s a merchant level salesperson (MLS) providing customers with products and services for payment processing, often you must serve as a jack-of-all-trades. So many different types of businesses exist, and you want them all to be your next big account. But how do you differentiate yourself from your competitors? The answer: focus on one or two market segments.

"The day of the generalist is over; ISOs/MLSs can no longer be all things to all people. ... As a modern ISO/MLS, you need to carve out your market and your methods and then make a plan. You have to pick a niche and become an expert in it by focusing on it and living it," said Garry O'Neil, President and CEO of Electronic Exchange Systems, a provider of merchant processing solutions.

Essentially, a niche market is a category of merchants other than traditional retail that is classified by type of business. For example, hotel and lodging facilities, medical offices, municipalities, educational institutions, mobile merchants, business-to-business providers, Internet merchants, banks and government entities, among many others, are niche markets.

In addition, merchants who speak a foreign language and whose customers speak a foreign language are also included in this list.

Basically, if you can think of it, chances are you've got a niche market opportunity.

O'Neil, who has been in the industry for 13 years, said, "The biggest secret of niche marketing is targeting a market, and once you target it, figure out how to sell to it."

Specializing in a merchant type "requires footwork on the agent's part," he said. "First, decide what you really like to do and what you are interested in. Then move into that marketplace and make a few calls; just ask for some help. Keep moving on from there until you figure it out. And you'll have to stick with it."

O'Neil said there are many advantages in pursuing specific merchant types. Although often there is an initial cost, whether through education or the expense of starting out, you can get margins and the sale becomes a little easier once you've done your homework.

A disadvantage? "Sales might lag significantly for a while, but then the curve switches dramatically," he said.

Breaking the Language Barrier

Many companies have already found opportunity in providing services and products for merchants that speak a language other than English.

For instance, Moses Heredia, President of ISO/MSP Global Electronic Technology of Los Angeles, said his company processes credit and debit, check, gift card, loyalty and EBT and sells POS terminals to small- and mid-sized merchants and municipalities. He said 65 - 75% of his customer base is from Latin communities.

Englewood Cliffs, N.J.-based ISO United Merchant Services, Inc. (UMS) pursues and services merchants in large ethnic markets across the country.

UMS' founders Jay and Shirley Yoon are Korean, so they initially focused on winning Korean business owners as their customers. But their business now includes Hispanic merchants, too. In 2000, they added a Spanish-speaking sales department. UMS is also looking to expand into other Asian markets, including Chinese.

Because of its multi-lingual specialty, UMS supports its merchant customers by helping them resolve risk, terminal and chargeback issues that they would have a hard time communicating otherwise. UMS provides both front- and back-end support and it also added an in-house leasing division because many of its merchants struggled in communicating with the leasing companies.

And Alpharetta, Ga.-based Cornerstone Payment Systems, Inc., a provider of merchant processing services, created a Hispanic division to service its Spanish-speaking customers.

Ron Tunick, President of Newbury Park, Ca.-based Cornerstone Pacific, Inc., the West Coast representative for Cornerstone, said the company does a lot of business in the "border states," so targeting and supporting this market segment makes sense.

"When a rep walks in and speaks Spanish to a merchant who only speaks Spanish, it's a much more relaxed atmosphere right away," Tunick said. "It's an icebreaker. I think all cultures like working with their own culture because there is a greater sense of trust."

Cornerstone's Hispanic division supports every facet of service from risk to customer service and support. The managers and reps all speak Spanish, too. "This really gives us a value-add in the marketplace," Tunick said.

"The response from the merchants has been terrific, but these are mostly smaller 'mom-and pop' types of merchants. A challenge for us has been that a lot of merchants in this segment are in the cash-only business, and a lot of their customers are 'unbanked.'"

In February 2004, Cornerstone, in partnership with Ingenico, began offering a point-of-sale solution to merchants who have Spanish-speaking customers ("Spanish Language POS Terminal Now Available," The Green Sheet, Feb. 9, 2004, issue 04:02:01). Cornerstone is reselling Ingenico's Elite 712 countertop terminal, which employs Vital Processing Services' authorization and settlement services.

Ingenico developed the payment application that the terminal uses, and Vital Processing Services Class-A certified it in April 2003.

"It's the same application that's available in English," said Michael W. English, Director of Marketing and Communications for Ingenico.

"We developed it based on research we did with different Vital customers with which we work, like Cornerstone, in terms of the viability of the Spanish-speaking market in the United States."

English said the offering is a complete Spanish-language solution for payment acceptance. "The Elite 712 is a multi-application terminal that provides not only payment but value-added services such as gift card, time and attendance, loyalty and prepaid cards, which is a huge market with many Spanish speaking merchants and their customers," he said.

"Cornerstone is very forward thinking and has the ability through support services to provide Spanish assistance," English said. "There aren't too many solutions out there that are customized to the Spanish language market, which is the fastest growing demographic in the United States."

The terminal, along with the application, supports credit, signature and PIN-based debit, Visa POS Check and EBT transactions, and it displays prompts and prints in Spanish. The terminal also comes with documentation in Spanish. Ingenico and Cornerstone prepared data sheets for sales lead generation, operational guides and quick reference guides (QRGs) in Spanish, too.

Last May, Heath, Ohio-based CardWare International, a supplier of POS equipment and merchant support to financial institutions and ISOs, began offering QRGs written in multiple languages ("When English Is a Merchant's Second Language," The Green Sheet, May 26, 2003, issue 03:05:02).

