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Online Issues Trends Dec07 Feature: Going Vertical
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| Feature: Going Vertical |
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In years past, Independent Sales Organizations (ISO) and merchant level salespeople (MLS) presented themselves as one-stop shops for processing and boasted about a wide list of clients across many industries. Many ISOs, particularly very small shops, still use this as their core business model. Yet, industry observers note that many offices are seeing the advantage of positioning themselves as specialty boutiques by catering to merchants in specific industry segments. These ISOs present themselves as processors that know an industry inside and out and, as a result, anticipate problems and create solutions unique to that industry. While some analysts predict that we will see more ISOs and processors marketing themselves as experts in narrowly defined vertical markets rather than as generalists, there are still many in the industry who are not convinced that this is the right business strategy. Neil L. Randel, president and CEO of First American Payment Systems in Fort Worth, Texas, states that, “Whenever you specialize in a certain industry segment, you immediately limit your universe. Larger ISOs need to spread their merchant base over a wide geographic area so that a regional economic downturn does not affect them too seriously.” Randel goes on to compare an ISO’s merchant base to a personal investment strategy: Most financial advisors recommend investing in a wide range of industries as a risk-avoidance mechanism. He adds that, “We don’t like to see portfolios that are concentrated in a handful of SIC codes.” Download the full PDF |
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