Agents’ Expectations Are Rising

Salespeople expect more from their ISOs these days, industry sources report.
“You’ve got to provide them something they couldn’t get on their own,” said Doug Small, director of third-party sales at Cayan, which recently changed its name from Merchant Warehouse. “That used to mean a physical office, but now it’s, ‘Can you provide them with POS solutions, integrated mobile payment solutions as well as what you’ve been doing for the last few years.”
But beyond embracing technology, ISOs should become more generous—or at least more creative—with compensation.

“In the last year, we’ve just gotten more flexibility about how folks are paid: monthly bonuses, signing bonuses, residuals,” Small said. “Flexibility with how we blend bonuses with residuals, different ways to slice the pie. The flexibility has increased tenfold in the last five or ten years.”
Still, if an ISO has to choose between tech options or compensation strategy, the tech changes have far more recruiting power.

“The changes in the last year have been much more about technology and mobile and less about compensation,” Small said. “What the startups have done is open up the end-user to all these different payment possibilities, which is great because we’re ready to play in that space.”
Marc Badalucco, recruiting director at Impact Payments Recruiting, agreed that technology offerings should become first priority. “If you have the right technology, that’s key today. We’re talking mPOS as a huge component, with data analytics tied in. If you’re coming with us, we have this technology,” Badalucco said. “A lot of companies are selling payments services. If you’re going in as a traditional ISO (with old school technology), you’re not going to have a chance in today’s world. Customers now have higher expectations. The biggest thing that has gotten a lot of attention? M-Commerce.”

But Badalucco argues that compensation increases are also critical, along with more revenue-sharing options. “True ongoing residuals. That’s been really key for the ISOs we’ve worked with,” he said. “A lot of ISOs are now offering signup bonuses of $2,500 to $5,000. Just offering the signing bonuses (is a change). We didn’t see a lot of them in 2012. In 2012, it was more about what is the pricing and what are your products and what is your residual split?”
Today, Badalucco said, he’s seeing ISOs offer residuals that top 90%. “That’s a little higher than it was in 2012,” when he saw top residuals in the 50% to 75% neighborhood. “We’re also seeing $1,000 bonuses for every merchant you sign up.”

Company-paid training can attract salespeople, and the Electronic Transactions Association has been helping with that by offering the Certified Payments Professional credential, said ETA CEO Jason Oxman. Studying to pass the CPP exam provides excellent training.
The CPPis designed to “raise the level of professionalism” in the industry and it theoretically “allows an agent or an ISO to demonstrate their professionalism,” Oxman said. “Certainly for an individual who is trying to set themselves apart, it’s an important designation.”

Oxman said that Cayan, for example, now requires all sales personnel to earn the CPP designation.

“It’s neither expensive nor complicated. It’s a few hundred dollars and it’s a self-study program,” Oxman said. “We designed it to have a low barrier-to-entry. It’s a review for things that people should already know.” Oxman said. He added that the test’s pass rate is somewhere between 66% and 75%.

Oxman argued that the credential is a powerful lure. “I do think that having a more educated and knowledgeable sales force is more important than ever. If offered as a benefit, it is an enormously valuable recruiting tool. It’s part of their ongoing professional education,” he said. “This is part of an ISO fostering a sense of appreciation, which is much more important for retention purposes. This helps the agents to continue to grow and develop.”

Some have argued that the low barrier-to-entry factors Oxman himself points out could make the certification a less effective recruiting tool, as it’s so easy for agents to obtain on their own. Oxman counters that the point is that many agents won’t do it on their own and they know that. When an ISO offers this as part of a mandatory training program, the agent gets the credential and is presumably not penalized for taking the time for the program. An agent doing it on his/her own would be giving up revenue that otherwise could have been earned during that time.

“It’s encouraging me to take the time to take the test and get the credential and that’s a powerful tool,” Oxman said.

Badalucco is skeptical of the recruiting draw of ETA CPP. “I often come across the certification, but I won’t go after a person because of the certification,” he said. When he reviews what retail clients list as the desired background for agents, he said, “they’ve never said CPP certification. It’s never been included.”

He backs specialized training—”You obviously have to offer the training. If you have the right training tools in place, that’s always going to help. That’s huge.”—but he just doesn’t see the appeal of a basic certification such as ETA CPP. “I don’t see that as something that will get an agency to come sign with you rather than another agent.”

Of much greater concern to most agents are factors that boost their compensation and adjust the timing of payments. “Who is doing the risk assessment? How fast is the onboarding process? Because that’s how they get paid,” Badalucco said.

Whatever the criteria, recruitment has to keep up with the quick pace of change in the payments industry.

This “is a very different year than even 2014,” Oxman said. “Look at EMV deployments, NFC, the launch of new POS competitors like MCX. There are tokenization products out there today that weren’t around 12 months ago. They know about Apple Pay, but they don’t know what they are supposed to do with it.”

Oxman argued that all of the players must no longer think of themselves as supporting transactions but using technology to support as much of the commerce process as possible, from the backroom to the supply chain to customer relationship management to invoicing to helping the shopper complete all buys effortlessly. “You’re no longer just a payments company. You are in technology solutions. You are looking for loyalty programs, mobile, security, E-Commerce,” he said. “You need a much broader range of services. You are positioning yourself as an organization for the future.”

As for retaining salespeople, industry observers point out that agents may tend to stay in the acquiring business even if they leave for positions with other ISOs or other processors.
“We’re talking about independent agents,” Small said. “The vast majority of the commissions they make are residual commissions. This requires them to be around for years, which is why we call the agent business, ‘Get rich slow.’ ”