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:

1. 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.
2. 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.
3. 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.

Final Thoughts

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!