From the Paris runways in spring to the New York runways in fall, fashion trends can be readily seen and followed. When it comes to independent sales organizations, the latest trends are found year round on the streets of America's retail marketplace.
   The buyers who walk those streets are sales agents eager to stay ahead of the curve with best-of-breed product and services. The designers who court those buyers are manufacturers, processors, vendors and related service providers, all vying for center stage and solid sales. What did they showcase this past year? What look are they creating for the next year? And most importantly, which are finding their way into the business wardrobes of ISOs?
   Transaction World recently hit the payment processing runways and posed these and other questions to leading designers and buyers. In this first of a two-part series, here's what the buyers had to say on what's hot, what's not and where the industry may be heading. The second part of the series (appearing in the May 2003 issue of Transaction World) will highlight the designers' observations and expectations. The "buyers" include Retriever Payment Systems, Total Merchant Services, Certified Merchant Services, Electronic Data Resources, Advanced Payment Systems and International CyberTrans. The "designers" interviewed include Hypercom, VeriFone, Global Payments, Global Tech Leasing and First Data Corp.
   One company that has been sitting in the front row for years and closely watching style and trends is Retriever Payment Systems. Headquartered in Houston since 1986, this unique ISO exemplifies successful trendsetting.
   In response to the first question posed as to the number of new ISOs in 2002 and what trend that figure might suggest, Retriever was hard pressed to give an exact number‹as were all companies interviewed. This is one figure that everyone wants, yet no one can get a hold of.
   "We haven't seen a trend towards more ISOs popping up in 2002," says Joe Natoli, Executive Vice President/Director of Retriever. "We tend to call every sales organization that gets in business an ISO and that's a misnomer. Actually registered this past year, there were probably less than a half dozen with any major experience."
   Natoli cites a number of reasons for the trend toward fewer rather than more new ISOs, including the world economic climate, a slow down of consolidation and the shrinking number of merchants ­ merchants who are becoming savvier.
   "Merchants are more educated," says Natoli. "There are publications available today that weren't around years ago. What appears to be a complicated industry is becoming a lot easier to understand. Now that the merchant is more educated, he's easier to sell to. We don't have to sell the undefendable."
   Retriever sales for new merchants reflect that new merchant attitude. In 2000, their merchants numbered 70,000. That figure jumped to 80,000 in 2001. This past year, the increase was not as substantial.
   "We had great growth in 2002, but not like in the past," says Natoli. "We probably added between 20-25% new accounts, as compared to a 30% increase in past years. We started to notice the trend towards a softening of the market back in 2001."
   Is there a softening trend when it comes to hardware sales as well? Natoli sees a shift from quantity to quality.
   "Hardware today is being complimented by multiple software applications," says Natoli. "They enable product and service offerings that didn't exist years ago. You've got to feel the pain of the hardware manufacturers. They are a commodities supplier and their price margins are pennies apart. They're now getting a breath of fresh air. New products like gift, loyalty and truncation are giving them a shot in the arm. I think it affects the marketplace in a positive way. The big entities have to make their numbers and they did it or didn't do it last year by adding auxiliary product. Bottom line revenue may have grown but non-core area products are making the difference. Anyone who has any substantial plan is focusing on peripheral products that are becoming primary."
   With the trend towards alternative product offerings, it would follow that alternative ISO compensation offerings are being showcased as well, or are they? Retriever sees a continuation of the standard programs as well as an emerging trend towards the not so standard.
   "Bigger ISOs are asking for and getting cost plus compensation programs," says Natoli. "Our industry was geared toward a buy rate and the sales rep would get 100% over that. The focus on rates has brought down our margins. Our good sales agents and our good merchants become our competitors' best prospects so we work like heck to keep them. Like the manufacturers, sales organizations have felt pain as well because their margins are shrinking. A lot of industry leaders are going towards ­ ŒHere's my cost, lets work on a percentage above it.' You're going to see a lot of that next year."
   Natoli sees buy rates as becoming a commodity, with confusing aspects as regards new offerings.
