DT, December 2016
December 1, 2016
By Kevin Woodward
Going too deep into the payments thicket could be a sales killer. Smart agents know when, and how, to explain certain terms.
Want a sure way to stunt a sale, perhaps even ensure it can’t be closed? Start talking about payments. Yes, start throwing around the key words and phrases that payments professionals know so well, yet are meaningless to most merchants.
Try lecturing on what a processor is or explaining that services are actually sold by an independent sales organization. Expound on how an ISO differs from a payment facilitator. What’s the difference between contactless EMV and contactless mag-stripe? How does NFC work? Digital Transactions readers understand these terms, but merchants will soon lose patience.
Of course, knowing and understanding essential payments terms is important for those who work with merchants and have to explain how the payments industry works. It’s also important to organizations new to payments, such as software vendors or payment facilitators.
The trick is balancing not only which terms to discuss, but how much to say about them and how to talk about them. The first threshold should be which bits of industry terminology will help a merchant make or save money on payment processing.
Among the universal terms are those related to payment security, especially PCI—shorthand for the payment card industry data-security measures outlined by the PCI Security Standards Council—which comes up quickly in most merchant discussions, observers say.
“If I’m a merchant, I’m going to be thinking about what are the most worrisome [elements] that affect my business,” Donna Embry, chief payments advisor at Payment Alliance International, a Louisville, Ky.-based payments company. “They’re going to care about understanding risk and anything that applies to risk. What should go to the forefront is PCI and understanding PCI and security.”
Indeed, payments security and data integrity are so important that the Electronic Transactions Association, a Washington, D.C.-based trade group representing the acquiring industry, publishes guidelines for risk and underwriting for ISOs and for payment facilitators. The association also publishes a glossary on its Web site.
It’s a lot of information for payments professionals to absorb. “It’s an alphabet soup with additional ingredients thrown in,” says Amy Zirkle, ETA director of industry affairs. “That’s the vibrancy of the ecosystem.”
The glossary is 285 pages of terms as essential as “bank identification number” (the first six digits of a card number) and “discount rate,” which the ETA calls the merchant discount and is the percentage of each retail sale a merchant pays the acquirer for the ability to accept a credit or debit card.
But it also includes terms that dive deep into the industry, like “mid-qual” (a category of interchange downgrades for transactions) and “ECM merchant,” which stands for “excessive chargeback merchant.”
As important as merchant education is, trying to impress a merchant with payments knowledge might misfire unless the merchant is known to care about the subject. “At the end of the day a merchant will just care about what their core business is,” Zirkle says. “It comes down to a merchant understanding what their risk level is. Are they vulnerable? Risk management is cost management and doing all they can to effectively manage their costs and keep their businesses successful.”
The beginning of the sales pitch is where Mark Dunn, founder of Hartland, Wis.-based Field Guide Enterprises LLC, says it is best to determine the merchant’s primary interests, aside from pricing. Dunn routinely leads a series of classes for sales agents at the regional acquiring shows, which include those organized by the Northeast Acquirers Association, Southeast Acquirers Association, MidWest Acquirers Association, and the Western States Acquirers Association.
“I let the merchant tell me what’s important,” Dunn says. “I try not to make the sales call with an agenda. My agenda is not important. What’s important is the merchant’s experience and where they’re at.”
Some merchants may ask about PCI or data security because they’ve heard about it or experienced dealing with a breached credit or debit card, but they may not know much about the subject, he says.
Dunn’s advice is to let the merchant do the talking. “Let them tell you about what’s important to them,” he says. At some point in the conversation the sales agent should mention the importance of payment card security, but it’s not a subject to lead with, Dunn says.
He recalls one sales agent he was tasked with helping who had a strong sales pitch, but couldn’t close sales. The reason: He talked too much. He went into lengthy details about payments, trying to help the merchant understand the value of electronic payments acceptance. The fix, Dunn says, was to teach him to talk less. It sounds simple, but the sales agent had to learn when enough was enough. The training worked, Dunn says.
Integral to that training is educating sales agents about issues that are landmines, Dunn says. “You don’t want to step on it, but at the same time you have to recognize it’s there and you have to deal with it.”
