Sales agents who take advantage of industry training to stay current on issues, technology and regulation can safeguard their future in an industry with a shrinking number of employers, observers say.
"Players in the industry are beginning to consolidate," says David Fish, a senior analyst for Maynard, Mass.-based Mercator Advisory Group Inc. And consolidation means fewer ISOs will be hiring agents, but those with the most comprehensive grasp of the industry will place themselves among the most sought-after recruits.
Consolidation usually centers on one or more of four factors, Fish says.
Companies merge when one ISO seeks to take advantage of another ISO's innovative technology, such as its advanced loyalty and rewards scheme or point-of-sale system that enhances security or makes merchants more efficient, Fish says.
Or the buyer may want an ISO's payment gateway that handles card-not-present transactions, its new ways of leveraging mobile devices, the interfaces it has with gaming and social media, or its open-standard platforms that developers can manipulate and customize, he says.
ISOs also sometimes take over a competitor that has a good reputation in a narrow class of retailing or that has developed a niche specialty requiring a specific approach.
A merchant-service provider might specialize in serving liquor stores, for example, a category where selling B2B services such as inventory control could boost business and earn retailers' appreciation, Fish says.
In a saturated market, an ISOs also could grow its business and take advantage of economies of scale by acquiring a competitor in a single deal instead of whittling away at the competition by taking over one account at a time, he says.
Increasingly, investors from outside the industry are seeking to buy ISOs, often because of the opportunity for recurring revenue, Fish says.
