As the times change, so too do our perceptions of what is good and bad. And just as in life in general, this natural course of things holds true in the merchant acquiring industry. What buyers of merchant processing ISO’s and portfolios perceived to be positive attributes just 6 or 7 years ago, no longer holds true…at least not exactly.
As an owner of a merchant processing ISO it is incumbent upon you to be aware at all times of the value you are creating in your organization and your merchant portfolio. Thus, here’s a little primer for your benefit; a list of 5 things you should be aware of in 2020 which directly affect (positively) how a buyer would perceive the value of your ISO and your merchant portfolio.
1) Good Production: All buyers want to see that an ISO is consistently writing new business. This goes to the very core of what it means to be an Independent Sales Organization. If you are not consistently signing up new accounts on a monthly basis, you are not going to command a high valuation in the marketplace. To a buyer, a high quality merchant processing ISO typically writes more than 50 new accounts per month.
2) Direct Sales Channel: 10 years ago, most buyers could not care less as to whether you were writing business through independent, 1099 agents or full time W-2 employees. That is no longer the case. The highest valuations today go to those organizations that primarily utilize direct sales, W-2 employees. Competition is fierce and the best ISO’s out there no longer just sell payments processing, but business management solutions as well. This requires that the sales force is highly trained and closely monitored, and most buyers today believe that this can only be accomplished through the direct sales, W-2 model.
3) Utilization of New Technologies: It is no longer just about payments processing. Merchants today get bombarded by offerings from software companies who have designed platforms which provide comprehensive, end-to-end solutions for any type of business. Their software integrates with payments. If your merchant processing ISO’s idea of embracing technology is limited to the stand alone terminal, you are well behind the times and will inevitably be perceived by prospective buyers as less valuable than your merchant processing ISO counterparts who are embracing these new technologies.
4) Niche Markets: Buyers today perceive ISO’s who have effectively utilized the aforementioned direct sales channel and new technologies to successfully penetrate niche industry verticals as the most valuable. The degree to which your merchant portfolio reflects specialization in niche markets matters greatly. Specialization which leads to niche market penetration is reflective of a higher quality sales channel and at least some leveraging of technologies (which in of themselves can generate substantial revenues beyond just the transactional from payments processing), all of which add value to your merchant processing ISO.
5) YOU!: Remember, when a buyer is looking to purchase an ISO, the buyer is buying the entirety of the business, not just the merchant portfolio. Numbers 1-4 above are all a reflection of your stewardship of that merchant processing ISO. If you are hitting the mark on the items listed above, a buyer is bound to assess your ISO as a high quality property.