   "Traditionally VISA and MasterCard didn't have a trans-action fee," says Natoli. Now they have substantial fees. Interchange rates are published and the confusing part is dealing with those transaction fees. Some add it to the back end. Hidden in other charges, it confuses sales groups. When you look at these cost plus programs, they are actually charging more than a straight buy rate program. They're charging a percentage of something over cost with a bunch of other fees. My advice to the sale rep is to hire yourself a good consultant and let them do due diligence to review the compensation program for your merchant portfolios."
   Another area that Retriever believes ISOs should concentrate on is training. It is obvious the trend is towards preparing agents to efficiently and effectively facilitate sales. Where many organizations incorporate training in ISO-centric operations, Retriever is somewhat unique in that it insists agents travel to Houston for a three-day basic training seminar. Depending on the size of a sale office, they may opt to send trainers off site to further along that training.
   "We have a dedicated team just for ISO support," says Natoli. "Whether large, mid and small, whether seasoned or brand new, they all go into an incubator training for 90 days. Change is tough and often traumatic. We soften it with training and support. If you have a glitch or hiccup in an initial relationship, you may never know how good an organization is if you turn it away. We take great pride and commit great resources not only to ongoing relationships but especially to the new 90-day ones. We want to help them get over that initial hump. We pay $1.6 million in residuals every month because we have great groups with great portfolios."
   Regarding portfolios, some retail runways seem to be sporting a trend towards ISOs giving up ownership of merchant agreements and receiving a monthly residual from their acquirers instead. Is Retriever embracing this trend?
   "A lot is happening in our industry with banks having to tie up more capital because of certain portfolios," says Natoli. "Certain ISOs are downstreaming from member banks.
   It really depends on the merchant agreement. Some give you that right, others don't. Some are based on longevity, others are based on transactions. From a seller's standpoint, if your revenue stream is solid, meaning it is not heavily weighted in any one area, if fees are competitive and the portfolio is diverse with a good attrition rate then you can get the most for it. The key to the kingdom is the more revenue stream you're sending down that merchant pipe in both directions, the more valuable that relationship is worth."
   As regards relationships, that trend is not changing. Like any business, integrity and loyalty are the staples of a successful line.
   "Our industry attracts some of the nicest and brightest, but also the opposite," says Natoli. "You can make a lot of money as a sales group in a relatively short period of time, but it is not a get rich quick scheme. For every ten new groups, Retriever terminates two who are not our caliber. Misrepresentation or poor representation gives the industry a bad name. The bigger you get, the harder it is to make sure everyone is doing what you want them to do. We put in tremendous compliance measures. We have over 2,500 reps nation-wide. We can't yell down the hall anymore so we are strict on how we disclosure."
   The flip side of disclosure is non-disclosure, an unsettling trend that is still plaguing the ISO community. This past year, fraud was seen but happily not widely accepted.
   "It is almost like the vocal minority overshadowing the thousands of good organization out there," says Natoli. "Every day you have agents that service their merchants well. You have a relatively small number that are not and you have a lot of focus on them with government agencies getting involved. Overall, this is good for the industry. Fraudulent reps are a threat to every organization, no matter how big or small. We try to catch them and usually do, within 30 to 60 days, but it is never quick enough. I wish we had an ISO agency where everybody registers. Fraud costs the industry hundreds of thousands of dollars and there is no central point. The bad guys just move on to another processor."
   Despite this negative aspect of the industry, Natoli sees a positive future trend. He sees the industry purging itself. He sees standardization in offerings equaling the playing field. He sees quality organizations committed to investing in infrastructure and compliance in appropriate areas.
   "I think that we will get through the 2002 scrutiny," says Natoli. "This is a great industry to be in. We are in the middle of a correcting mode not unlike years ago with electronic products. The good, quality ISOs will get their fair share of business."

   Another ISO getting its fair share is Total Merchant Services. Based in Colorado, TMS was founded in 1996 by current President/CEO Ed Freedman. He follows trends, walks away from others and is getting ready to introduce a few of his own.
   Like Natoli, Freedman sees the trend towards fewer rather more new ISOs. Of the ones that have come onto the field, he notices while the corporate monikers may be new, the guys behind those names are not.
