By Brandon Banks
In the vast world of business, there are a plethora of specialized positions that play a vital role in how businesses operate, but remain largely unknown. One such role in the merchant services industry — that is both crucial and often misunderstood — is a merchant services agent or payment processing agent.
From the outside, these agents might seem to have an obscure role in the business world. However, a deeper look reveals a vital role that is foundational to the digital economy.
Understanding the Role
What exactly is a merchant services agent? In layman’s terms, a merchant services agent is a sales agent who acts as an intermediary between businesses seeking to process digital payments and the companies that offer those services (i.e. a payment processor, merchant services provider, independent sales organization, etc.).
Imagine for a moment that you’re starting an online and/or brick-and-mortar retail business. In order to be successful, you need to accept digital payments from your customers. In order to start accepting payments, you’ll need a merchant account and other payment services.
This is where a merchant services agent comes into play. An agent will guide you through the process of signing up for a merchant account. This includes:
- connecting you to an acquiring bank that will underwrite your account
- helping you determine what payment processing services and equipment you need
- helping you determine what payment methods you need to be able to accept (e.g. credit cards, debit cards, digital wallets, electronic funds transfers, etc.)
The payments industry is notoriously complicated and confusing. Agents play an important role in making it easy and seamless for businesses to start accepting digital payments.
How Agents Operate and Make Money
Agents function by partnering with merchant service providers, payment processors, or Independent Sales Organizations (ISOs), usually through agent programs. Agent programs help payment service providers reach more businesses that need their products and services. The agents are typically given a sales kit — including brochures, applications, and rate sheets — which they use to sell payments services to merchants.
Agents make money through the transaction fees associated with payment processing. These fees — typically a percentage of the transaction or a fixed rate per transaction — are paid by the merchants to the payment provider. The agent’s share, known as residuals, can come from a variety of these fees, but most commonly from the interchange fee (i.e. the fee paid to the card-issuing bank).
Moreover, agents may also earn money through equipment sales or leases and other value-added services, like point-of-sale (POS) systems, gift card programs, or payment gateway services.
The Economic Potential
Becoming an agent can be an economically rewarding choice. Given that agents earn residuals from each transaction made by their clients, the earning potential can grow significantly as they add more businesses to their portfolio.
Additionally, the ongoing digitalization of commerce means the demand for merchant services is not only strong but growing.
Getting Started and Scaling
Becoming a merchant services agent usually involves partnering with a payment processor or an ISO. Most will provide the necessary training and support to help you get started. It’s critical to choose a partner with a good reputation, high-quality services, and a strong support system.
In terms of scaling the business, the key lies in continuously adding more merchants to your portfolio. This typically involves networking, marketing, and sales efforts. It could also involve specializing in specific niches where you can offer added value, such as a particular type of business or payment technology.
Selecting Processors or ISOs
Agents need to be discerning about the agent program they choose to work with. Every financial institution is different. Key considerations include the following:
- Underwriting Speed and Efficiency — Agents need processors that can underwrite new merchant accounts swiftly and efficiently to ensure a smooth onboarding experience for merchants.
- Support Quality — An ISO or processor with excellent customer support ensures that the agents’ clients receive prompt and accurate assistance when they need it.
- Technology and Equipment — Industry-leading, easy-to-use technology and equipment can make the difference for many merchants’ purchasing decisions.
- Residual Income Structure — The way residuals are structured and how often they are paid out is another crucial factor. Agents generally prefer working with ISOs that offer a higher cut of residuals and more transparent, consistent payout schedules.
Strategies for Merchant Acquisition
In the digital age, strategies for acquiring merchants have evolved. Agents can leverage the power of digital marketing to reach potential clients. This includes the following strategies:
- Search Engine Optimization (SEO) — By optimizing your website for search terms that merchants might use when looking for payment solutions, you can increase your visibility on search engines.
- Content Marketing — Producing high-quality, relevant content on your website can help demonstrate your expertise and attract merchants who are looking for information.
- Social Media Marketing — Platforms like LinkedIn, Facebook, and Twitter can be effective for increasing visibility, connecting with potential clients, and building your brand.
- Email Marketing — Building an email list and sending out regular newsletters or promotional offers can be an effective way to keep your services top of mind for potential clients.
- Networking — Attend industry events, trade shows, and business meetups. Building a direct relationship is often just as (if not more) effective as digital strategies.
Untapped Opportunities for Agents
Today’s economic landscape presents several opportunities for independent agents, particularly in the following areas:
- High-Risk Industries — Many payment processors avoid high-risk industries (such as adult entertainment, CBD and cannabis, gambling, or nutraceuticals) due to strict payment regulations and higher instances of chargebacks. As such, businesses in these industries often struggle to find reliable merchant services. Agents who specialize in these industries can carve out a niche for themselves, if they find the right processor to support them.
- E-commerce — The ongoing digitalization of commerce has opened up numerous opportunities in the e-commerce sector. Niche online retailers, subscription-based services, and digital product sellers present promising prospects for agents.
- Small and Medium Enterprises (SMEs) — These business types are particularly underserved or rural areas and represent untapped potential. These businesses often lack access to sophisticated payment solutions, and agents who can provide these services can make a significant impact.
Winning in the Competitive Arena
In the competitive world of merchant services, agents must differentiate themselves to win business. Here are key characteristics of successful agents:
- Industry Knowledge — A deep understanding of credit card processing, payment regulations, and the latest payment technologies is essential.
- Problem-Solving Skills — Merchants often face unique challenges with their payment processing. An agent who can provide innovative solutions and tools will stand out.
