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This article appears in the June 4, 2009, issue of ISO&Agent Weekly.
BCS Holdings Inc., an ISO based in Arcadia, Calif., is turning to Asia in its quest for new merchants.
BCS has signed an agreement with Hong Kong-based Sino Payments Inc. to develop a merchant sales and marketing program for China and other Asian nations by the end of this year.
The two companies have a mutual goal of building their merchant portfolios, Matthew Mecke, Sino Payments president, tells ISO&Agent Weekly. As an ISO, it is BCS's job to find merchants, Mecke says.
Sino Payments primarily is focused on converting dial-up point-of-sale terminals at physical retail locations to equipment that connects via the Internet to processors, says Mecke. He sees a lot of potential in China because large international retailers and regional multinational merchants are eyeing China for expansion.
The largest Hong Kong retailer represents about 15% of the retail spend and uses POS terminals that sit on top of electronic cash registers, but the terminals are not connected to the registers, Mecke says.
"The conversion [to integrated systems] is in the very beginning stage," he says.
BCS also sees a lot of potential among banks in the region, which often work directly with merchants for their payment-processing services, unlike in the United States, where ISOs generally work directly with merchants, especially smaller ones.
"In Asia-Pacific, a lot of banks, even though they are medium-size, do not offer merchant services," says Pius Pang, BCS president.
Pang sees an opportunity to import the U.S. ISO model to the region, with some modifications. Profit margins may not be as much as in the United States, and Sino Payments will send transactions to a processor in the country where the merchant is located, he says.
Pang likens the state of the merchant-acquiring industry in the Asia-Pacific region, particularly in China, to that in the United States 20 or more years ago, when banks earnestly began to offer merchant services.
"Right now, there are no ISOs helping the banks," Pang tells ISO&Agent Weekly. Pang is projecting that more Asia-Pacific banks will want ISOs' help to become "one-stop" providers for merchant financial services. He expects to have a sales team dedicated to working with banks in the region.
Initially, BCS and Sino Payments will work on building a mutually profitable merchant portfolio, Pang adds.
"We both see a lot of opportunity on the acquiring side in Asia-Pacific," Pang says, citing Columbus, Ga.-based Total System Services Inc. and its 45% ownership in UnionPay Merchant Services, a division of bankcard network China UnionPay and Atlanta-based processor Global Payments Inc.'s activity in the region.
BCS's merchant portfolio consists of U.S. businesses focusing on the Asian community. The ISO has a satellite office in Hong Kong and a call center in China, according to its Web site.
