AI Overview
Merchant Level Salespeople (MLSs) are at a crossroads. As software eats the payment world, successful agents must choose between becoming technical experts or strategic consultants. This guide by Allen Kopelman explains why embracing tech is the only way to survive and thrive in the modern ISO landscape.
Embrace Tech, Ditch the Old Pitch
By Allen Kopelman — CEO, Nationwide Payment Systems
Hey, merchant level salespeople (MLSs) who are still selling like it's 1999, you know who you are. While you're selling processing and terminals, ISOs are recruiting ISVs to sell software. Granted, they aren't paying the kind of splits you've known for many years. They're trying to recoup some of the millions they've invested in subscription service products and high-end POS, which they're selling directly through salaried salespeople.
An ISO that bets the farm on a new POS model isn't in any position to pay out 70, 80, 90 percent residuals to an MLS. We all know that gravy train had to end. When I started in this business in 2001, the going rate for commissions was 50 percent. Over time, as ISOs competed to attract new agents, commissions went up to 70, 80, 90 percent with free terminals and sign-on bonuses.
Even before software began to eat the world and our business, I saw ISO friends get heavily in debt just a few months after launching this type of program, which leads many in the business to question if there's a future for the MLS.
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I believe in the power, relevance and resilience of MLSs, especially those who are knowledgeable about technology and how to sell it. They need to choose the right business model by deciding between Option A where they do sales, installation and support, or Option B, which is exclusively sales. For me, Option B was an easy decision. I chose to partner with a company that owns the software and installs, maintains and supports it.
My partnership with my POS technology provider enables me to focus on getting new accounts. I'm happy to trade my slightly lower residuals for peace of mind and not having to do service calls at one o'clock in the morning, which I remember all too well. I was glad to give up that part of the business so I could focus on selling.
MLSs that fully support SaaS and POS systems can make a good living as skilled technicians. They typically manage training and onboarding, which can be costly and complicated. It takes skill, time and money to install these POS systems. These MLSs need to be knowledgeable about the products so that they can train merchants and their staff, which can take a few days, a week or longer.
Find your differentiator
It's not easy to win merchants away from Toast, Square and Stripe. These companies are selling sticky products, and merchants are sticking around because the product does so much more than process payments. Merchants like to log into their portals where they have a single access to their entire enterprise.
And they like the built-in loyalty, accounting, payroll and customer analytics that come with it. They like being able to run their business from anywhere, using proprietary software with baked-in payment processing.
Many merchants that use self-service and cloud-based systems miss having local service and support. ISOs and MLSs can fill that gap by offering local, personalized service, which gives them a competitive advantage over big tech. ISOs with deep knowledge of a specific vertical industry are also well positioned to compete because they can understand the unique challenges and pain points of merchants in a particular segment.
Choose your model wisely
An ISO recently complained that their MLSs only want to sell terminals and asked me how to get them to sell software. The short answer is to level up commissions by giving independent agents more than a 25 to 50 percent split, especially those who are willing to do the installations, service calls and support.
An MLS recently asked me if I see a future for agents in this business. I think there is no future for agents who expect to get huge residuals from selling countertop terminals. I think the future holds great promise for payment professionals who are willing to adapt, change and learn about technology and industries beyond just payment processing.
AI-powered software is making it easier for merchants to personalize the customer experience, and adoption is growing. ISOs and MLSs need to catch up. With the right technology partner, we can be dealers that provide programming, installation and support or specialists that consult, refer and sell.
Want to know more? Keep reading The Green Sheet and consider following me on LinkedIn, where we can share ideas and support each other.
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FAQ: Frequently Asked Questions
1. Why are high residual splits (70%–90%) becoming less common?
In the past, ISOs competed for agents by offering massive splits. Today, ISOs are investing millions into SaaS (Software as a Service) and high-end POS systems. To recoup these investments and cover the costs of salaried sales teams, they can no longer afford to pay the "gravy train" rates of the early 2000s.
2. What is "Option A" vs. "Option B" for the modern MLS?
Option A: The MLS acts as a full-service provider, handling sales, installation, onboarding, and ongoing technical support.
Option B: The MLS focuses exclusively on sales and partners with a technology provider that handles the installation and 24/7 maintenance.
3. What is the main risk of "Option A"?
Option A requires the MLS to be a skilled technician. It involves costly and time-consuming onboarding that can take days or weeks. It also means being available for service calls at all hours, which can detract from time spent hunting for new business.
4. Why are products from companies like Toast and Square considered "sticky"?
These companies don't just process payments; they provide an all-in-one enterprise portal. Merchants stay because the software handles loyalty programs, accounting, payroll, and customer analytics, making it difficult and disruptive to switch to a different provider.
5. What is the "competitive advantage" an independent agent has over Big Tech?
While Big Tech offers great software, they often lack local, personalized service. Independent agents and ISOs can win by offering face-to-face support and deep knowledge of specific industry verticals that generic cloud-based systems might overlook.
6. Can an MLS still make a living selling only countertop terminals?
According to the article, the answer is no. There is very little future for agents who expect large residuals from selling basic hardware. The industry is moving toward "software eating the world," where payments are just one feature of a larger business management tool.
7. How should ISOs motivate agents to sell software instead of hardware?
The author suggests that ISOs need to level up commissions. Offering a meager 25% to 50% split isn't enough to entice agents to learn complex software, especially if those agents are expected to handle the grueling work of installation and support.
8. What role does AI play in the future of payment sales?
AI-powered software is becoming a standard tool for merchants to personalize the customer experience. Agents who want to remain relevant must adapt and learn how to consult on these technological advancements rather than just quoting processing rates.
9. Why is "vertical-specific" knowledge important?
ISOs and MLSs that specialize in a specific niche (e.g., restaurants, medical, or construction) understand the unique "pain points" of that industry. This expertise allows them to recommend software that solves specific business problems, making the sale about value rather than price.
10. Is the Merchant Level Salesperson (MLS) role dead?
No, but it is evolving. The future belongs to "payment professionals" who view themselves as consultants or dealers. Whether they choose to be technical specialists or sales-focused partners, they must embrace technology to survive.
