Triumph And Challenge at the ETA

An acquiring group at heart, the Electronic Transactions Association adapts to changing business models and payments technologies. But has it outgrown its base among grassroots ISOs?

Now in its 26th year, the Electronic Transactions Association may be in the midst of one of its most transformative periods yet. The Washington, D.C.-based trade group is comfortably embracing new payments business models and technology companies alongside its traditional acquiring focus.

Formed as the Bankcard Services Association to foster growth and development in the merchant-acquiring industry, the ETA continues to pursue the interests of merchant acquirers. But now, its mission has morphed into one with a broader focus.

With a name change in 1996 to Electronic Transactions Association, the trade group steadily grew its membership and derived the bulk of its revenue from an annual conference. Its membership has doubled in the last four years to more than 500 companies, including the likes of Apple Inc., MasterCard Inc., and Samsung Electronics Co. Ltd., along with vanguards such as Sage Payment Solutions, Omega Bankcard Services, iPayment Inc., and Electronic Merchant Systems.

“The ETA today is the association of the payment-technology industry,” says ETA chief executive Jason Oxman. “Our focus remains on the acquiring side of the ecosystem. That means our members, whether they’re an independent sales organization, equipment manufacturer, one of the networks, a financial institution, or tech company, all share an interest in the merchant’s commerce ecosystem.”

In the past four years, the ETA staff has doubled. Its government-relations staff alone increased from one to four employees to counter regulatory actions like Operation Choke Point, a federal-government initiative to remove bad merchants from the payments system by targeting their processors and acquirers.

Not only has the ETA testified about Operation Choke Point, it produced a guide for the industry to help payments providers better monitor the actions of their merchants.

The Sales Channel

Embracing the tech players is a natural progression for the association, says Dan Neistadt, president and chief executive of Cleveland-based Electronic Merchant Systems.

“That fact is the definition of payments has changed,” Neistadt says. “Part of that is technology-driven. A part of that is new business cases being formed every day. It just makes sense in order for the ETA to survive and truly stay a spokesperson for the industry. They have to embrace that change, no question.”

The tech powerhouses belong to the ETA for the same reason that ISOs, acquirers, and others long associated with payments joined, says Oxman. “At bottom, our core mission remains the same; that is to grow the payments industry,” he says.

Today’s payments industry, however, is not solely magnetic-stripe cards and dial-up terminals, as it was in 1990. What is the same, and remains a powerful tool, is the army of sales agents who call on the estimated 8 million U.S. merchants that already accept credit and debit cards and countless others yet to do so.

“The sales channel, even 26 years later, still is the most effective way to reach merchants,” Oxman says. “Even if you’re Apple or Samsung or Google deploying mobile-payment technology, you still understand the ISO and agent, the processor, the acquirer. That channel is crucial to ensuring merchants understand and implement new payments technology.”

While to some it may appear the ETA has to balance the interests of its traditional acquiring membership base with those of the technology companies, Oxman says that’s not the case. The association’s sole purpose, he repeats, is to foster payments-industry growth.

“ISOs remain our single largest category of member companies,” Oxman says. “They’re at the bottom of why we exist as an organization. We do everything we can to address the needs of the ISO, from government representation and lobbying on behalf of ISOs to guidelines to help manage fraud to events where we bring ISOs together to our committees.”

Missing Ingredient

But one discussion point that has surfaced among industry observers is how the ETA accommodates smaller organizations, and even individuals, in the acquiring industry.

Over the years, regional trade shows have sprung up to serve this constituency. As a mid-size ISO, EMS is a strong supporter of these regional acquiring events, says Neistadt, referring to the four annual conferences put on by the MidWest Acquirers Association, the Northeast Acquirers Association, the Southeast Acquirers Association, and the Western States Acquirers Association. Each of these organizations exists to foster networking and educational opportunities for agents and the ISOs who work with them.

Oxman began presenting at the regional shows a few years ago, and the ETA has steadily increased its presence at the events with sessions and speaker availability.

While supportive of the ETA and its mission, Neistadt says the regional events garner much of his company’s support “because that’s where our customer base is,” he says.

The ETA’s main show, labeled Transact, benefits EMS because of the technology being showcased at it. “Just about everybody is there who wants to sell to the industry,” Neistadt says. The ETA rebranded the event in 2013; it had been the ETA Annual Meeting & Expo.

