The Green Sheet Online Edition

September 25, 2023 • Issue 23:09:02

Advisory Board - Payments, a retrospective
Elite experts reflect on their tenure in payments - Part 1

Through the years, The Green Sheet has been honored to work with some of the industry's great innovators. Several such leaders are on our Advisory Board. And some have joined in celebrating our 40th anniversary, coming up in October, by reflecting on the following questions:

1. When did you join the payments industry? What attracted you to this sphere, and how have opportunities for new entrants changed since your early days?
2. Technological innovations continue to transform the payments experience for merchants, shoppers and acquirers. What have been the most significant developments, and how have they affected your company?
3. Previously, the merchant services/acquiring side of payments operated with little attention from regulators, venture capitalists or competing fintech schemes. How has increased scrutiny challenged, as well as strengthened the industry?
4. In our constantly evolving industry, what advice do you have for payments professionals that's likely to stand the test of time?

This issue contains a portion of their insights. Additional perspectives will appear in a forthcoming issue.

Mark Dunn, Field Guide Enterprises

1. I started in payments in March 1989. I had been a successful regional sales manager with a company that went out of business. Well, a more accurate description would say that senior management made some serious mistakes. As such, I was looking for a new position, and it just so happened that my former national sales manager had taken the position of CEO with Tymnet, an early payments processor. He hired me to sell national accounts, and I was trained by Rod Hometh.

   A couple of years later I moved over to VeriFone, where I remained for seven years. Merchant services has always been a pretty price competitive field. In the last few years, though, it seems that many merchants are looking for functionality and integration first, then price for services.

   For new people in payment processing today, I would recommend they get training, more training and even more and still better training. Get a mentor, network at the regional acquiring association shows, keep reading The Green Sheet. Move out of your silo and see the wider world of payments. Opportunities are everywhere; keep striving to qualify for the next opportunity.

2. I have seen these developments change the payments industry: seamless, secure ecommerce processing; payments gateways that route payments to almost any processor; APIs that link payments to existing enterprise software; omnichannel payments; and the advent of e-wallets and participation of Apple and Google.

   All of these have made it easier to get payments processed. As a result, payment processing itself has become very commoditized. I recommend to all of my clients that they develop their own integrated payment solutions, ecommerce and POS. Technology solutions need to be end-to-end and proprietary. Without your own technology, you are not differentiating your portfolio, and the value of your portfolio will diminish.

3. For years now, merchants have lobbied Congress and regulators that core payment processing in the USA is too expensive. At the same time entrepreneurs have attempted to disrupt the payments industry. Not many of the disruptors have significantly cut the cost of core payments processing. Aside from the Durbin Amendment, there have not been major shifts in credit or debit processing costs. That may be changing now, as there is increased interest in trying to remake the cost of processing.
4. Take the long view. Be transparent and treat people the way you want to be treated. Get a coach and a mentor. Develop a plan for a 30-year career. No one succeeds alone. Have confidence in yourself and in your team. You are better than you think you are. And you can be even better tomorrow than you are today.

Jeff Shavitz, ToolBox Payment LLC

1. through 4. Time Flies. I joined the payments industry nearly 30 years ago and until today, I candidly didn’t realize that The Green Sheet was 40 years old—congrats on the publication and being a sounding board and resource for our industry. Job well done.

As a former investment banker working for Lehman Brothers in the late 1980s, I had rejected business school, decided I didn’t love corporate America and wanted to become an entrepreneur. I spoke to many business brokers, researched companies in a plethora of industries to either buy outright or become a minority partner, and was open to a myriad of opportunities.

One of my banker friends suggested, “Have you thought about the credit card processing industry?” My answer, “What does that even mean?” After months of research, I started my first ISO and I have loved the business ever since.

What interested me in our industry? I had never heard of residual income, but now I love it nearly as much as I love my wife and children. I have become so enamored with the concept of residual income that I even wrote a course and book about it called The Power of Residual Income – You Can Bank on It.” As I have educated our sales team, if you want to give yourself a bonus, just close another merchant account.

When I entered the industry, many of my business mentors and advisors said to me, “The industry is overcrowded, commoditized and to look for a different industry.” How wrong were they? Upon reflection, and as I think about my future in the industry, I do believe three overriding themes now exist for people considering entering our industry: 1. Bundling services and creating a program versus selling a rate; 2. The integration of technology and payment processing embedded into SaaS-based systems; and 3. Niche marketing to own and conquer a specific industry vertical.

As we develop a merchant base, whether it’s 100 or thousands of merchants employing your systems, there are, of course, other products and services to offer your valued customer base to derive incremental recurring revenue.

Although our industry has become more competitive, more technological and commoditized with rates still being an important facet of the sale, one business adage remains—the relationship with your customer. I have instilled into our team that a business person would rather buy a “good” service from a “great” salesperson.

Be a great resource for your merchant, stay in touch and provide value. With this attitude, your rates and whether or not you are a few basis points higher than a potential competitor, should not be the driving factor to lose a merchant.

Having worked with many PE and venture firms throughout my career, the payments industry is and will continue to be a hot industry for many years to come. Many driving factors, including recurring revenue and constant and growing EBITDA, have attracted Wall Street to our industry. I may write a future article for The Green Sheet on this topic.

In conclusion, I want to thank The Green Sheet for including me on the Advisory Board for 25 years; plus I enjoyed authoring Street Smarts a few years back. I continue to read all the issues and learn from your writers and all the contributors. Congrats again on 40 years!

Steve Sotis, eProcessing Network

1. I launched eProcessingNetwork from my spare bedroom in 1996, and our company has been going strong ever since with developing the software and service products that meet the needs of today's merchants in the payments space.

   I've said it before, but the payments industry is inspirational to me; it's like an artist's canvas. You can just keep throwing more paint at it without diminishing the integrity of the product. And the opportunities for new entrants are unlimited if they understand the industry and how staying ahead of technological trends impacts the customer base they serve.

2. Over the years the payments landscape has seen more players enter the arena to challenge the way ISOs and ISVs operate. But we've also seen how consumer demands for more payment choices, convenience and security have influenced how nimbly our industry anticipates and adapts to those demands. Being able to offer integrated omnichannel solutions to implement BNPL, BOPIS, pay-at-table, recurring/subscription, contactless, and others into their existing payment methods has helped our resellers meet and exceed the demands of their merchants, and in turn their loyal customers.
3. Security requirements like PCI, PA-DSS, QIR, EMV, and the costs to implement them can be overwhelming. As security breaches become more frequent, the credit card companies and networks are imposing security requirements that have to be met in order to operate. They charge hundreds of dollars to take a test to certify for QIR [Qualified Integrators and Resellers] that our tech support agents now have to pass to be able to do the installation of our software with a merchant. Compliance is costly, but it's one of the ways that the brands are raising the barriers of entry for everyone across the board.
4. Know your customers. If experience has taught us anything, it’s taught us that being flexible and responsive to how customers shop has been key to staying open; knowing what solutions are needed and being able to quickly adapt them to emerging technologies is key.

   Here at ePN we offer free support, education, developer tools and marketing materials to help ensure our resellers know our products, which in turn helps their merchants feel confident that they’ve chosen the best provider. Our experience and tenure allow us the flexibility to quickly adapt to the technological needs of the merchant and partner successfully with resellers to tailor services and solutions that make sense for their business—now and in the future.

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.

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