Hi, my name is James Shepherd and today’s video is going to be a little bit different
than ones I’ve done in the past.
I got a little bit of notes here I’m going to be looking at because I want to provide
a lot of information in a hurry.
I want to talk to you about 5 brands and 5 big changes or disruptions to the payments
industry.
The 5 brands are Square, Stripe, Paypal, Amazon and Groupon.
These 5 companies taken together represent the biggest threat to ISOs and agents.
I get a question a lot of you know, “James, how is our industry going to be disrupted?
Are we the middle man?
How are we going to get cut out?”
Well, if you want to know, you just look at these 5 companies and you find out.
These are the 5 companies that want to disrupt our industry and they are the leaders right
now in what they are doing.
While each of these companies and brands represent the unique threat, they also represent a unique
opportunity.
I want to just talk briefly about that today.
Let’s start with the biggest one.
Let’s start with Square.
Okay, what is the threat?
What is the opportunity?
Well, the threat is obvious.
If you don’t know that Square is a threat by now, you are blind.
Merchants, even those doing $10,000 to $100,000 in volume, they view Square as a viable option
now.
So Square is a direct threat to exactly what you do.
Now what is the opportunity?
What can we learn?
We can learn a couple things from them.
I think number one, we can learn that simplicity matters.
Merchants really love simplicity.
Even in the point of paying more money because of the simplicity and the transparency.
So hopefully that dictates a little bit of your pricing strategy in terms of what are
you offering that is simple.
Secondly, brand messaging can work in the payment processing industry.
But you have to have a value proposition that is simple enough that it can stick in the
mind of the merchant as a brand.
Square has that, right?
2.75% flat rate.
All of us know it.
So do the merchants.
So when they are looking at that you know credit card processing statement.
They are frustrated and they see that they’re at 3.1% effective rate or whatever, in their
mind there is a brand that is positioned perfectly and that is Square and they know Square is
2.75%.
Right?
So that is positioned perfectly.
You can do that.
How is your brand positioned?
What do you stand for?
Is what you are offering, your value proposition, is it simple enough to even work as brand
messaging?
Something to think about.
#2.
Stripe and the growth in E-commerce processing.
Now Stripe represents a very different kind of threat because what’s happening is merchants
that you process for now, more and more of their transactions and their payment processing
is going to be happening online and through mobile apps.
Okay, anybody that thinks that that’s not true is just insane.
I mean obviously that’s going to happen.
It’s already happening big time.
So think about any business.
I don’t care which business it is that you are working with.
They are going to have a large percentage of their revenue in five years that is going
through other things.
It’s going through web applications, mobile apps, all that stuff.
Okay, so because of that Stripe is the company right now that’s taking all that revenue
from you in the future.
So what do you need to do to combat that?
Well, the biggest opportunity is understand E-commerce.
That’s an opportunity right there, but also understand the way that stripe is targeting
developers and web application developers.
They are targeting a totally different group of people that make decisions and then those
people are passing the cost of processing on to the merchant, but they are making that
decision.
So you need to be looking at these strategic partnerships with developer shops, with ISV
channels, all those things and you need to understand how to make things simple.
Again, going back to simplicity.
Developers use Stripe because it is so much simpler to use than all the others and authorize.net
or these other gateways.
So be aware of that, but Stripe is definitely a big one.
#3.
Paypal.
I want to talk about Paypal and the lesson of missed opportunity.
Everybody agrees Paypal was and is the leader in person to person payments.
Right, they pioneered and they won that, but then they got complacent.
Instead of diving down into a niche and taking over things like fund raising and things like
that and even E-commerce, they sat back and now Stripe took over E-commerce.
Gofundme.com took over fund raising for the most part online.
So what happened is Paypal lost a lot of opportunity because they stayed generalized.
What is our lesson that we can learn from that?
Don’t stay generalized.
What is a vertical that you could go after over the next 12 months and you could target
with a specific value proposition and you could really dominate that vertical?
You got to make sure you are going after verticals.
Segment your market and make specific plans to go after different market segments.
That’s going to make you a lot more successful.
#4.
Amazon and the closed versus the open strategy.
Okay, so with Amazon, let’s talk about this for a second.
I wrote down; it is kind of funny.
I put that Jeff Bizos, he seems to have a very simple strategy.
He wants to sell everything to everyone who buys anything.
That is his strategy.
I think that is pretty obvious when you look at what he is doing right now and the different
businesses he is opening.
But how is Amazon really a competitor to ISOs?
They may not look at it that way.
Well, I think Amazon is a competitor to ISOs in two ways.
#1.
A lot of consumers are shopping on Amazon, rather than in local shops, which is hurting
you.
Also, Amazon is trying to convince your retailors to sell their stuff through amazon.com eco
system to consumers, so that they can have online shopping.
Right?
So you need to understand that there is an opportunity here where merchants are looking
to sell their stuff online.
Again, I’m talking about everybody.
Service businesses, funeral homes, you name it.
Everybody.
That doesn’t mean that they are going to sell stuff and ship stuff, but they all want
to process payments either online or through mobile apps.
So think about that for a minute.
How is that going to materialize in your market?
What third part integrations could you get, or opportunities could you explore where you
could do that?
Lastly #5.
Groupon and the big margins that come with increased revenue.
Now Groupon is just kind of I picked that brand.
There are several companies.
There is another one called The Level Up.
It’s pretty cool if you go to thelevelup.com.
There is a lot of companies that fit this description.
What they are doing is they’re going to merchants and saying not hey, we are processing
payments.
They are going and saying, “We are going to help you increase your revenue.”
Now savings is a zero sum game.
If somebody is paying a $100 a month in credit card processing, or even $500 a month, I mean
there is only so much savings you can do.
That is a zero sum game and the merchant realizes that.
When you are talking about increased revenue, that’s not a zero sum game.
You know, if I can tell somebody I can increase their revenue, well, what do I mean?
It could be tripled, quadrupled, whatever you know like it could be massive.
So understand that big margins come when you are able to increase the merchant’s revenue.
Now having said that, I still am a big believer in walking into a business and pitching savings.
That’s the easy way.
You know you pitch savings, dependability, good service, all the normal things that we
pitch to sell merchant services, that’s your foot in the door.
Once you got your foot in the door, walk inside and be ready to have a relationship with that
merchant and help them to understand how to grow their revenue through gift and loyalty
programs and another other ideas you have to help them grow their revenue and understand
that the big margins and the big profits are going to come when you are increasing the
merchant’s revenue because that’s really what they value most.
My name is James Shepherd.
This has been 5 brands and 5 big disruptions in the payments industry.
I hope you have an awesome day!