Remember the days when consumers had to provide driver's licenses and credit cards to pay for goods or services with checks? Where did that leave consumers with no credit cards? Merchants could phone issuing banks to verify funds or call check guarantee companies. Meanwhile, the other people in line were tapping their feet.
Electronic check conversion arrived in 1999, shortly after the founding of Global eTelecom Inc. Check conversion with guarantee at the POS was the next logical step.
"There really weren't a lot of options for the ISOs or the merchants for check conversion with guarantee on these point of sale devices that an ISO would normally use," said Chris Brundage, President of GETI. "So, originally that was the biggest need that we filled, and that's where we saw a lot of our growth.
"Since then, we've expanded quite a bit. On the ACH [automated clearing house] side, we've grown into checks by phone, checks by Web, doing recurring debit, authorizations and processing, and we've gone outside of the ACH world in the past three years."
Global eTelecom now offers services in three more areas: Check 21, remote deposit capture (RDC), and gift and loyalty processing.
Check 21, short for the Check Clearing for the 21st Century Act, allows banks to clear checks using digital images rather than the original items.
Check 21 requires the use of RDC, a Web-based electronic payment processing system that enables users to scan checks and transmit the ACH data to banks for posting and clearing.
GETI brought Brundage, then a five-year ISO veteran, on board in 2001 to grow its ISO channel. At the time, GETI was boarding 75 new merchants a month, to whom it catered with a staff of about 20; now the company boards around 2,000 new merchants a month with a staff of 70.
While growth is something every business hopes for, it can inundate a company with constant demands and challenges. Brundage said the jump in merchant boarding put stress on every department.
Adding new products also presents challenges. "As soon as we get a process flow down on something, as soon as we get comfortable, things end up changing again," Brundage said, adding that the company's expansion has made even the little changes more complicated.
Originally a privately held company, GETI has been acquired twice – by Verus Financial Services in 2003 and The Sage Group PLC in 2006.
"We've actually been very fortunate," Brundage said. "Both of the acquisitions gave us a lot of financial security, a lot of financial depth, access to some other resources that we didn't have as a very small, privately, closely held company."
He added that both parent companies allowed GETI to remain largely autonomous. "I think the main reason is we do what we do very well, and they recognize that and just continue to let us do that without having really much involvement," he said. "In these days of acquisitions, it's kind of unique in that we didn't get rolled up into or gobbled up by these entities."
Brundage said he's seen ACH adoption slow down in some environments while growing in others. He said it has slowed mostly in the POS arena, as more consumers pull out their debit or credit cards instead of checks.
But there has been more adoption in bill pay environments and business-to-business (B2B) transactions in the form of checks by phone and over the Web, according to Brundage. People are still using their checking accounts to pay those bills, but now they are doing it without paper, he said.
Brundage noted that merchants benefit when consumers pay from their checking accounts rather than with credit cards because they avoid the interchange fees associated with credit cards. "As the cost of accepting credit cards has continued to increase throughout the years, that has just kind of become more of a pain-point" for merchants, Brundage said.
Furthermore, when consumers pay via the Web or over the phone, merchants don't have to deal with handling paper checks, which makes processing faster and less labor intensive. Merchants can charge a handling fee but aren't likely to do so because they incur lower fees themselves, said Brundage.
Using the Web or phone to pay bills may be more convenient for consumers than writing and mailing checks. It's also good for the environment, and it saves postage.
The B2B market, which still relies predominantly on check-based payments, has been fruitful for GETI, with the company's largest gains coming from Check 21. "Retail is flat and slightly going down, but these other environments – B2B, bill payment, phone and Web – those are all increasing," Brundage said.
GETI developed its own Check 21 RDC product at the beginning of 2008. The company offered something Brundage said it hadn't seen in the marketplace: RDC with a check guarantee option to protect merchants from bad checks. The RDC product has been GETI's fastest-growing service, with a great response from merchants and ISOs, according to Brundage.
"ISOs love it because it's another source of revenue; they can capture more of a merchant's processing," Brundage said. He added it has helped ISOs explore niche markets they might not otherwise have tapped. "It opens up some new doors for them and ideally it helps them expand their bankcard business as well," he said.
Brundage noted that GETI focuses on ISOs. "We don't just want our sales department to be ISO-friendly," he said. We want everybody, whether it's the IT person or my underwriter … centered around one thing: How is this going to affect the ISO's relationship with the merchant and how they do business with us?"
No one can be all things to all people, but GETI tries to tailor its approach to each ISO – an approach that separates the company from its competitors, according to Brundage.
"We find out how our ISOs currently do business (boarding merchants, agent training, resource material, merchant support, residuals, et cetera) and customize all these touch-points to fit each ISO's unique operation as opposed to forcing ISOs to do business our way," Brundage said.
"This, I believe, is what sets us apart from other value-added companies in the industry.
"Sometimes that's to our detriment. I mean, obviously it's tough to grow and stay big when you create so many custom features, and you create your own monster a lot of times." However, he added that ISOs appreciate GETI's customization.
"We recognize ISOs are in the bankcard business," he said.
"They're not in the business to sell my product. I'm just there to add value. Some ISOs will lead with our products and then follow up with bankcard. We constantly preach that the agents need to evolve from just a bankcard salesperson to more of a payments consultant."
The more payment solutions an ISO provides to a merchant, the less price-sensitive that merchant will be, Brundage said.
GETI recruits ISOs through print advertising, industry events and referrals. Brundage said the main reason GETI decided long ago not to be in the bankcard business is it doesn't want to be seen as a competitor to its ISOs.
GETI provides a comprehensive agent resource site full of resource material, documentation and power point presentations to give ISOs all the information necessary to market its line of products.
The company also holds webinar trainings on a regular basis. For the larger ISOs that have training programs, GETI sends representatives to facilitate the insertion of its products into those companies' training modules.
Brundage said getting in front of ISOs' internal operation teams and answering their questions is the best approach to training. GETI training extends beyond the salespeople to all the support staff.
"We don't have a direct sales force or direct sales channel," Brundage said. "I really don't see us getting out of the ISO channel and branching out into any other sales channels just because we've tailored everything to fit this one."
Brundage, who is known within the company for his philosophy of keeping everything as simple and efficient as possible, said, "The larger you get, the more distractions there are, the more waste there is, the more complexity there is, and it's a constant battle to continue that theme of efficiency and simplicity." Monetary gain isn't the only measure of success. Brundage said his biggest reward is when people approach him at conferences and give him positive feedback about the company: how well its staff handles situations, how knowledgeable the tech support staff is, how friendly the receptionist sounds and how well GETI takes care of its merchants.
He said the positive reinforcement – whether from the chief executive officer of a large, publicly held ISO or a guy working out of his basement giving GETI two deals a year – is very rewarding. "Our name in the industry means something," he said.
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