Independent sales organizations are using value-added services as profit centers, differentiators, or both, observers say.
Such services include gift cards, loyalty and rewards programs, mobile marketing, remote deposit capture, data-breach insurance, ATM support, check services, cash advances, cash register express-lane systems, and merchant equipment financing.
As a differentiator, one of those services or a combination of them might complete a product offering, giving an ISO a suite of electronic payments to offer prospects, says Don Singer, a senior vice president at EZCheck, a Houston-based provider of electronic check payment, authorization and collection services.
Having a suite of products helps close more credit and debit card acceptance deals because merchants often prefer a single-source vendor to a combination of vendors, Singer says.
Mentioning value-added services in an initial approach to a merchant gives an agent something to talk about other than debit and credit card acceptance, he says.
“Anybody that has been in the payments business for more than a few months has no doubt run into plenty of merchants who are approached many times throughout a week about credit card rates and costs,” Singer notes.
The fifth salesperson to call in a particular week on a particular merchant increases his or her chances of having a meaningful conversation by bringing up value-added services, Singer contends.
Once a merchant relies on an ISO for two, three or more services, switching becomes more difficult, Singer contends. “It makes it tougher for a competitor to replace you,” he says.
Differentiation aside, agents make value-added services profitable when they understand which ones make sense for a particular merchant and which generate the most residuals, Singer says.
For example, remote-deposit capture holds little appeal for a restaurateur who seldom accepts checks, but gift cards that boost his revenue by encouraging new customers to come in seem likely to pique his interest, he says.
Agents who quickly determine what value-added service or services a merchant might appreciate should be on their way to bigger monthly residuals, Singer says.
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