Letters
Mr. Green (or to whom it
may concern):
I believe we are all
upset with compensating Discover Reps for the labor of our hard work.
How about the merchant that contacts Discover's 800# and is charged
an enrollment fee of $75.00 to simply add the Discover Card to their
existing equipment? I'm surprised that a field sales rep working for
Discover will enroll a merchant at no cost to accept Discover,
however if the merchant calls their 800# the enrollment fee is
applied.
In addition, when a
merchant contacts Discover's customer support line for administrative
changes, such as enrolling the merchant to accept AMEX, Discover will
charge the merchant a mandatory fee of $50.00. In my opinion,
Discover has taken an adversarial position in establishing a
relationship with the merchant. In the end, Discover will most likely
change their way of operating their sales activity. Hopefully there
will not be too much damage. If not, Discover will ultimately lose
the battle with merchant signings and will continue to be disliked
within the ISO industry. Come on Discover, take a partnership
approach! Hey, if AMEX can tailor a program to the ISO that works and
makes sense, why don't you?
Name
Withheld
Dear Mr.
Green:
I'm presently
considering becoming an ISO. I've been in the business for seven
years and have a pretty good understanding of how things work. My
question is: What is the advantage of registering with V/MC and
paying the $10,000 fee other than being able to use your own business
name? The people I ask don't seem to have a definitive answer.
Additionally, several people told me the risk is entirely mine. How
does one protect themselves from being personally liable in the event
a merchant goes bad? Is there an insurance company out there that
will cover a claim for a premium? Your input is most appreciated.
The Green
Sheet has
taught me one thing over the years and that is that you seem to have
a good answer for everything.
Sincerely,
Seeking
Opportunity
P.S. I agree with all
the negative feedback regarding Discover. It's been a terrible
experience trying to work with them over the years. They are out for
themselves and think nothing of stabbing you in the back. I
personally lost several accounts because of them under-cutting
me.
Dear Seeking
Opportunity:
Registering with the
associations is necessary for two reasons. Generally, you cannot get
a deal with a bank without fraud unless you are registered. You
cannot contract an agreement in which your income stream is protected
to survive the sale of the bank or upstream organization unless you
are registered. The insurance you are looking for to protect the ISO
against merchant default is available through LMA (612) 332-6200. We
have done a few articles on this company. To read these articles
please visit our Web site http://the.greensheet.com
and use the search engine to get a list of all the articles. Our
backlist since September 1995 is available on-line.
Good
Selling!
Paul
Green
Editor-in-Chief
To:
The Green
Sheet:
I would like to learn as
much as possible about the various credit card processing equipment
that is available to merchants. In particular, please identify the
new products and their advantages. What products are becoming
obsolete in the marketplace? What products, in your opinion, are the
best?
If you have already
written an article that can provide this information, please send it
to me at the above address.
Thank you very
much,
Larry
Stewart
Dear Mr.
Stewart:
Thank you for your fax
of July 12. Enclosed is the premier issue GSQ:
The Payment Systems Quarterly.
This report on the POS industry should have all of the information
you requested. Additionally, I have enclosed a sample copy of our
bi-weekly newsletter, The
Green Sheet.
I have also included a
subscription form. Your annual subscription will include 26 issues of
The Green
Sheet as
well as our quarterly magazine. To begin your subscription
immediately, simply include your charge card information and fax the
completed form to (707) 586-1738.
Good
Selling!
Paul H. Green
Paul:
Recently read your
article on smart cards entitled "Smart Card Update" [Issue
98:01:01]. Just prior to your most recent article on Smart Cards
I received the following email from MasterCard International on the
subject:
The Mondex card is being
selectively tested in the U.S., Canada, the UK, New Zealand, the
Philippines, and Hong Kong. It has the potential to be accepted
around the globe. As to when it will reach you, bookmark this site
(http://www.mastercard.com/smartcard/faq.html)
and check back for information on further market
introductions.
Best
Wishes,
MasterCard
International
Customer
Service
My response to them was
the following:
Is it possible that this
product will be driven by consumer/user acceptance?
Can you admit the likely
scenario that the previous possibility, if not accepted, means that
the Smart Card, at least in North America, will never be seen or used
by 90% of the purchasing population?
