Margin Compression in the Payment Processing Industry

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Executive Summary

Margincompressionoccursatvarioustimesduringthematuringstagesofmost industries.Atitscore,margincompressionissimplyareductionofoperating margins(grossrevenuelessthecostofgoodssold)andiscausedbyavarietyof factors,bothinternalandexternal,microandmacro. Thepaymentprocessingindustryisnoexception,andhasnotbeenimmune fromrecentmargincompression.Overthepastfewyears,manyIndependent SalesOrganizations(ISOs)haveexperiencedsignificantreductionsinmarginon bothdirectprocessingrevenuesandPOShardwaresales. Thecausesofmargincompressioninthepaymentprocessingindustryarevaried andcomplexandinclude:increasedcompetition;poorsalesforcetrainingand practices;inflatedmerchantportfoliovaluations;freeterminalplacements;and changesineconomicconditions. Thispaperdefinesmargincompressioninthepaymentprocessingindustry (specificallywithregardtoISOs),examinessomecausesofmargincompression andmakesrecommendationsforpreventing,mitigatingandreversingthetrend. Margincompressionforamaturingindustrymaybepredictable,butforthe savvyandattentiveISO,itcanbehighlycontrollable.

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Margin Compression in the Payment Processing Industry

For the typical ISO, revenues come

primarily from one or both of two general

and broadly defined sources: processing

revenues and POS hardware sales. For a

typical, mature ISO, the overwhelming

majority of revenues will be derived from

processing fees with little revenue derived

from hardware sales. Obvious exceptions

include ISOs with specific POS hardware

or system sales strategies.

Historically, new ISOs generated the

majority of their early revenues from

hardware sales while building a portfolio

to generate increased, business‐sustaining

processing revenues.

In this paper, processing revenues

generally refer to the operating profit

generated by the gross revenue paid to

the ISO by their acquiring bank or

processor, after cost of goods sold

(interchange, authorization and

settlement fees, etc.) and before costs

(salaries, overhead, sales expense, etc.).

Hardware revenue generally refers to the

net margin derived by the gross selling

price less the wholesale price of the item

sold. Processing revenue is expressed as a

percentage of processed volume. For

example, a merchant processing $10,000

in card volume generating $100 in

processing revenue provides 1% (or 100

basis points) of margin.

Origins of Margin Compression

In the early development stages of the

electronic payment processing industry,

few merchants had POS devices.

Therefore, the primary goal of ISOs was

hardware deployment (POS terminals and

printers, electronic cash registers, etc.).

Many early stage ISOs enjoyed hardware

margins in excess of 100% with leasing as

a popular option for the small and mid‐

sized merchants.

As deployment saturation began to

develop and compress hardware margins,

a second generation of hardware models –

along with the rapid adoption of PIN

debit – provided renewed deployment

opportunities with ISOs still enjoying

margins as high as 50% or more.

During this timeframe, merchant demand

for hardware grew as they sought to

transition from paper to electronic

capture. Additionally, integrated

terminals supporting PIN debit

transactions and, to a lesser extent, check

processing provided easy merchant

processing account opportunities to ISOs.

The fertile landscape provided ISOs with

strong processing margins – in many

cases exceeding 100 basis points on

processed volume. It is also important to

note that, during the industry’s early

stages, processing volume was a small

fraction of current volumes and

represented a small share of a merchant’s

payment acceptance mix.

Industry resource, The Nilson Report,

noted in its October 2009 issue that, while

processing volume has increased in the

last decade, merchant’s fees as a

percentage of processing volume have

actually declined from a peak in 2005.

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purchases have impacted fees, but margin

compression has also had a demonstrable

impact.

Source: Nilson Report, October 2009

As the payment processing industry

matured, it attracted more competition

from a variety of sources: entrepreneurial

startups, banks, large cross‐marketing

programs and others. With new hardware

deployment opportunities becoming

limited to new business start ups and

additional locations, less‐frequent

upgrades and replacements, ISOs were

forced to begin to focus primarily on their

processing service offerings, which

naturally lead to a focus on price.

During this same timeframe, several ISOs

and processors went public, attracting

both institutional and private capital into

the industry, which significantly

increased both company and portfolio

valuations. The increased value placed on

each processing account allowed many

ISOs to invest far more heavily in

merchant acquisition. This, in turn, led

many ISOs to offer free hardware to

merchants as an incentive to sign up with

them, causing the virtual elimination of

hardware margins ISOs experience today.

