he Green Sheet Advisory Board (AB) is a group of volunteers who represent a cross-section of our industry, from merchant level salespeople (MLSs) to the biggest processors and vendors. Each member of this group has agreed to "give back" to this industry through participation in the AB.

Every six weeks we send this group an open-ended question and ask that they respond by e-mail with the explicit understanding that we will publish their responses in The Green Sheet. Additionally, we ask that they send us suggestions for future questions.

In September 2004 we submitted to the Advisory Board (AB) the following question, which was suggested by an AB member: "Has Electronic Transactions Association (ETA) lost touch with a large segment of its membership? Was its move to Washington, D.C. good for ETA membership? Why/why not? Could ETA better serve its membership by moving ETA HQ closer to Visa/MasterCard? Should ETA take the lead in providing MLS certification?"

This question undoubtedly hit a nerve. The Green Sheet received the largest number of responses from the AB to date, and many members wrote lengthy responses to this inquiry. We want to thank all the AB members who took time away from their businesses to respond. Here we share their thoughts with you, in alphabetical order by last name.

A significant majority of the respondents told us that they believe the recent changes at ETA are a positive evolution: moving to Washington, D.C., hiring a dedicated employee staff, expanding through regional events and revamping ETA University.

The AB responses, however, show that there is some confusion in the marketplace over who makes up ETA membership; there are also feelings that ETA has not clearly communicated its mission to the industry.

Additionally, there appears to be a call from the industry participants for ETA and the regional acquirers' associations (such as MWAA, NEAA, SEAA, WSAA) to find common ground and work together to bring the needed education and information to the MLS at the regional level without the continued expansion of the number of regional events.

In the next issue of The Green Sheet (Nov. 8, 2004, issue 04:11:01) we plan to publish the ETA Board's response to this article. This is in keeping with The Green Sheet's mission to continue providing a forum for open dialog between our readership and ETA. We also encourage all of our readers to participate in this discussion through The Green Sheet.

Please send your comments, opinions and questions to julie@greensheet.com . We will continue to publish this active dialogue for as long as it appears to be constructive and supportive to our industry as a whole.

AB RESPONSES

Tony Abruzzio, GO Software, Inc.

"'Has ETA lost touch with a large segment of its membership?' I think not. There will always be membership segments that feel ETA is or is not in touch with them. We have a diverse membership, and I think that ETA listens to the needs and tries to meet its mission.

"If ETA has lost touch, then the membership should steer ETA in the direction that serves most of the membership. After all, the members are the organization. Everyone in ETA can call, e-mail or personally talk to all of the ETA Board members to provide them with input on their needs.

"Washington, D.C. is the only place to be for a trade organization to stay close to legislation that can affect our business. For sure, bringing on a paid professional management team for ETA has been a plus.

"I think that ETA should work with the card Associations, but should keep [an] arm's length. To be sure, I have heard more about the Associations losing touch with our industry more than ETA being out of touch with the membership. I suspect that both Visa and MasterCard have a legal presence in Washington, D.C. anyway.

"'Should ETA take the lead in providing MLS certification?' Yes. To me, ETA is the obvious answer. ETA University is a step in the right direction. Who else could legitimately provide such a certification, make it credible and make it stick?"

"My clients tell me that ETA has less relevance to them now than the regional shows. I am not in the best position to give a fully informed response on this topic because I am not a member of ETA. Nonetheless, I have observed that ETA may be a victim of its own success. It has become so large and predominant, that the medium- and small-sized ISOs and MLSs, who are the frontline of this business, may have shied away from it.

"As an industry attorney, I am very sensitive to the fact that banks and large processors sit on the opposite side of the table from smaller processors, ISOs and MLSs. While there are many issues on which these two groups agree there are also a number on which they will necessarily disagree on account of their very nature. ETA, which tries to satisfy all of these constituencies, is sometimes through no fault of its own caught in between these two competing groups.