For Neistadt, the missing ingredient at the ETA is a way to make it easier for the constituency that attends the regional shows to also attend the ETA show. “I will hand it to Jason,” he says. “He is trying and rubbing elbows at the regional shows. He needs to bring that constituency that the regional shows enjoy under the umbrella of the ETA show.”

That sentiment is echoed by others.

Making participation in the ETA more affordable is one important task Oxman and his staff should address, Mary Winingham, president of the MidWest Acquirers board, says in an email.

“Lower the fees to attend the annual conference,” she notes. “Lower the yearly membership fees. We believe that one of the reasons the regionals have seen the success and longevity they have is because of the affordable nature of the events. We realize it’s not ‘apples to apples,’ but the regionals allow individuals and companies to come and participate for a much more reasonable cost.”

The registration fee for the next MWAA event, July 26-28 in Cleveland, is $200, but is discounted to $100 for preregistration. Registration for the Western States event, Sept. 14-15, in Scottsdale, Ariz., is $99 now and $125 at the event. By contrast, individual ETA member fees for Transact16 this spring were $1,345 for full show access and $450 for a trade-show only pass.

For its part, the ETA wants membership to be affordable for all payments professionals, including agents, Oxman says. Although the ETA is a trade association, which typically requires a corporate membership, instead of a professional organization that would have individual members, “we set our membership dues as low as possible,” the ETA says in a statement. “We do offer a $950 annual membership fee for small businesses, including independent agents, which is one of the lowest dues of any trade association.”

That rate entitles the member to a $500 discount on attending Transact and the ETA’s Strategic Leadership Forum, held in the fall.

Some see the ETA’s involvement in the regional events as a significant step toward inclusion. “One of my favorite improvements, that the ETA is already on top of, is actively working with other associations to develop ways to attract smaller ISOs and [merchant-level salespersons], which make-up a greater number of players in the marketplace,” Xavier Ayala, president and chief executive of the Western States Acquirers Association, says in an email.

“Some smaller ISOs and MLSs may not be able afford to attend larger conferences like the ETA and [non-ETA fintech mega-event] Money20/20 but are engaged at the regional conference level, and it makes sense to develop a plan that is inclusive of this large group.”

‘Room for Two Big Shows’

The annual Money20/20 event, too, is a bit of an issue for the ETA, if only because of the attention it draws. Started four years ago, Money 20/20 attracts more than 10,000 attendees. By contrast, Transact16 drew more than 4,000, the ETA says. The standard rate to attend Money20/20 is $3,350, and exhibit hall-only rates aren’t offered.

“Money20/20 is a big event that is very expensive to attend and very expensive to participate in,” Oxman says. “It attracts a lot of people.”

The primary difference between Money20/20 and the ETA’s annual event is that Transact is “designed to advance the business interests of our members as part of the mission of the ETA,” Oxman says. “Our mission is to grow the payments industry.”

Money20/20, however, is a for-profit venture owned by i2i Events Group, a London-based event manager, “that makes money for itself,” says Oxman. Meanwhile, participation in ETA events advances the mission and goals of the ETA, Oxman says.

The events are six months apart, with the next Money20/20 scheduled for Oct. 23-26 in Las Vegas. And Money20/20, while offering a good deal of payments content, is concerned more broadly with financial-services technology. “There is room for two big shows,” Oxman says. “They are much broader than we are in scope.” Money20/20 did not respond to a Digital Transactions request for comment.

Indeed, the ETA’s focus on the merchant-acquiring industry and its accompanying technology is welcomed by many.

“A lot of associations are trying to emulate Money20/20,” says Donna Embry, chief payments advisor at Louisville-based processor Payment Alliance International. “They look at it as the benchmark. But sometimes bigger is not better. You hear people who go to Money20/20 say it’s great, but hard to navigate. You never hear, ‘Look what they did for me, look what I got out of it.’”

Success Indicator

What seems apparent to many for now is that the ETA’s focus is steady. With new technology and new players appearing seemingly by the week, members particularly value the trade group’s educational emphasis.

“The ETA has always served as a strong advocacy group, one that gives its members a powerful collective voice within the payments industry,” says Terri Harwood, chief operating officer at Troy, Mich.-based North American Bancard. “That isn’t going to change. However, with a membership that now numbers some 500 companies and is continuously growing, as well as a payments industry that is continuously and rapidly evolving, I think education will continue to be the ETA’s main focus.”

For Oxman, the success indicator for the ETA is the progress its members make or don’t make. “Are our members doing well in the market? Are they able to grow their businesses? If the answer to that is yes, our efforts are successful,” he says.