Today I’m going to talk to you about how
to choose the right credit card processor, when you are selling merchant services. This is an extremely important decision. I’ve really been interested as I talked
to probably 300 or so merchant services sales people just in the last month or so. I do every year have a big thing where I talk
to a bunch of different people in the industry. I’ve really been interested to learn how
little people seem to understand about this decision. This is an extremely important decision, which
processor that you choose. I have the benefit of being in the industry
for a long time. I’ve consulted for a lot of different processors. I’ve sold for different processors. So I have learned a few things along the way. I wanted to make this mini series. We are going to have six videos here talking
about getting into the industry, choosing the right processor, getting the right compensation,
kind of just all these main building blocks that you need to have in place. I think this is a really important topic. There are four things that you need to understand
in order to choose the right processor. #1. You need to understand yourself. What I mean by that is, are you the type of
person that can sell merchant services? Do you have a problem talking to business
owners face to face? Do you have a problem walking into businesses,
or calling them cold turkey on the phone? Do you not enjoy running numbers? This is a financial services business. If you are like, “I hate math. I hate doing numbers. I hate talking about things like that, detailed
numbers stuff.” I’m not a detail person, but I do like math. I like business in general. I’m a logical person. That helps me in this industry because it
is financial services, so there is a little bit of that involved in it. The idea of looking at an excel spread sheet,
does that scare you to death? Then you either need to take some online courses,
or something because this is not going to be a good match for you. Number one, you need to understand yourself. #2. You need to understand the industry. You’ve got to understand the industry, at
least a little bit. When I talk to some people and they are like,
“Yea, I picked this processor.” Oh, cool, what is their Schedule A cost for
their per transaction fee? They are like, “What do you mean? What is a per transaction cost? What is a Schedule A?” Well, there is really no way for you to make
a good decision about choosing a processor if you don’t even know what a Schedule A
is, if you don’t know what a transaction fee is, if you don’t know what a per item
cost is. Now you don’t have to have the interchange
table memorized. You don’t have to know everything about
the industry, but you do need to have a couple basic building blocks in place and understand
the industry. That is an area where if you feel you are
a little weak on that, let me encourage you to go to and sign up
for a free trial. You can watch all my video courses there. Start with Understanding Merchant Services,
How to Sell Merchant Services. I have a really good one in there. I think it is only an hour or two. It’s about How to Read a Processing Statement. That’s a really good one to help you understand
the industry. It goes through a lot of things. I even talk about compensation in there a
little bit and how that works. You need to have a basic understanding how
residuals work and kind of the core stuff. Understand yourself and understand the industry,
those are the first two. #3. You have to understand the compensation. This does go with what we talked about a minute
ago. You have to understand the compensation. How does it really work? The best way that I found for a person to
really truly understand the compensation structure of a processor is to ask them to walk you
through how they would sell a merchant that does $5000 in volume, $10,000 in volume, and
$50,000 in volume. Those seem to kind of be the breaking points
on most of the compensation plans. If you think you are going to be selling really
small merchants like phone swipers, you could also ask about a merchant that sells $2000
in volume. What I mean by that is have them walk you
through that. Let’s say that I called you right now, you
are talking to a processor and you are like, “I’ve got a business that is processing
$5000 in volume, what kind of pricing would you recommend? How much money would I make up front? What kind of terminal would I provide? Does the terminal cost money? What would happen in that case?” Once you have that, “Would there be anything
different about what you just told me if they were doing over $10,000 in volume?” They are like, “This would be different
and that would be different.” “What about if they were doing $50,000 in
volume?” Maybe you could also say, “What if they
were doing less than $5000? What if they were doing $2000 or $3000 in
volume?” If you understand the basics of the industry,
take 15 to 20 minutes to get them to explain those kind of four options. What if I sell somebody that is under $5000? $5000 to $10,000? Over $10,000? $50,000? What is the comp like? How much do I make? How would you price them? What kind of equipment would I provide? Get the full thing, like you are going to
make that sale. That is a really good set of questions to
ask if you are really trying to understand the compensation program with a particular
processor. That kind of leads us into the last one. #4. You need to understand their value proposition. I’m going to talk to you more about this
in an upcoming episode, where I’m going to talk about how to make money in merchant
services, but I just briefly want to open this up and let you know every processor does
