November/December 2016 www.isoandagent.com IF EMV ISN’T SELLING, WHAT IS? Sales of EMV hardware are dropping off. Here’s what ISOs can do to keep sales strong ISO111216_Cover_Final.indd 1 11/8/16 11:20 AM 002_ISO111216 2 11/8/2016 5:25:32 PM Fund and Retain Your Prime Merchants Prime Merchants Demand First Class Rates For a merchant with 687 FICO and 9 years in business: $ $50,000 $55,241 1.10 12-month loan pay back pricing term Contact Opportunity Fund at 408.516.4602 to find out more. For more information visit www.opportunityfundloan.org/partners Opportunity Fund is a U.S. Treasury certified Community Development Financial Institution. Loans will be made or arranged pursuant to Department of Corporations California Lenders License #6050609. 001_ISO111216 1 11/8/2016 5:08:11 PM Inside 11 /12.2016 Cover Story If EMV Isn't ADOBE STOCK Selling, What Is? 30 The U.S. liability shift for EMV is well behind us, but it has not lit a fire under the merchants who have still not upgraded. If they're not spending on EMV, what are they buying? ISOs EMV Cash Advance 06 | Expect More ISO- 18 | Gas Stations Under 50 | Merchant Cash Ad- Vendor Teamups Pressure to Upgrade vance's Allure Hides Risks Independent sales organizations and Gas stations have an extra year to The merchant cash advance market independent software vendors are upgrade their pumps to support EMV, is enticing but turbulent, with a high equally threatened by disruption. but many are moving slowly. What can turnover. Is the reward worth the risk? Does this make them natural allies? the payments industry do to speed things up? Technology Processing 59 | Mobile Wallet Lessons 12 | Chase Gives Walmart Technology from Walmart and Dunkin' Ammo in Its Swipe-Fee Fight 22 | A Decades-Old Payment Walmart and Dunkin' Donuts have separately built their own mobile ChaseNet, a closed-loop system Tech Fights for Its Future payment apps, learning a lot along the developed by JPMorgan Chase, gives ACH is popular for its low cost, but way. Can their experiences help other Walmart something it has long de- this is offset by its slow speed. As merchants? sired: less costly Visa transactions. the U.S. pushes to develop a faster payments infrastructure, will ACH still EMV have a meaningful role? ISOs 16 | How the Payments 61 | To Survive, ISOs Need to Find Allies Industry Failed an Arizona Merchants Grocery Chain The technology world is changing 36 | Merchants Warm to far more rapidly than most ISOs can Bashas' had the best intentions for Surcharging adapt. Rather than get left behind, its EMV migration, having begun its some are seeking allies from other Merchants have long desired a way to upgrade well ahead of the liability shift types of businesses. deadline. But the payments industry offset card fees. Now that stores can could not move as fast, leaving the add a surcharge at the point of sale, grocery chain exposed. what will change? 2 ISO&AGENT November/December 2016 002_ISO111216 2 11/7/2016 4:47:21 PM Play with the Big Boys. Join EMS and leverage the power of the industry leader’s flexibility • Multiple Sponsor Banks (No Good Merchant Left Behind) • Flexible Agent Agreements & Bonus Programs • Industry Leading Products & Retention Tools • Full Marketing Support • Dedicated Sales Support • In-House Leasing, Customer Service, Cash Advance • Key Accounts Relationship Team 1.866.845.6026 emsagent.com 35 Years of Helping Agents Build Stronger Portfolios 003_ISO111216 3 11/8/2016 5:08:15 PM DANIEL WOLFE Editor’s Letter Editor ONE STATE STREET PLAZA, 27TH FLOOR • NEW YORK, NY 10004 EDITOR Daniel Wolfe 212-803-8397 [email protected] CONTRIBUTING EDITOR David Heun ART DIRECTOR Monica Pizzi GROUP EDITORIAL DIRECTOR, BANKING Richard Melville Looking Past the EMV Upgrade [email protected] VP, RESEARCH WE'VE COME A LONG WAY IN THE MIGRATION TO EMV CARDS IN THE Dana Jackson United States, but the journey is far from over. NATIONAL SALES MANAGER, ADVERTISING Hope Lerman The biggest issue seems to be a lack of enthusiasm — for many merchants, 312-475-0649 the world did not end when the fraud liability shift took effect in October [email protected] VP, CONTENT OPERATIONS AND CREATIVE SERVICES 2015, so their motivation to upgrade disappeared. And as consumers adjust Paul Vogel their expectations at the point of sale, the pain points of EMV seem to disap- DIRECTOR OF CREATIVE OPERATIONS Michael Chu pear as well. DIRECTOR OF CONTENT OPERATIONS But whether or not a merchant is EMV compliant, the pace of technology Theresa Hambel GROUP MARKETING DIRECTOR marches on and new payment options invade brick-and-mortar stores and Jeannie Nguyen digital