"I do not think the move to Washington, D.C. has changed the ability of ETA to serve its membership. I think the move was a good idea because sooner or later there will be regulatory issues to address, and it's best that the industry be in town when lawmakers decide to meddle in this business.

"In business today, it does not matter precisely where you are on the continent. I am the best example of this, as a U.S. payments industry New York attorney based in lovely Montreal. This question does, however, raise the very important issue of a blatant disconnect between the Associations and the front lines of the industry.

"Issues such as (i) chargeback rules, (ii) MATCH file listings, (iii) certification requirements and procedures are all issues for which I believe the Associations should be consulting with processors, ISOs and merchants.

"No doubt the [credit card] Associations serve the interests of their members; however, the reality of their monopolistic position in the marketplace requires them, on the basis of equity, to take into consideration the views of participants other than their members when deciding on basic issues such as those set out above.

"On the subject of chargebacks, for example, some member banks are lax in recovering or contesting chargebacks because of the convenience of relying on processors and ISOs with liability. Similarly, the exorbitant level of friendly fraud (i.e. cardholders using cards then saying they did not use them) is something that the Associations are somewhat slow to address. If ETA were advocating for the industry with the Associations, these kinds of issues could perhaps be resolved long before they turn into class action lawsuits.

"ETA is certainly the best organization to take a shot at MLS certification. Let's not forget, ISOs already have to register with the Associations, and are occasionally required to register their agents as well. The Association registration hurdle is becoming harder to traverse, and an industry association should not make additional impediments to entering the business.

"Still, if someone is going to certify MLSs, I think it should be ETA. The following principles should guide ETA if it is going to get into the certification business: (i) keep certification costs low; (ii) keep the process transparent; (iii) keep the process objective and limited in scope to industry issues; and (iv) get ready to face a hornet's nest of legal issues."

"ETA has not lost touch with its members. It has evolved along with the industry from an ISO-centric organization to one that serves many other constituencies, including banks, processors, equipment and software manufacturers and others. Taking its place for the small agent/ISO are the regional acquirer associations. Together, ETA and these organizations do a good job of serving their members.

"It remains to be seen whether the move to Washington, D.C. and a dedicated staff will be good for the membership. Location is less important than programs and advocacy, and if ETA can improve its programming and provide effective advocacy for its members, then the move will be a good thing.

"Better programming includes more education, more definitive leadership, insistence on integrity and best practices and more. Effective advocacy means ensuring that our industry continues to operate on a substantially level playing field for all participants, and ensuring that any additional regulation is applied with fairness and reason.

"What do you mean by 'certification?' Back in the mid-1990s, I received a pin from ETA certifying that I had completed one of its courses in basic credit card processing. I think that signifies that ETA has taken a lead in educating sales people, and such 'certifications' are good. Could the organization do a better job of making its educational programs more accessible? Certainly. There's always room for improvement.

"Bottom Line: ETA is a good organization that has gotten better over the years and continues to improve. Its members should use it and participate in making it better. But they should not rely on it as the be-all and end-all for information dissemination, training and education, certification or regulation, or any other matters. It is, at bottom, a trade organization that struggles like all of us to do the right thing as often as possible."

"From my perspective, recent changes at ETA have only strengthened its value to the industry and to its membership. For example, this year's [April 2004] Annual Meeting in Las Vegas was the biggest yet. It had more exhibitors and attendees than ever before. Beyond sheer numbers, I think those that attended probably saw a greater level of quality and service as well.

"I'd also point to two other things. First, ETA University is setting the standard for industry education. Nobody else is providing this type of training including individual companies and the card Associations. The rollout of three new ETAU classes in Vegas was a shot in the arm for the program and the classes were really well attended.

"Second, ETA's Expo Networks are diversifying the business opportunities available to all of us. While Vegas is a huge experience with thousands of people and loads of activities, the Expo Networks (which my company has supported) give us access to a different cut of the market.

"They also give small companies and independent sales organizations/agents the opportunity to get the benefit of a large industry event on a local scale. Vegas would probably be overwhelming to them but I think the smaller conferences are the perfect size.

