From the largest terminal manufacturers to the smallest value-added service providers, it seems everyone wants to entice ISOs with creative financial incentives, sales tools and other programs that try to make it easier and more financially rewarding to earn a merchant's business.
   Whether an ISO is interested in earning modest financial perks or gaining significant competitive advantage, it pays to understand what is being offered by industry stakeholders and what is motivating them to be so competitive in their efforts to support ISOs.

Why all the fuss over ISOs?

   For starters, we all know that terminal manufacturers want ISOs to sell more terminals �well, not just more terminals, but more of their terminals. Preferably their latest terminals, which (in the case of the largest terminal manufacturers) are in some way designed to support multiple applications such as credit and debit as well as value-added applications, like gift card, age/ID verification, loyalty, electronic check conversion, time and attendance, EBT and more.
   Terminal manufacturers have invested heavily to communicate to ISOs the fact that offering a merchant value-added applications is a far more effective way to initiate a sale than offering a merchant a lower discount rate. Few ISOs, however, have translated this knowledge into practice, even though today's fiercely competitive marketplace is crying out for ISOs to differentiate their offerings.
   Now, some value-added providers are getting into the act, working hard to demonstrate how their solutions can help ISOs access accounts they may not have been able to service before. They're turning out more complete solutions in an effort to attract ISO's put off by the added complexity that some value-added services represent.
   U.S. Wireless Data, for example, is offering the Creditel PowerSwipe attachment that converts an off-the-shelf Motorola Phone into a wireless POS device. "ISOs can sell this product into accounts that require a wireless point-of- sale, such as taxis and other outdoor sales environments, and they won't believe it is so affordable," said Dan Lamb, Assistant Vice President of Marketing at U.S. Wireless Data. "The biggest benefit for the merchant is reduced risk, and for the ISO, simplicity." U.S. Wireless Data provides all the support required for the product: getting the phone and attachment, the service, the application download and the printer, to keep the sale simple for the ISO. "We even have an online site with customizable marketing materials ISOs can use to sell this," said Lamb.
   Not all value-added providers have managed to keep things so simple for the ISO. In fact, it is common for ISOs to shy away from selling multi-application terminals because the terminals and value-added applications are more complex and represent new and uncharted territory.
   The distraction that these new products represent can be especially important to smaller ISOs. "Taking on another product is a big decision for us," said Jennifer Brinkman, Managing Partner at Advanced Payment Solutions LLC, an ISO serving middle Tennessee and southern Kentucky. "We have to ask ourselves how much time it takes away from our core bankcard processing focus? Is it right for our target market? Will it appeal to our existing customers that are trying to increase their sales? Will it open the door to new customers?"
   Brinkman acknowledged that one of the biggest challenges for her company, once they find a value-added product that fits, has been getting the commitment level from service providers. "Very often they aren't in tune with the merchant and what it takes to make that relationship solid. Most of them want us to take the ball and run with it and they don't really want to be bothered," she said.
   Many ISOs avoid selling value-added services because they tried to sell them in the past and were let down by unreliable, unresponsive value-added service providers who made promises they didn't deliver, ultimately ruining some of the ISOs' merchant relationships. With no way to determine which value-added service providers are reliable and which aren't, these otherwise willing ISO have opted to avoid selling value-added applications and services altogether�no matter what incentives are offered to sell them.
   Some industry stakeholders, like Transaction Payment Systems, have adopted strict policies to stay in control of the value-added services they offer. "We do EBT, gift cards and debit in-house, but we don't want to be a company that does everything and we don't sub contract," said Peyton S. Hunter, Senior Vice President at TPS. "If we don't have it in-house, we don't do it because we want to stay in control of quality and pricing."
   Not all value-added service providers � those companies offering gift card, time and attendance, loyalty programs, and the like � are bad. Many will go the extra mile to get their services into the hands of merchants. Some terminal manufacturers and processors are requiring value-added service providers to pass specific requirements before they will promote a value-added application through their sales channels. Value-added service providers have every reason to cooperate with these qualification efforts because manufacturers pushing multi-application terminals represent their best chance to gain visibility through ISOs to the merchants.
   These providers are also motivated to work with processors who typically applaud the sale of multiple applications terminals because more applications mean more transactions and ultimately more revenue for a processor. A processor can more effectively (and profitably) beat out other processors by offering merchants unique value-added services than it can by using price discounts. Even better, retention is far higher when a merchant is using value-added applications provided by the processor. It is no surprise, then, that ambitious processors like Vital and Transaction Payment Systems are sharing with their ISOs the points and perks offered by terminal manufacturers and value-added service providers� essentially passing along some or all of the incentives to the feet on the street.
   Now that we have reviewed some of the priorities that are fueling the fire of programs aimed at motivating and helping ISOs, let's review what the top four terminal manufacturers are offering to merchants. As you will see, it pays to take advantage of the different perks and programs they offer.

