In the ever-evolving globalized market, as services transition to eCommerce and online setups – merchants are increasingly relying on ever-expanding cashless payment methods. The plus side to this is that the individuals benefitting the most from these changes are the merchants themselves. The credit card processing business is at the front line of this exciting modernization, capitalizing on this developing and evolving new niche in the globalized market.
The benefits of this career path for anyone interested in how to become a credit card processing agent are not just financial – this industry is a surefire way to implement professional growth and build a sense of accomplishment as you work hand in hand with the innovators.
This article will explore why setting up a credit card processing business is an exceptional opportunity to place yourself at the forefront in the rapidly essential payments industry and how to become a credit card processor.
What does a Credit Card Processing Business entail?
A credit card processing business, a Merchant Service Provider (MSP), or an Independent Sales Organization (ISO) are all titles used interchangeably within the payment processing industry. As a credit card processing business, you are representing an issuing bank to sell their payment processing services.
However, an essential aspect of being a credit card agent is that you must make an upfront investment before the issuing bank officially initiates the credit card processing business into its reseller program. Benefits of doing so include low buy rates – which is the charge for the payment processing service which the credit card agent sells to merchants – something we will dive deeper into below. Another major part of their job is to provide ongoing support to help effectively market the merchant account services.
As always, there is a downside, which in this case would be the upfront investment required to set up the credit card processing business. Often, the issuing bank may not even consider an individual credit card agent for the program, instead requiring the person to become a part of an already existing ISO/MSP.
What are some key traits that make a credit card processing agent successful?
What exactly does being a credit card agent entail? What are you responsible for as a credit card processing business? Well, as with any type of sales agent, the name of the game is to ABC – always be closing. How exactly do you do that?
Approach merchants as respected partners: Credit card agents that can carefully pay attention to and anticipate merchants’ needs are who will be successful. What are the main concerns of the merchants? What can make them successful? Merchants who’ve agreed to have a discussion with a credit card agent in the first place is a great sign and an opportunity to learn more about their business and their pain points. To successfully set up a credit card processing business, entrepreneurs need to address these pain points to ensure a frictionless and hassle-free path to winning over customers.
Be a fast learner: What products are available? What are the types of merchants you may be servicing? Who are the major competitors? What’s Cash Discounting? Is it legal? Will my existing POS system integrate with your merchant account? What is the EMV liability shift? How expansive are the omnichannel payment options with your offering?
What paperwork would the merchant need to fill out? How can the credit card agent support them in the process? The ability to answer these questions, and many others, is the path to how to become a credit card processor. Anyone running a credit processing business should readily have the answers to these questions at their fingertips. That is how you earn trust and get merchants to come to you for honest and reliable solutions.
Never give up: Keep on keeping on, as the saying goes. Be proactive when it comes to expanding your client base. It will be hard to start with, but you must remember you’re playing the long game. You’re in it to win it. Remember to keep checking in and seeing if they need anything. Advise and inform them of changes within the industry. Be honest with them about how what you have to offer is a more suited solution for their needs.
The benefits of having your own credit card processing business
Freedom
The 9-5 model grows increasingly outdated with every passing day. The gig and freelance economy are being prioritized along with passive income so people can focus on doing what they want to do in the time they have.
Setting up your own credit card processing business full-time allows credit card agents to dictate how they operate. You decide which customers to pitch, which industries work in, how hard you work, and how much risk you are going to take on.
Innovation
The payment processing industry has been in a state of innovation since Frank McNamara [MF1] left his wallet at home and was inspired to create the first charge card back in the late-‘40s. Since then, businesses have sought to accentuate trade by removing barriers and synergizing the customer’s journey.
Today, the payments industry experiences immense growth from consumers’ interest in mobile and eCommerce transactions – mainly thanks to the shift to online shopping and contactless payments precipitated by shoppers worldwide. Now, with the implementation of digital wallets accelerating more commerce, including cross-border trade, the payment processing industry is at the center of it all to effect change and profit. The question on many entrepreneurs’ minds now is how to become a digital payments agent.
Be your own boss
Running your own credit card processing business requires effort, discipline, and critical communication skills, among other techniques that you must learn. Like most things, you get back as much as you put in.
Unlike businesses such as franchises or retail companies, the up-front costs of starting your own credit card processing business are comparatively minimal. Resellers of payment processing should expect some initial costs for relationship management and marketing software, travel, and office supplies to get started.
Choose your customers
Your success is directly dependent upon whom you work with. That’s why it’s essential to seriously research your options when deciding which merchant service provider to partner with. Merchants demand an omnichannel payment processing solution – because that is what their customers want.
