A gateway to Canadian merchants

Federated Payment Systems LLC provides processing solutions and value-added services for merchants based in the United States and Canada. The company offers a full range of services including credit and debit card processing, equipment leasing, gift and loyalty card programs, cash advance, and check approval services for traditional, mobile and e-commerce applications.

The company was founded in 1999 by John Guirguis, who prior to Federated had worked extensively in the operations side of the payments industry. He merged services, partnering with Jon Levitt, another ISO and seasoned sales professional, who was charted with running the company's sales and marketing initiatives. And today, Federated has grown to more than 230 employees with another 450 payment professionals working externally to support more than 25,000 merchants.

"We, as a company, have grown from serving the processing needs of the smaller, traditional brick-and-mortar businesses to becoming one of the leading merchant service providers, first in the U.S. and, for the past two years, Canada," said Levitt, who serves as Federated's Chief Executive Officer. "Today, we offer solutions for every type of business, from traditional retail to mail order/phone order, e-commerce and mobile, while providing the world-class service and support our customers, as well as our ISO partners, need to grow their business."

Roots of expansion

Federated discovered a land of opportunity when the company launched its services into Canada. Realizing rapid expansion of its merchant base in Canada, Federated quickly found that many Canadian merchants were paying higher rates than most U.S. merchants, and many of the merchants they encountered revealed that customer service, for the most part, was minimal at best. "We jumped into the Canadian market for three key reasons: lack of competition, mandated chip-compliant terminal upgrades and restructured interchange," said Scott Avery, Senior Vice President of Sales at Federated Payments. "Until recently, the market was controlled by a handful of large, merchant-unfriendly banks who overcharged the merchants with prices one-and-a-half to two times what they should be paying," Avery said. "Due to strong relationships Federated has with its alliance partners, we have now unveiled a simple solution to allow U.S. and Canadian ISOs to maximize their opportunity to increase profits by expanding into the Canadian market." In Canada, Interac Association, MasterCard Worldwide and Visa Inc. have all committed to chip migration by the end of 2015, when full compliance will become mandatory. With Canada's shift to Europay/MasterCArd/Visa (EMV) chip-enabled devices and cards, Federated sees tremendous growth opportunities in equipment leasing programs, as most merchants in Canada currently rent their equipment, and of those merchants, only 15 percent are chip-compliant.

With debit and credit card fraud losses in Canada reportedly totaling nearly $250 million in 2006 and rising at an annual rate of close to 30 percent, experts are hopeful that chip migration will reverse this alarming trend. Federated said that adoption of chip technology in Canada is expected to reduce exposure to fraud and could ultimately result in rate reductions for processing card payments. Another factor Federated believes will open additional opportunities for selling in Canada is the fact that Visa and MasterCard restructured interchange 12 months ago from eight levels to more than 123 levels, offering more ability to accurately tailor pricing to transaction type.

Stateside ISOs stake claims in Canada

Since its entry into Canada, Federated has developed a lucrative turnkey program for U.S. ISOs and merchant level salespeople (MLSs) interested in selling payment processing services to Canadian merchants. The company unveiled its new program during the 2010 Electronic Transactions Association Annual Meeting & Expo held in April in Las Vegas.

"It's an open market, and we've laid the groundwork for U.S.-based ISOs to move into the Canadian market with a program that provides a roadmap to success in Canada," said Jim Perri, Vice President of Operations at Federated. "We've built a number of proprietary systems that will enable the ISOs we work with to be more productive."

The company's Canadian branch, Federated Payments Canada, offers ISOs access to the company's exclusive web-based agent portal: Canadian Account Tracking System (CATS). According to Federated, CATS is unlike any other system in Canada in that it offers an intuitive, user-friendly interface with on-demand, flexible, custom reporting on all facets of merchant account activity and sales performance.

Additionally, the company reported that CATS provides ISOs and MLSs instant access to a full suite of training materials and documentation. The system has the ability to create tickets, generate customer service alerts, and can produce reports based upon more than 200 separate criteria. All the statistics an ISO needs for day-to-day operations are available on demand. The customizable administrative features allow ISOs full control over sales team access to information.

"CATS is truly a unique tool in the Canadian market providing owners, managers and sales reps from our partner ISO organizations with real-time, online access to all the information they need to run their business efficiently," stated John Guirguis, founder and President of Federated.

Solid support from all angles

This year, Federated launched a redesigned website: www.federatedpayments.com. "The restructured website provides key features that enhance the customer online experience, including an extensive list of frequently asked questions; access to SafePay, which allows Internet-based businesses to process online transactions; 24-hour access to technical support and customer service; and enrollment in the Federated merchant referral program," said Greg Slote, Federated's Director of Marketing and Communications.

Federated prides itself on its sales and support efforts, with teams focused in Canada and the United States available to answer questions and resolve issues pertaining to alternative funding, EMV chip compliance in Canada, training and the many other services offered by the company. Expert technical support is available 24/7, 365 days a year. Also, according to Federated, most support issues are resolved on the first call, and a study conducted in the fist quarter of this year showed 85 percent of customer service calls were answered within 15 seconds.

Federated sells and supports all major equipment and terminal manufacturers and software processing packages available on the market today, and in-house programming allows for fast deployment of equipment. In addition, SafePay, Federated's industry-leading, proprietary Internet gateway, supports 80-plus shopping carts and is defined by the company as ultra-secure. "We are 100 percent PCI compliant and work with our clients to ensure their systems are as secure as possible." Perri said. "It is very important to us to make sure we're always looking out for our partners."

Building an international revenue base

Federated Payments takes a consultative approach in developing long-standing relationships with its merchant customers, ISOs, MLSs and cash advance partners to enhance the speed and functionality of merchant commerce. Various programs maximize front-end and back-end profits, combined with a no-liability program, to provide a turnkey solution to both U.S. and Canadian ISOs and MLSs of all sizes and levels of operation. Federated offers revenue sharing and buy rate options to ISOs and MLSs operating in the United States and Canada. It also provides pre-set appointments under select programs, with sales reps choosing the program that best suits their needs. Additionally, the company reported that its commissions are paid daily, based on an attractive upfront commission structure; residual income is provided with true split over interchange; detailed residual reports show exactly what is being paid; and a designated hotline is available to answer residual report questions. Federated also operates a dedicated website for its sales partners: www.hugeresiduals.com.

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