Feet of Clay

I just read an "article" featuring a dumb and happy VAR who "now sells card processing" to his clients. He became a referral partner to an ISO who specializes in leaching onto POS makers and VAR's. The article even went on to talk about how the VAR does not know anything about card processing and does not have to. And how he pretty much just refers clients, sits back and makes money.

I'm pretty sure I saw that same company advertising on my local telephone pole. Something about sitting at home all day making $30K a week.

Now, I'm not saying that this VAR-Replaces-Agent model is all bad....but here are a couple of things to make note of when headed this way:

a) As a VAR, when you lock yourself in with a single ISO/processor....you are no longer "processor neutral." If you have a client who is at all business savvy, then he is going to want to shop his rates and services for the best deal. The "best deal" of course is more than just the transaction rate, but the overall service that comes with it. Simply put: be sure you are willing to shack up with one ISO because it's going to be a limiter to your client base.

b) Now this second point is a bit more hypothetical, but its worth asking; assume you've just got in bed with a single ISO who promised you a rainbow and new pony. You spend a year or two pumping their Rolodex full of clients. Then that ISO gets sold or acquired (as they do every day) to some mother-ship who has their own POS solution in-house.

The answer to that scenario is; "hope you saved up your pennies while you were still in business."

And the lesson there is this: It happens.

If I were a VAR or POS re-seller, I'd sure like to keep my eggs in more than one basket. Its better for my clients and better for my own longevity.

This is why we are a "processor neutral" product. Our interest is in serving the merchant and the ISO with a highly flexible solution. The best ISO's don't stick with the same processor forever -after all, card services is a risk managment game. So it's in our best interest to be poised to move with them. At the same time, as merchants become educated and want to explore more merchant service options, then we need to be flexible to be there as well.

As a VAR, you should look for flexible solutions that are profitable and sustainable.

Pass the Buck

You gotta love the card payment industry if no for no other reason than it's an entire vehicle that has found a way to split a penny up to 50 different ways. Its like the 6-Degrees of Kevin Bacon except that everyone who plays gets a piece of Kevin's money just for signing up. Or, like going to church and when they pass the offering plate, everyone goes ahead and skims a quarter, plus .15 cents off the last guy - and another nickel for taking the effort to pass the plate down the line.

This is all fine and good I suppose. It's a large industries model and it works. But it's kind of funny to hear the shock and awe in peoples voice when they hear that we (Carpé Charge) don't get into the stream of collecting residuals. That our fee for the software is what it is and no more. That we really post a single-price and that's actually what we charge. And that the ISO, agent, reseller or otherwise keeps their residuals and their margins right where they planned to in the first place.

It's a sustainable model and it's a model that has an identity uncloaked by smoke or curtains.
Consider this next time you are installing another software payment terminal and then contact us: www.carpecharge.com