Lipman USA's NURIT VIP Program

   To reward processors and ISOs that sell Nurit terminals directly to merchants, last year Lipman USA came out with its Value Incentive program called NURIT VIP, a loyalty program that rewards salespeople with points for selling equipment and various value-added applications to run on it. Like a frequent-flyer program, VIP program participants can redeem their points to earn things �in this case gifts or free terminals. Over 1,000 people were registered with the site as of June 1 and more than 50 new companies are signing up each week, according to Lipman.
   Lipman also allows distributors to participate in the NURIT VIP program. Distributors earn 5% of whatever points are claimed for products purchased through them. Distributors can also purchase points from Lipman to use for sales force competitions, to motivate help desk people, etc.
   To get their points, participants must go to the NURIT VIP web site at MyNURIT.com and register. Then, every time they sell a terminal they go back to the site and enter the terminal's serial number along with some other information about the sale, including what Value-Added Service Provider's applications are being activated on the terminal. Lipman has partnered with some of its Value-Added Service Provider partners to award double, triple and even quadruple points for the sale of a terminal running one or more value-added applications, such as time and attendance, gift card, prepaid telephony and loyalty card.
   But rewards are just one component of the VIP program. Starting in August, Lipman will add more than a dozen management tools to MyNURIT.com that VIP participants can use to be more efficient and effective sales people. Lipman hopes these tools � which are normally too costly for small ISOs to buy and use �will give VIP participants a strategic advantage over their competitors.
   The VIP modules include:

• A Customer Relationship Management (CRM) tool that helps ISOs track customer and equipment information, such as a terminal's warrantee and serial number history. Online training tools where participants can learn about the equipment and applications they are selling
• A scheduling tool
• A lead management tool
• Comprehensive sales reporting for ISOs and their managers
• An order entry system
• A web-based download system
• A project management tool that can help ISOs follow the status of a certification or a fix request, for example
• A knowledge-based module ISOs can use to look up information

   "No matter their size, ISOs dont' want to be sold. An ISO wants to be serviced," said Mony Zenou, President and CEO at Lipman USA. "Our VIP program offers ISOs value on many levels by providing rewards in the form of gifts or terminals, and access to sophisticated sales tools and technology that can help them succeed."

Hypercom's Hy-Inside Program

   Not to be outdone, Hypercom came out with its Hy-Inside Web site and reward program shortly after the MyNURIT.com site was unveiled. Like the NURIT VIP program, the Hy-Inside program lets participating distributors and their agents earn points by selling Hypercom equipment and registering with the Hy-Inside site. Hypercom has plans to enhance the site with other services for its members, such as online training to teach distributors how to install terminals.
   Hypercom tries to encourage distributors to sell certain models by offering promotions that give members more points for selling a given product line. For example, Hypercom offers distributors more points for selling a T7Plus than an older model.
   Hypercom has also created a Global Alliance program to help value-added resellers who want to get their value-added applications certified to run on Hypercom terminals.
   "VARs represent a key element of our strategy for growth, and their applications represent one way for the distributors to differentiate themselves," said Eric Duprat, Senior Vice President of Global Marketing and Product Development. "Big processors are now embracing multi-applications and rolling out gift card, prepaid cards and other value-added applications.. We are providing dedicated account managers, developers and marketing help to those partners we feel have the greatest potential to provide value to the merchant with their value-added applications." According to Duprat, Hypercom has more than 100 registered VARs in the United States that are offering value-added applications.