General Causes of Margin Compression

The causes of margin compression are

extremely complex and varied. Though

margin compression is typical in most

industries as they mature, the payment

processing industry has experienced

recent margin compression due to a

variety of somewhat interrelated factors. 1. Economic Conditions – Internal

A significant byproduct of the

maturation of the payment processing

industry has been the exponential

growth of same store electronic

payment acceptance and a widening

of acceptance locations. During the

past decade, more and more non‐

traditional acceptors have come to the

market. In addition, card volume as a

percentage of overall sales mix has

continued to grow. It has been

common for certain business segments

to see double digit growth of card

volume while overall sales have

remained flat.

Like most businesses, ISOs have both

fixed and variable costs. With the

ever‐increasing volume per account,

many ISOs have been able to reduce

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sometimes expanding revenue per

processing account.

Furthermore, the predominance of

three‐tiered pricing (i.e. qualified,

mid‐qualified, non‐qualified)

combined with a decoupling of

interchange rates for credit and debit

products by the card associations

(Visa, MasterCard, Discover) and ever

increasing “less than qualified”

transactions (reward, corporate, etc.)

has allowed ISOs to maintain or even

lower “qualified” rates while still

enjoying constant and sometimes

increased processing margins.

However, in recent years ISOs have

begun offering more small to mid‐

sized businesses “pass‐through”

pricing which typically generates a

lower, fixed margin and eliminates

margin inflation caused by debit

interchange differentials and higher

rates for less than qualified

transactions. Traditionally, a pass

through pricing model was used for

very large processor based merchants.

As greater transparency is created by

Visa and Mastercard for their

wholesale interchange rates, further

pressure to adopt pass through pricing

may increase.

2. Economic Conditions – External

The broad, country‐wide economic

decline has caused more merchants to

closely examine supplier costs,

including costs of payment processing.

More and more merchants have

contacted their providers for “rate

reviews” and merchants are far more

receptive to low‐rate offers from ISOs

and agents. This has led to three

observable results: one, some ISOs

have chosen to reduce margins to

retain existing accounts. Two,

merchants are far more likely to leave

their incumbent provider for lower

rate offers. Three, some merchants

have chosen to stop accepting

payment cards altogether.

3. Retailer Industry Push Back– Government Regulation

Over the past decade, merchants have

become more vocal as an industry in

raising awareness of the fees that they

pay to support the acceptance of

payment cards. While deep debates

have been had on the very tangible

benefits that merchants receive

through acceptance, such as increased

sales, low charge‐off rates vs. in house

credit programs and customer

convenience / satisfaction; merchants

have raised fee arguments to a fever

pitch thereby placing additional

pressure in their community to drive

down rates as an industry. As a result

of retail industry lobbying,

government regulation and oversight

have been proposed in the past several

years and has made its way in the

form of governmental study into

recent legislation.

4. Increased Competition/Lack of Tangible “Offer”

In recent years, the payment

processing industry has seen a

significant increase in competition,

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partially as a result of extremely low

barriers to entry. In addition to

competition created by new ISOs, the

industry now includes competition

from companies such as Google,

PayPal, Intuit (QuickBooks), Sam’s

Club, Costco, UPS, etc. Further, new

and existing ISOs have continually

expanded their sales operations and

call centers. It is estimated that the

average merchant receives dozens of

merchant account solicitations each

month. As the “supply” has increased

faster than the “demand,” margins

have decreased. Years ago, opening a

merchant account was a difficult and

hard to source service. Today, due to

the competition (and the internet!), it

is almost as simple and accessible as

opening a new checking account.

During this time of expanded

competition, fewer tangible sales

opportunities exist. There have been

no recent POS developments to drive

equipment upgrades (the most recent

– contactless – has still not managed to

leave the starting gate in the small to

mid‐sized market) since PIN pad

deployments almost a decade ago.

Further, with the overwhelming

majority of all payments processed

through one of only a handful of

processors (First Data, Paymentech,

Elavon, TSYS, Global), and the

ubiquity of POS terminal design and

functionality, there is little to no brand

differentiation available as a sales tool.

In most ways, payment processing

services have become commoditized,

further leading to margin

compression.

