Cover Story

by Lisa Dowling

   With his trademark cigar in hand, Groucho Marks once quipped, "I wouldn't want to be a member of any club that wanted me as a member." Such is not the case with the latest trend in the payment processing industry. In response to an ISO outcry to have their voices truly heard, regional associations have burst onto the scene and are actively recruiting members. NEAA, MWAA, SEAA, WSAA and NAOPP are their monikers. Creating a forum for education, training and networking are their goals.
   What spawned these births? Could it be a reaction to the perception that the leading national association for payment professionals has not stepped up to the plate for the ISO? Are ISOs starting to realize and flex their power with programs of value or are they just creating opportunities to golf and gab?
   To accurately answer these questions, one first has to examine each regional group. Starting in the northeast corner of the United States is the Northeast Acquirers Association, the oldest of the regional organizations. NEAA was founded in 1985 and focuses on a target membership of ISOs and banks from Virginia up north to the Canadian border. Self-defined as a "non-member" association, it actively solicits over 1,500 professionals in the northeast area of the country. Its primary object is "to serve as an educational forum for financial institutions and ISO/MSPs/MLS in the Acquiring Industry."
   To facilitate that mission statement, NEAA gathers and distributes information on the latest technology and the hottest topics in the payment industry as well as new changes to card association rules and regulations.� This not-for-profit association holds various networking events and seminars throughout the year that are funded by vendor sponsorship and minimal registration fees. Their most recent summer seminar was held in Woodcliff Lake, New Jersey on June 8 and was sponsored by American Express, Discover, MasterCard and Visa. Their next event will be their 20th anniversary Winter Seminar in February of 2005 at Grand Summit, Mount Snow, Vermont.
   "NEAA started in 1985 which I believe makes us the oldest running show," says NEAA President Alan Forgione. "Our success is based on regional people working to make our industry better through education and networking opportunities."
   Moving down the coast, we next come to the Southeast Acquirers Association. Like the NEAA, the SEAA is a "non-member" association. According to their website, all those who in the past, at the present time, or are someday looking to participate in the Merchant Acquiring Industry are welcome at SEAA functions.
   The mission of the SEAA is to " provide a regional opportunity for training, education and networking for the Acquiring community." Sound familiar? Its goal is to improve the Acquiring industry as a whole by providing small- to mid-sized ISOs and MLS with affordable access to the latest in industry regulations, information and technology from the leading vendors in the Acquiring industry. For the most part, this goal is accomplished through seminars. For a $75 seminar fee, attendees have the opportunity to learn about the latest information and technology direct from the source. SEAA seminar presenters include the major card networks, processing companies and equipment manufacturers. These seminars also provide education on a broad range of topics, including information vital to operating a business, generating new sales and the latest products to cross-sell to current merchant bases. Their next event, the 2004 SEAA Seminar, will be held in September in Atlanta, Georgia.
   Heading towards the heart of the country, the next group on the list is the Midwest Acquirers Association, founded in 2003. MWAA also boasts a "non-paid" membership. Participation in MWAA events is open to anyone in the electronic payments industry. Like its fellow regional groups, NWAA aims to serve the needs of MLS, ISOs, processors, vendors, banks and financial institutions connected with the bankcard industry.
   Geographically, MWAA concentrates on a constituency within the Midwest, which is roughly defined as the area from Pittsburgh to Denver and Fargo to Dallas. Their mission statement reads similarly to NEAA and SEAA: "Our mission is to provide a regional opportunity for training, education and networking in the Midwest Acquiring community." Do you see a mission statement pattern here!
   How do they accomplish that mission? This group was founded on the belief that it is important to educate the ISO and MSP community with the constantly changing information that the industry dictates. They are committed to delivering that information by involving all aspects of the payment processing community. MWAA emphasizes open communication, question and answer dialog and a level playing field in friendly, professional market competition.
   Paramount to their strategy are seminars and conferences that address current and important industry-related issues. Their annual conference to be held this month in Chicago will offer opportunities for MSPs, MLS, ISOs, banks and vendors to spend a couple of days focusing on industry trends. The MWAA conference is highly cost-effective for all with vendor table space going for under $1000 and attendee registration at $100 (for early registration). Since all vendors get a six-foot table, it is possible for smaller companies to look just as big as larger companies. The groundbreaking MWAA 1st Annual Conference took place last July. Over 400 industry professionals were in attendance and MWAA expects an even greater number of attendees at this year's conference.