"ETA, in my experience, has been focused on listening to its membership and striving to meeting their needs. In my opinion I do believe they are doing the right things. It is improving the quality and quantity of business opportunities in the industry. Its education is also raising the bar across the board. Of course, ETA won't please everyone all of the time, but I don't think anybody can (or should) doubt ETA's dedication to improving the industry and always looking for creative ways to increase value to its membership."

1. No, ETA has not lost touch with a large segment of its membership. The new leadership is working overtime to meet our needs.

2. The move to Washington, D.C. was the right move because the prior administration was more focused on its own personal agenda than the needs of ETA members.

3. What possible good would moving closer to Purchase, N.Y. or Foster City, Calif. do for ETA membership? My answer to that question is 'NO.'

4. Yes, ETA should take the lead in MLS certification.

"When we run across an uneducated MLS in a competitive situation, we ask the merchant to give us their business card and then we often automatically get them a subscription to The Green Sheet so they can get some reliable information about our industry! Uneducated reps hurt all of us because they destroy the Visa and MasterCard brands in the minds of the merchants who are taken advantage of!"

"I think the real questions are, 'Who is ETA's membership, and who are the perceived target members? Are they an organization that represents the ISOs or do they want to represent the agents/independent contractors/account representatives of these ISOs?'

"In a strictly business sense you cannot do both without doing an injustice to the other. If ETA is insistent on taking in the so called 'feet on the street' agents/independent contractors/account representatives, then it would not surprise me that another group like ETA is founded to represent the business interests of the ISOs themselves.

"At the ISO management level there are many items that are not the business of the agents. ISO management has many responsibilities to both the agents and the ownership. Not all issues are universal as to whom they affect and how they affect each group.

"There seems to be a finite number of 'registered ISOs,' and an almost infinite number of unregistered agents. Membership organizations have historically been numbers-driven. Sometimes that drive can overshadow the real need or original intention of the formation of the organization. We support and believe that ETA is currently the organization that is needed and appreciated in our industry today going forward.

"The move to Washington, D.C. may or not be good for the membership regarding physical location, but it was surely good for the membership by having representation close to the national legislature.

"We must be in position to lobby for the good of the industry. There is no better location than the U.S. capital. The proximity is imperative to acting and reacting to legislative efforts that are of interest to the industry. Hopefully the staff has the knowledge and ability to protect the industry from unfair and unnecessary government regulation (interference) in the future.

"I see very little reason for ETA to be located close to MasterCard or Visa. While MasterCard/Visa represent the lifeblood of the industry, we have survived without being on their doorstep in the past. ETA is not a member bank of MasterCard/Visa and has no say in what the issuers do or want. What we would like is inside representation in the Associations, some kind of input that allows our thoughts to be part of the considerations of how regulations affect the ISOs and the merchants themselves.

"Perhaps a true advisory board including ETA, ISOs and merchant association representatives that meet with the [card] Associations for the purpose of input should be proposed and formed. The Associations have historically been secretly run and seem to operate without consideration of how their regulations and policies affect the ISOs directly and the merchants indirectly.

"Universal certification, while a worthwhile goal, is basically impossible to accomplish on a volunteer basis. Unless there are some teeth in the process, it will not be successful. Eventually the government may get involved and force us to complete universal certification. Our business is increasingly infected with unscrupulous ISOs and agents that are running around deceiving merchants, not paying agents/reps, and making the industry look like thugs to many merchants.

"The certification of a few good people can be overshadowed by the creeps of the industry. Until ETA is willing to take a stand against ISO/agent fraud and illegal business practices, revoke memberships, and create a list of those people and so on, certification will seem somewhat useless.

"Yes, education is primary in creating an atmosphere of respect by the industry professionals. But it is going to be necessary that the sponsoring banks require certification for licensing of the ISO/agents before any real progress will be made. The question is, 'Are the sponsoring banks going to successfully require initial certification of ISOs/agents?' Somehow we have to make the ISO owners responsible for their agents' actions in the field.

