ike Rottkamp, a Principal with Florida-based Renaissance Associates, has been involved with merchant services, in some fashion, since he was a teenager. In this interview with The Green Sheet, Rottkamp discussed the importance of education, entrepreneurship in the ISO world and selling on rate alone.

The Green Sheet: What brought you into this business?

Mike Rottkamp: I am proud to say that I am a second generation "bankcard guy." My first exposure to this industry was as a teenager working for my father, Dave. I worked summers in Manhattan carrying a canvas bag, going to merchant locations and picking up credit card receipts for delivery to the processing center. Ten years later, I was given an opportunity to work for a small sub-ISO, starting as a clerk, filing merchant applications. I later moved into customer service, then technical support. Three years later, I joined Bank of America [BofA] to develop the Relationship Management team for the Eastern half of the U.S.

GS: What did you do with BofA?

MR: I assisted in establishing eight regional sales offices, a telesales division (consisting of 40 reps) and a full-scale sales support and credit department. After six years with the bank, I decided it was time to get back to the ISO world.

GS: What's the difference between the direct sales and ISO channels?

MR: The difference is pretty great, really. When you are working with a banking group such as BofA, you are given leads. You are working off of an existing client database that consists of literally millions of business checking accounts. You are working with commercial bankers and treasury management folks trying to deepen relationships with products, versus going out there with one core product, your merchant processing.

From the [direct] sales perspective, pretty much, without diminishing the capabilities of the sales rep, you are more of an order taker; you are more of a feel good kind of guy because you are really working in tandem with other banking folks. ... [Y]ou don't have to go out and hit the streets. ... A lot of sales folks enjoy the art of the sale, the challenge of the deal. They enjoy the financial rewards that come with the art of the sale for themselves versus making the big bank more money and just dealing with their standard compensation package.

GS: Is this what brought you back into the ISO world?

MR: Absolutely. Working with a big institution definitely has benefits as you are gaining more momentum in an industry, because there are a lot more resources that you can tap into, for experience as well as education in that industry. Working directly with BofA gave me the opportunity to work directly with folks at Visa and MasterCard. I learned a tremendous amount working for BofA; it was a great education. Not, though, the same type of education that you get working with a typical ISO, simply because most ISOs don't have the training facilities, or potentially even the capital, for employee development, that a large financial institution does.

But when you get back to the ISO world and dealing with the feet-on-the-street type folks, the entrepreneurship comes back. ... The creativity and ability to make your own path is always very appealing to myself and other guys out there.

GS: How prepared do you think newcomers are now compared to when you first entered the industry?

MR: Most new agents are not very well prepared. Anybody can go out and sell a terminal or even give one away. The biggest challenge is to understand all the players and pieces involved in bankcard processing.

With such vast amounts of information available on the technical/product side, as well as the financial side, it is easy for new agents to get overwhelmed. That still shouldn't preclude them from being able to sell the service.

I believe that agents should always look for that "Bankcard 101" core base of knowledge before going out to the field. Having a good support channel behind them, such as a sales manager or a mentor from within the industry, is paramount to their success.

GS: Where would a sales rep, particularly someone new, go to get that Bankcard 101 training, especially, as you said, when a lot of ISOs don't have the capital?

MR: One of the first things that an agent should look at ... is to find an ISO that has a core-based training program that can teach them the basics of the industry. It should, number one, have a very good reputation and, number two, have folks that they can work with, day in and day out ... such as a sales manager type. I know a lot of independents don't want to deal with a "sales manager"; [they want] someone inside that can help them answer questions, assist them with pricing and help them with the technology.

Most salespeople are fairly good at the art of the sale; it's just learning the product that they need assistance with. ... [A]gents without a core knowledge of bankcard really end up becoming equipment pushers. ... Really, you are selling merchant services, which is a financial service.

GS: What has been the biggest change since you first started?

MR: Without a doubt, technology and interchange. When I first started out, my AOL connection was at a 1,200 baud rate. I was excited. Now, instantaneous responses via IP sometimes aren't fast enough. The entire contactless arena (RFID, transponder) is also a tremendous change for both the issuing and acquiring side.