Would you or I ever give
$400 cash or more to a bank or financial institution, on the notion
that I might spend it in a week or two? Is that not the premise upon
which the Smart Card works? It sounds like bad money management to
me. Correct me if I am wrong. I personally would rather invest money
where it will earn any kind of return. I believe most other consumers
feel the same way. What will propel the economic engine of America to
reverse the trend of hold money instead of a reverse float
?
Dear Mr.
Green:
The article "Hitting
Infinity" in your issue 98:06:02 regarding our new Infinity 2000 ATM
resulted in us receiving 76 calls nationwide in a three-day time
period. Calls are still "trickling in" daily and we are signing
distributors nationwide as a result. We probably could not have
gotten such a quick response with an advertisement in 10
publications!
We've read
The Green
Sheet
articles for the past year, enjoying the diversity, but more
importantly, the variety and accuracy of each article.
By informing sales
groups and ISOs nationwide of our "new, lowest-cost on the market
today Infinity 2000 ATM," we are able to provide small to mid-sized
merchants with the ability to finally afford an ATM. Your article
helped pave the way for us. It also showed us exactly how much
readership you DO have! For all of this, we thank you! (And you can
be guaranteed we WILL be advertising very soon!)
Best
regards,
Bob
Donohue
Electronic Financial
Systems
Dear
Paul:
As per our conversation
that we had in Orlando at the seminar on May 14, 1998, we have a
business in Tampa known as JNT located at 6712 Benjamin Rd., Suite
600, Tampa, FL, telephone 813-885-7592 or Fax 813-882-9567. The owner
is Jim Ide.
The reason for this
letter is to pay the ultimate compliment to this company. They have
always been courteous, prompt, and more than reasonable with their
prices. I don't think 25% of our market know about them. If you take
a piece of equipment there without an appointment, in most cases they
will repair it while you wait. Your merchant really appreciates this
type service from their processor. We spoil them and we retain them
with good service. I count on JNT and they always come through for
me. Mail in repairs usually are done in 24 hours.
They have been serving
the area since 1998. They repair the entire line of VeriFone
equipment and various printers. The repairs are warranted by them of
course. addition, JNT has designed and developed hardware
modifications to take advantage of the emerging Cellular Digital
Packet Data (CDPD) technology. It enabled than to use Tranz460s and
Tranz 380/380s to operate in the Mobile environment without a phone
line. The modified Tranz 460 operates on traditional AC power, car
battery, or vehicle cigarette lighter. They also have developed the
capability of the Tranz to operate in the CDPD environment using a
single IP address. The merchant pays only for the actual packet
transmission even though the unit is in constant communication. With
a local tower. CDPD represents a major cost savings over a typical
cell phone where airtime fees accumulate over the entire connect
time. With typical transaction speeds of 5 seconds, or less, this
application is great for taxis, kiosks, road shows, delivery
vehicles, etc. Today about 70% of the U.S. is covered by CDPD. GTE,
AT&T, Ameritech and Bell Atlantic provide the bulk of gateway
services.
JNT is not a dealership,
nor are they connected with any processors or ISOs. They just do a
tremendous job at what they do. If you find someone as good as these
guys, call me!
Thanks,
Joseph R.
Flynt
Paul:
Thank you for a well put
together and very upbeat conference. Looking back, I can't believe I
stayed wide-awake for a meeting that long. I was truly fascinated and
involved in all that went on. I also would like to thank you for
considering the areas of my concern. Your publication is well read
and possibly influential enough to make a real difference. As I said
in our conversation, I feel that the industry is changing in ways we
should address. Healthy competition is good. Cutting each other's
throats is counterproductive. When the software developers cut us out
of profits, it muddies the water even further. I think these trends
are creating an environment of part timers in our industry. When you
do this for a living, it is disheartening to be competing with a kid
who works a forty-hour job cooking at The Waffle House or pumping gas
at a quickie mart. When that guy makes fifty dollars on a merchant
account, he thinks he is a winner. Except for the Visa/MasterCard
regulations, our industry can be unprofessional and unethical.
