I've noticed some of the most hotly debated topics in the business today are whether we should have some sort of certification for agents/representatives and some sort of regulation for ISO/ MSP's. There are a couple of solid reasons for such a heated debate.
First, margins on processing are disappearing; interchange has steadily gone up the past few years, while the rates at which we sell have remained the same or gone down. One of the major contributors to this is agents that "give away the processing" to get the equipment sale. This is usually the newer or very untrained agent who doesn't understand the business and is only looking at the short term.
Second, equipment margins are dropping every day. In an effort to get more processing accounts, some more established businesses are willing to take little or no margin on the equipment so they write a greater number of merchant accounts each month. With the ability to sell on the internet or via phone and fax our cost of making the sale is greatly reduced.
Third, with the complexity of merchant agreements, leases, and technology combined with the lack of training and standards, our industry is rapidly moving toward greater government scrutiny. This very lack of understanding about the products and services we represent sometimes causes a complete misrepresentation to the merchant. Worst of all it's a misrepresentation with no accountability, because there are so many different people that come together to provide the services.
So, what is it that leads to a great number of people entering our business and being inadequately trained? I believe the answer is that it's FREE! A representative or agent can literally get started with no up-front cost. An ISO or MSP will send a new agent some applications, a basic training manual and then it's selling time. If anything the "training manual" that I'm referring to is really training on how to sell, not training on how the industry operates. If you're being hired as a rep you'll get a couple days of "sales training," a presentation book and you're out the door. From thatpoint on it's all about turning in deals. Many agents and reps get confused, disillusioned and leave the industry. But usually not before signing up a couple of unsuspecting merchants. Even scarier is that some
of these people succeed using these methods and go year after year giving the same "incorrect information" to merchants. It can be because they just don't know or just don't want to know. Hey, it makes life a lot harder when you realize that mid & non-quals, long term contracts, cancellation fees, and non-cancelable leases exist. These people may continue to sell, but their customers sure don't stay around long and they surely can't go back to up-sell new products and services.
The smarter agents read all the agreements and begin to learn the business. As your business grows you must become familiar with self employment taxes, insuring yourself, accounting, legal issues and all the other things that go along with running your own show. With all these responsibilities and no one to really help you with them, many agents or small ISO/MSP have their work cut out for them. It takes a lot of extra time and effort reading industry publications, talking to other industry professionals and yes reading ALL your contracts to truly understand your business.
Why is it so hard? The only thing I can figure out is because it's FREE. What's the old saying "you get what you pay for." Heck you have to go to school and get a license just to cut hair. Also, take a look at all the customers we work with. They lease and remodel stores, buy inventory, advertise, buy or lease equipment, get signs, web sites and countless other things all before they make a penny. Think of the investment it takes to open your average restaurant? Then think of what the likelihood is that they will survive? Now in our business you get started with nothing and make $1000 on your first sale not even knowing what you're doing. Is it starting to sound like it would even be a bargain to pay that $1000 to get started in our business? It sure would help keep out a lot of the riff raff.
Now, let's imagine for a minute that for that $1000 you actually got something. Let's say a comprehensive training course, a demo terminal, access to group health insurance and accounting help? It would still be the least expensive and most profitable business you could ever start. Or would you rather open that restaurant? We all would benefit from more educated and qualified agents and businesses.
Every agreement you and I have ever signed in this business clearly states that we will adhere to all Visa and MasterCard regulations. You know, I've never had a processor actually give me a copy or tell me where to find such regulations. If I hadn't gone out and found them on my own, I'd have no idea what they where? Do you?
I'm a firm believer that the information needed to operate your business and conform to the industry regulations should be provided to you. The agent deserves to be clearly told what they're getting into just as much as the merchant does and yes, the agent or the processor should be willing to pay for it.
In conclusion, someone needs to step up to the plate and do something, before we're giving away our processing, giving away our equipment and under strict government regulation. How much VALUE does our wonderful business have if we just give it away to anyone who will take it?