In the classic marketing triangle – of

service, product, price – price is

generally the easiest to compete on,

especially in the short‐term and in

light of the above.

According to analysis of nearly 90

merchant portfolios during the 2003 –

2007 timeframe by industry

participant, Calpian, monthly

revenues per merchant has declined in

most merchant segments. The most

concerning component of the analysis

is that through margin compression,

new merchants being sold by ISOs are

at lower margins than the tenured and

attriting merchants they are replacing

in the ISO’s portfolio. In essence,

some ISOs may be engaging in a

“sprint to the bottom of margins.”

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Merchant Portfolios By Average Revenues (% of Total Portfolios) 0 10 20 30 40 50 60 <$20 $20-$40 >$40 Monthly Revenue Per Merchant (Avg)

% o f P o rtfo li o s 2003-2006 2006-2007

Merchant Portfolios By Average Revenues (% of Total Portfolios) 0 10 20 30 40 50 60 <$20 $20-$40 >$40 Monthly Revenue Per Merchant (Avg)

% o f P o rtfo li o s 2003-2006 2006-2007

Sample Size # Portfolios

2003-2006 ₅₁ 2006-2007 38 Total 89 Source: Calpain

5. Poor Sales Representative Training

Partially as a result of all of the

previous points and the resulting

margin compression, many ISOs have

attempted to grow their internal and

external sales staff as quickly and

efficiently as possible. Proper sales

representative training is a significant

cost, especially in a complex industry

such as payment processing, in which

the learning curve is long and steep.

In many cases, ISOs attempt to utilize

contract sales staff, with inherently

high turnover rates, which further

decreases the ROI of sufficient and

significant training programs. And

often trainers have not been fully and

properly trained themselves, adding

to the problems of untrained sales

staff. With lack of proper training,

and misrepresentation (both

intentional and unintentional), ISOs

often revert to competing on the

easiest attribute to copy, low price

offers, furthering the industry’s

margin compression.

6. Increased Competition for

Agents/Agent Awareness

ISOs employing a typical

agent/contractor model face increased

competition for qualified experienced

agents. Over the past decade,

increased access to information

provided by the internet, the

Electronic Transaction Association’s Transaction Trends magazine, The Green

Sheet and other publications have

created a far more informed agent

population.

Further, what was once a “home‐

grown” small industry now has a

myriad of advertising and marketing

outlets to attract experienced sales

reps. During the early days of the

“agent model,” ISOs relied on

recruiting new agents from outside the

payment processing industry. Today,

a majority of the recruitment comes

from within. All of this new agent

marketing has created in essence

bidding wars for agents with one ISO

after another offering higher and

higher agent compensation.

In 1998, top agents could expect to

receive 30‐50% of the overall

processing revenue. Today, 75% or

more is available to agents. Some ISOs

even advertise up to 100% residual

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The increased agent competition and

significantly increased compensation

to agents with no offsetting cost

reductions for ISOs have created

significant ISO net margin

compression.

Preventing and Mitigating Margin Compression

While margin compression is traditionally

present in most mature industries such as

payment processing, there are many

strategies that an ISO can implement to

help prevent or mitigate margin

compression. These strategies can broadly

be categorized into two approaches:

customer‐focused and internally‐focused.

Merchant Focused Strategies

Margins can be preserved and often

expanded if ISOs change their focus.

These changes can include:

 Identifying new acceptors to find

merchants that your competition has

not

 Solving merchant problems and

selling value

 Formalizing and focusing on merchant

retention

Identifying New Acceptors

Typical “Main Street” merchants receive

dozens of payment processing

solicitations each month – by phone, in

person and by direct mail – making it

very difficult to engage these merchants

in meaningful conversation leading to a

sales presentation.

Rather than participating in the “herd”

mentality, focus on bringing products and

services to new and historically under‐

solicited market segments. With this

approach, ISOs will often avoid having to

displace an incumbent processor,

eliminating the need to use the tired

“better price” sales pitch which only leads

to reduced overall margins.

Major card brands have been very

successful in penetrating many markets

for payment card acceptance. As an

example, over 10 years ago, it was still the

exception for grocery stores or quick

service restaurants to accept payment

cards. However, despite the efforts of the

major card brands to penetrate every

conceivable market, acceptance is still not

universal by all merchants in all

commerce situations. Acceptance

opportunities exist in many market

segments, including business to business

payments; mobile commerce, such as

home delivery services; micro‐payments,

such as vending machines; and recurring

payments, such as utility, insurance and

property management.

