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Change places with a typical merchant a moment. Remember that no one has ever taught you the difference between a transaction fee and an interchange rate. So what do you do when a fast-talking salesperson strolls into your office spitting out numbers?
None of what the sales agent says makes much sense to you, but the agent assures you the offer is the best deal in town-just because the agent feels charitable and likes you.
Although skeptical, you like the numbers and sign up for a shiny new leased terminal and processing contract. And then the first statement arrives.
It turns out that glib swindler "neglected" to tell you about the exorbitant monthly fee, your new, unthinkably high transaction costs and, oh yeah, your store does not clear nearly enough volume to qualify for that rock-bottom rate the agent promised you. When you call to complain, the salesperson has moved on, a commission check in the bank account, never to be heard from again.
While it would be nice to think that unethical deals like that were the exception in the payment card industry, enough bad actors have burned enough merchants to sully the name of the industry for decades.
"Our industry has been damaged by the unethical tactics of the few. They have made it difficult for all the other ISOs," says Kevin Jones, vice president for sales and marketing at First American Payment Systems LP, a Fort Worth, Texas-based ISO. "I am constantly offended by their smoke-and-mirrors tactics. They are damaging our reputation and our industry."
Because so many merchants either have suffered at the hands of an unethical sales agent or have heard stories from their business colleagues, many have the idea everyone in the payment card industry is cheating them, Jones says.
Closing Culture
The pressure to close sales at any cost often serves as the catalyst for ethics problems, says Mark Dunn, owner of Hartland, Wis.-based Field Guide Enterprises LLC, the publisher of FieldGuideForISOs.com.
"We are a service industry but if all management talks about is closing, that is step No. 1 down the road to questionable practices," Dunn says.
Most payment card professionals agree that commonly abused scams can result in short-term sales, but they come back and bite ISOs over time. With so many agents making so many sales calls each day, a competitor is sure to come by and reveal your slight of hand. When that happens, an ISO will not lose merely a customer. An angry merchant will share the bad experience with industry associates, potentially endangering an ISO's other accounts.
Although it seems contrary to the way most agents think, companies should walk away from deals that do not work for the merchant, says sales consultant Brian Parsley, president of Charlotte, N.C.-based TrainOne Inc., which offers sales training geared to consultative selling.
"Understand that if you are not the right fit, then the ethical thing to do is send them to the people who are," Parsley says. "Put the customer before the commission. Ethics is not what you say. It's what you do."
Ignorance Is Not Bliss
Most ISO veterans agree, saying customer service and quality products should drive sales, not smoke-and-mirror pricing.
Sales agents should strive to serve as consultants to merchants. But finding the right products for the merchant takes knowledge of the intricacies of pricing tiers and the inner workings of the industry, wisdom that many employers fail to impart to their agents.
"If your training is all about how to close and overcome objections, rather than solving a problem for your customer, then that is problematic," Dunn says.
Often, those poorly trained newcomers commit the most heinous ethical breaches, partly out of ignorance and partly out of desperation for a win.
"There are ISOs out there who are recruiting sales teams, and their attitude is that their sales force doesn't need to know about the industry," says Craig A. Lesser, CEO of Big Bend, Wis.-based LSR Technology LLC, a medical data and payment company, and president of the National Association of Payment
Professionals. "They teach them the wrong way to do it. They get on the street the day they are hired, and they have a sales pitch [but] not a clue how the industry works." The association membership includes merchant-level sales agents, ISOs and vendors.
But that's not to say the rookies are causing all the damage to the industry's reputation. Unprincipled veterans commit a fair amount of outright and willful deception, Dunn says.
"You see people misrepresenting their pricing structures as being lower than what they are paying now-like quoting a supermarket rate to a boutique. It's just wrong," Dunn says. "The other side of that is these people who use the complexity of interchange rates to mislead someone about what they are paying and what they should be paying."