Ingenico's Revenue Sharing Approach

   Ingenico is working hard to make it worthwhile for ISOs to sell multi-application terminals by selecting value-added partners that offer some kind of revenue sharing opportunities for the ISOs. For example, the company has established a partnership with Valutec to offer gift card and loyalty applications on Ingenico terminals, and at the end of July announced that Ingenico achieved a Class A certification with Vital to offer gift card services provided by Valutec. ISOs who sell this service on Ingenico terminals are compensated for placing the terminal and selling the gift card application that runs on it.
   Valutec views partnerships with Ingenico and other terminal manufacturers offering multi-application terminals as vitally important. They rely on the latest multi-application hardware because it's critical to ease of implementation for ISO's and processors.
   "There are only a few multi-application terminals available in the marketplace and Ingenico is one of the companies leading the way," said Jack Lance, President at Valutec, which has over 225 banks and ISO partners servicing more than 10,000 merchants across the country with gift and loyalty card programs. "Some sales reps would rather beat their head against a wall with one bankcard product than sell something new, but I'm convinced that over some period of time the guy on the street needs other value-added services to get the merchant bankcard business."
   "We try to make it easy and financially rewarding for the ISO to pick our gift card service as the way to open doors. Multi-application terminals make it easy to slip a gift card program into an existing terminal, saving the merchant money, time and even counter space. One of the first questions we hear is 'Will it work with my terminal?' so we have to make ease of implementation a priority, not only for the merchant, but also the processor. Our relationship with Ingenico ensures the merchant can have the value-added services he/she wants."
   Ingenico has also partnered with a prepaid phone provider and time and attendance companies.
   "We have aligned with partners who provide revenue share for the ISOs because we know that the sales rep is out there selling and is the one that needs to be incentivized," said Lori Breitzke, VAR Solutions Manager, Financial Systems at Ingenico. "Our partnerships are only with those providers who can provide the best value and best service. We believe that is why Vital chose us first � because they have very high standards for service and support, and our program with Valuetec meets those high quality standards."
   Breitzke said that Ingenico is currently creating its own rewards program, which will go live in the September/ October timeframe. Like other reward programs being offered, Ingenico's program will be managed through a web site and will offer a point-based reward system. In the meantime, Ingenico offers ISOs special incentives for volume purchases, such as, buy 15 get one free, deals.

VAP - VeriFone's Industry Seal of Approval

   VeriFone has taken a two-pronged approach to encourage ISOs to sell more multi-application terminals. One piece offers training and reward programs on a customized scale. The other is VeriFone's Value-Add Program, which not only helps value-added resellers get their applications certified to run on VeriFone terminals, but also makes it easier for processors and ISOs to identify reliable value-added partners who offer applications that run on VeriFone terminals.
   "Rather than developing a broad brush loyalty program like our competitors have, VeriFone is working with ISOs and sales organizations to understand what products they want to introduce, and what inventory they want to move, so we can create programs to help them complement their objectives," said Leah Roscoe, Market Solutions Manager at VeriFone. For example, VeriFone provides training followed by sales contests sweepstakes. These are short duration contests that give away weekly prizes, terminals, money, vacation packages and demo equipment. VeriFone also offers results-oriented incentives to ISOs.
   The VeriFone Value-Add Program began in April 2002 and was created to help the industry identify the best in breed providers for various value-added applications that run on VeriFone terminals, such as gift card, prepaid card, ID verification, check, time and attendance.
   Value-Added Provider participants earn VeriFone's stamp of approval as a reliable partner after they successfully complete a rigorous 5-step program that many providers have dubbed "Boot Camp" according to the Value-Add Program's Director, Patty Colby.
   "The best of breed in Value-Add Providers just got better, it takes a lot of commitment for a VAP to go through this program, as many VAPs have dropped out as have made it through successfully, we've set very high standards for quality, performance and revenue models.
   We hope this helps ISOs and acquirers know which value- added applications and services they can now sell confidently to their merchants," said Colby.
   "Each step in the VeriFone program helps the VAP meet the basic requirements necessary for their application to be a good neighbor in the terminal and for the VAP to offer the service and support merchants and acquirers will need to easily adopt these new services" according to Colby. As of June 1, VeriFone had 24 partners successfully enrolled in the VAP program and at least 15 more anticipated by year-end.
   The VAP designation gives these partners access to VeriFone sales channels as well as marketing support that make it easier for the provider to get in front of ISOs and acquirers of all sizes and needs. These Value-Add Partners include best of breed providers in the time and attendance, employee background screening, check, gift and loyalty, prepaid and age verification segments.

   With so many reward programs, partnerships and perks to navigate, how do ISOs decipher the real opportunities from the hype? One way is to sign up for all the reward programs and take time to stay informed about the incentives each offers so you can use them to your advantage as appropriate opportunities arise. In addition, don't be afraid to stoke the competitive flames between companies offering perks. You may find out that one company will match the incentives offered by another just to keep your business.
   As more and more sales tools are added to the loyalty sites, be sure to check out the tools and consider how useful they might be for your day-to-day sales activities. Make suggestions about what other services and tools should be added to these sites. After all, you can never be too organized or responsive to your customers.