- Excellent Communication — Agents must be able to explain complex concepts in simple, understandable terms.
- Reliability — Merchants want an agent who will be there for them when they need support or assistance. Responding promptly to communications and delivering on promises is crucial.
Enhancing the Merchant Experience
Merchants expect their agent to be not just a service provider, but a partner in their success. To provide the best experience, agents can:
- Offer Comprehensive Support — Be available to answer questions about payments, provide guidance, and resolve issues swiftly.
- Provide Education — Help merchants understand their credit card processing better, including how fees are calculated and how to reduce chargebacks.
- Offer Tailored Solutions — Understand the specific needs of each merchant and offer solutions that fit those needs.
- Maintain Transparency — Be upfront about fees, terms, and conditions of the merchant account to build trust.
- Be Proactive — Regularly check in with merchants, offer new solutions that could benefit them, and keep them updated about changes in the payment processing landscape.
Merchant services agents remain an important link between businesses and payment providers. By taking advantage of unique opportunities, utilizing modern acquisition strategies, distinguishing themselves from the competition, and providing a fantastic merchant experience, agents can become successful in this fast-paced environment.
To make the task of becoming a merchant services agent easier, joining an established program like that provided by Nexio can help steer you in the right direction. Partnering with us will give you access to valuable resources to ensure that your merchants have a world-class customer experience. Don’t wait and take action — become part of Nexio’s agent program today and launch your tantalizing career as a merchant services agent!
FAQs on Merchant Services Agent Program
What is a Merchant Services Agent?
A merchant services agent is a crucial intermediary in the digital payments industry, connecting businesses with payment processing solutions. These agents possess extensive knowledge about various payment systems and guide businesses in selecting appropriate services, whether it’s hardware like card terminals or software solutions. They play a key role in negotiating contracts, ensuring businesses understand and receive fair terms for their payment processing needs. Beyond sales, these agents often offer ongoing support, assisting with system setup, training, and any future issues or upgrades. Essentially, they are advisors who facilitate seamless digital transaction processes for businesses, making them an indispensable resource in the complex world of electronic payments.
How Can One Become a Merchant Services Agent?
To become a merchant services agent, the initial step is to partner with a reliable payment processor or an Independent Sales Organization (ISO). Choosing the right partner is crucial, as they differ in support, commission structures, and service offerings. This partnership is key for receiving training and resources necessary for success in this field.
Once partnered, agents undergo training provided by the processor or ISO. This training encompasses the essentials of merchant services, sales techniques, and understanding of payment processing products, along with industry regulations and compliance. Additionally, agents receive support resources like marketing materials and CRM tools to manage their client interactions effectively.
Building a professional network is also vital. Participating in industry events and connecting with experienced agents can lead to valuable insights and client opportunities. Continuous learning and staying abreast of industry trends and technological updates are essential for providing up-to-date advice to clients.
What are the Key Considerations When Selecting a Processor or ISO to Partner With?
Selecting the right payment processor or Independent Sales Organization (ISO) for partnership as a merchant services agent hinges on several crucial factors. The underwriting speed and efficiency of the processor or ISO is a primary concern, as quicker underwriting enables businesses to commence payment processing sooner, reflecting the efficiency and reliability of the partner.
The level of support offered is another critical aspect. This encompasses not only technical and customer support for merchants but also the support available to agents. A processor or ISO that provides robust support ensures swift resolution of issues, maintaining service integrity and client relationships.
Technological offerings are equally important. The processor or ISO should provide up-to-date and versatile payment processing solutions, including various payment terminals and online payment gateways. This capability is key in attracting and retaining clients.
Additionally, the structure and frequency of residual income payouts are essential considerations. Transparent and favorable terms in residual income, which constitutes a significant part of an agent’s earnings, can be a decisive factor.
How Can Agents Enhance the Merchant Experience?
Agents have a significant role in shaping the merchant experience in the realm of payment processing. By adopting certain practices and approaches, they can greatly enhance the service quality and satisfaction of their merchant clients.
Comprehensive support is a cornerstone in enhancing the merchant experience. This goes beyond addressing technical issues or queries. It involves offering holistic support encompassing every aspect of the merchant’s payment processing needs. This might include assisting with the setup and integration of payment systems, providing guidance on transaction disputes, and offering solutions for operational challenges. An agent’s readiness to offer prompt and effective support at every stage builds a foundation of trust and reliability.
Education on credit card processing is another area where agents can add significant value. Many merchants may not be fully versed in the intricacies of payment processing. Agents can demystify this by explaining the processes, fees, and best practices in a straightforward, accessible manner. This education empowers merchants to make informed decisions and manage their payment processing more effectively.
Tailoring solutions to individual merchant needs is critical. Each business has its unique set of requirements, challenges, and goals. An agent who takes the time to understand these specifics and offers customized payment processing solutions adds immense value. Whether it’s selecting the right hardware, choosing the most suitable payment gateway, or advising on the best transaction fee structure, personalized service can significantly enhance the merchant’s satisfaction and operational efficiency.
Maintaining transparency in fees and terms is essential for a positive merchant experience. The world of merchant services can be complex, and hidden fees or convoluted contract terms can lead to distrust and dissatisfaction. Agents who are upfront about all costs, clearly explain contract terms, and ensure there are no unpleasant surprises foster a more trusting and long-lasting relationship with their merchants
Being proactive in relationships with merchants sets exceptional agents apart. This means regularly checking in with merchants, staying updated on their business changes, and anticipating their evolving needs. Proactively offering new solutions or advice on industry trends can help merchants stay ahead of the curve.