A different vision, a better solution

When Sharif Bayyari formed international payment solutions provider and payment processor Merchant e-Solutions Inc. in 1999, it was out of frustration with his previous executive position and his desire to offer merchants a comprehensive set of payment solutions under one roof. Bayyari, President and Chief Executive Officer of MeS, was the CEO of Bank of America Merchant Services Inc. from 1993 to 1999.

When Bank of America Corp. decided to bring its merchant services functions back into the company as a wholly owned subsidiary, Bayyari realized it was time to break away from a company in which he had lost control over both operations and investment infrastructure. When Bayyari founded MeS, a handful of the BA Merchant Services management team went with him.

"I teamed up with Sharif in 1993, and he built the BofA business from 7 billion processed card transactions a year in '93 to about 60 billion by the end of 1999," said Jim Aviles, MeS' Chief Operating Officer. "It was all done organically, but the truth is that BofA had a very different vision of the merchant business.

"They said they were in cost-reduction mode and, by the way, all of your product development projects have been cancelled. Well, Sharif and I thought about that situation and felt very strongly that they were making a mistake. We had built them an awful lot of growth in that end of the business, and they were going to let the air out of the tires. They were obviously going in a different strategic direction, so we felt it best to leave the company."

One system, no silos

MeS serves the payment processing needs of community banks and their merchants, partner channels and international e-commerce clients. MeS payment solutions and reporting services were designed specifically for these market segments. Aviles added that what differentiates MeS from other processors is that it has one system that addresses the entire functional requirements of merchants' businesses.

"We wanted to create an environment in which we got rid of all these siloed systems and built one platform to address all these different requirements," Aviles said. "We strive to take advantage of modern technology to build out the electronic payments infrastructure for our merchants' businesses. So that simply means we wanted to own all the operational and systems landscape on one proprietary platform and avoid outsourcing anything to third-party vendors."

Since January 2000, the company's portfolio has grown to over 65,000 merchants and 200 financial institutions that outsource their processing services to MeS or resell the company's services under their own white-label brand. Approximately half of the company's merchants are e-commerce whose transactions are categorized as card-not-present (CNP). The other half are doing business in the retail, restaurant and hospitality, and business-to-business (B2B) spheres.

Three components, equal weight

Aviles noted that MeS has three divisions that are equally weighted from a revenue standpoint: the financial institutions that resell MeS services, a direct sales force and, most importantly, the channel partnerships it has developed with value-added resellers, technology providers, associations and other payment-related companies that refer business to MeS.

"We have an affinity for acquiring merchant relationships through our banks and we feel there is a lot of stickiness there," Aviles said. "It's very cost effective because the banks are doing most of the marketing and sales. We're providing the tools they need to better manage those merchants and it's been very successful. We can also sign up merchants directly through our sales force."

He added that the partnership channel allows the company to market its services through companies that offer related services.

"For example, we teamed up with Sabre Travel Network, which is the largest travel agent reservation service provider in the country," he said. "We can now offer their agents a merchant services program that is integrated into Sabre's reservation system infrastructure. The benefit is we can develop new merchant relationships without going after individual agents."

MeS authorizes and processes transactions in 150 currencies in 22 countries. In addition to credit and debit processing, the company offers automated clearing house (ACH) services, electronic check conversion, online PIN debit and alternative payment platforms such as Bill Me Later, PayPal Inc. and Acculynk's online PIN debit.

Kevin Gallagher, MeS General Manager, e-Commerce, said MeS has integrated the alternative payments directly into its processing platform, which allows the company to facilitate those transactions through its own infrastructure. "We can also provide real-time reconciliation reporting to our clients as well as currency conversion services," he said. "So we make sure from a CNP space that we are supporting those alternative payments that enable our merchants to accept whatever the customer chooses to pay with.

"When you get into different countries you need to be able to facilitate transactions beyond Visa and MasterCard processing, otherwise the merchant could end up losing a huge percentage of their potential customers. We have done a great job of putting the right pieces in place."

Real time, no paperwork

Aviles said that one of those pieces is a Web-based platform that enables merchants to submit their applications online and get all of their transaction processing and chargeback information online in real time.

"E-commerce merchants looked at that and said, 'Wow, this is the way we want to interact with our processor,"' Aviles said. "They tell us they don't want paper statements, green-bar reports [rigid hard-to-use data from a mainframe computer environment] or chargeback notifications mailed to them. They want to do all those processes online. And because of the infrastructure, we started drawing interest from a lot of e-commerce merchants. As a result we began building out our product line and sales organization."

Aviles added that this also enabled the company to expand outside of the United States. "From the merchants' perspective, we provide one interface that can support any of their payment methods worldwide as well as one set of reporting and reconciliation to manage those operations," he said. "This makes it much easier for our merchants to connect to us for any of their processing needs."

Currently MeS works with U.S. companies that have a multinational presence, and many of its larger e-commerce merchants have significant business in Europe and Asia. The MeS proprietary platform enables merchants to interact with their international customers in the currency and payment mechanisms native to their own countries.

One partnership that facilitates this began in March 2008 when MeS added 2Checkout.com Inc. (2CO), an e-commerce solutions partner and fraud specialist, to its fold. MeS' Global Acquiring Platform (GAP) enhances the turnkey services that 2CO provides. GAP enables 2CO customers to sell merchandise in dozens of currencies including U.S. dollars, euros, pounds, yen and Canadian dollars.

"Merchant e-Solutions' GAP not only provides comprehensive support for currencies and payment methods throughout the world, but the back-end tools that help us manage them more effectively," said Alan Homewood, CEO of 2CO. "We felt, through this platform, 2Checkout has unlimited possibilities for expanding our business to every corner of the globe."

Kristin Dach, 2CO's Chief Financial Officer and Chief Operating Officer, added that MeS was very responsive to 2CO's strategies and goals and has enabled the company to move forward much faster with new products and services.

"There's a lot of volume out there that we believe we would excel at handling, but we haven't had the proper type of merchant agreement or perspective base," Dach said. "MeS is giving us the education and the willingness to do multiple product offerings. They've brought more aggressive players to the table. I also appreciate the fact that they're not afraid to do their due diligence. In a word, they've been great."

Practical solutions, stable environment

Aviles said that while MeS is a technically oriented company, he is most proud of the company's quality of service, which is paramount to maintaining merchant relationships. "Our ability to service our merchants, partners and banks and to work with them to solve their problems immediately is really culturally what we're all about," Aviles said. He added that because MeS owns all of its service delivery mechanisms, it can control them and follow through on all that the company's customers need it to do.

"We have built a solid reputation for being responsive and supportive," Aviles said. "Our help desk operations people in Spokane are graded on the quality of the call and not its length. We encourage our customer support reps to address all of the merchant's problems right then and there on the phone. So we benefit because that person doesn't feel the need to call back. And just as important, they're going to walk away with a positive feeling."

One of the characteristics that Aviles feels distinguishes MeS is the company's name. It was founded to provide solutions that make transaction processing and settlement more efficient and cost-effective for the end user. "We can provide our merchants with solutions that are just a little bit better and address some of their issues," Aviles said. "In this regard, work for me is personal. I love the attitude companywide of getting things done. With all the kerfuffle in the bigger service providers and processors, there are so many small and mid-sized merchants and banks that are feeling out in the cold."

Aviles believes that what they need is a good, stable processing environment and partner who understands their specific requirements. "We simply want to make life a little easier for them in terms of service and product delivery and help them address the current and real problems they have today," he said. "It's all about being flexible and inventive. And I know this is an area where we feel very well-positioned."

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