I’m writing this article in the beginning days of May reflecting on the past 7 weeks from the perspective of a credit card processing executive whose living is made by credit card transactions and ancillary fees – and that living has been dramatically compromised during this pandemic. I have spent the majority of my career in the payments space, having worked with tens of thousands of business principals from the local independent business owner on Main Street to CEOs/CFOs of some of the biggest corporations in America – but certainly you and I have never experienced remotely like this. None of us have!
Some facts that illustrate the volatility of the payments space during the last 2 months:
- Visa Stock Price; 2/18/20 – $211.20; 3/20/20 $146.84; 5/1/20 – $175.57
- MasterCard Stock Price :2/20/20 – $344.45; 3/20/20 – $211.42; 5/1/20 – $268.74;
- American Express Stock Price: 2/20/20 – $344.45; 3/20/20 – $211.42; 5/1/20 – $268.74
And why? Because their earnings are severely affected by decreased spending – and, so are ours. The volatility and valuations of our portfolios have gone down significantly depending on the mix of your portfolio. Some ISOs and agents I have spoken with are down as much as 75%. So how do we adjust for that? And just like my financial planner repeatedly states, asset allocation and diversification are critical to a successful portfolio – and it’s no different and parallels the theme in credit card processing – work with a variety of merchant types (i.e. restaurants, retail, e-commerce, healthcare, non-profits, technology, etc) in order that “your eggs are not in 1 basket”. Spread the reward and certainly spread the risk.
It’s obvious that the economic and human impact of the past few months have been devastating. Rather than look back and live in the past, let’s look forward to create a brighter future for our business and our merchants. We must now set the foundation for our futures by embracing the technological changes in payments and the cultural evolution of our society.
A cashless society – we have heard this trendy term for years; this idea is coming to realization before our eyes. Merchants of all shapes and sizes are encouraging customers to go contactless in an effort to keep the consumer and the merchant’s personnel safe. The idea of touching cash and potentially getting the Virus is real. The concept of contactless payments is critical to understand, more so now than ever.
For those who might not be familiar with the concept, “ contactless payment systems involves using credit cards and debit cards, key fobs, smart cards, or other devices, including smartphones and other mobile devices, that use radio-frequency identification (RFID) or near field communication (NFC, e.g. SamsungPay, Apple Pay, Google Pay, Fitbit Pay, or any bank mobile application that supports contactless) for making secure payments. The embedded integrated circuit chip and antenna enable consumers to wave their card, fob, or handheld device over a reader at the point of sale terminal. Contactless payments are made in close physical proximity, unlike mobile payments which use broad-area cellular or WiFi networks and do not involve close physical proximity”. Some companies claim that transactions can be almost twice as fast as a conventional cast, credit, or debit card purchase. No signature or PIN verification is typically required, making it faster and more efficient for all parties involved. Technologies like contactless will continue to grow for a plethora of reasons, some of which are mentioned above.
Selling During the Virus: As credit card professionals, is it “right or wrong” to be actively calling on merchants to sell credit card processing? In my opinion, at its core, it is morally wrong; however, and I genuinely mean this, now is the time to “educate, educate, educate.” Educate CEOs, CFOs on the hidden fees of accepting payments, PCI, how to protect from phishing, how to set up their online portal (if they do not have one because they have operated as a physical retailer for years), teach them how to use mobile payments using your smartphone.
Have empathy! Put yourself in the shoes of the business owner. What a horrific and unimaginable few months! 30MM people unemployed, completing PPP loan documents, filing for unemployment, making rent checks, employees getting sick with the virus, caring for family members, helping people stay motivated and not depressed when they haven’t left their owns and been social with others for weeks. So much to be done and you want to call to sell credit card processing to a business owner. Are you nuts? You are not if you call with empathy and the goal to teach. Lastly, do not have an ulterior motive because it’s so easy to see through people like this.
Just like you want to earn a valued merchant account, be respectful and understanding of the underwriting process at the processor level? Whether you are using one of the major processors as your backend, or a Super ISO, submit good deals that fit their underwriting criteria. I have seen so many start up companies that are now importing KN95 and N95 masks with 1 month future delivery, low credit scores of the principals, websites with no refund policy that expect to be at Interchange + 10 basis points. It’s not going to happen and it is not fair to waste valued personnel’s time helping with the due diligence process for deals that will just not be approved. During these times, develop relationships with both conventional and high risk processing partners to handle all merchant types
Dream of tomorrow – credit card transaction are not going away, but the space is going to completely transform. Adapt, be respectful to the new normal and continue to be a backbone for your merchants as this is the only way to progress to create real value and ensure your success in our industry.