   "We're seeing guys from years past who sold their companies and are now coming back with new organizations," says Freedman. "It's new ISOs but old players. We're still competing with the same guys, with the same sales forces."
   Freedman attributes this to a growing trend on the part of banks and processors to give out fewer contracts. Their requirements are stricter. And Freedman thinks this will not only benefit ISOs but the industry.
   "Banks don't want to do business with just anybody," says Freedman. "Quality control is very important. The trend is towards consolidation of players, not hundreds running the game. Bad running of business creates bad opinion of business. At the end of the day, you have responsible ISOs enjoying good competition. That lifts our business as a whole.
   Freedman also attributes the trend for fewer start-ups to the change in the marketplace, especially when it comes to capital required to sustain a start up.
   "You just need to have more money now," says Freedman. "It costs more to get started because the scenario is different today. We started out by selling equipment and used that money to build an office and strong residuals. Today, that opportunity isn't there. You've got to start with enough money to get a portfolio built. The model isn't as attractive as it was a few years back."
   Does that mean that less hardware units are being sold? Freedman believes that is the case. He also sees the trend towards smaller margins in equipment sales.
   "The point is you can't make the kind of margins you did years ago with terminals close to cost," says Freedman. "It's harder to create residual accounts and this is affecting guys who just rely on sales. It's preventing ISOs from signing up new merchant accounts and if they can't make a living, some are signing up with programs where money can be made."
   And what is the look of those new programs? According to TMS, one is an alternative compensation program based on an out-of-the-box theory of upfront money.
   "We dedicated more than $1 million to set aside for those sales guys who need to put food on their tables," says Freedman. "We pay up front money to reps for simply writing an account with our program."
   TMS is calling its newest style a "Production Bonus." Freedman is quick to point out it's not a signing bonus and there are no limits as to the number of accounts. Salespeople earn $100 per deal on every deal they bring to TMS. Haven't the retail runways see this trend before?
   "Competitors have used this strategy to attract people but only paid signing bonus on the first 10 or 20 deals," says Freedman. "We have no limit."
   Walking right behind the Production Bonus program on the compensation catwalk is TMS's Conversion Bonus program.
   "We know the sales guys can't make today what they made in the past," says Freedman. "We also know that they can't sell new equipment to a merchant currently processing. With our program, you don't have to sell equipment. For each merchant currently processing over $10,000 per month and who converts, we will pay between $100 to $150 to reprogram onto TMS. It's a conversion bonus, with no limits. We even have a leasing bonus program that pays an extra $1,000 bonus when you do 10 leases with us."
   Will upfront programs become the hot trend for 2003? Freedman believes they will. He sees TMS's programs making a splash because they address multiple issues, including shrinking margins and conversion.
   "What is unique about us and has caused our business to triple in the last quarter is that we have added a new program rather than make you choose," says Freedman. "We pay up front production, conversion and leasing bonuses in addition to paying residual income. We want to help get you to point where you can make a living on residual income. These upfront programs are designed to get you there, help you stay there and build your portfolios. We still let reps choose either buy rate or share program in additional to bonuses. That is a unique position from a trend standpoint. Companies can't compete if they can't do both. It is an uphill battle. If your company isn't making changes to compensation you're not going to have much fun right now."
   When it comes to sporting the trend towards comprehensive training, TMS is part of the pack. It brings in groups every month, at its expense, to learn all about new products and services. TMS also holds a national sales conference in a central location with leading vendors so their agents can see the latest styles.
   With some of those vendors, TMS has created another new look‹the co-op lead generation program.
   "This is a very interesting trend," says Freedman. "Once you have a good sales partner, generating leads is a number one problem. You can have the greatest compensation programs in the industry, but if you're not getting the business, no one makes money."
   When it comes to compiling those businesses into a viable portfolio to sell, Freedman admits some are following the trend, but not all.
   "ISOs in this business that are able to take 100% liability for their portfolio are in a unique position to get contracts allowing them portability," says Freedman. "Fewer people are in that position today. We own the risk. We own the contract. You need to partner with a company that can, if you can't. Everybody in this business wants the most amount of money for their accounts. That won't change. Consolidation is a current trend and the smaller ISOs are being rolled together to maximize value of portfolios. If you are an ISO looking to maximize, a good question to ask is what is your exit strategy. You need to align your vision with someone of the same vision."