marketplaces. Convenience and security are among the big drivers MARKETING MANAGER of these changes, but loyalty also plays a growing role. Raquel J. Lucas FULFILLMENT MANAGER The landscape is also becoming easier to understand, as early innovators Christopher Onyekaba drop out of the race, creating a more streamlined and comprehensive list CUSTOMER SERVICE 212-803-8500 of options for merchants. [email protected] Even if the U.S. never fully migrates to EMV, it’s clear that technology will continue to improve and the point of sale will continue to be a platform for innovation. The only question is what shape that innovation will take. CHIEF EXECUTIVE OFFICER Douglas J. Manoni CHIEF FINANCIAL OFFICER Michael P. Caruso CHIEF REVENUE OFFICER Marianne Collins EVP & CHIEF CONTENT OFFICER David Longobardi CHIEF MARKETING AND Minna Rhee DIGITAL OFFICER SVP, CONFERENCES & EVENTS John DelMauro SVP, HUMAN RESOURCES Ying Wong © 2 016 I SO&Agent a nd S ourceMedia, I nc. a nd I SO&Agent. ISO&Agent i s p ublished 4 t imes a y ear b y S ourceMe- dia, I nc., O ne S tate S treet P laza, 2 7th F loor N ew Y ork, N Y 10004. F or c ustomer s ervice c ontact u s a t ( 212) 8 03-8500; email: h [email protected]; o r s end c orrespondence t o C us- tomer S ervice, I SO&Agent, O ne S tate S treet P laza, 2 7th F loor New York NY 10004. For m ore i nformation a bout r eprints a nd l icensing c ontent f rom ISO&Agent, please v isit w ww.SourceMediaReprints.com or con- tact P ARS I nternational C orp. ( 212) 2 21-9595. T hose r egistered with the Copyright Clearance Center (222 Rosewood Drive, Dan- vers, Mass., 01923) have permission to photocopy articles. The fee is $10 p er c opy. C opying for other t han p ersonal use or i nternal reference is prohibited without express permission. This publication is designed to provide accurate and authoritative information regarding the subject m atter covered. It is sold with the understanding that the publisher is not engaged in rendering financial, l egal, a ccounting, t ax, o r o ther p rofessional s ervice. ISO&Agent is a trademark used herein under license. 4 ISO&AGENT November/December 2016 004_ISO111216 4 11/7/2016 4:34:07 PM 005_ISO111216 5 11/8/2016 5:08:18 PM ISOS PARTNERSHIPS Expect More Vendor-ISO Teamups To fight back against the disruption, independent sales organizations and independent soft- ware vendors are joining forces. BY DAVID HEUN hen V isa o pened sent the proverbial best of times and ing common practice for them to seek its network to third- worst of times. partners they might not have considered party software de- The trend is good because there are to be allies in the past. velopers for the first far more opportunities for partnerships But they also face an ongoing threat. time in its history and deals; it is bad because having many “As the networks and ISVs become earlierW this year, CEO Charlie Scharf choices isn’t the same as making the more sophisticated, the gateway com- said his company was going after a right choices. panies and ISOs become less valuable,” “staggeringly large” opportunity. “The days of an ISO just dialing for Robshaw said. “While we use a couple Now, independent sales organizations dollars and standing on their own as an gateway companies, we primarily tie and independent software vendors are independent solution are about over,” directly into one of the leading process- equally threatened by disruption, mak- said Rick Robshaw, CEO of Club Prophet ing networks.” ing an alliance a logical — i f uneasy Systems, a software vendor providing In an example of the types of ISO- — step for both groups. point of sale, management and food/ vendor partnerships possible, Club It’s a quickly changing environment beverage software and services to the Prophet works with Linked2pay, In- up and down the payments food chain, golf industry. tegrity Payment Systems and TSYS especially for the ISO and ISV opera- ISOs understand that their traditional for the majority of its clients, but also tions. They may find the current fast role in merchant acquiring has changed with gateways Phoenix and Shift-4 for pace of payments technology to repre- because of technology, and it is becom- niche markets. 6 ISO&AGENT November/December 2016 006_ISO111216 6 11/7/2016 4:55:38 PM Reduce churn and grow your restaurant portfolio. How? With Upserve’s Agent Program. • Increase average deal size • Sell on value • Reduce customer churn • Capitalize on repeat business • Dedicated agent support team We know that restaurateurs don't want just another credit card processor. But what they do want is a technology that can help them grow their business.