Monday, April 12, 2010
According to an April 2, 2010, report from the United States Department of Labor, the financial services sector was the only major private U.S. industry to have significant job losses in March 2010. Yet the job outlook for the payments business specifically may be a lot brighter than what the report seems to indicate.
Overall, the country's private industries added 123,000 jobs in March – among them, 36,700 in health care, 17,000 in manufacturing, 15,000 in construction and 14,900 in retail. But among otherwise good news for the private sector was the reported loss of 21,000 jobs in the financial services industry. What to make of this jarring figure?
For starters, the term "financial services" is occasionally used interchangeably with payments; here it refers to a much broader field of financial players – among them are loan providers, investment firms and banks of every kind. Trends in the financial services industry at large do not necessarily reflect what's happening specifically in the payments sphere, and that seems to be true in this case.
According to J.T. Driscoll, President of payments industry job recruiting firm Impact Payments Recruiting, the acquiring sector job market began rebounding several months before the new figures emerged about a greater bounce-back.
"In December we started seeing [the turnaround]," Driscoll said. "And typically in this industry that's a slow time to hire because that's when all the sales are happening, and we were taken back by it. But I think what happened is everyone had new initiatives for 2010 and wanted to get things started by hiring right off the bat."
Driscoll said Impact Payments had procured data indicating that job postings for the financial services industry were up 15 percent in March 2010 from March 2009, and that the company's assessments in general weren't reflected by the Labor Department's findings.
"I was a little surprised to read that [information]," he said. "It didn't appear that way to us, maybe because we're so 'niche' that we're a little isolated from the quote unquote rest of the world … We're definitely seeing growth. We've probably got 20 percent more [available payments] jobs than we did at the end of '09, and we've got higher paying positions now and more senior roles that are coming in."
Among the positions beginning to generate significant demand, he said, are ones in sales management, loss prevention management, risk underwriting and other openings that were almost unheard of until recent months. In fact, the recession caused contractions in virtually every payments industry job category except one: feet-on-the-street sales. Driscoll said businesses have been aggressively seeking salespeople all along, even while many were crunched by the recession and making cuts in other areas.
"The way the industry's been and because of the economy, everybody started hiring salespeople," Driscoll said. "It was sort of counterintuitive, but even though the economy was down and hiring was down, top salespeople actually became more difficult to get because they got more desirable. Clients just wanted to spend their money on what was going to bring them back revenue directly and were holding off on other projects.
"Meanwhile, some were cutting back on customer service teams, relationship management teams and executive leadership. But now that it looks like everyone's going to make it, people are moving forward with those initiatives, and we're seeing a big difference in all the different types of jobs that are opening up."
Paul Martaus, President of payments industry consulting firm Martaus & Associates, expressed a more ambivalent outlook about industry job growth. He noted that on one hand, the acquiring industry's sales forces comprise some of the most resilient and talented sellers out there, which ISOs recognize. Even as "ISOs are buying and selling each other like crazy," they don't seem to be shedding many jobs, he said.
But the industry isn't without lingering problems, Martaus pointed out. One is that "we've had zero growth in merchant formation" and "the opportunities to earn large incomes have been dramatically altered," he said. However, many say this will change as the economy improves.
Martaus also said the recession drove some banks to assume full control of acquiring functions they had long outsourced to other businesses, a cost-cutting measure that likely shrunk sales forces.
"The industry has undergone a dramatic change in that many of the acquiring companies are being consolidated under bank ownership – Chase Paymentech is an example – and being part of banks, they probably did undergo some consolidation of their sales forces," Martaus said.
However, Martaus also noted that many merchant level salespeople (MLSs) work purely on commission, and thus aren't technically employees to begin with (and aren't accounted for in unemployment surveys). Their incomes may fluctuate, but MLSs are virtually never completely out of work.
But the MLS employment dynamic is also changing. Both Martaus and Driscoll said it has become increasingly common for MLSs to receive base salaries in addition to their commissions, a trend that Driscoll said has been driven by the recession and the interest in sales talent that it cultivated – not only in the acquisition of good salespeople, but in their retention, too. Companies increasingly seek loyal sellers who won't drift off, start a separate business or join a competitor, he said.
"The days of having a lucrative production-only compensation plan and not any upfront payment have slid backward," Driscoll said. "Salespeople have more options now, so why not go to the company that pays a base or has better benefits?"
With the economy rebounding, even more companies will consider improving their compensation packages, Driscoll said. More generally, he said, the less inhibited flow of money appears to be ushering in a new day.
"In general, Americans are spending more money, and … more sales processors are signing more new businesses, and existing businesses are starting to process more and have more money to spend. Lending is loosening up, and we've also seen a lot of venture capital flowing in. … Merchant portfolios are down; you can buy them cheaply, so companies are investing."
Martaus added that as job growth in areas like mortgage lending continues to stagnate, some workers from that and other fields have trickled into the payments sector. But he cautioned that, regardless of the economic climate, windfalls aren't guaranteed to any starting MLS.
"The guys attracted to this business are usually looking at the rare phenomenon of the closer," Martaus said. "He's the guy that really knows what he's doing – has the private jet, the big house, diamond-encrusted, platinum Rolex – and that's an enticing fantasy.
"A lot of people living the life of quiet desperation will look at this guy and say how did you do that? … It's unique in this industry that the closers are so heavily rewarded. People are always attracted to opportunities for making quick and solid money. The problem is it's deceptively easy looking."
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