   The one vision that no one in this business wants to share is fraud. Like other ISOs, TMS believes that a cooperative effort between competitors in fighting this unwanted trend is the answer.
   "I don't think fraud is such a threat that it will put us all out of business, but having these fraudulent reps going from ISO to ISO hurts the business," says Freedman. "The ISOs that are leaders in this business, the real professionals, are talking on a regular basis about who is doing bad business. The bad guys won't be able to ruin it for all us good guys as long as we continue to work together and share information."
   What future trend does Freedman see for the ISO community?
   "Ultimately, at the end of the day, I see a lot of consolidation and fewer players in our industry as far as major ISOs," says Freedman. "We are going to be left with a group of really strong, well run and well financed organizations leading the way. I also see the super ISOs realizing that the professional guys on the street are valuable agents and those sales agents being offered more lucrative contracts. The red carpet is being rolled out for them. I see a trend for the sales professional on the street being treated better, being paid better and getting a larger percentage of the buy. For the first time they'll be treated like the value assets they are. That's the hottest trend."

   The past year has witnessed many changes, some more significant than others. For Mary Dees, President of credittrans.com and now General Manager of Certified Merchant Services, it has been extraordinary. Having served as CMS's court appointed receiver in 2002, Dees has taken on the challenging task of heading up its operations permanently. She has been watching the retail runways very carefully.
   "This is a very intricate business and requires a technical base of knowledge and financial customer service," says Dees. "It is a unique business model that is complex to run because of non-employee based sales people. This past year has been consistent with past years in new ISOs. No more or less. There's been an entrance of new but former players. I believe more are being attracted because ours is an exciting industry that has technologically changed tremendously with recent dramatic shifts. This was the sole bastion of banks years ago. Now it is wide open and there are more opportunities."
   It is that degree of technological changes that Dees sees as creating the trend towards bringing merchants to a higher level of efficiency, which in turn creates opportunity. And with the trend towards increased sales, comes increased compensation. Dees doesn't spot any one trend making a fashion statement.
   "People keep trying to tweak existing programs, but I haven't seen anything that dramatic," says Dees. "Yes, some companies are offering up front payments rather than residuals, but how will that sustain longevity of the relationship with reps being paid out on the front end".
   Dees sees the trend as more of a mix of shared profitability and participation where there is sharing of ownership. She believes ISO compensation programs are still going to be buy-rate based.
   Where does she see portfolio compilation heading? For starters, Dees doesn't see whether the agent owns the agreement or not as the issue.
   "It's all about whether through your contract, you can negotiate profitability," says Dees. "ISOs need pre-agreed parameters around portability."
   On the subject of fraudulent trends, Dees speaks profoundly.
   "Anything that is providing a service that doesn't exist is fraud," says Dees. "If you are selling things and they don't work, you are totally defrauding your customers. In this business, what you have are audit and disclosure issues. The education of disclosure requirements by law is key. What are appropriate actions to take on agreements, ISO staffers need to know these things. Our sales people don't grow out of an environment that is regulated. I have met many people that when you sit down and talk to them have no familiarity with the laws that govern this business in certain states. It's more to do with lack of knowledge. Now there is a heightened sense of awareness of all issues, based on events of last year, including events with the card associations as well as the government. This is an outgrowth of a regulative business which is not regulated."
   Regarding future trends, Dees predicts advancement in many areas, but emphasizes the importance of the ISO channel.
   "I still firmly believe there will be growth and strategic development in all areas of the market," says Dees. "It will continue to prosper. There is no way the large institutions can convert the complexity of the marketplace and the needs of the smaller merchants. There will be a need for personal attention and the ISOs who usually operate a smaller base will meet those needs. Without the ISOs, the merchants would never have the ability to take advantage of technology. That is what makes this business an ISO generated industry."

   Headquartered in West Palm Beach, Florida since 1999, Electronic Data Resources is the brainchild of executives from NPC and Nova. President/CEO Bill Blakey has definite opinions and style when it comes to ISO trends.