Additionally, first‐time card acceptance

opportunities also exist within various

ethnic, immigrant and first‐generation

businesses in many locales. Many of these

businesses traditionally conduct

commerce in cash and sometimes store

credit, with card acceptance being a

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acceptance mix. Proper networking

within these business segments can yield

a solid referral source.

Finally, there is renewed activity in the

new business segment. Traditionally,

economic disruptions and increased

unemployment have lead to an increase in

new business creation. The current

recession is no exception. According to

the 2009 release of Kauffman Index of

Entrepreneurial Activity report, a leading

indicator of new business creation in the

United States, over 6 million new

businesses were created in the United

States in 2008 (source:

http://www.kauffman.org/research‐and‐ policy/kauffman‐index‐of‐

entrepreneurial‐activity‐1996‐2008.aspx).

Since unemployment increased in 2009

and continues to be high in 2010, it is

likely that the pace of new business

creation will continue. Identifying and

targeting new businesses can offer ample

new merchant opportunities as many

ISOs have been very successful

contracting with startup businesses.

Solve Merchant Problems and Stop Selling on Price Alone

After identifying your target prospects,

how do you position your product

relative to the competition? Is price your

primary differentiator? If so, you are

creating internal margin compression.

Unless you are achieving significant

scale and continually improving internal

efficiencies, this strategy will negatively

impact your bottom line.

While price is important, value is a far

more important factor to all consumers,

and prospective merchants are no

exception. Consumers routinely pay $4

for a cup of premium coffee when a $1

cup is readily available. Car buyers

shun “cheap” in favor of value and

quality (remember the Yugo?).

Merchant principals are consumers, and

value is a key attribute in their decision‐

making process.

Offering nothing more than a low price

devalues your service and opens the

door to any and every competitor

offering what appears to be a lower

price.

ISOs can easily present value over price

by simply identifying the merchant’s

needs. While pain points vary from

prospect to prospect, all merchant

prospects will have specific hot buttons.

Asking probing questions (such as

“What do you like about your current

provider?” and “What don’t you like

about your current provider?”) will help

uncover their hot buttons and will help

lead to a higher‐margin sale.

Perhaps the prospect has reconciliation

issues due to daily discount, or a hard to

read statement? Can they benefit from

an electronic gift and loyalty card

program? Can a check processing

solution benefit them?

By asking the proper questions, you will

not only lead yourself to the sale, you

will become a solutions consultant to

the prospect, instead of just an “I can

save you money” offer.

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Merchant Retention

Keeping your existing merchant

relationships will protect processing

margins and revenues. Maintaining your

existing merchants will allow you to focus

on increasing your portfolio base, instead

of replacing attriting merchants – often at

reduced margins.

While there are many strategies ISOs may

employ to reduce attrition, a full

understanding of your portfolio makeup

is needed. Merchants can be analyzed and

retention efforts organized by the

following factors:

1. Customer Profitability

Understanding the actual, real value

of your merchant accounts is vital to

allow retention efforts to be

concentrated on the most profitable

and important accounts. This process

for identifying your customers can be

simple to complex. For a starting

point, you will need to determine the

margin per customer (billings to

customers less cost of goods sold).

Once you have margin established,

you then need to understand all

internal costs incurred in selling,

boarding and servicing the merchant.

Sometimes these costs can be uniquely

identified down to a specific

merchant, such as how often the

merchant calls in for servicing or if

free supplies are provided to a specific

merchant. Other times, the ISO will

find that costs need to be assessed to

merchants on an allocation basis (total

costs / divided by number of

merchants) for expenses such as rent

and furniture. In determining

profitability, an ISO may want to

acknowledge and put a financial

number to extra benefits a merchant

provides them such as referrals or

testimonials.

Once real profitability is determined,

merchant accounts should be ranked

or classified into profit groups such as

“very profitable,” “moderately

profitable,” “marginally profitable,”

and “not profitable.” You might be

surprised to discover that accounts

previously considered “moderately

profitable” have diminished to “not

profitable.”

By stratifying merchant accounts in

this manner, retention efforts can be

more efficiently focused. Keeping

larger, more profitable accounts

obviously requires more effort than

keeping smaller accounts. Further,

servicing resources (proactive

visits/calls, priority call routing, free

supplies, etc.) can be dedicated more

efficiently to provide the greater

service to the most profitable accounts.

