COMMENTARY: Time for the ISO Business To Stop Talking And Start Acting

By Steve Norell

I started in the acquiring industry approximately 20 years ago, and during those 20 years have seen and heard just about everything one can imagine about the way our products and services are marketed.

That’s especially true when it comes to deceptive and fraudulent practices. During those 20 years, despite the never-ending discussion of how to stop this madness, nothing has changed. To see that for yourself, just read “Time for the Abuse To Stop,” by Alex Nouri, in the October issue of Digital Transactions magazine.

We all know, and have lost, merchants to companies that make unending telemarketing calls claiming to be the merchant’s current processor. They claim the merchant’s equipment is non-compliant and will incur fines, or that they are so big they can get lower rates from Visa and MasterCard, and so on. The leasing of equipment at ridiculous rates is a story all unto itself.

So here we are, 20 years later, and no one has done anything to fix this mess or seems willing to do so. The card brands clearly want nothing to do with this, and who can blame them? They get our organizations to do all the heavy lifting for them at no cost whatsoever to them.

The bank sponsors don’t seem to care. After all, this is an issue that is far removed from their world. Independent sales organizations are the last ones to care, since in most cases they are the ones engaged in the deceptive practices.

When I first got into this business, the company that I represented told me that this is an unregulated industry, so you can pretty much do whatever you want and get away with it. Yet, to me, regulation is what is needed now to stop the runaway train of bad actors.

Whenever government regulation is mentioned, everyone cries, “Not just no, but hell no.” The famous line is that we don’t need the government in our business. Really? In my opinion, that is just what we need because the industry is never going to fix this mess we are in.

So here are my suggestions:

1. On a state level, there should be a mandatory annual license fee for anyone selling card payments, whether by phone or in person. In Florida, if you trim trees, you need to pay $1,000 per year to the state. This would eliminate 50% of the one-hit wonders.

2. Also on the state level, there should be criminal background checks.

3. On both the national and state levels, we should have continuing education.

4. Ninety days should be allowed to cancel a contract with no penalty. This will allow the merchant to really measure the benefits of making the switch and also allow the former provider the opportunity to show why the new deal is not better.

5. There should be standardized pricing. I know this is a pipe dream, but the only way to measure savings is if everyone is using the same method.

6. Finally, there should be heavy fines for any person or company that violates the rules. I doubt that anyone can name a person or ISO that has been fined by a sponsor bank or the card brands in the last five years.

For years, all we have talked about is the bad merchant-level salesperson, the deceptive selling methods, the constant bombardment from telemarketers, and so on. But what we have failed to talk about is that we have the merchant’s checking account, phone number, home address, state driver’s license and, most important, his Social Security Number (SSN). I have said many times that I have collected, over the last 20 years, probably 10,000 to 15,000 merchant applications. Not all of these merchants are still in business, so having their checking-account details does not really help me. But the one thing that never dies is the SSNs.

In the current environment of security, it never ceases to amaze me how my company and thousands of other MLS/ISOs collect and maintain this info, and yet the government has no idea who we are or that we have this sensitive data. Any one of us could take this info and sell it on the black market, and no one would be the wiser.

So yes, nothing has changed. And do you know why? Because people who are honest and hardworking continue to do nothing other than say, “Nothing has changed.”

Those of us who have the power and connections should go to our state reps and demand that, at the very least, it must be mandatory for everyone to register by way of an annual fee. If we are ever to stay relevant and above board, then we need to do more, and do it today.

—Steve Norell is founder and chief executive of US Merchant Services, Port St. Lucie, Fla. Reach him at steven@usmsllc.com.