   "This past year has seen more ISO start ups because the barrier of entry into the industry is less secure than it was," says Blakey. "You can be an ISO tomorrow if you want, whether you have bank card background or not. There's no classical experience required. What you've got to do is define ISO. A lot of people fall under that blanket, including rogue agents. Regarding significant ISOs, I've seen a couple emerge. I've seen numerous smaller ISOs and an untold amount of new agents. Part of the problem is that there's no way to gauge active ISOs because there is no registration or regulation process."
   Blakey acknowledges a trend towards fewer ISOs becoming successful. He cites knowledge and need for capital as the reasons.
   "Critical to being successful is understanding the dynamics of our business and the merchant marketplace," says Blakey. "In any business, you also must have enough cash to execute a sound business plan. Most ISOs fail not because of a plan but because they don't have the cash to support it."
   Regarding hardware units, Blakey doesn't see a trend towards increased sales. The changing face of the industry, as well as price, is at the core.
   "What's happening with the ISO channel is a mixchange," says Blakey. "In the past, we built our business 70% on equipment sales rather than reprogram. There wasn't much competition. Pricing dynamics were more in line and merchants weren't as savvy. Now, merchants can buy a terminal off the Internet for $350 that we would have sold for $1,000. Our business strategy today is 80% processing and 20% equipment sales. We have to move away from equipment sales. We will provide it if merchants want it, but the paradigm is changing."
   How will this affect new merchant sign ups? How will it affect compensation? How will it affect the manufacturers? AT EDR, 70% of its revenue comes from existing processing merchants while only 30% is realized from new merchant accounts. Blakey says that the company doubled its accounts in 2002 because it changed its strategy to a sales channel that focuses on target marketing.
   "Terminal manufacturers don't want to hear it but compensation is moving away from equipment sales," says Blakely. "The majors are trying to figure out what the merchant marketplace needs. I find it is not as complicated as we make it out. Most merchants want the ability to accept credit and debit and get loyalty off their platform. What else does the merchant need at the point-of-sale that is a value add? No one has answered that question yet, but they are trying."
   With a number of new compensation trends coming down the catwalk, which style works for EDR? Blakey chooses the more traditional over the untraditional.
   "Sharing residual income with ISOs and agents works best," says Blakey. "You have to have it in place in order to attract quality people. There is less compensation opportunity based on equipment so we do all kinds of customized programs."
   EDR has also gone in the direction of specialized training for its agents. It has dedicated additional management resources for training as well as recruiting. In-person as well as on-line modules are the training styles EDR sports.
   Talking about another direction, where does EDR point when it comes to portfolio compilation? It points to independence.
   "This is an interesting trend," says Blakey. "I would suggest there are very few ISOS that "own" their merchant contracts. The bank technically owns it. The majority of ISO relationships have only a residual opportunity and no equity interest in the merchant agreement. EDR does "own" our merchant agreements but there are very few that do. If you don't own your contracts, you are limited to who you can sell it to. If you don't have a vested interest in the merchant contract, it limits the portfolio value."
   What also limits value throughout the marketplace is ISO fraud. Blakey sees it as a bane to the industry.
   "It is a visible threat based upon the Dallas situation," says Blakey. "It is something we all knew was out there‹rogue processors and agents. Those of us that have been in the industry a long time do it right and do best practices and compliance. We run background checks, credit reports, talk to processors, etc. We find out who the bad guys are and our management team has been doing this collectively for 50 years."
   When it comes to what Blakely anticipates the future will showcase on the retail runways, he is quite optimistic. That seems to be a trend that is universally reflected.
   "I think the ISO channel will continue to flourish and be the driving force for mom and pop businesses," says Blakey. "We do need to address some of the issues that have come up in the last year as regards best practices and compliance. We need to do a better job of managing our own business, regulating our own business. ISOs not in full compliance and not forthright in dealing with merchants will go out of business and that is not a bad thing."
   Blakey predicts the ISO channel will continue to be the most attractive marketing side of the business. He envisions more mergers and acquisitions.
   "Consolidation is natural," says Blakey. "It has happened in the past and will happen in the future. The good, smaller guys will benefit from it."