   Moving on towards the Pacific Ocean, the next and newest group to join the party is the Western States Acquirers Association. WSAA was established in January of 2004 by a group of respected industry veterans with the vision and intention of meeting the needs of all types of merchant acquirers in their area. These veterans noticed the impact other regional associations were making on the Merchant Acquiring front and decided to bring that opportunity to the Western states.
   Like its fellow groups, WSAA is a not-for-profit, non-membership organization that boasts an independent forum dedicated to keeping Acquirers educated and informed on the ever changing industry environment. As a regional, non-member based organization established to co-exist and cooperate with the other regional Acquiring associations, WSSA hopes to meet the needs of the payment professionals of the western region of the country by providing a substantive opportunity for all facets of the Merchant Acquiring Industry from street level sales reps to agent banks to nation- al ISOs looking for education, networking opportunities and ways to stay competitive and keep abreast of the ever changing environment.
   The WSAA will be calling all interested professionals to join them in San Francisco in November for their inaugural meeting. The plan is to provide educational and training sessions for all attendees as well as an opportunity to meet with leading industry vendors for one-on-one exchanges.
   Not to be overshadowed by the ISO-centric associations, the Midwest ATM Association has also stepped onto the field. This not-for-profit corporation was formed in Chicago in April by three industry executives in response to Illinois' recent legislative changes banning surcharges on ATM withdrawals.
   The current goals of the Association are to promote ATMs and their usage, raise funds for legislative lobbying and to bring together area ATM deployers to gain benefits not otherwise available to small ATM deployers.
   The companies represented by the Association's membership and board currently manage more than 1500 ATM locations. The Midwest ATM Association invites ATM deployers, manufacturers and processors who do business in Illinois to attend upcoming meetings.
   With the express vision of education and training but taking it one step further to the feet on the street, a new and ambitious association has been created � the National Association of Payment Professionals. Based out of Tampa, Florida, this grass-roots organization works on the premise that the ability for a product or service to be delivered to the merchant is dependent upon the merchant level salesperson. For those who know what it's like to sell and service payment products, NAOPP is your voice. While existing associations are geared to product vendors and manufacturers, NAOPP was formed by MLS for their own benefit. NAOPP intends to assist in bridging the gap between the sales force at the street level and the decision makers at the top. NAOPP believes a better educated MLS will deliver better service to the merchant, reduce training costs to the ISO and submit higher quality business to leasing companies and processors.
   That belief is reflected in its mission statement: "This organization shall exist for all those selling in the payment processing industry by providing education, benefits, liaison/representation and certification."
   NAOPP celebrated its first birthday in February of 2004. During its first year, it elected a board of directors to protect the interests of the MLS. Fundamentally, NAOPP is run by its members who elected the board. It was decided that the board of directors voting members must always be made up of a majority of MLS.
   During its inaugural year, NAOPP created a forum where MLS can be recognized. For a minimal $25 membership fee, NAOPP has afforded hundreds of MLS an opportunity to let their voices be heard. On a more practical note, NAOPP offers much needed benefits and education programs for MLS such as low-cost legal consultation and representation, a 401K plan and health benefits (all documented on the organization's website).
   "More than anything else, NAOPP was designed and created for one major purpose � to give a much louder voice to the smaller ones in the industry," says co-founder Steve Norell. "It's all about having a one-man MLS needing help and not having a chance to get his or her point across unless he or she can add it to hundreds of others."
   According to Norell, "We're focused on benefits, accreditation and certification. For example, if an MLS were to go to a large retailer and prove that he is a better qualified professional, he stands that much closer to closing the deal. NAOPP offers certification to MLS and that could mean the difference between gaining or losing a merchant."
