Having recently formed a joint venture with Total System Services Inc. (TSYS), Central Payment Co. LLC (CPAY) is poised for a major take-off. The founders of the Northern Calif.-based ISO said the company's capacity for devising creative, tech-savvy solutions will be bolstered by the financial and technological backing of one of the industry's largest, most reputable processors.
Brothers Matt and Zach Hyman, who co-founded CPAY in 2005, said the relationship with TSYS allows CPAY to retain its identity and creates a unique dichotomy: a company that combines the economy of scale of a payment giant with a smaller firm that has catered to the small and midsize merchant space and relied on innovation and flexibility to gain a leg up.
"I think our [agent] partners perform better with us than they do the competition, and the reason is that our company - all of our 130-plus employees - are focused on offering the utmost flexibility to meet the needs of every agent," Matt Hyman said. "We want our agents to feel like they're part of something bigger and better, we want them to feel our entrepreneurial spirit, and we do what we can to make sure they have the tools to make that happen."
According to Matt Hyman, those tools include efficient, thorough and individualized phone and technical support; flexible compensation schedules; and an array of value-added products to expand POS functionality. These include facilitating back-office functions such as tracking outlays and receivables and ramping up merchant marketing campaigns with promotions via email, text message and social media.
Zach Hyman noted that CPAY's approach to its agents is very individualized. "One area we've really put a lot of work into is building systems and support to be more flexible with each agent," he said. "We have 50 different compensation schedules. We talk to each agent separately, help them establish marketing guidelines and [sales] programs. We do not do our policies and procedures with a broad scope." He added that the company also provides 24/7 phone support with zero hold times, as well as ready field assistance for issues related to payroll, service, technology and proposals.
Matt Hyman said CPAY's signature value-add is the SpotOn digital loyalty and marketing platform - a product that employs texting, email and social media as both channels for multipronged loyalty campaigns and as vehicles for tracking customer purchasing data.
Zach Hyman said many of CPAY's value-added products are the same as those offered by other ISOs; however, SpotOn is the type of program that "99 percent of these merchants have never been pitched before." He added that the product is "one of those things every agent looks for, and that's something that gives them a distinct competitive advantage. Our check services and POS services are great products, but those aren't things that give our outside sales agent a real competitive advantage."
SpotOn is part of the larger evolution in gift and loyalty programs away from plastic cards, stamp cards and paper coupons and toward mobile phones and digitization. The program uses a Samsung Galaxy Tablet, placed on the merchant's counter top, to communicate with customer cell phones (using Quick Response Codes) to automatically redeem coupons, confer loyalty rewards and the like.
"Loyalty [programs] depend typically on sending out 100 or 200 loyalty cards, and that solution doesn't help your relationship with merchants," Matt Hyman said. "Number one, it's expensive: merchants need to re-order their cards every time they run out. And number two, it's not consumer friendly: consumers end up having to carry 10 different loyalty yogurt shop cards."
A consumer signs up for SpotOn by either tapping a smart phone to a counter-top tablet and entering an email address or by downloading a smart-phone app.
Once registered, every time a consumer pays for merchandise or services at a store that uses SpotOn, the customer simply taps his or her phone on the merchant's reader for loyalty offers and promotions. The program also enables smart-phone users who download the app to look up the names and locations of merchants that use SpotOn in a given locale.
Merchants collect, at minimum, an email address for every customer who registers, which merchants can use to send ads or promotions. They can also track consumers' spending habits and craft individualized marketing campaigns.
Beyond that, the program allows consumers to opt into a mobile alert program that uses text messaging. Merchants can also post deals on Facebook and Twitter, where customers can redeem coupons anywhere they are posted, be it the merchant's Facebook page or where it pops up in the news feed on the customer's own page.
According to Zach Hyman, social media creates a more interactive element, too. Consumers can rate deals and post feedback, while merchants can use social media to target customers with selective ads and promotions, based on the customer's feedback and other online activity.
"Part of SpotOn is the merchant connects their business with social media and can respond to posts, as well as put one up," Zach Hyman said. "They might post on their Facebook page, 'Come in tomorrow between 5 and 6 p.m. for a free tequila shot.' And if the customer clicks to redeem something, we recognize that customer, who will then see the deal they redeemed on the tablet [at the merchant's POS].
"On the other hand, they can just send an email to 1,500 customers, maybe if a restaurant is changing locations, or is opening for lunch. Now you can tell everybody. It all makes it very easy for a business to track redemptions and see their [return on investment] on SMS, a mobile app, emails or social media outlets. ... Just that power to connect is worth a lot of money."
According to Matt Hyman, the benefits of CPAY's new partnership with TSYS are financial, technological and reputational. "TSYS has a solid reputation, and this deal really puts CPAY on the map," he said. "I think TSYS is an ethical company, so our cultures align that way. ... And we don't have the bandwidth that they do, so we'll be able to do things with products and technology that we couldn't do before."
Zach Hyman added, "We plan to aggressively board outside agents and let them know who we are and about the venture. It's a huge value, and our phones have been ringing off the phone with interest."
As for TSYS, the venture with CPAY represents its second major move into the acquiring space - but its first into the arena of independent sales, CPAY noted. In March 2010, TSYS established itself in the direct merchant acquiring space by purchasing a 51 percent controlling interest in the First National Bank of Omaha.
CPAY, on the other hand, does all of its merchant boarding through independent sales channels, thus giving TSYS a strong foothold in both the direct and indirect acquiring sectors, according to Susan Sheen, Senior Director of Marketing, Communications and Business Support for TSYS Merchant Services. "It gives us both sides of the equation," she said.
Sheen said the other selling points for CPAY include what she described as a "great cultural fit," as well as the fact that it was already a TSYS processing partner before the acquisition. "They don't have to learn the tools as they go to market," she pointed out, adding that TSYS has aims of becoming a top 10 global acquirer.
"We see ourselves growing through our existing business, through this joint venture, and we will also be looking at making other acquisitions in the future," she said.
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