Interchange has also seen plenty of change. Twelve years ago, there were a handful of categories; now there are over 120. Today's environment requires both technical and financial savvy in order to produce the most revenue from each deal.

GS: How do you explain interchange rates to your clients?

MR: I am a believer in educating clients. The actual discussion of interchange depends on the size of the client, the current processing history and the client's desire to understand. For the higher volume merchants, understanding interchange compliance and the impact to their bottom line is critical. For the low-volume merchants, it is not as critical but can still have some impact.

Although this is not my typical approach, the increasing trend for the past few years has been to quote merchant rock-bottom rates, while surcharging heavily for interchange downgrades, while using a three- or four-tier statement. This approach requires agents to be able to analyze statements and truly understand the cost of interchange so that the correct revenue can be achieved as well as a savings to the merchant.

GS: How do you choose a processor?

MR: Reputation, service and price, in that order. Without a good reputation, service and pricing doesn't mean much. The majority of the large processors (front end and back end) all have similar products. ... The majority of the ISOs also have similar products and services. Knowledge and track record are also key components for both the customers and the MLS. ... You also need outstanding service. It is just too easy to lose a client due to a service issue.

GS: What types of merchants do you prefer to work with?

MR: The majority of my portfolio is face-to-face businesses, such as retailers, restaurants and resort properties. Another segment that I feel is extremely rewarding to work with is the B2B [business-to-business] market. In the B2B market, the attrition rates are much lower, and the margins [are] usually higher. The most recent newer market segment that I find exciting is the small ticket segment and contactless payments.

GS: How do you approach upselling?

MR: This can be useful when you see the need. The majority of my clients are already savvy acceptors, so upselling is not always an option. The long-term goal is about the processing revenue. This is what gives your portfolio long-term value. Another great tool is cross selling. With the availability of products such as gift card, check service, payroll processing and many others, this will help increase your retention rate.

GS: What are the basic tenets of your business philosophy?

MR: There is no substitution for knowledge. Even if you are not the best salesperson, you can still provide excellent consultative input and get the sale.

Effort and passion: You have to be committed to your product or service in order to sell it effectively. For me, it takes an emotional attachment to a product or service to truly believe in it. I live and breathe bankcard.

Trust: I trust the organization I work with, and I know that merchants trust me. I will never have a merchant come back and say that I misled them.

GS: Where do you think agents stand on the topic of security?

MR: Most agents I speak to need to attend a basic PCI compliance seminar or spend some time reviewing the Visa and MasterCard compliance Web site. There was an excellent presentation given at the Winter NEAA [Northeast Acquirers Association] event this year.I believe that most agents aren't really too concerned ... [T]heir Independent Contractor agreements have a no-risk clause. They need to understand that a PCI compliance penalty can not only put their merchant out of business, but can also significantly impact the ISO/MSP that they are doing business with. Ultimately, it impacts their residuals.

GS: Describe a typical day in your life.

MR: Get up at 6:00 a.m., drink plenty of caffeine and get to work. I usually start by reviewing my notepad for items or calls that are still outstanding. I then prioritize my office work and my appointments for the day. Early mornings are great; the phone and e-mail's are quiet. This always changes as the day progresses. Usually by noon or earlier, I am out and about doing the field work. By late afternoon, I am almost always back at my office, returning additional phone calls, filling out paperwork or answering e-mail. Once the sun goes down, I am back in the office, preparing proposals, reviewing e-mails or just catching up on industry news. A typical day usually involves 12 hours of work time. Sometimes more, rarely less.

GS: How has The Green Sheet helped you?

MR: The Green Sheet does indeed provide valuable information for our industry. I have read very interesting articles ranging from interchange to ISO strategy. I often recommend the publication to new agents just coming into the industry. They can immerse themselves in bankcard information.

GS: Any advice for someone just starting out?

MR: The bottom line is that there are no valid get-rich-quick approaches. The other very important piece is knowledge. Read everything you can get your hands on. Always ask lots of questions. Get to the local shows. This industry has plenty of people that like to talk and share information.