   An organization that doesn't sit in the front row and doesn't spend a bundle on the latest business fashions, but is still quite reflective of the ISO community is Advanced Payment Solutions. Its main offices are in Nashville. Its management is headed by two seasoned women who have a keen eye for style, a sharp edge when it comes to business and an aggregate of 35 years experience in sales and merchant services.
   Partners Debbie Bowles and Jennifer Brinkman weighed in on what they're seeing on the streets. What they observed this past year is fewer ISOs making it.
   "The ones that are failing are realizing this business is a lot harder," says Brinkman. "You've got to be relationship and service oriented if you are in it for the long term. Some of the pop-ups still want to make a quick buck‹in and out with equipment. They're not relationship oriented. They're not going to make it."
   APS is making it, in part to sales. Obviously, this organization isn't supporting the trend towards less terminal sales.
   "We are selling a lot of terminals," says Brinkman. "We see the trend is more receptive to new technology, different things rather than just a piece of hardware. When merchants make an equipment purchase, they're not wanting to get tied into a piece that will be obsolete in two or three years. When we do have a new purchase, it's important for us to have a piece that can support other platforms down the road like smart card, check truncation, debit and gift card. Eventually they will have to support it and the ability to add those relatively quickly and painlessly is important now."
   APS is watching the compensation trends as well, but is staying away from the more avant-garde styles.
   "For us as a company, we are not introducing new programs," says Bowles. "Our sales people still work with buy- rates. It is the easiest and best program. Our people have flexibility to take that buy rate and be as lean and mean as they need to be to make the sale. We're not just equipment sellers. The residual stream is considered as well. The sales people we look to be successful are entrepreneurs on their own. It is about what they want to make of it and we will help them in any way possible. It is not all about selling a piece of equipment, its also about commissions from value-adds and building a strong residual base."
   APS's take on the new look of upfront money is interesting. They see this trend as having the potential for less than positive results.
   "We don't see those people staying in the industry," says Brinkman. "They will do a turn over. When you offer those types of programs, you are going to get those types of people who are in and out quickly. Advance income sets them up to go in and run out. If that's the way you want to do business, great. But that is not ours and never will be. Their agent attrition rate will be tremendously high and that translates to a high merchant attrition rate."
   When it comes to training, Brinkman notes there was a trend for turn and burn in that area as well, but sees it changing.
   "We have always done it differently," says Brinkman. "Our sales people do their own installation so we do a total hands-on three day training period for each sales rep. We work personally with new reps on cold calling, writing paper and installation. Two weeks after everyone is installed and up and running, we follow up with on-site visits to the merchant, answering any questions or concerns. We have a niche market in personal service. It is crucial. We kicked around hiring an installer but we want to maintain the philosophy of personal service. We are never going to be any other type of ISO."
   Another type of ISO that APS will never be is a fraudulent one. Both Brinkman and Bowles are adamant about integrity and honesty in the ISO community.
   If the company is not disclosing, then the sales rep won't," says Brinkman. "A person will sell how the culture of the company is set up to sell. What we have seen here is companies that do not do full disclosure to their merchants. If you are going to do business, you better have it together, especially disclosure of fees. We are very upfront with our merchants, it is the way we do business. We are very honest about all fees charged. If your company is such that you turn and burn, you will have fraudulent reps. Again, it is the company culture. It's all about how your train your reps."
   Brinkman sees a future trend towards ISOs becoming more of advisors rather than just straight sellers.
   "I see our industry going towards more of a consultant type of business where companies rely on you to weave them through all of the things that VISA, MasterCard and American Express are doing," says Brinkman. "We have to be in the middle to bring it down in lay terms and explain to merchants how it will affect their business as regards payments. Merchants know that they will need experts because it is getting so convoluted."
   "There's also going to be more consolidated with less players," says Bowles. "Big guys will always buy up little guys. They'll just keep getting bigger and that's okay for us. We like it. It just makes it better for us. It's all about relationships and when they are that big, there is no relationship. Their customers call an 800 number that could ring in India. The less ISOs like us is good for us. We are more personalized. Merchants can count on us, and in the minds of merchants, it is all about service. If you provide good service, everything else that is good will come with it. That trend will never change."