And retention efforts can be easily

tracked and refined based upon

success in each group.

An additional goal of this strategy is to

place an emphasis on promoting

merchants from a particular group

into the next level up. By pricing

changes and additional service

offerings, unprofitable merchants can

be upgraded to marginally profitable,

and marginally profitable merchants

can be upgraded to moderately

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nothing if you lose a marginally or

unprofitable merchant due to a price

increase.

2. Attrition Analysis

Another important foundational

element in retaining merchant

accounts is to understand and track

reasons merchants leave you. Attrition

should be tracked by profitability

group, market segment both MCC

and type (such as retail, MOTO, etc.)

and attrition reason. ISOs should

analyze their attrition data to identify

patterns within the overall portfolio or

specific niche groups that might

indicate products, service or pricing

that needs to be addressed or

improved.

The greater the details, such as the

types of merchant accounts, average

age of account, and attrition reasons,

the more valuable and actionable the

data will be in understanding why

merchants are leaving and developing

strategies to reduce this attrition. For

example, are merchants leaving

during the initial year of processing?

Maybe their sales personnel are over‐

promising or otherwise misleading

merchants. Are more tenured

merchants leaving? Maybe they feel

forgotten or unappreciated as

customers and they require more

lifetime customer interaction to

continually show value.

The attrition analysis should also

reveal common attributes within the

merchant accounts retained. Is there a

common baseline of services offered to

these accounts? Do the merchants

share common demographic attributes

(i.e. MCC, processing methods, etc.)?

These factors can be used to expand

your offerings to attract a wider range

of merchants while continuing to

focus on these core factors.

3. Market Segment Analysis

Certain market segments receive more

competitive solicitations than others.

New business start ups, independent

restaurants and bars, and “Main

Street” retailers often don’t go a day

without receiving a payment

processing solicitation. Other types of

merchants, such as manufacturers,

B2B suppliers, government contractors

and other hard to reach businesses

typically do not receive many

competitive offers.

The more competitive solicitations

merchants receive, the more likely

they are to leave. In addition to the

revenue stratification described above,

retention strategies should be focused

around those merchants receiving the

greatest number of competitive

solicitations – whether by phone,

direct mail or in person.

4. Services Provided

It is commonly believed by industry

experts that the more services an ISO

can provide to a merchant, the more

likely the merchant will remain with

that ISO. More services also generate

more margin and revenue.

Are you solely a card processing

provider? Add related and ancillary

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merchants. These products and

services can include:

 PIN pads for retailers who

do not accept debit today  PCI compliance services

and SAQ assistance  Electronic gift and loyalty

programs

 Online statements and

reporting

 Check processing services

including verification

and/or guarantee

 Recurring billing and ACH

processing

 Insurance verification

services for medical

merchants

Increasing your account services

penetration – or “hooks” into a

merchant – significantly decreases risk

of attrition while increasing margins

and revenue.

Payment processing industry trade

shows, such as the Electronic

Transaction Association’s annual

conference, as well as regional trade

shows, provide a great introduction to

these services and many more.

Internally Focused Strategies

While focusing on merchants is vital in

retaining merchants and preventing

margin compression, reviewing and

focusing on internal factors can also aid in

mitigating declining margins.

Internal factors reviewed should include:

1. Reduce Costs

Since margin is the difference between

fees collected from an ISOs merchants

and the ISOs costs (interchange,

processing fees, third‐party servicing

costs, etc.), an ISO can increase margin

by decreasing costs.

Review existing vendor agreements

such as core processing services

(authorization, settlement, etc.) and

third‐party agreements (gateways,

ancillary services, etc.). Is there an

opportunity to obtain a reduction of

fees due to the changes in market

conditions? Are you nearing the

expiration of the agreement, opening

the door for renegotiation? Are there

less costly alternative options? Have

there been increases in your volume or

transaction count?