"Leasing companies too will have to assist in preventing 'fraud.' Allowing 10 - 20 times cost in lease funding is nothing more than encouraging ISO/agent fraud against the unsuspecting merchant. Full disclosure of lease terms and total payments will cut down on some of the exorbitant sales of equipment. These are just a few of the items that need addressing if we are going to be serious about certification. Anything less is not going to accomplish anything but lip service.

"I realize that we do not live in a perfect world, that there are legal issues with certain items. But if we are to be successful in making the industry a true model of fairness to the members, ISOs, agents, merchants and sponsoring banks we must make a true effort for complete certification which includes education, enforcement and publicity."

"Not only has ETA lost touch with a large segment of its membership, it has lost touch with its mission and what value it truly brings to the acquiring industry.

"To me it is a no-brainer that working with the bankcard Associations serves our industry much better than trying to influence legislation that is beneficial to our cause.

"If they [ETA] are not careful they will find themselves at odds with the Associations, which will put them at risk of isolating the parties so crucial to their ongoing success.

"This mirrors my concern of their strong arm tactics in trying to force the not-for-profit regional shows to re-brand to ETA or they will compete directly and in their words, 'drive them out of town.' All of a sudden ETA has 'gotten too big for its britches' trying to be all things to all people and fill voids where they simply do not exist.

"The not-for-profit regional shows cater to a different audience and provide a much better value for smaller ISOs and for the MLS. If they [ETA] weren't so high and mighty they definitely could add value to the regional shows, especially as it relates to training and education.

"I happen to know first hand that such an overture would have been welcomed by the regional shows and working together would prove very beneficial to the industry as a whole. To many, whom I hold in high regard, ETA has become a bully pulpit for individual agendas where certain people think and assume they know what is best for all. Unless that attitude changes and they truly become representative of the acquiring world at large, as opposed to the dictatorial stance they have taken lately, I am afraid that rough sledding lies ahead.

"It is not too late for directional change, and I hope I am wrong in thinking they are too wrapped up in their leadership's egos to admit that a course change is in the best interests for all who love and are passionate about the acquiring world and its many unparalleled opportunities."

"'Has ETA lost touch with a large segment of its membership?' Possibly. They are definitely not catering to the heart of the industry, which is the 'feet on the street,' but I think that they have grown to the extent that they cannot possibly be all things to everyone in this industry.

"Was the move to Washington, D.C. good for its membership?' In some ways, yes; in others, no. My sense is that they expanded their overhead exponentially, which was difficult at first, but they also added needed staff that seem to be getting on board with industry knowledge, and they are lending a hand to the committees and Board they serve. They also made a much needed step towards self-government, as well as moving closer to the heart of Washington, D.C. to be more proactive in our industry.

"'Could the membership be better served by ETA HQ moving closer to Visa/MasterCard?' That would be impossible, Visa is in San Francisco and MasterCard is in New York.

"'Should ETA take the lead in providing MLS certification?' I believe that they should be providing some level of accountability in this arena."

"A decade ago I remember attending my first American Bankers Association (ABA) and ETA conferences. What struck me was the energy of ETA conference attendees and their continual quest for learning and professional growth. Likewise, after attending the ABA, I witnessed almost the exact opposite, knowing that the ABA would not last long as a meaningful entity.

"ETA, as any organization does, is maturing in scope and stature. From its beginnings it has grown to represent an industry that is far-reaching and seemingly recession proof. However, I do believe that even before moving to Washington, D.C., ETA was beginning to lose sight of its roots. [Unlike] the ABA, ETA has recognized this and is taking strong steps to close the gap between its leadership and the MLS.

"The move to Washington positions the organization to represent the industry in a time when the federal government is evaluating security and commerce policies more than ever. It will become critical in the coming years that the merchant bankcard industry is represented on a daily basis, demonstrating and showing a commitment to fair business practices. This is a full time job and one that cannot be accomplished long distance.

