The company that says yes when others say no

Complete Merchant Solutions LLC co-founder David Decker believes his company's sales force can aggressively target even the most elusive merchant niches because of the company's uniquely flexible relationships with its two partner banks: National Bank of California and HSBC Holdings PLC.

"It's a collaboration versus the bank saying, 'You guys need to do this; here's you're credit, and good luck,'" Decker said. "When you're working with [a traditional bank], they're not going to listen if you have an account you think you can justify, because of the relationship or some nuance, if it doesn't fit into the credit policy."

Decker pointed out that CMS is among "only a handful" of payment processing companies in the United States that has a direct relationship with its banking partners.

"This distinction affords us far greater control over the accounts we accept and maintain, and greater flexibility over the pricing we're able to extend to our sales partners," he said. "If there's a card-not-present account that doesn't meet [another bank's] credit guidelines, they decline it, whereas we go to our bank and we're able to discuss some of the nuances."

Built for adaptability

CMS was launched in 2008 by Decker, Trever Hansen and Kyle Hall. All three had previously worked as merchant level salespeople (MLSs) with an ISO that operated under a major national bank and went out of business.

The failings of that ISO caused the founding trio to conclude that in an increasingly competitive, complex marketplace, adaptability is essential. They realized an ISO functioning in a rigid, monolithic way is handicapped in today's complex merchant services landscape with its greater diversity of merchant types, more intricate fraud schemes and different risks than existed 10 years ago.

In 2009, consultant Jack Wilson, who had run the merchant services division for Electronic Clearinghouse Systems Inc., came aboard and subsequently became CMS Chief Executive Officer. Decker said Wilson was instrumental in driving the company's early evolution, which entailed shifting from focusing singularly on brick-and-mortar merchants to aggressively zeroing in on the e-commerce space.

"Our experience was use the call center, set up appointments and then go after low-hanging fruit, which is retail," Decker said. "He taught us the importance of the Internet and also that the key relationship was not so much the one with the processor but the one with the bank. Many [ISOs] just piggyback the credit-worthiness of the processor."

Willing to take on liability

CMS is certified as a Full Service Provider (FSP), which gives it a pliancy with underwriting that most competitors lack, according to Decker. He said becoming an FSP entails complications that most ISOs aren't willing or able to tackle. For one, ISOs that are FSPs usually bear greater liability for their business decisions; normally the bank takes on the extra liability.

"We have a huge reserve with the bank and take 100 percent liability with [CMS' processor] First Data and the bank, and that is what gives the bank the comfort level to give us that flexibility we have," he said, adding that FSPs tend to be large companies with money to invest in operations and technology.

"It requires a significantly larger infrastructure," he said. "A typical ISO works with First Data or Global Payments, and in a palatable format they'll provide them with reports. As an FSP, you do huge data dumps that require a lot of money, and you need to develop the technical infrastructure to report it all."

CMS tends to target midsize and large merchants. Decker said the company leverages its strong capitalization and cutting-edge, in-house technology to provide scaled services at a good price to that market. He added that about 60 percent of the company's merchants are e-commerce based, with brick-and-mortar and MO/TO merchants accounting for the other 40 percent.

"A big key to our success is identifying key vertical markets where others don't understand the risk or otherwise lack familiarity, and where the clients are underserved," Decker said.

Sold on security

CMS excels at helping merchants deal with issues pertaining to information security and chargebacks, Decker said. The processor is Level 1 Payment Card Industry Data Security Standard-certified and can help its merchants become certified, at reduced rates, through its partnership with SecurityMetrics Inc.

CMS also partners with Panoptic Security Inc., leveraging that company's services to assess merchants' levels of PCI compliance and help root out potential problems upon detection. "Merchants will log into our system, to [the Panoptic page], and fill out a survey of their operations," Decker said. "Based on that survey, they'll be given certain requirements.

"Also, Panoptic will scan their website looking for noncompliance issues and report back to them."

Decker said CMS provides separate guidance to merchants about preventing fraud, with technicians posting regular tips on the CMS website and on merchant statements about risk-related items.

Undaunted by chargebacks

CMS commonly takes on large merchants that are deemed too risky by other processors, often because of high chargeback levels, Decker noted. He said the company specializes in helping such merchants maximize profitability by reducing their chargeback levels and guiding them in effectively handling chargebacks when they do occur.

"There are large companies that are underserved, because most processors consider them untouchable due to chargebacks or some risk involved," he said. "We're working with large companies that, for whatever reason, had a glitch in their processing past, and we're working to fix those glitches and get them back into the mainstream."

Decker added that CMS often encourages merchants to contest fewer chargebacks because such contestations can be detrimental to customer retention.

"Typically, it comes down to the issue of communication with their customers," he said. "If they're not free enough with their refunds or in speaking to customers about their problems, those customers won't be happy with their service. So companies often need to allow chargebacks when they can."

Decker said CMS provides reporting tools that allow merchants to drill down to finely detailed payment information. He also said merchants have 24/7 phone support, with each assigned a "special relationship manager" whom they can reach by cell phone with questions or concerns. Merchants can also get help through the company's customer service and technical support channels.

Committed to customer service

CMS' commitment to efficient, customized service is what distinguishes it from other processors, said Ken Musante, President of California-based ISO Eureka Payments LLC, a CMS partner.

"CMS is extremely professional and, at the same time, they're small enough that you can talk to the decision-makers and be able to talk through requests and needs from the merchant clients," Musante said. "They're a knowledgeable and efficient firm that can work very quickly on all types of deals, from regular retail to high-risk online."

As an example of CMS' ability to quickly address distinct client needs, Decker cited a recent experience with a large education foundation that had been profiled as a "debt repair" company by its previous processor, which then said it was shutting down the foundation's account.

"Visa and MasterCard don't like certain credit types, and credit repair is an industry known for high chargebacks," Decker said, adding that volume is what prompted the termination. "They started processing at $100,000 month [and] ended processing over $1 million," Decker said. "The processor got nervous because the company grew too large."

Decker said CMS conducted a thorough review and, after consulting with its partner bank, agreed to take on the foundation. It also recognized that the foundation could be classified as a nonprofit for tax benefits, he added. "We hustled and got them processing within the allotted time frame, and now they are once again thriving while providing an important service to our community," he said.

Decker said the experience exemplified CMS' unique ability to navigate different roadblocks to a processing agreement. "Due to the inherent risk, most processors automatically say no if they don't immediately understand a business model or it doesn't fit nicely within their credit policy," Decker said.

"We try to do the opposite. As long as merchants are willing to conform to the rules, we use benchmarking and analyses to try to figure out a way to say yes."

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