As ISO/MSP's and MLS's we all sell merchant accounts. Some of the greatest buzz in the electronic payments business over the last few years has been in value-added products and diversifying the residual streams. We've readily added products and services such as gift & loyalty cards, check conversion and ID verification among others. What's always amazed me is that with the solid business case behind most of these add-on services, they've remained just that "add-on services". Even though the competition for most of these services is less than in merchant accounts, most of the people I work and meet with still have vastly greater numbers on good old meat and potatoes merchant accounts with equipment. We constantly read articles about how bundling products decreases attrition and sometimes can double or triple our residual income per merchant. So, why is it that most people are still primarily focused on the merchant accounts and equipment? The only thing that I can come up with is that it is still the path of least resistance. Meaning that most merchants know they need it and it's very familiar to them. It's also what we've all been trained to sell and focus on. We all know that change is very hard for most people.
   The next obvious question that I ask myself is what is going to be the next merchant account business? Wouldn't we all have loved to been leasing Zons for $79 with discounts of 4% when interchange was lower than it is today? Well, I tell most people that were in at that time have since bought and sold their businesses many times over. Days are different now. We have companies that are giving processing away at super slim margins and paying upfront bonuses to do that. I'm not whining about competition or declining margins, because I am an optimist. The merchant account business has been and continues to be very good to me. I also firmly believe that no matter how tough the market gets there's always room for the best, and I always intended my group to be in the best of the best. One would have to be stupid not to be keeping an eye out for what could be the next merchant account business.
   I've decided to talk about some products and services that we and some other companies in the industry are selling that just might be the next electronic processing revolution.
   The first is payroll processing. Steve Norell of USMS (U.S. Merchant As ISO/MSP's and MLS's we all sell merchant accounts. Some of the greatest buzz in the electronic payments business over the last few years has been in value-added products and diversifying the residual streams. We've readily added products and services such as gift & loyalty cards, check conversion and ID verification among others. What's always amazed me is that with the solid business case behind most of these add-on services, they've remained just that "add-on services". Even though the competition for most of these services is less than in merchant accounts, most of the people I work and meet with still have vastly greater numbers on good old meat and potatoes merchant accounts with equipment. We constantly read articles about how bundling products decreases attrition and sometimes can double or triple our residual income per merchant. So, why is it that most people are still primarily focused on the merchant accounts and equipment? The only thing that I can come up with is that it is still the path of least resistance. Meaning that most merchants know they need it and it's very familiar to them. It's also what we've all been trained to sell and focus on. We all know that change is very hard for most people. The next obvious question that I ask myself is what is going to be the next merchant account business? Wouldn't we all have loved to been leasing Zons for $79 with discounts of 4% when interchange was lower than it is today? Well, I tell most people that were in at that time have since bought and sold their businesses many times over. Days are different now. We have companies that are giving processing away at super slim margins and paying upfront bonuses to do that. I'm not whining about competition or declining margins, because I am an optimist. The merchant account business has been and continues to be very good to me. I also firmly believe that no matter how tough the market gets there's always room for the best, and I always intended my group to be in the best of the best. One would have to be stupid not to be keeping an eye out for what could be the next merchant account business. I've decided to talk about some products and services that we and some other companies in the industry are selling that just might be the next electronic processing revolution. The first is payroll processing. Steve Norell of USMS (U.S. Merchant Services) has been offering payroll services with merchant services since 1999. He feels it's a "good compliment" to merchant services. Steve stated, and I agree, there are about 5 things every new business must get: Services) has been offering payroll services with merchant services since 1999. He feels it's a "good compliment" to merchant services. Steve stated, and I agree, there are about 5 things every new business must get:

• Bank Account
• Merchant Account
• Telephone
• Payroll Service
• Business Insurance

   Steve says oftentimes the payroll processing residual can exceed the merchant account residual for any given merchant. It's a good value-added service that helps with customer acquisition and customer retention.
   Howard Holiday of Payment Professionals has been offering payroll services for about a year and notices that he can usually save merchants between 15% and 25% off what their current providers were charging. Howard states the two major providers that he usually runs into are Paychex and ADP.
   Take it as you wish but I think there must be something to this trend. Companies like Heartland have developed and are selling payroll services. Heartland is also adding a product on to the payroll services called payroll debit cards. These are either PIN based debit or Visa / MC check cards that are issued to the employee. The employee's paycheck is then direct deposited onto the paycard. In the simplest terms the paycard is a virtual bank account where funds are available at ATM's and merchants that accept PIN based debit. This product is very appealing to companies that are currently writing paper checks to a largely un-banked workforce.
   The revolution that sparked the wonderful processing business we are in came from the conversion of paper draft to electronic data capture. Why? Paper transactions of any type are labor intensive and time consuming, making them expensive and inefficient. Almost all add-on products we have today have come from the elimination of paper, such as check conversion or plastic gift cards. Will there ever be another core business like merchant account processing? Maybe these other services haven't become our core because we haven't let them? The old self-fulfilling prophesy? I guess it doesn't hurt to dream about $79 Verifone 330's and 2% profit margins... and being the first to market with little competition.