"Of even greater importance is the organization's need to dedicate itself to the MLS. ETA University is one example of a program that provides newcomers with a quality introduction to the industry while serving as a refresher for those that have been in the industry for years.

"Although its primary goal is education, it achieves a strong secondary goal of laying the groundwork for fair business practices that will help all industry participants reduce the chance of federal or state government oversight. As Paul's question suggests, ETA should take the lead in MLS certification, providing a consistent informative education program as well as updates on regulation and policy changes.

"ETA has also implemented a series of regional meetings across the United States that will enable many more MLSs to attend ETA-sponsored events. I attended the first conference in La Jolla, Calif. and was disappointed by the attendance. However, as with any new endeavor, it must be given time to gain acceptance.

"One action that will 'prime the pump' would be if members of the ETA Board would drive attendance by their respective organizations. Another action that would improve the quality of these regional programs, and ETA's relationship with MLSs, is the creation of an MLS advisory group, strictly consisting of 'street level' salespeople. This would enable ETA to better position itself to understand the needs the MLS. Frequent focus groups would also help ETA to keep focused and provide meaningful programs.

"To some people in the industry, these regional meetings [ETA Expo Networks] are ETA's response to conferences being held by organizations such as the MWAA, NEAA and the SEAA. Most likely this is true. However, to the benefit of the industry, these organizations and ETA need to come together to reduce conflict, standardize education and consolidate the number of conferences being held, thereby reducing the impact on the budgets of those companies that exhibit and serve the industry.

"In summary, ETA must continue to improve its service to the MLS while representing the industry. It must gain agreement with the established regional organizations to both consolidate and build programs while ensuring quality educational offerings that stress best business practices. If done, ETA will build strong value in the eyes of the MLS and not suffer the same demise as the ABA."

"I don't think I have much to add since we are not ETA members, which probably answers your question about relevance. We do attend and enjoy the two annual meetings."

"As the distribution channel within our industry matures and continues to develop I do believe ETA has lost touch with the independent sales offices. When ETA first was developed there were not as many ISO/agents, it was more concentrated with fewer offices/agents representing a smaller amount of companies.

"From this prior landscape ETA was able to serve this sales channel more efficiently. Now with the increased diversification among the sales offices/reps, ETA has grown but in the opposite direction of our distribution channel. They have become more institutionalized while the sales channel has become more entrepreneurial.

"It would be beneficial to all if ETA would work more closely with Visa/MasterCard in educating them on the dynamics of the distribution channel within our market on the acquiring side. With this effort the certification piece would be addressed thru this process of ETA working with Visa and MasterCard directly.

"Over time the direction and decision on MLS certification would become clear as to what needs to be done. Given this development, ETA will be doing the sales channel a favor and come full circle with better understanding why they are in existence and who really is their customer."

"The handful of pioneers who put the old BSA together had an image of what it would be. They, better than I, could tell you what that image was. I do know that it was meant to be a 'safe haven' for small- to medium-sized ISOs to meet, to learn, and to speak with vendors that might otherwise not know the ISO existed.

"There were large meetings to discuss the points of general interest and smaller meetings for more specific topics all meant to improve the working knowledge of the sales force. The overall objective was to produce a more cohesive group capable of establishing standards by which all ISOs would operate.

"Over the past 10 years or so, the members and the membership have grown. The mix of the membership has also changed considerably ... to the point that the small ISO no longer feels like part of the group. It is no longer the small, quaint group of the BSA, but is now a Comdex-style show that caters to the larger organization and is too big to be held close to the membership.

"While the name change to ETA may have better symbolized the new complexion of the group, it signaled the end of an organization that would cater to the smaller ISO in search of a place to learn and grow.

"I believe that the regional concept is great as long as the objective remains what it is today. It should be a group that is established to provide leadership, guidance and assistance to the small- to medium-sized ISO. It should have an atmosphere of education and learning. Government provisions and Visa/MasterCard mandates are becoming more prolific ... the ISO must have a way of understanding what is required in order to stay incompliance.

