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.
Prev Next
