In The Trenches
Is Competition Killing Our Business?

by Steve Pavent

   One of the biggest concerns of the smaller sales office and the independent representative is the ever increasing competition in our business. As more and more people enter our business and economic growth has slowed, the amount of people clamoring for the attention of fewer merchants has increased. Recently one of my sales reps, just returned from the war in Iraq, told me that he felt the most dangerous place in the world was standing in the parking lot of a new merchant with an "opening soon" sign hanging in front. He felt the odds of being run down by the wave of credit card representatives, charging in to set the business up with a merchant account, was far greater that being hit by an Iraqi bullet.
   On one side we have Joe Equipment who is selling at 1.49% and .20 cents so he can lease a terminal for $59.99. Joe will tell you just about anything you want to hear so you'll purchase or lease his terminal. Joe probably works with an ISO paying upfront rollover bonuses or pre-purchasing his residuals. Joe is always selling and going! The merchant should never expect to see Joe again after the initial sale. Although he's making a decent living, he has to keep working week after week to make new sales and keep the cash flowing.
   On the other hand we have Mary Residual. Mary has been in the business for a while and she wants larger volume, more stable accounts. She wants to build her residual and she's willing to lease a terminal for $15.00 to get it. She's selling her accounts with margin, and she will take care of these customers because she wants to keep them. Mary probably works on a revenue sharing model and she just needs to keep her merchant attrition down to continue to make a nice living.
   We also have Sam Hybrid and he's a little of Mary and a little of Joe. His equipment and processing is priced fairly, but he'll go to cost on equipment or processing if he needs to! If there's some sort of profit in the deal he'll take it!
   Of course we all know that when we go to see the Jane Customer she'll tell us "I can get processing at 1.49% and a terminal for $19.00." But she won't tell you that it's two different people and she definitely won't tell you, because she surely doesn't know, is what are all the details associated with the teaser pricing, terms of the contracts, cancellation terms, additional fees of mid, non qualified, batch, annual, network, interchange and all that juicy stuff. Renewal and transfer terms of the lease with all of the taxes, insurance and other fees also elude her. Jane may think that a terminal is just a terminal but as we all know, or at least we should know, different terminals are appropriate for different customers. Jane may be interested in recurring ACH billing, check services, gift or loyalty cards, prepaid products, medical insurance billing or any of the many services that make up our electronic processing business.
   So where am I going with all this? Well let's look at the word competition and a thesaurus and we'll get words like; challenge, race, match, game, fight. Now let's look at who wins or does best in challenges, races, matches, games and fights. Normally it's the people who are the trained the hardest, know the most, work best as a team. How many hours a day do you think Tiger Woods or Lance Armstrong practice? How much do they study the sports of golf and cycling? It's no different in our business. Sure there are a lot of players and there always will be. But there's always room for success if you know and practice your craft. I can't tell you how important it is to read and understand the terms and agreements that your customers will enter in to. Work at improving your time management and people skills. How much competition you feel is game. You can complain and just lie down and die, or you can be better. The person who complains would be better suited putting all of that energy into being a more fierce competitor. This is America­ we are a capitalist country. So the next time you feel threatened by competition remember that capitalism is simply survival of the fittest and is the ultimate competition.