A Profitable Truth
Agents that establish healthy, honest consultative relationships with merchants find prospective clients receptive to well-structured deals.
"The way I say it is to let the clients know up front we are going to make a profit, and, as a rule, they are OK with that because they need to make a profit, too," Jones says. "They understand business, and they understand you aren't going to just give something away. The trick is that, if you don't hide your profits, the business owner will respect that, and you can move forward with a healthy relationship."
Show merchants the Visa Inc. and MasterCard Worldwide rates, and explain why those 1.3% rates other people are promising are impossibilities and are sure to come bundled with hidden fees, Jones says.
As sales schemes and hard-nosed closing tactics become more common, merchants also are becoming shrewder, Dunn says.
"People have become more savvy and sophisticated to these tactics," he says. "Business owners get very uncomfortable when they are put on the spot. There are so many people selling merchant services that if they do something to make them uncomfortable, they kick them out and wait for the next guy."
Parsley says it another way: "They have to like you before they can trust you."
Building trust requires time and an understanding of what the merchant wants.
"There are a good number of ISOs who are trying to do things the right way," Jones says. "They are open with their customers and take a consultative approach. They are the ones, over the long term, who are open and candid and are doing better. It pays off."
Boomeranging Ill Intent
Shady business practices are not just a subject for Sunday-morning sermons. They also could wreck a sales team's bottom line, especially when practices cross the line from unethical to illegal.
"The pinnacle of shame is a [Federal Trade Commission] or attorney general investigation for deceptive sales practices. That is 'game over,'" says Dunn.
News stories or letters to the editor in a local paper follow as a close second in terms of destroying profits.
But even if investigators are not hauling computers out of the office on the evening news, questionable ethics still could pinch the bottom line, Parsley says.
Those upset customers may not stop at dropping your services, either. Irate clients may post complaints on "slam" Web sites, such as RipOffReport.com, where users write screeds about bad experiences with companies. They also can take the old-school tactic of filing a complaint with the Better Business Bureau. Both tactics could mean profit losses for an ISO.
"People will stop doing business with you as you build your lousy reputation," Parsley says. "You may wonder why people will stop returning your calls. You may blame it on others. But if you look in the mirror, you will realize it all comes back to you."
Hiring And Training
Management's culpability starts with hiring practices, Dunn says. "If all they do when they hire is look at people who are forceful to the point of being manipulative, then it is a good bet that those same people will drive the merchant to make a decision that isn't in their best interest," he says.
Often, an ethics breach occurs because management did not properly train the sales team or failed to follow up to ensure the team put that training into practice.
Training should include information about the industry and its complexities, including how to read statements, Jones says. "That way you can take a statement and give honest advice that will add value," he says.
At First American Payment Systems, sales training includes having consultants "hold the hand" of all new agents for the first few sales calls. "That helps them build strategies to become successful," Jones says.
The worst thing a sales team can do is forgive breaches because someone is a nice guy or a good performer.
"The archenemy of ethics is justification," Parsley says. "You can't rationalize it. I know he is a good guy, but if he isn't doing things above board, you need to let him go for the sake of your company."
Giving Them The Hook
The industry is considering punishment for ethical breaches that could include banning some offenders. Chronically unethical sales reps could find their names on a so-called "bad guy" list or black list.
However, liability poses a problem with such a list, Lesser says.
Publishing a list of people with ethics problems would open whoever maintained that list to a flurry of lawsuits and challenges.
Thus, industry associations are proposing an alternative to the black list-a "white list."
Lesser describes the white list as a sort of accreditation or certification from Visa and MasterCard that would require agents to achieve a certain level of training before calling upon merchants.
Until someone creates and maintains such a list, however, ethics will remain largely an issue of self-policing and self-discipline.
"Really, what it comes down to is that if an individual doesn't have the moral courage to stand up and say, 'No. I don't think this deal is right. It doesn't fit my style. I can't do this,' then you are going to have unethical sales practices," Dunn says.
