A Big ISO Seeks to Help Merchants Sort out Myriad Business Systems

North American Bancard, one of the nation's biggest independent sales organizations, has established a new division it hopes will help merchants navigate tricky technological waters beyond payment processing, thereby increasing merchant loyalty. Troy, Mich.-based North American says the purpose of its new Alliance Division is to forge relationships with software developers, value-added resellers, application service providers, financial institutions, specialty merchants, and others desiring integrated payment solutions and ongoing merchant account-management services. The idea is to make life easier for merchants struggling to manage often-complex systems that run their various operations, not just payments. “You've got more and more of these third parties involved, and I think there's more of an opportunity to reach out to these parties,” says Tom Merten, North American's channel manager for alliance development. For example, the order-entry or inventory-management systems many merchants use often have payment-processing capabilities, but “the payments component is always the one that gets the least attention,” he says. That would change if North American and its partners strike up integrated service offerings to oversee a range of operations. “We think there's an opportunity to really tie it together,” says Merten. The division, which is headed by David L. Tepoorten, who has 24 years of experience in the acquiring and ISO industry, is just getting started and doesn't have partners or participating merchants to announce yet. Merten says the initial target clients are businesses serving other businesses. North American's core client is the small to mid-sized consumer-oriented retailer. “There's another level of client out there that has a more sophisticated need?more b-to-b rather than c-to-b,” he says. North American has about 80,000 merchants generating approximately $6 billion in annualized charge volume. North American is not the first big ISO to venture beyond bread-and-butter terminal sales and payment processing as a way to deepen ties with merchants. Earlier this year, United Bank Card Inc. launched a service called Harbortouch POS that includes a point-of-sale hardware package from Toshiba America Inc. running Microsoft Corp. business applications for retailers and specialized programs for restaurants. Besides payments, the systems can handle order processing, inventory control, payroll processing, employee time and attendance, and other functions (Digital Transactions News, June 24). Branching out to address merchants' business operations is almost becoming a necessity as competition in merchant acquiring intensifies. “You really have to help them grow their business,” says processing researcher Adil Moussa of Boston-based Aite Group LLC. “You're not going to be successful any more just providing processing.” To do that, some ISOs are looking to move up the merchant ladder beyond very small retailers to larger ones?but not national chains served by the biggest acquirers?with more complex business needs, creating the possibility for the sale of more services, according to Moussa. “If you can help them smooth out these operational issues then you can be their best friend,” he says. Says Merten: “You try to compete on rate alone, you're not going to be around very long.”