ISOs should “shop” on a regular basis,

just as merchants do, to be certain they

are receiving the best combination of

services and low costs. ISOs of

significant scale can often leverage a

conversion of their portfolio to another

provider (if the agreement allows for

this) in order to receive competitive

bids and often garner a fee decrease

from the current provider. 2. Identify Core Strengths

Determine the core strengths that you

utilize to bring value to your

merchants at either the point that they

purchase your solutions or those they

enjoy through the on going delivery of

value of services. What are your

strengths: technical creativity and

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merchants? Is it after‐sales support

through incredibly trained support

staff? Is it providing your merchants

superior analytics on their cost of

acceptance such they can reduce

overall acceptance costs? Regardless of

what the strengths are, they should be

used to further differentiate your

offerings from your competitors, while

adding value to your clients. By

distancing yourself from competition

it will put less pressure on price and

therefore less pressure on margins. 3. Evolve Your Offerings

ISOs should conduct regular analysis

and audits of their product and service

offerings. Is your offering stagnant?

When was the last time you

introduced a new product or service to

your existing merchant base or your

sales staff? Has your products and

service offering to merchants kept

pace with their evolving product and

service needs? For example, ten years

ago, data security compliance was not

a key topic for large merchants,

however, over the past decade it not

only is key for large merchants, but

has now gone down market to small

markets. Has your offer kept pace

with your competition? Your

competition is certainly looking to

outpace you. As evidence, a brief

review of the many industry

periodicals highlight new innovation

that your competition is bringing to

the marketplace.

4. Enhance Sales Force Training

Proper sales training sometimes takes

a back seat during periods of rapid

and aggressive sales force expansion,

primarily due to limited financial and

time resources. However, despite the

payment processing industry’s

complexity, proper sales

representative training is vital to both

efficient merchant acquisition and

maintaining sufficient processing

margins.

Historically, the use of contract (1099)

sales representation has been popular

among ISOs as a lower cost vehicle to

grow its sales force. Too often, ISOs

have minimal oversight to the sales

training, selling tactics and pricing

models utilized by these contractors as

they are not employees. However,

ISOs should review their training

programs, test competencies and

ensure consistent delivery of the ISO’s

selling proposition. For example, if

the ISO’s products and service

offering is based upon a very

consultative sales approach through a

clear understanding the merchant’s

payment processing needs and goals,

but its sales distribution channel has

not been effectively trained to carry its

message or desired approach to the

market, it will not likely meet its

objectives as intended. Instead it

might result in a vastly different

approach of selling by its sales

distribution channel barking, “low

prices, low prices, low prices!”

Several suggestions of enhanced sales

training are product and services,

sales and selling proposition. More

specifically, products and services

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and services work and the benefits

that are provided to the customer.

Sales training can entail how to

prospect, engage and close an

opportunity. The sales proposition

training educates sales representatives

on the ISO’s marketing message to its

prospects and customers. The selling

proposition is the market based

positioning that enables the ISO to be

uniquely different from that of

competitors in the payment processing

space. It is imperative that the sales

channel, whether it is contractors or

employees, understand the selling

proposition so it can effectively

communicate it to prospects and

clients.

Today, through technology, a number

of lower costs sales training programs

can be developed. Several technology

examples include long distance

“classroom” learning over the internet,

“push based” tutorials delivered to

sales professional’s desktops or mobile

phones. These training tools can be

used to train, certify and periodically

recertify a sales representative’s

knowledge on existing products and

services, new products and services or

the sales process and selling

proposition.

Summary / Conclusion

Although many ISOs report a recent

increase in margin compression, there

are many strategies that may prevent it.

By changing market focus, ISOs have the

potential to tap into newly established

and rarely sought after merchants. In

addition to less competition in selling

to these individual merchants, there is

also a great opportunity to build

profitable referral relationships and grow

the overall portfolio. With existing

economic conditions, there are many

startup businesses to solicit.

ISO sales reps can demonstrate their

value to both potential merchants as well

as their employer by abandoning the ʺlowest priceʺ selling proposition and

developing a strategic partnership with

potential merchants. This not only

drives the merchant to sign and retain

the relationship, but generally leads to

higher margin earnings. After the

relationship is established, there are a

number of strategies that can be used to

prevent margin compression. Those

strategies can be developed by routinely

analyzing merchant profitability,

merchant retention and the need for

more updated services and offerings. Internal practices factor into controlling

margin compression as well. It is

important to routinely examine costs,

identify and build upon the strengths of

your company, analyze and update

offerings and continually improve sales

training.

Taking into consideration both internal

and external factors, ISOs undoubtedly

have the ability to influence margin