Dallas Cowboys Become An ISO

Merchant acquirers have faced disruption from a number of powerful new entrants to the market in recent years, including Square, Apple and Google. Now, a pro football team is getting into the game.
A subsidiary of the Dallas Cowboys called Blue Star Payment Solutions will initially target businesses in the Dallas/Fort Worth metropolitan area and in other areas with lots of Cowboys fans, including parts of Oklahoma, Arkansas, San Antonio and Austin. The move is meant to build on the relationships the Cowboys have already forged in those communities.
“The core targets for the business will be the Cowboys sponsors and other people that are already doing business with the Cowboys,” said Jerry Mooty, the president of Blue Star and the nephew of Cowboys owner Jerry Jones.
Blue Star is operating under a referral agreement with Bank of America Merchant Services, but it will become a registered ISO over the next two to three months, Mooty said.
The company will sell card processing, e-commerce services, m-commerce, security and encryption, working capital, and equipment such as Clover (First Data’s table-based point of sale). First Data and Bank of America did not return requests for comment.
“It’s an unusual arrangement,” said Paul Martaus, a merchant acquisition consultant and researcher, who said he could not think of another “alternative” ISO. “It’s a forward-thinking idea.”
The model somewhat resembles the affinity card arrangements common at universities, “but it’s not really the same thing as a merchant services company,” Martaus said.
Blue Star sees a fit in a merchant services industry that’s filled with what Blue Star called “blank names,” expecting the Cowboys’ famous name will be its own draw in an industry in which companies are often challenged to stand out.
As part of its sales program, Blue Star will offer Cowboys merchandise, invitations to exclusive events, and drawings for viewing experiences related to Cowboys games, practices and training camps. Merchants are also enrolled in the Cowboys United Fan Club.
Other sports franchises have used their brands to tie transactions to merchandising, though not necessarily to the extent of what the Cowboys are doing. The Miami Dolphins have deployed a mobile app that’s designed to lure fans to buy merchandise and concessions while entering and moving about the team’s stadium near Miami. MasterCard and Sports Fusion sell a service that integrates different payment modes that are connected to the same sporting event, and have landed the business of several European football clubs.
But despite the freshness of this idea, it’s not the Cowboys’ first rodeo. Legends Hospitality, a stadium and arena concession management company whose owners include the Cowboys and the New York Yankees, uses MasterCard’s mobile technology for pre-ordering and payment for what it sells at sporting events. Blue Start is not directly affiliated with Legends, Mooty said.
For the Cowboys, the barriers to entry are not high, but tapping the merchant services market remainsl a challenge, said Rick Oglesby, a senior analyst and consultant at Double Diamond Payments Research.
“While it’s unusual for a payments team or an ISO to align with a sports franchise, it’s not at all unusual for smaller and/or startup payment companies to focus on a local area and/or use an affinity marketing approach that appeals to the emotional needs of small business owners,” Oglesby said. “So this is a new way to pursue a fairly common strategy.”
Because the link to Bank of America Merchant Services makes Blue Star a marketing company and not an actual payments company, it’s easier for Blue Star to pursue the market, Oglesby said. “Anyone can start this type of company, but not just anyone can succeed.”