Uncertainty, competition and even attacks. In 2012, independent sales organizations face a year of danger and opportunity.
Because of rising renewal fees, some companies may stop registering as ISOs with the card brands and instead become sales agents for other ISOs, says Duayne Haskett, vice president for agent/ISO business development at Priority Payment Systems LLC, an Alpharetta, Ga., ISO.
"An increase in registration fees by MasterCard and potentially Visa may force smaller ISOs to rethink being registered as an ISO," says Linda Rossetti, the president of Bluestone Payments LLC, a Peachtree, Ga., ISO. "Some may choose to fly under the radar as either not registered, or they will change their models to becoming agents."
MasterCard Inc. increased its renewal fee for ISOs to $5,000 for 2012, according to a MasterCard bulletin. That doubles the $2,500 fee the company charged for 2011, Haskett says.
Many ISOs fear a similar increase from Visa Inc., and that is contributing to the atmosphere of uncertainty, he says.
"Merchant acquirers are under attack," says Paul Coppinger, the president of Apriva Inc. of Scottsdale, Ariz. "They are being assaulted by people from outside the community who are taking opportunities away."
Square Inc., which is offering merchants a free mobile card reader, intends to disrupt the entire payments industry, not just the acquiring side of the business, Coppinger says. In 2012, Square will offer value-added services to help merchants run their businesses better, he says.
Google Inc. is offering a mobile wallet with the help of partners that include Citigroup, MasterCard and Sprint. Isis, a mobile commerce joint venture, brings together AT&T, T-Mobile, Verizon Wireless, Visa, MasterCard, Discover Financial Services and American Express Co.
Google and Isis base mobile payment offerings on near-field communication. "Next year will not be the year of NFC," Coppinger says. "It's a business model not proven and a business case not sold." EMV chip cards, however, will make inroads in the U.S. by the end of the year, he says.
Fraud is driving the need to convert to EMV. Visa is continuing to push for EMV adoption and has set policies designed to bring about the conversion, says Eduardo Perez, Visa's head of global system risk.
In another thorny development for ISOs, some retailers and restaurant operators may stop accepting debit cards for low-cost merchandise or meals in reaction to the Durbin amendment to the Dodd-Frank Act, which is raising debit card fees for small-ticket transactions. One piece of advice: ISOs and agents should augment payment processing offerings by providing value-added services to transform themselves from salespeople into consultants.