Dunn’s advice is to prepare a simple, direct explanation. It might help to structure the talk as one might in explaining to a child where babies come from. It’s not that the merchant is childlike, but most prospects’ awareness of the process is vague and uncertain. Providing an overly complex response might provoke additional questions.
“Ask an open-ended question so they can give you more information about why they’re asking. You don’t want to assume you know the questions they’re asking,” Dunn says. The inquiry might need only a simple response.
Diving into an unwarranted 10-minute conversation is a sales killer, Dunn says. For example, if a merchant asks about the chips suddenly appearing in cards, the better response is to ask how the subject came up or what’s been the merchant’s experience with it, he says.
Jumping right into a discussion of EMV and how it sets the standard for how credit and debit cards can engage in a two-way communication with a point-of-sale terminal, well, that’s enough to say about that. By asking an open-ended question, the sales agent has a better idea of how to respond, Dunn says.
Payments professionals should prepare a two-to-three sentence explanation of the most common subjects, Dunn says. “A sales rep should write this down and memorize it,” he says. The idea is to offer a quick and succinct response and move on. Then, if the merchant responds, it might be an opportunity to explain how the agent’s services differ from those of competitors.
That’s why it is so important to understand the merchant’s perspective, says PAI’s Embry. Risk, what drives transactions, and how to grow a business are almost always top concerns, she says. “They don’t care about if it’s an ISO or payment facilitator [offering the services],” Embry says. The question to help merchants with is what is payment acceptance going to do for their businesses. “You put yourself in their shoes,” she says.
That means anticipating different conversations with a merchant that operates a flea market, has a retail shop, or operates a taxi fleet. Ideally, the sales agent understands the merchant and what the merchant is trying to accomplish, she says.
Aside from knowing terms associated with risk and security, payments professionals should understand interchange and its role in pricing, Embry adds.
Of all payment-related terms, interchange is among the most complicated and most likely to be misunderstood, in part because of the false ideas that have grown up around it. “I’m still amazed at what seems to be urban legends about interchange,” Embry says. Yet interchange is at the heart of electronic credit and debit card acceptance, she says.
One way to explain how it works is in terms the merchant can understand, such as how they make money in retail by marking up the wholesale prices they buy products at, she says.
Yet other subjects require no explanation. When selling a point-of-sale system, for example, there’s no need to explain what an independent software developer or value-added reseller is. “The merchant doesn’t care,” Embry says. “Why confuse them?”
‘In the Driver’s Seat’
That’s why Dunn says to avoid leading with a technical issue in a sales pitch. “You’re jumping into deep water,” he says. “The merchant may not understand it.”
When addressing such complicated subjects as security and PCI compliance, what might inspire confidence in the sales prospect is a clear statement that the merchant-services company maintains its system so it is compliant with the latest security measures, Dunn says. If a merchant wants to go deeper into that subject, then proceed, Dunn says. Otherwise, understand first what the merchant has experienced, then address the subject from that standpoint.
Sales agents also should monitor consumer trends, Embry says. Where consumers go, merchants will follow. “It moves very quickly,” she says. Indeed, electronic payments is changing quickly, fueled by a trinity of influences: consumers, merchants, and acquirers, Embry says. “Consumers are in the driver’s seat and not the merchants,” she adds.
Most merchants know that, and their payments questions will mostly flow from that fact.
In Case You’re Asked ...
Here’s a sampling of payments terms it’s important to know but not lecture on.
Acquirer’s Reference Number (ARN)
A 23-digit or 24-digit identification number specified by the Visa and MasterCard rules and submitted with the clearing records by the backend processor. It includes the bank identification number (BIN) and the acquirer’s processing date.
Basis Point (BP)
One one-hundredth (0.01) of a percentage point, a measurement usually used in interest rates or discount rates. For example, a change from 1.43% to 1.50% is a change of seven basis points.
Batch Authorization Transaction System (BATS)
A system designed to allow certain merchants—mail order merchants, for example—to batch-process authorizations on their own time schedules.
Downline Load (DLL)
The process of downloading a software application onto a terminal.
Risk Assessment Management Program (RAMP)
A tool for assessing an organization’s current capability to manage and protect against inherent internal and external risks in its issuing and acquiring portfolio.
Vertical Value Added Resellers (Vertical VARs)
Sell to or consult with merchants in specific market segments, such as medical, education, government, hospitality, and financial.
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