It's 3 p.m. on a Sunday afternoon. The phone rings at an ISV's call center with an incoming call from a merchant that suddenly cannot complete credit card transactions. The agent refers the merchant to its payment processor, whose call center personnel point the finger of blame right back at the ISV. Meanwhile, the merchant is stuck - and is becoming more irate by the second.
In the not-too-distant past, such a scenario was the rule rather than the exception. However, the tides are turning as ISVs and payment processors migrate from an adversarial stance to partnership-based business models that enable them to better-cultivate and maintain merchant relationships. Many of these partnerships also involve independent sales organizations (ISOs) that sell payment processing services to merchants, as well as VARs.
"We're absolutely seeing a true marriage of the software and payment processing worlds," asserts Chuck Riegel, executive vice president, software products and partners for Payment Processing Inc. (PPI).
Software development, configuration and/or deployment comprise the focus of many ISV-processor partnerships. "The closer the technology 'match' between ISVs' products and the payment processing (gateway), the lower the potential for problems" on the merchant front, Riegel asserts. He adds that integrated payment solutions are also easier to sell because they satisfy heightened demand among merchants for applications that enable them to reduce errors in payment data entry, improve reporting capabilities, streamline administrative tasks and enhance training for unskilled labor.
PPI currently teams up with ISVs and VARs to integrate their software offerings with its PPI PayMover transaction processing gateway. Under this umbrella, it provides to its partners free developer kits and integration/certification services, along with complimentary PADSS/PCI validation services. Each ISV, and its respective reseller, is assigned a dedicated account manager to facilitate the software development process; Support for marketing integrated solutions to end users also falls under the partnership umbrella.
This past April, PPI signed a partnership agreement with Uniforce Technology, a retail and restaurant POS solution provider headquartered in El Monte, Calif. The integration of PPI PayMover with the Uniforce application renders the latter more appealing to a broader spectrum of end-user customers, creating new marketing streams and opening doors to new marketplaces, according to Arnold Garcia, Uniforce's vice president of sales and marketing.
A Bundled Approach pcAmerica, an ISV and VAR in Pearl River, N.Y., follows a similar protocol. The company bundles its Cash Register Express (CRE) and Restaurant Pro Express (RPE) POS systems with the networks of three different merchant processors and is preparing to add a fourth processor to the list. Retailers and restaurateurs that install CRE or RPE are not obligated to select these bundled options, and can instead implement middleware as a connection between their transaction processing environment and preferred payment gateway. Nonetheless, they benefit when they go this route, as do pcAmerica and the cadre of VARs to which it sells its software.
"If our POS system 'talks' to the payment processor's network, setup and maintenance become far simpler and typically, the merchant is looking at a lower overall cost," says David Gosman, pcAmerica's CEO.
More significantly, pcAmerica and its processor partners cooperate in handling support issues. Merchant customers that contact the ISV/VAR with a problem are not transferred or referred to partners' help desks. Rather, pcAmerica personnel initiate a conference call between the merchant, the processor and the firm's own experts. A staff of three processor partners adhere to the same procedure should they be the first party approached by a merchant with a problem.
"We're familiar with the processors' issues, and they're familiar with ours," Gosman says. "Finger-pointing and shuffling customers around are obsolete practices. Customers gain the advantage of better service, and the cooperative stance gets matters handled in such a way as to prevent attrition and promote merchant 'stickiness' for all parties concerned."
Baron Unbehagen, executive vice president of marketing and alliances for Postilion Americas, corroborates Gosman's comments, adding that it is critical for ISVs to be willing to work with payment processing entities on configuring and reconfiguring their solutions in an effort to target new segment markets, within and beyond the retail markets. "This has become the key to driving volume in the increasingly competitive payment processing landscape," Unbehagen says.
