As traditional local media players begin to lose some of their prominence, the search for alternative local sales channels has become increasingly important. The channel currently being explored: payment processors, which normally focus on selling Point of Sales systems.

Processors start out with a technological advantage; the “big data” from consumer purchases can help produce offers, rewards and other incentives. In addition to their large reach, processors already handle related issues that put them top of mind with SMBs as trusted business partners, such as payment processing, as well as credit/debit card management.

The first significant sales deal with a processor channel started with a pilot program last October between LevelUp, the Boston-based transaction marketing/loyalty company, and Heartland Payment Systems, which works with 250,000 merchants and is the fifth largest payment processing company.

LevelUp had built up a local sales force of about 25 people in eight markets. The local sales efforts had been moderately successful for such a new business concept, resulting in 6,500 business relationships. But the pilot with Heartland caused the company to shift its approach. After the pilot, LevelUp decided to focus more on its product offering and reach, and less on building its own branded services and local sales forces.

Heartland’s own perspective is that there are rich opportunities in working with companies such as LevelUp, and extending beyond payment processing sales. In a conversation with BIA/Kelsey, Sarah Owen, Heartland’s Executive Director of Mobile & Retail Payment Strategy (and former First Data executive) notes that it makes total sense for processors to begin selling consumer-centric solutions.

The relationship with LevelUp is a “perfect marriage,” says Owen. It would almost be unnatural not to pursue broader solutions, she says. “We ask ourselves: What types of solutions and brands do we need to support that consumers need to use? It is not just about payments. It is about launching and driving consumer behavior.”

Owen notes that the company has 800 of its own feet-on-the-street sales reps. “We are already talking to merchants about payments,” she says. “We act as a consultant to merchants in their acceptance of payment strategies. We help merchants understand what they need to do with a POS” to drive customer adoption and lower costs.

This post is an edited excerpt from a newly published BIA/Kelsey client Briefing: “Payment Processors as Local Sales Channels: A Look at the Heartland/LevelUp Relationship.”