In 2000, Drew Sementa was running a Web development company in Florida. He had clients around the nation and needed to accept credit cards. So, an acquaintance in the payments industry sold him a transaction terminal for cash. But Sementa never received the terminal, nor did he get a refund.
Given his introduction to financial services, specifically payment processing, Sementa's decision to become an ISO may be surprising. However, he felt that merchants, as well as agents, weren't getting the true story when they set up merchant processing accounts.
"So, I just went out and tried it," he said. "I began as an agent and started building my portfolio. I figured it was a good opportunity _ and a lot of ways to make money and also help people."
He soon founded Premier Payment Systems, where he serves as President. PPS provides merchant services to a variety of businesses nationwide, both online and at brick-and-mortar locations. Additionally, it has developed specific solutions for the utilities sector and not-for-profit organizations.
PPS' goal is to make ethical business transactions the standard in the payment processing industry. "We believe firmly in conducting business with honesty and integrity," Sementa said.
The company employs nine full-time workers at its Lombard, Ill., headquarters and has 20 additional agents throughout the nation. PPS reports $36 million in annual credit card volume processed and expects that number to skyrocket to nearly $500 million by the end of 2008.
This is due largely to recently signed preferred vendor agreements with several publicly traded companies. Also, PPS has formed a relationship with one of the nation's largest chambers of commerce to provide members with merchant services and credit card processing.
Sementa believes that businesses select PPS for merchant services because of its integrity. He said one client revealed it had researched PPS' competitors and found that PPS was "the only company that had the right idea, the integrity and the way to do business the right way."
The "right" way for PPS is relationship-building, which means talking with clients and paying attention. "We genuinely want to help people make money," Sementa said.
Sementa has worked in sales since he was 16 years old. He began as a sales rep for telecom companies. At the ripe old age of 17, he landed his first management position.
When the telecom industry was deregulated, he started running call centers for communications companies and then dot-com companies. "The problem with the dot-com boom was they kept going bankrupt because they didn't have the best business plans," Sementa said.
He moved on to Web development, which brought him to the financial services industry.
Sementa's experience as a small-business owner helps him understand the plight of many merchants. "I think the reason many business owners get burned is they have a lot on their plate," he said. "They know that credit cards are a necessity, but they don't research it as much as they should."
He believes the majority of merchants sign with whoever talks to them first and view setting up payment processing services as just another hurdle to climb.
Unfortunately, this does not always serve merchants' needs. "We want customers to look at us not as a necessary evil, but as a business partner," Sementa said.
Sementa is proud of PPS' tarnish-free reputation. "We have zero complaints with the Better Business Bureau and are members of several local chambers," he said. "We take pride in what we do, and it trickles down to the agents and to the merchants."
Just as his experience as a merchant helps Sementa understand merchants, his experience as a merchant level salesperson (MLS) helps him identify with agents.
"Starting as an agent helped me in the way I treat my agents and build my agent program," he said. "I did have some bad experiences as an agent as well _ not being paid correctly, not being paid on time. We are in an unregulated industry, and unfortunately people take advantage of people."
Sementa believes that many unsatisfactory situations arise because MLSs are learning as they go. That is why training is so important to him and his company.
PPS is a young company and not as large as some of its competitors. What it lacks in size, it aims to make up for with scruples. "We are not out to get anyone, agents or merchants ... We are going to be around for a long time," Sementa said.
Sementa believes that customers have the right to be informed and educated about their merchant accounts.
"Many merchants do not realize that the fine print in their contracts contains important information until it is too late," he said.
"We are proactive in preventing our merchants from violating the rules and regulations established by the card Associations."
PPS also educates merchants about security and fraud issues, such as preventing employee card fraud, chargebacks and protecting cardholder information.
It can be difficult for a company to differentiate itself in the payments space, especially to retailers. "When offering merchant services, it can seem like you're comparing apples to apples," Sementa said. "We separate ourselves by making each and every merchant a priority."
PPS provides merchants with free rate reviews to ensure that they are processing at the most effective rate possible.