Doctors have the AMA. Lawyers have the Bar. Perhaps it's time that we
unified in some way. One of the things I learned in college is that
if you sell a product, you must sell your product for at least twice
your investment to stay in business. Selling at three or four times
your wholesale costs can keep you in the black. I love sales. I
believe that if you want to sell something, sell something people
need. Credit card processing is a career I can be proud of and I
actually like bumping into my merchants at public places with my
family. When I started in this industry, it was us (the ISO) or the
banks. Merchants could usually save a fortune on discount rates and
service fees with an ISO but have to pay (sometimes through the nose)
for equipment when the banks practically gave it away. The
marketplace was black or white for the merchant to choose. I found my
"niche" in providing for the high risk, low volume merchants. In
time, I forged alliances with local banks for referrals. Nowadays we
all want to build portfolios, and the "buy rate" has become ultra
important for a comfortable margin of profit.
When I signed on with
Merchants' Choice, the retail and MOTO buy rates were very
competitive and I saw a future with Woodforest. Then a prospective
merchant pointed out that I was selling at 2.45% when all "my other
offices" were advertising 2.23% MOTO on the Internet with ICVERIFY or
PC-Charge for $395. After a little surfing, I had to ask myself if I
was missing something here. If we are not making a profit on the
discount rate or the equipment software sale "where's the money?"
Even if the software was free (as in bootleg copies), $395 is a far
less profit than a $39/48 month lease will give me.
Over the past few years
some new players have come into our game the software "profiteers."
Just about any electronic product you can think of was more expensive
last year and the year before than today, except our product lines. I
keep switching suppliers to save a few bucks on products that seem to
be getting more expensive each year. Yet ICVERIFY and PC-Charge are
publishing prices on the World Wide Web forcing us to sell for less
and less. Selling above the published prices makes us look like
crooks. As of this time Go Software's pricing page is
unchanged.
In his presentation at
the convention, the ICVERIFY spokesman went on about all of the
wonderful features and ease of use of CyberCash. If they are charging
transaction fees and monthly service charges for it, where do we
profit? Getting a salesman pumped up about features & benefits is
easy. Removing his profit (commission) just lets the air out of his
sail. Very little effort was directed to help us make money. As long
as we are the sales force, this is still our game.
I didn't know many of
the folks at the convention and I didn't want to be negative. I have
done public speaking in the past, but here I felt that it would be
smarter to present these issues to people like you who are more
knowledgeable about our industry for an opinion. Besides, I'm sure
you know the old expression about first impressions. When I speak
openly, I want to be seen by my colleagues as a long awaited ally
because of what I can do for them, not as a whiner or complainer.
Part of my "niche" is turning competitors into allies. Paying my
competitors for accounts they previously put in the trash has to be
the fastest way to make new friends. That's one of the reasons I
signed on with ECS. As a salesman, I want to be able to write
accounts for all merchant types. ECS Nationwide does not want to
compete with other ISOs for merchant accounts.
The merchant is the only
winner in any kind of price/rate war. Electronic Card Systems
specializes in risk management. We enjoy the same types of accounts
everybody else does, but we also offer merchant services to the types
of businesses on their "unacceptable" lists. In fact, I solicit
referrals from ISOs all the time. I put one of my form letters on the
main table at the convention. Had I known the advertising space would
be available, I would have done something more appropriate. At ECS
Nationwide, we can place even the highest risk
merchants.
Travel, Inbound
Telemarketing, Seminars, Trade Shows, Used Car Dealers, Auto &
Home Security Companies, Tour Operators, Advertising Agencies &
Services, Detective Agencies, Health Food/Vitamin/Nutrition Products,
Import/Export, Multilevel Marketing, Financial or Computer
Consultants, Bail Bond, Quasi Cash Establishments, Computer Sales,
Cellular Phone/Beeper Services and Travel Agencies are among the most
often referred. ECS Nationwide opens these types of merchant accounts
daily. Other agents could give these prospects my card and tell them
that ECS Nationwide specializes in these types of businesses and
offers reasonable rates. We will be happy with the equipment/software
sale. I know that if you want to dance, you have to "pay the
fiddler". I offer (monthly) a share of the residuals or a portion of
the profit when we make the equipment/software sale.
There are a considerable
number of merchant accounts my colleagues pass up daily because their
criteria are much stricter than mine. Passing them on to me can be
profitable. Occasionally, I can even get a merchant an account from
the terminated merchant file. With cooperation, these leads are a
terrific starting point for an alliance.
Edward
Kaye
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