Smooth talk goes only so far. For long-term success at signing up merchants for card services, sales agents should develop a sound general knowledge of how interchange rates work, ISOs agree.
Well-versed agents can quote prices confidently and field retailers’ questions deftly, creating an advantage over competitors, ISOs say. Agents themselves point out that colleagues who fail to fathom interchange cannot even calculate how much pay they would receive.
No agent needs to know all of Visa Inc.’s and MasterCard Worldwide’s hundreds of interchange rates, says
Glenn Zapolsky, co-owner of Source One Payment Solutions, a Santa Fe Springs, Calif.-based ISO. “But they do need to understand the main components, like the transaction fee, rewards, business cards and downgrades,” he says.
Agents who specialize in one or two types of merchants, such as gas stations or bar/restaurants, tend to learn a few recurring key rates for their categories, says Scotty Holman, president of 1st Choice Business Services Inc., a Round Rock, Texas-based ISO. “Just out of repetition, you’re automatically going to start remembering those interchange rates,” he says.
Minimum Knowledge
When agents pursue merchants in multiple lines—by taking on e-commerce, for example—they stand little chance of learning the many specific rates, notes Ted Svoronos, vice president of Group ISO, an Irvine, Calif.-based ISO. But signing up for card services does not require a “split-second decision,” so agents have time to check with their offices on rates, Svoronos says.
At a minimum, agents should know about three-tier pricing with its qualified, mid-qualified and nonqualified rates, according to Chris Wilkin, also a Source One co-owner. Three-tier pricing assigns transactions to one of the three rates. Agents should teach merchants to stay competitive by learning how the tiers work with differing fees for various transactions, ISOs agree.
Knowing interchange also helps agents quote prices for “interchange-plus assessments”—a common fee structure known as “interchange plus” for short, Holman says. “It helps for the agent to know that interchange is at, say, 1.13% and 15 cents,“ when using interchange plus, he notes.
Interchange plus makes sense to Kathy Harper, a merchant-level salesperson for Progressive Payment Systems, a Griffin, Calif.-based ISO. “If you sell interchange plus, [merchants] can get a much better price break, and it gives you a big advantage over an agent who doesn‘t understand interchange—or who is unwilling or unable to sell on an interchange plus rate.”
Interchange plus requires caution, however, “If they have the latitude to price an account at anything above interchange plus some sort of per-item fee, they don’t want to make the mistake of committing to a rate that’s less than interchange,” Holman says.
The consequences of misquoting can prove dire. “They’re going to lose money, possibly even have the application kicked back to them depending upon their relationship with their acquirer,” Holman says.
Agents who fail to understand interchange also remain in the dark about their pay, says Harper. “You can’t possibly have a clue as to what you’re being paid,” she says. “Fifty percent? Fifty percent of what? Is it 50% straight from the interchange chart or 50% of what that office is getting? That’s a big, big difference.”
Besides a grasp of interchange, agents need a knack for reading competitors’ statements and ferreting out the true meaning of fees, ISOs agree. Merchants usually hand over the monthly card-services bills for agents to examine, they say.
“They come in all shapes and sizes,” Wilkin says of statements. “Fees are hidden, and you have to look with a microscope at times to find out what pricing is and where additional fees are.”
If one ISO charges a $10 statement fee for sending out a bill, and another assesses a $10 monthly service fee that covers billing, free replacement terminals and free receipt paper, the latter is offering a better value, Holman says. “Our agents need to be able to articulate that,” he says.
Yet some ISOs send agents into the field with little training. “The rates were a mystery to me the first two or three years in the industry,” Harper says. “I didn’t even know they existed for the first year and a half or so. I was like many people that start in the industry and nobody tells them.”
Trial And Error
Today, education is taking precedence. In three days of training for new agents, Source One devotes lots of time to interchange rates, merchant statements and role playing, says Wilkin. Monthly meetings help agents keep up with changes in the industry, he says. The company also advocates industry-wide agent certification based on formal classes and tests.
Experience counts, too. “You can’t really give them a week’s work or give them a book and say, ‘Hey, read this cover to cover and after you finish you’ll be a bona fide merchant services sales expert—it just doesn’t work that way,” Holman says. “It’s going to take trial and error and the overall experience of a year to a year to finally have your aha moment of ‘Oh, this is how it works’—and then be able to make a compelling business proposal consistently to experience the success that everyone seeks to have.”
Svoronos says he wants his agents to feel they are never alone—that they can call the company at any hour on any day of the week for support. “You have to empower them, work with them, talk with them, do whatever you need to do to make them better, stronger, faster,” he says of his company’s relationship with agents.
Still, much comes down to the agent’s determination to learn. “If I were a new agent just starting out,” Harper says, “the very first thing is [to] learn everything I could about the interchange chart.”
From the June 3, 2010, issue of ISO&Agent Weekly.