   One of the most recognized faces around the retail runways is Joyce Cook. One of the founders of the ETA and now CEO of International CyberTrans, a very successful independent sales organization also based in Nashville, Cook has years of following trends and setting trends to fall back on.
   She favors the trend towards more ISOs being attracted to the payment processing industry. She also notices that smaller ISOs who are floundering by themselves are looking to larger organizations for support and education.
   "I don't see credit spending going downward," says Cook. "The slow economy is retarding new business growth but existing merchants still provide sales opportunities. They may be driving the price point to a place that is not attractive to ISOs but what is driving many ISOs are new equipment opportunities. There are new products in the market, equipment as well as value-adds such as electronic check conversation, that are giving sales a boost."
   Cook also believes that credibility plays a big part when it comes to sales success. She sees a strong trend towards referrals and referrals come from merchant loyalty. If an organization delivers a high level of customer service and satisfaction, it will translate to long-term business relationships in transaction processing.
   According to Cook, there is also a trend towards increased hardware sales. While she admits it's not as high as it was in past years, she is optimistic about an upward trend.
   "We're seeing more equipment sales this past year because of new opportunities requiring unique equipment," says Cook. "Multi-products on one terminal create a need for upgrade. If you sell a value add product, hand-in-hand with that comes new equipment."
   With those new sales comes increased revenue. What style has International CyberTrans selected to facilitate those revenue streams?
   "We have been successful in our agent recruiting efforts with base plus commission programs," says Cook. "We want our sales force to be as sticky and loyal as our merchants. For us, sticky is base plus commission."
   Like others in this arena, Cook questions the staying power of the new upfront money offerings.
   "How are you going to be certain the merchant is going to stay after a rep makes a hard sale to get upfront commission," asks Cook. "The ISO will be left with a high risk of attrition. I have been in business 20 years and know what makes money‹and it isn't giving away money."
   What Cook does believe in giving freely is training. In fact, CyberTrans boasts a high quality training program.
   "Our agents are far more trained and knowledgeable about our philosophy and the way we want to be presented," says Cook. "Knowledge is power and we believe strongly in complete industry training so our agents are professional on the street and fully represent the industry."
   Another area of the industry that Cook sees representative of a growing trend is portfolio compilation. She sees many still being influenced by the late `90s when there were many opportunities to cash out. She acknowledges ISOs are still trying to build portfolios for cash value.
   "Acquirers got smart after the big merger and consolidation frenzy," says Cook. "They are not so willing to give ownership to merchant accounts and unless you had a lot of credibility and people wanted you as their ISO, the newer ones weren't able to negotiate ownership. Those of us who have ownership are growing our business. Who knows what the future holds but there is not a lot of aggression out there. Right now I don't see anything happening except with those people who need to cash out for personal reasons, not for business opportunity."
   On the subject of fraud, Cook does have a definitive answer. She sees it as a real threat to the industry.
   "I was a founder of the ETA and in 1990 we started that organization as a result of bad publicity from old companies like Peach Tree who perpetrated fraud and brought down the wrath of the associations," says Cook. "I'm seeing a recycling of that. Instead of one or two large predators, it's a lot of little ones. I think the ETA has lost its mission and vision. The original vision was to improve the quality and standards of the ISO community through education and information and guidelines. Whether they are VISA and MasterCard imposed or on paper, there were compliance guidelines out there but never enforced. It's like when you try to run a red light, there are rules against that. Now, it seems there are no rules and guidelines. I think we need to be in the trenches with grass roots. We need to change the mindset of the new ISOs."
   Cook predicts a retro trend, so to speak, for the future. She envisions a return to a stronger stance.
   "From my perspective, I see a potential movement to go back to the basic philosophies of the original bank card associations and the old ETA to once again put credibility and standards out for all ISOs to measure up to," says Cook. "I do think that will happen."
   Is it the old school versus the new school when it comes to trends? Is it a battle of back to basics versus new ideas and philosophies? Perhaps the reality is somewhere in between. Tune in next month to hear what the designers have to say about state of the industry.