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Posts tagged merchant portfolio

Portfolio Rationalization

Once upon a time, a merchant was a merchant was a merchant. The putative strategy in merchant acquiring was simple: board as many accounts as possible – big merchants, small merchants, low risk merchants, high risk merchants, and even new LLCs – basically any merchant with a checking account and an “open for business” sign. The rationale for this was straightforward: payments processing – transaction processing – produced real, actualizable revenue that made merchant acquiring a lucrative endeavor. Read more...

Payments Processing 101 for ISVs, VARs, & MSPs

I recently had the opportunity to attend a Business Solutions Magazine sponsored conference for ISVs, VARs, and MSPs. Though not an owner/operator of the aforementioned business types, I do have a keen interest in the “goings on” of these businesses. I am a consultant and strategic advisor to payments and payments technology companies, and have been on a self-imposed mission to better understand the ISV, VAR, and MSP points of view on payments. Collectively, these business types have become the new darlings of the payments processing industry in its insatiable thirst to sustain growth (and arguably viability) through the value added products, services, and distribution, which ISVs, VARs, and MSPs bring to bear. Read more...

Payment Consultant’s Guide to a Successful Acquisition Strategy

Full version of article originally published in The Green Sheet, 6.27.2016 Edition. Written by Adam T. Hark My firm receives over a dozen inquiries every month from parties interested in acquiring merchant processing portfolios. I’m amazed by this level of interest. Why? The merchant acquiring industry is evolving at a blistering rate, pivoting away from the traditional model where the core product and service offering is just payments processing, and hurtling towards a model where comprehensive, end-to-end business management solutions, usually offered as SaaS platforms, rule the day. Let me be blunt: the traditional merchant acquiring model has crossed the event-horizon and is well on its way towards non-viability. As such, when parties approach me about acquiring a card processing portfolio, the first question I always ask them is “why?” I ask this because there is nothing more important in designing a successful portfolio acquisition strategy than clearly understanding the client’s objective with the acquisition, and given that the acquiring industry is undergoing convulsionary change, it stands to reason that past drivers for merchant portfolio acquisitions aren’t necessarily what’s guiding the market activity today. So what’s driving the interest in portfolio acquisitions right now? What strategies are being employed? Let’s take a look at three of the most common scenarios in today’s marketplace. Read more...

The Economy and Your Merchant Portfolio

Overview

In the build-to-sell world of merchant processing ISOs, I’m sure the question ‘how will the current state of the economy impact the value of my ISO or portfolio’ has been something that most ISOs have been contemplating lately.  In recessions in the past, the merchant processing industry has always taken pride in what it believes is a recession proof business.  Many ISOs believe that when times get tight, consumers shift from cash to credit cards and consequently merchant processing volumes tend to be stable,  sometimes even growing  during recessionary periods.  However, this recession may be unlike any we’ve seen before.  In prior recessions, there was varying degrees of commercial credit available and there was the ability for people to take out home equity lines against their home.  In the current recession, credit is extremely tight, and many people’s homes are worth less money than the value of their mortgage – so there is no possibility to take out a home equity line. Read more...

Go Vertical, Young ISO

This year’s  ETA meeting was very interesting—of the many new and emerging angles we encountered in terms of what were the most sought after acquisitions, there appeared to be one common theme amongst acquisitive ISO’s – niche specialization.  Being an industry insider and dealing with buyers and sellers every day, I have been accustomed to seeing a merchant portfolio’s value enhanced through a broad spectrum of diversified SIC codes, geographic locations, and a large component of traditional  brick and mortar businesses.  Well, times are changing. Welcome to the dawn of enhanced value through NON-diversification, specialization and ancillary products. Read more...

Choosing a Growth Strategy for Your ISO

There are two primary ways to grow your ISO- organically, through your existing sales efforts, and through acquisition.    There is a trade-off between the two strategies: on the one hand you could ratchet up your existing marketing efforts with additional financial investment, and on the other hand you could appropriate additional funds towards an outright ISO or portfolio acquisition.  In contemplating an acquisition, you need to do a significant amount of evaluation, not the least of which is your internal client acquisition costs.  You need to know how much it presently costs your firm to acquire an individual merchant account including all marketing efforts and overhead.  With this information, you can begin to evaluate the trade-offs between expanding your existing sales operation and purchasing an ISO or portfolio. Read more...