Meghan Boyer

With preferences for carrying and using cash continuing to drop, more consumers expect merchants to accept debit or credit cards for payment. But not all merchants do, especially those that lack physical storefronts. Some industry insiders believe mobile-based products might help encourage them to accept electronic payments.

With fierce competition for merchants and slim margins in the U.S. acquiring market, more ISOs are expressing interest in penetrating the largely unsaturated Canadian market, according to Federated Payments, an ISO with operations in the U.S. and Canada.

Better economic conditions helped retail sales and that helped the transaction processor Heartland Payment Systems Inc. swing to a first-quarter profit.

Hoping to extend its reach to mobile merchants, USA ePay, a merchant-service provider, this week launched a portable card-acceptance machine that connects to Apple Inc.’s iPhone and iPod Touch products.

Speakers at a recent Internal Revenue Service hearing on proposed transaction-reporting requirements that take effect next January largely focused on the potentially detrimental effects their companies may experience from a foreign-merchant rule contained within the law.

Transaction Network Services Inc. and Blue Bamboo have entered into an agreement that enables independent sales organizations, acquirers and processors to sell a mobile-payment system, according to the companies.

Residuals are a standard form of payments revenue for ISOs and sales agents, but the weak economy, decreased transaction volumes and margin compression are making it more difficult for individuals to subsist on residual income alone. As some agents’ residuals grow tenuous, more salespeople are expressing interest in up-front revenue to bolster their incomes.

Compliance among small merchants with the Payment Card Industry Data Security Standard remains relatively low, but ISOs may be able to increase compliance rates in their portfolios by launching multifaceted campaigns, some industry insiders suggest.

Nxgen International is opening operations in the United Kingdom and Italy as part of a European expansion strategy the Whitefish, Mont.-based merchant-service provider announced last week. Diversifying geographically can help Nxgen grow and differentiate itself further, says Giuseppe Caltabiano, Nxgen president.

A recent study that focuses on Payment Card Industry Data Security Standard compliance among large merchants also is helpful for educating ISOs and the smaller merchants with which they typically work, observers note. ISOs should educate themselves not only about their specific markets but also about all aspects of data security and compliance in the payments industry to better serve their clients and ensure all merchants protect card data, they say.

Despite a fourth quarter net loss Heartland Payment Systems Inc. attributes largely to breach-related expenses, the Princeton, N.J.-based payment processor sees “encouraging progress” in small and midsize merchant transaction-processing volume and same-store sales, Robert Carr, Heartland chairman and CEO, told analysts during a conference call last week.

Sales agents for ISOs increasingly are seeking additional industry training to improve their abilities to better compete for scarce business during the difficult economy, observers note.

MTN Group is launching a mobile financial-services product for its more than 100 million telecommunication subscribers in Africa and the Middle East that uses Gemalto NV’s SIM-based security module, according to the France-based card vendor. The product will enable subscribers to check account balances and conduct such mobile services as funds transfers and payments.

Processors, not ISOs, likely will handle many provisions of a law that takes effect next January requiring acquirers to report merchant credit and debit card transactions to the Internal Revenue Service, says Henry Helgeson, co-CEO of Merchant Warehouse Inc., a Boston-based ISO.

News last week that North American Bancard has hired a financial advisor to help sort out its future and that Merchant Data Systems Inc. has purchased a 1,300-merchant ISO potentially is signalling a resurgence in mergersand acquisitions among portfolio buyers and sellers. It also signals further consolidation in the ISO and merchant-acquiring industry.

Automated clearinghouse transaction processor ACH Federal LLC is introducing a merchant-referral partner program for ISOs in the hopes of expanding its client base, according to the Chattanooga, Tenn.-based company.

Total System Services Inc., known as TSYS, plans to reduce expenses and employee headcount in anticipation of another difficult year. The Columbus, Ga.-based transaction processor believes it will see continued constriction in its business until the economy begins to recover and unemployment levels fall.

The loss of large clients, price compression, currency valuations and the tough economy all contributed to a difficult fourth quarter and 2009 for Total System Services, and its executives said the same issues are likely to affect it well into this year.

A general approach to marketing for ISOs seeking new clients is more likely to fail than would a campaign that targets specific merchant segments and generates referrals, some observers believe.

Visa Inc.’s devotion to signature-based contactless transactions has caused one large retailer to take a stand against the card network, and it also poses an obstacle to adoption of EMV cards in the United States, says an industry analyst.