have a slightly different value proposition. There are some I agree with, some I disagree
with, but I would encourage you to keep an open mind about this stuff. You just need to understand it. You don’t need to immediately judge whether
or not their value proposition is evil, or whether it is good, or whatever. Just how does it work? What’s the pitch? When you go to a merchant, you say what exactly? I looked at a company yesterday that has a
really slick gateway. It’s a really nice billing system, some
data analytics in there and I could tell just from looking at that I was talking to a sales
rep. He was asking me my opinion on this particular
company. I was like, “That’s cool. They have a technology value proposition.” I was asking him some questions of like, “How
much does it cost? Is there an extra monthly fee for this technology
and analytics? Is it included?” You need to understand the basic value proposition. Some companies, it’s all about, “We price
really low. We have really transparent pricing, free terminal,
month to month agreement.” It’s kind of the idea of that. If that’s the pitch, if that’s the value
proposition, there is also another side to this value proposition. This is where I think a lot of sales reps
get all screwed up. You have to understand that the processors
are all making money on the accounts. They’ve all found ways to make money on
the accounts. There is no company out there that is like,
“Yes, we are going to pay you a bonus and we are going to pay you monthly. We just don’t want to make any money because
we just love merchants so much we just don’t want to make anything.” That does not exist. I feel like some sales people are like, “No,
you don’t understand, James. I found the company. You wouldn’t believe. They just literally don’t make anything.” Either you are right and they are going to
go out of business in a month, or you are wrong which means you have no idea what you
are selling. Let me explain that. Do you understand there is something called
price increases? If the money doesn’t make sense up front,
you can just raise the price. There are price increases that can be done. There are little extra fees that can be added
in. I’m not saying that stuff is bad. I’m not judging those models. I’m just saying everybody has a model to
make money. You need to understand, What is the value
proposition for the merchant? What is the value proposition for the processor? What is the value proposition for you the
sales rep? What do you make? How do you make that? Why do they pay that much? They pay a huge up front bonus. Why? Is that because they only pay 5% residual
or 10%? “They pay me 90% split.” Okay, what is your Schedule A cost? Do they pay an up front bonus? Do they charge you for equipment? That’s not bad. If you want a 90% split, there you go. You found your processor. Right? If you want a 15% split and a huge up front
bonus, you found your processor. The question isn’t, “Is this processor
evil, wicked, or good?” The question is “How do they make money? How is this good for the merchant? How does it affect you?” Once you understand all three of those things,
you really understand the value proposition, and now you can make a good decision. Having said all that and you are like, “Wow,
James, you clearly know a lot more about this than I do.” I probably do. Do you know why? Because I’ve been doing this for a really
long time and I know like everybody in the industry. All the processing companies I’ve talked
to and worked with and things like that, so if you would like my help, one of the things
I’ve started doing recently now that I am really focused on the training and technology,
is I still want to be able to talk to individual reps and ISOs. One thing I’m glad to do is network with
you a little bit. If you go to and click on find
processor, click on that. There is a form there. Just fill it out. My assistant, Angela, will reach out and schedule
a call for you. You and I can talk for 10 or 15 minutes. I will evaluate the company you are with,
ask you some questions about it. We’ll figure out if I think it is a good
deal. If I think it is a good deal I’ll say, “It’s
a good deal.” If it is not I might say, “Here is another
company you might want to consider. I’ll make an introduction for you.” It’s just a service I like to provide. Let me help you find the right processor. It’s something I can do because I know everybody
in the industry, and I’ve got a pretty good idea of the different programs. I can tell you after talking to about 300
different sales people, the vast majority of them there were some big things they did
not realize about the compensation or the processor they were with, not always a bad
thing, just something you’ve got to understand in order to move forward. We’ll talk more about that. We’ve got episodes coming out every day. They are going to be really powerful for you,
if you are in the merchant services industry to make sure you are choosing the right credit
card processor. My name is James Shepherd. Thanks for reading!

How to Choose the Right Processor – Part 1
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2 thoughts on “How to Choose the Right Processor – Part 1

  • November 7, 2017 at 1:54 pm

    Thank You for the video… Wow I just got an offer from a processing company to work for them. Then you upload this video. I'm contacting you ASAP.

  • February 25, 2018 at 9:14 pm

    How do I find these qualities in a processor? Is there a list of good ones? Can I ask them for this information?


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