   Still in its infancy stages, but gaining momentum, is the NAOPP certification program. It is web-based and available to all members. MLS can get certified by taking an open test online that encompasses over 1,000 industry-related questions and answers and 100 test questions. Once the MLS passes, he or she is awarded a certificate and receives a card stating they are a NAOPP-certified merchant service provider.
   At present, NAOPP holds membership seminars and meetings at the various regional association meetings. NAOPP will next share the spotlight at the October SEAA meeting where it hopes to increase its current membership of 200 by much more.
   "If we can show we bring something to the table to give MLS value, then they will join NAOPP," says Norell. "Down the road, we hope to hold one large annual meeting each year with MLS from all over the country. It won't be oversized booths sponsored by super vendors who will have to pay an arm and a leg. It will just be MLS networking. It won't be like ETA. That's gotten out of hand."
   And therein, perhaps, lies the core of the controversy surrounding the birth of these associations. Could it be the associations versus ETA? Transaction World went to industry consultant, Paul Martaus, to get his take on why these groups have formed, what they are really accomplishing and if the widespread opinion that the ETA doesn't cater to ISOs has fueled this growing movement? What does it all mean to the industry? Are ISOs gaining power? Are they putting together programs of value or just creating opportunities to golf and gab?
   "It's a multi-faceted argument," says Martaus. "There is a perception that although the ETA does try, there are two voices within the ETA. One is the millionaires club and the other is the smaller ISO. ETA is controlled and managed by the millionaires club. Part of their constituency is the guy on the street, but the ones who pay the most in dues and fees are the large ISOs. They are the ones that make ETA run. There is a perception the ETA has lost its focus since they moved to Washington, D.C. which is well off the beaten path for any ISO."
   According to Martaus, what has happened is that the regional associations have crept up to provide a voice for the little guy, the guy who can't get his voice heard among the super powers. But if it is all about speaking out, why don't these voices join together, as NAOPP is attempting to do?
   "There is some truth in saying that regions do have region-specific needs," says Martaus, "As an example, online debit is huge in California. Some other areas are very big in wireless because of technological resources of regional providers. But these are all tactical as opposed to strategic."
   Martaus doesn't see regional associations insulating themselves as much as providing a voice for their specific regions.
   "Look at the SEAA membership for example," says Martaus. "What you will see are people who know each other and compete with each other on a regular basis. Where the super ISOs can get together and fly in to meet each other, the regional guys drive to meet each other. I think there is a need for local interest groups. These regional guys can get together easily and not have to spend a lot of money to fly to Vegas. They meet on a local basis and solve local problems. After all, all politics are local."
   With the associations gaining in strength and numbers, how can ETA compete? Martaus cites their latest programs as ammunition.
   "The ETA is trying to compete with the new regional shows, but their pricing mechanism looks to be preventive in nature," says Martaus. "They want to reach out to MLS since the regional associations, for the most part, are not aimed at MLS but rather the smaller ISOs. On the other hand, ETA's regional show pricings are out of whack. For ETA, it seems it's all about money."
   Another issue that is rearing its ugly head with the advancement of regional associations, and the counterattack by ETA with regional shows, is the growing financial burden on the vendors. Martaus sees it quite clearly.
   "The vendors that provide the bloodline to all these events are getting ready to revolt," says Martaus. "They used to be able to budget their trade show dollars. Now, there are shows every couple of weeks and they're not inexpensive. Vendors are waking up and smelling the coffee and not liking what they smell. They're spending a whole lot of money because as industry leaders, they have to be seen everywhere. At what point will they reach their limit and say no?"
   As regards the positive value of regional associations, Martaus sees it as limited.
   "I don't see an advantage to them yet, other than local voices solving local issues since they don't perceive they can be heard at the national level," says Martaus. "One guy in Temecula, California, with six guys in his office won't get his voice heard at ETA, whereas, a guy with three MLS can wind up being president at the regional level. I don't know if these associations will have any impact. Will they be able to approach Visa? The ETA can't even do that. I really don't see a big impact on a strategic level."

Northeast Acquirers Association

Southeast Acquirers Association

Midwest Acquirers Association

Western States Acquirers Association

National Association of Payment Professionals

Midwest ATM Professionals