However, a credit card processing business wanting to build trust and loyalty with merchants will not accomplish this if the merchant service provider they are reselling services for offers prohibitive prices on POS equipment leases and has strong contractual language for long-term agreements with excessive early terminations fees such as liquidated damages.
Choosing the right partner will lead to a credit card agent focusing on building long-lasting relationships. It is essential to partner with a merchant acquirer whose values are in tandem with your own.
Fast-growth Industry
eCommerce is expected to cross one trillion dollars in sales in 2022, according to digital research firm eMarketer[MF2] . That’s just in the US. These flourishing businesses will want to partner with a credit card agent to process payments. Payment processing, online payment capabilities, fraud security, and PCI compliance are just some of the things that you can help them with. Additional consultation on which POS equipment is best for their needs, assisting businesses to implement gift card and loyalty programs, integrating with other workflow tools, or doing something as simple as building a website, are all opportunities to expand the credit card processing business or build more loyal customers.
That is the growth potential of the current market. The potential for growth increases when considering the existing pool of customers unsatisfied with current industry incumbents who have equated size with quality.
Shifts in key demographic
Flourishing opportunities are nurturing the payment processing industries’ economy – where potential lies with both past and future customers. It’s essential to consider the increasing number of people whose preferences have moved from cash to cashless, and businesses refusing to acknowledge this change will suffer. A prime example is the retail industry, where consumer spending has shifted from the physical to online shopping. 67% of Generation [MF3] Z and 56% of Generation X prefer online shopping over going into a store. Data reflect those of consumers between the ages of 25-44 years[MF4] , less than 20% prefer to use cash, with the remainder preferring card or digital payment solutions.
The trend in the data is clear – there is an overwhelming shift that proves that the payment processing industry will only get more lucrative as there is an ever-growing number of merchants and consumers looking to avoid cash. The demand for credit card processing businesses will only grow.
How can you choose the best credit card processing business partnership program?
The credit card processing business program you partner with will determine the amount you earn. An important factor that some credit card agents fail to understand is that building a business on trust and loyalty will always yield a more effective result than threatening merchants with the legalese of long-term non-cancelable contracts.
You want to build your credit card processing business without requiring any long-term commitments from merchants. The product and service level will be the differentiator to win more customers. Will your business offer 24/7 support? Can you easily integrate merchants’ prior POS equipment and offer additional tertiary services? Having these options on offer with transparent pricing makes your job as a credit card agent much more effortless.
The demographic trends and what they mean for the payment processing industry and the fast-growing career are all factors too appealing to ignore. If building meaningful relationships and developing transferrable skills while being rewarded for it in a secular growth industry sounds of interest to you, then carefully consider being a credit card processing agent.
The economics of setting up a credit card processing business
The buy rate is significant. This is the rate offered to the credit card agent from the merchant acquirer, or MSP. The buy rate includes the rate which the issuing bank and the MSP take at a minimum to process payments. It also consists of the fee available to the credit card agent.
A simple example, the buy rate in an MSP reseller program a credit card agent is part of may be 2.0% + $0.10. The credit card processing business can offer the merchant a rate of 2.5% + $0.15. The margin for the credit card agent in this example is 0.5% + $0.05 on every transaction. It may sound small, but if the merchant you signed up processes 100 transactions per day, averaging $10 per transaction, the credit card earns $10 (100*$10*0.5%) + $5 (100*$0.05), totaling $15 from that one merchant, daily.
Imagine how that can be scaled based on your efforts as a credit card agent working with existing leads and expanding the pipeline every day. This is a tremendous opportunity as more entrepreneurs start businesses and as more consumers shift their spending habits towards cashless.
Conclusion
In closing, the merchant services industry is primed for growth, with all the stars aligning for success for anyone looking to start a credit card processing business. The demographic trends, the industry’s growth potential, and the independence of managing yourself and your fate are just too rewarding to overlook. Suppose you want to build meaningful relationships and transferrable skills in an industry with a history of innovation and a flair for entrepreneurship. In that case, you should consider being a credit card agent full-time.
[MF1]Hyperlink to the history of CC industry article??
[MF2]https://www.insiderintelligence.com/content/us-retail-ecommerce-sales-surpass-1-trillion-this-year
[MF3]https://www.statista.com/statistics/242512/online-retail-visitors-in-the-us-by-age-group/
[MF4]https://www.frbsf.org/cash/publications/fed-notes/2019/june/2019-findings-from-the-diary-of-consumer-payment-choice/#:~:text=Individuals%20aged%2018%20to%2025,by%20two%20payments%20per%20month.
Figure 7