The company also makes customer service a priority. In-house help staff is available weekdays from 8:00 a.m. to 6:00 p.m. Central time.
At all other days and times, PPS offers customer service through a contractor. Thus, it has 24/7/365 customer service.
Sementa is very attentive to customer relations. For example, he said he sent personal greeting cards last holiday season to every PPS merchant.
He believes that a customer-centric approach helps PPS retain merchants. "While a merchant may be able to save a basis point or two with another processor, that basis point won't be worth it when they can't get anyone on the phone to ... assist them when they need it," he said. PPS boasts an attrition rate of less than 1%.
"We specialize in providing cost-effective processing solutions to businesses without compromising security, integrity or support," Sementa said. But companies also select PPS because of its ability to create customized programs for each client.
"It's me sitting down and looking at a way to do business on a large scale and coming up with what I think, with my knowledge of the industry and my staff's knowledge ... will be the best way to make credit card processing work for them," Sementa said.
Merchants can sign up directly with PPS; however, the company sells its services almost exclusively through ISOs and MLSs. "We decided about a year ago to phase out our own sales force," Sementa said. "We do not want to be in direct competition with our agents and ISOs."
Sementa said PPS strives to keep relationships with MLSs honest, open and straightforward. And it focuses on helping agents build a solid portfolio that will produce a strong residual stream.
"We start every agent on virtually the same program," Sementa said. "We let them [agents] know our pricing. They get a 50% split. ... If we receive $100 in residuals on an account, our agent gets $50."
The company pays upfront leasing commissions and pays on all residual streams, as well as its gift card program. It also offers agents monthly reporting of residual earnings.
It is also developing a Web interface that will enable agents to log in from cell phones or PCs and monitor account activity in real time.
Additionally, Sementa said agents are free to view information that confirms they are receiving true 50/50 splits. "They see the cut-and-paste of my residuals _ of what I get from the banks and processors," he said.
PPS does not require an exclusive agreement with its agents, nor does it have monthly minimum requirements.
"We encourage agents to continue their relationship with their current processing partner, but slip us a deal or two," Sementa said. "We know that after an agent sees the difference in not only their residual check, but our agent support and how we treat our merchants, they won't want to send deals anywhere else."
Sementa understands the quandary some agents face: As they are working to secure new merchants and build their portfolios, they risk alienating current customers. And if merchants are not satisfied, it reflects poorly on MLSs, causing them to lose business.
PPS maintains healthy relationships with customers, so agents can focus on building their portfolios. The company retains 99% of its merchants and charges no cancellation fees.
"While agents may be able to get a bigger initial split somewhere else or save a penny on transactions, is it worth it if the merchants they are working hard to sign up are constantly canceling?" Sementa asked rhetorically. "We focus on taking care of merchants so that our agents can turn their portfolios into a gold mine of referrals."
Sementa stressed that he and his staff are available to help agents in any way they can. "My staff is at your disposal," he said. Sementa will even ride shotgun on appointments if agents wish. "If you set up 10 appointments, I will go on 10 appointments with you," he said.
PPS also has a department dedicated to statement analysis. "We all know that statements can be confusing and time consuming to break down," Sementa said. Therefore, the company does this for its MLSs _ free of charge _ and provides them with a simplified analysis to use when meeting with merchants.
Agents in the field can fax a statement to PPS headquarters, and within 10 minutes, have a detailed analysis of a merchant's current processing program.
Sementa believes it is in both agents' and PPS' best interests to teach MLSs, so they can one day perform this analysis themselves. "A lot of people learn by doing," Sementa said. "We are here to hold your hand and walk you through it."
PPS also offers other training opportunities. The topic and level of complexity are dependent on individual agent needs.
"We have some agents that come by once a week and some we will see once a quarter," Sementa said. "We answer any of their questions.
"For agents who aren't in the local area, we provide lots of phone training, especially [if they] are new to the industry."
Drawing on first-hand experience, Sementa and his staff work to support their internal customers, agents and merchants. Through MLS training, statement analysis and customer service, they have set their sights on making honesty and integrity the status quo in the payments arena.
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Agent Relationship Manager