"This education would be less expensive (in time and cost of travel) if provided at the regional level. Whether or not it takes on the cloak of certification should be left to the regional leadership. However, it should be understood that certification will again bring about the need for standardization on a national level. Each regional group, then, would be tied somewhat to a national organization once again.

"The National ETA, HQ, whatever it would be called, definitely has a place in the picture. With the type and size of its membership it should have a clear voice in matters of national policy and procedure. As well, it should have the ability to assist the regional groups in attaining their goals of education and information.

"I cannot, though, imagine why, in this day of technology, a move of ETA headquarters to a Washington, D.C. address made a bit of difference in the effectiveness of the group as a whole. Being effective is not a matter of address but is, rather, part of the process.

"Certification, however, begs the next question of 'how to police it.' The industry, no matter what the majority of the group would like to have happen, is plagued with deceptive selling practices and misunderstood or misapplied regulations.

"Not all of them concern policy, procedure or paperwork but, rather, whether the corporate 'style' promotes that atmosphere while simply trying to compete.

"If there is a certification process in place, should ETA, then, also carry the burden of review?"

"'Has ETA lost touch with a large segment of its membership?' No, I do not believe so.

"'Was the move to Washington, D.C. good for its membership?' In most cases it does not matter where ETA is located.

"'Could the membership be better served by ETA HQ moving closer to Visa/MasterCard?' Only if ETA will better serve us by being in closer proximity to the Associations.

"'Should ETA take the lead in providing MLS certification?' Another bureaucracy? I don't think so."

"I have not seen any issues with ETA moving or losing touch, but I am not close enough to this matter to answer more fully."

Paul Martaus, Martaus & Associates

"ETA remains completely in touch with its original membership. I presume the question you are really asking is, 'Is ETA having any success attracting a new constituency, the MLS?'

"The 'feet on the street' salesperson has never been a targeted segment for ETA, although there are some that erroneously claim that ETA was founded to serve the needs of that constituency. In truth, the BSA was founded to provide a unified voice for the early ISOs in order to allow them to have some minimal say in their own industry.

"Although the ISO provided the overwhelming 'muscle' to the bankcard industry in terms of pure salesmanship, Visa and MasterCard have always (and will always) own the rights to their process (giving nods to American Express and Discover for their own roles within their segments of the market) and with ownership comes the right to dictate the rules. The BSA (and ETA to a lesser extent) got the attention of the card Associations and to a small extent provided minimal input into the process.

"This is no small feat, given the fact that the merchant side of the banks that own the Associations themselves have about as much input as the BSA did at its peak. ETA has evolved into a very exclusive club consisting of extremely large ISOs, processors, acquirers, merchant banks and vendors. ETA has never supported the MLS as doing so is outside of both its purview and charter. Should they include them is a different discussion. They are not prepared to answer the needs of the MLS, nor could the typical MLS afford member dues, training courses or attendance at their conferences.

"The move to Washington, D.C. has been a total waste of resource and capital. ETA has misunderstood its role within the national debate, thinking incorrectly that there is some sort of political agenda it can influence. The only thing its presence in Washington does is invite regulatory oversight rather than prevent it.

"The card Associations dictate the fate of the ISO, if ETA still represents the ISO as part of its agenda. If it instead represents all segments of the payment services industry, then it becomes just another useless, ineffective lobbying organization. The banks are thoroughly and professionally represented by the ABA and similar banking lobbies.

"The ISOs, acquirers, processors and vendors do not have federal oversight, nor could they raise the serious amounts of capital needed to provide true influence over whomever they would find willing to accept their paltry contributions. They should have moved across the street from Visa headquarters (with a smaller office across from MasterCard) if they truly wanted to try and influence the decision makers that own the rights to their infrastructure.

"If they [ETA] were to complete the process of developing all of the course material for all five colleges within ETA University, they would have a truly useful and possibly worthwhile educational resource for use by those that are interested in such things.

"As it stands, ETA University course offerings are extremely useful to many back office ISO and acquirer staffs but are for the most part totally useless to the salesperson on the street. The MLS