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Monday, June 22, 2015

Harbortouch aims to turn AmEx OptBlue into merchant green

Harbortouch, a merchant services and POS provider based in Allentown, Pa., launched a new version of the American Express Co.’s OptBlue program. On June 11, 2015, the company and sales channel partners began offering select merchants a 1.99 percent rate plus $0.10 on AmEx card-present transactions processed on Harbortouch POS systems.

Restaurant merchants must have active Harbortouch processing and POS system service agreements in place with average tickets below $150 to be eligible for the program. The company expects this to drive adoption of Harbortouch POS systems while providing a point of differentiation for its agents and partners. Participating merchants will be guaranteed the discounted AmEx rate for a full year, the company reported.

“Fundamentally, the OptBlue program that powers this pricing initiative is a real game changer for the industry,” said Jared Isaacman, Chief Executive Officer at Harbortouch. “We are excited to participate in that program and pass on those benefits to our sales partners.”

AmEx has steadily implemented third-party sales models over the last two decades. Its External Sales Agent (ESA) program, which began in the 1990s, pays ancillary bonuses to merchant level salespeople (MLSs) who submit AmEx merchant agreements with new merchant processing applications. The OnePoint program, established in 2007, pays ongoing residuals to agents who solicit, process and service AmEx merchant accounts.

In both the ESA and OnePoint programs, AmEx owns the merchant relationships and sets the pricing. OptBlue, introduced in 2013, was the first AmEx reseller program to enable third-party acquirers to own the merchant relationship, manage credit and chargeback risks, service the accounts, and use AmEx wholesale pricing to set their own rates.

Doubling down on OptBlue’s all-in-one program

OptBlue was created to complement other AmEx initiatives such as Shop Small, a program that encourages AmEx cardholders to patronize small, local businesses. Designed for merchants with projected AmEx charge volumes of less than $1 million per year, OptBlue aims to simplify credit card processing for small-business owners. Resellers can consolidate AmEx transactions with other major card brand activities to provide merchants with an all-in-one merchant statement and point of contact for all their processing needs. Both AmEx and Harbortouch strive to evolve their programs in response to payments industry trends. Harbortouch introduced a free POS initiative in 2011 with a flat monthly fee for related services that he described as being “no different than the free cell phone you get when you sign a Verizon or AT&T service agreement.”

Ed Jay, AmEx Executive Vice President, Merchant Services Americas, described OptBlue as part of the card brand’s ongoing commitment to enhance the small merchant experience in the United States. "The program will help deliver a smart and easy solution for U.S. small merchants to enjoy the benefits of American Express Card acceptance while making it convenient for consumers to Shop Small year round," he said.

Isaacman has observed a steady increase in boarding of small to midsize merchant accounts, many of whom are price sensitive and averse to AmEx acceptance. “As Harbortouch became more focused on offering POS technology, our target market evolved into the small and midsized restaurant and hospitality industry,” he said, noting that this market segment has traditionally perceived AmEx to be a premium and highly priced card brand.

“We want to reverse that perception and appeal to that market by lowering the American Express rates,” Isaacman added. He expects the program to deliver substantial cost savings to merchants who already accept American Express, freeing up funds that could be used to upgrade outdated equipment to Harbortouch POS systems. He also anticipates the special pricing to lower barriers to entry for merchants who have never accepted AmEx due to perceived higher costs.

Complete package is the real differentiator

AmEx rates can be especially steep for small merchants, many of whom lack the economies of scale to demand better pricing and pay as much as 3.5 percent to accept AmEx-branded cards. A business processing $20,000 per month in AmEx charge volume could save over $300 per month paying 1.99 percent instead. Isaacman and his team believe that the “complete package,” which bundles the AmEx offer with the company’s free touch-screen POS system, will be an important differentiator for MLSs and merchants alike.

“We believe the ‘complete package’ is really what makes the program special because it enables our sales partners to offer an aggressive cost structure on American Express acceptance, as well as an extremely economical, yet feature-rich POS system and still earn a competitive compensation package,” Isaacman said.

Isaacman noted that Harbortouch has consistently attempted to balance economical solutions with feature-rich technology while remaining responsive to sales partners and merchant customers. He feels the main message from all channels is very clear: “They want POS technology, like our Elite and Echo systems, but they want lower processing costs and more reasons to accept American Express from their customers,” he said. “We believe we are answering that demand and exceeding those expectations.” end of article

Editor's Note:

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