There are two types of merchant portfolio risk: fraud risk and credit risk. Fraud risk is the risk of uncollectable chargebacks due to criminal or collusive merchant behavior. Fraud risk tends not to be correlated with portfolio size; it is often unpredictable and is managed by monitoring merchant behavior vigilantly and by taking swift action when warning signs Independent sales organizations can use the concerns about security to aid them in their sales and relationships with merchants, according to Derick Belair, president of N-able Technologies, Ottawa, Canada.

Merchants, particularly those with multiple POS terminals and multiple locations, rely more on dependable equipment than ever before. That's why many equipment buyers insist on service level agreements that promise certain levels of "up time" for devices. A verbal promise is no longer good enough.

However, as POS equipment becomes more complex, there are more potential causes of failure. According to Belair, network connections between terminals and servers are common trouble spots. Seventy-five percent of the equipment failures in networked environments are due to configuration settings.

Another way to minimize those problems is to stick with reliable vendors and to avoid selling equipment from different vendors to the same merchants. Equipment from different vendors, even when seemingly very similar, usually won't communicate as easily with servers as the same number of terminals from a single vendor.

"Do your own service audit," Belair recommended. "Make sure that the hardware vendor has appropriate resources to help you when a terminal fails."

So check with the technology vendor's help desk to find out how long it takes to get service and to get questions answered. Rather than taking the vendor's word on quick turnaround, make a few trial calls to the company's help desk about potential terminal problems and solutions. See how quickly the help desk answers the phone and solves those problems.

Even with the best equipment, there will be occasional failures. It's at these times the ISO can make or break its relationship with a merchant, Belair said. If the ISO's service is little more than an answering machine that takes messages with days before return calls, the merchant will end the relationship as soon as the contract permits. If, on the other hand, the ISO quickly responds to a merchant's equipment problems and speeds along equipment repair or replacement, the ISO strengthens the relationship. That type of service means more than price to numerous merchants.