For example, ISV, Retalix, has configured a combination of its established StorePoint convenience store software application; the company recently introduced Retalix Commercial Fueling module to operate with Postilion Realtime, a payment switching engine that controls the payment, transaction authorization and settlement process in-store and enterprise-wide. The end result is an integrated commercial fueling solution for travel centers and an open systems credit and debit card payment switch for convenience stores. It yields Retalix and Postilion a stronger toehold in the travel center and convenience store segments.
In a slightly different vein, restaurant POS software provider Aldelo has added First Data South and Chase Paymentech Terminal Capture to its lineup of electronic data capture (EDC) processors with which it is allied. "Our expanded certification with Chase Paymentech offers both terminal capture and host capture transactions," observes Harry Tu, the company's CEO. He added that as a result, Aldelo is able to better capitalize on the market for compliant EDC software.
The Sales Differential
The payment processing arena is also seeing the advent of ISV/ processor/VAR/ISO partnerships outside of the software development space. "Many of these new alliances are intended to eliminate a lot of wasted sales effort, eliminate competition and close deals smoothly - which is a boon to everyone involved," says Jeff Riley, CEO of Dinerware, a restaurant solutions ISV based in Seattle.
Dinerware has forged such alliances with payment processors Heartland Payment Systems and First Data Merchant Services, as well as with Fast Transact, an ISO headquartered in Olympia, Wash. In handling prospective Dinerware clients, three in-house sales representatives query merchants about their processing needs and pain points, then refer them to the appropriate processor if they are not already working with another company. Once a processor has been chosen, the company will assist merchants in getting their processing problems handled, going so far as to expedite calls through processors' help desks.
For its part, payment processor Mercury Payment Systems has adopted a model wherein instead of attempting to chart unfamiliar payment processing sales waters, channel players handle the POS portion of sales and pass on payment processing leads to the processor itself. "It's a much better approach, because selling POS and payment processing involve two distinctly different core competencies," asserts Matt Taylor, Mercury's senior vice president of marketing.
Another marked trend, Taylor notes, is the expanding roster of services designed to strengthen relationships among payment processors, ISVs, VARs and ISOs. Mercury's efforts in this area are largely centered on its MercuryPay transaction processing system, which uses its own server, Web services architecture and IP platform. The system is currently used by retailers, grocers/markets/restaurants, theaters, museums and other high-volume merchants.
Mercury's merchants don't pay any upfront costs, do not incur fees for software purchases and have access to 24-7 support and real-time Web reports. They also receive free gift card and loyalty processing and a no-fee application and enrollment process. ISVs are given free software development kits and are encouraged to produce features beneficial to both customers and dealers.
"With these services in place, dealers have a better package to offer merchants and a better chance of getting them onboard and keeping them onboard," Taylor notes.
Meanwhile Cynergy Data Group, a Plantation, Fla.-based ISO and acquirer with 90,000 merchant accounts, strengthens its relationships with VARs partly by operating its own payment processing gateway. It also has its own gift card processing program and will add payroll services shortly, according to Don Hartley, national director of the company's Integrated Payment Systems group.
"It's all in the value you offer to the merchant, and the way you ally yourself with the partners that serve them," Hartley says. "The way to help them is through value-add."
Tony van Seventer, vice president of marketing and products at StoreNext Retail Technologies, a Retalix subsidiary, agrees. "If the service piece is missing, whoever is selling payment processing can forget about having an easy time of attracting merchant customers, let alone cultivating loyalty," he asserts.
van Seventer says several payment processors are partnering with StoreNext to provide improved processing rates on debit, credit, EBT and other payment options to users of its Connected Payments program for independent grocers. Cost-cutting services, such as electronic check conversion, are supported, along with gift card processing capabilities.
It's 3 p.m. on a Sunday afternoon. The phone rings at an ISV's call center with an incoming call from a merchant that suddenly cannot complete credit card transactions. The agent refers the merchant to its payment processor, whose call center personnel point the finger of blame right back at the ISV. Meanwhile, the merchant is stuck - and is becoming more irate by the second.