The company had received numerous calls from merchants looking for help with the transaction process and for whom English is a second language.

"The types of merchants both our bank and ISO customers are selling to are merchants such as restaurants specializing in Asian cuisine, and convenience stores-both Spanish and Asian-owned; these are the types of places the QRGs primarily go to," said Biff Matthews, President of CardWare.

CardWare developed QRGs in the Spanish, Thai and Cantonese languages.

"We're sending out many of these foreign language QRGs with English guides and English overlays, too," Matthews said. "We've laid out the foreign QRG identical to the English guide, that way, an English help desk can almost follow along button for button, instruction for instruction."

Matthews said the product came out of its own internal need to cut down on the number of help desk calls it received because the company does not have any staff that speaks either Spanish or any Asian dialect.

CardWare supplies the full-color guides on demand via U.S. mail, fax and even e-mail.

ISOs Finding Their Niche

Many ISOs and agents have already built a successful business model around targeting a few or more merchant types.

Business Payment Systems (BPS), an ISO/MSP based in Tarrytown N.Y. with sales offices throughout New York, New Jersey, Connecticut, Pennsylvania and California, has been successful selling to a number of niche markets such as Spanish-speaking and Jewish merchants.

"There are definitely a lot of opportunities on the customer service end," said BPS CEO Sam Chanin.

However, Chanin said that foreign language-speaking merchants have not been BPS' most successful niche. Targeting mobile merchants, such as tow truck companies and bus companies, with wireless solutions has been their biggest success to date.

He also stressed the opportunity in targeting banks, which he said a lot of salespeople don't even think about. "This is one of the best kept secrets of the big processors," he said. "And it's very simple; there's no negotiation. A merchant comes in, opens up a bank account, and the guy behind the desk asks if they are interested in credit cards.

"If so, they'll call [their agent partner and ask,] 'Will you go and sign this guy up?' Merchants trust you because you are a reference from the bank. I think that every single agent, rather than going after 'merchant, merchant, merchant,' should be going after 'bank, bank, bank' because that relationship will bring them 10 - 15 merchants a month.

"Banks are not in the business of going out, finding the merchant and installing the terminal," Chanin said. "They are in the business of holding money and making money off of other people's money. Our business is to go out there in the hot and the cold and make the merchants happy. No matter what, the banks are going to need people like us."

He also described a rather unique merchant niche that has been very successful for one of its sales offices, especially because there is little competition in this area: RV park rentals. "Millions of Americans rent RVs. But they still need to park the truck at a specific location. These places that we target rent space for people to park their RVs," Chanin said.

Although niche markets have been successful for BPS, Chanin often discourages his reps from becoming too specialized in one area. "They should always have a few niches up their sleeves, but they should stick to the core by still going to every single block and every single business office because they are all potential clients," he said.

Cornerstone, in addition to targeting Spanish-speaking merchants, actually focuses on several niche markets such as school districts, Internet merchants and the hotel and lodging segment, which Tunick said has been a very profitable niche for the company.

"We go after independent hotels and motels and chains, bed and breakfasts; anything dealing with lodging," Tunick said. "It's a challenging market to break into because typically hotel owners are not standing behind the counter. Often the owner works with a property management company."

Cornerstone offers a proprietary solution that has allowed it to be very competitive in the marketplace. The company also trains its reps to serve as advisors to a hotel management team. Reps are trained in areas such as financing, merchant accounts, operating systems and reporting systems.

"Our business strategy is not 'If I can lower your price, will you do business with me?'" Tunick said. "Rather it's, 'We will reduce your operating costs and show you how to increase your average ticket.'"

In order to successfully sell to niche markets, Tunick said, ISOs or agents must be smarter than the competition, which he calls having "intellectual assets"; must understand the unique issues of that niche; and must be able to support and solve any problems for that niche.

He recommends going to tradeshows and becoming involved with associations for that market. Having all this, "not only do you become a trusted advisor, but you get referred from one merchant to the next," he said.

"I think being a specialist today is what the marketplace demands," Tunick said. "Merchants are more comfortable when you understand their issues. Can you make a great living as a generalist? Absolutely, but I think you're challenged more. It's easier to focus when you concentrate on a niche."

Other Reading on Niche Markets

Unfortunately, our space for this story is limited, and there are a lot more areas to explore for information. In order to further expand your knowledge, check out the articles referenced below that were contributed to The Green Sheet by industry experts:

O'Neil discusses the importance of concentrating on one merchant type in a recent article in The Green Sheet, "If You Want to Grow Big, Think Small" (April 12, 2004, issue 04:04:01).

Ed Freedman describes opportunities for providing level-3 processing services to entities that accept government or corporate purchase cards, such as business-to-business types of merchants ("Taking It to the Next Level," The Green Sheet, April 26, 2004, issue 04:04:02).

And in "The B2B Opportunity," Peter Scharnell also discusses this topic in this very issue (see page 72).

In her article, "Medical Transactions: Your Prescription for a Bigger Payday" (The Green Sheet, May 24, 2004, issue 04:05:02), Lisa Shipley, Senior Vice President of Hypercom Corp., discusses a great opportunity in selling to medical locations such as doctor's offices, clinics, dentists and physical therapists.

Resulting from the Health Insurance and Portability and Accountability Act (HIPPA) is the HIPPA transactions niche.

Healthcare providers must handle enrollment, eligibility verification and billing electronically. Shipley calls this the "great tsunami of business opportunity."