When payment processor Clearent LLC set out to build a proprietary, technology-driven settlement platform back in 2005, few in the payments industry were tackling such a challenge. But for Clearent Chief Executive Officer Dan Geraty, who was coming from a telecommunications and technology background, the concept would become the cornerstone for his new venture.
"We believe that the technology is really the base of the pyramid in which we grow everything else," Geraty said. "It's the source of differentiation for us in terms of product. It's what helps us do customer service better for our customers. It's what helps us turn around new applications in hours or minutes."
Another critical structural component for Clearent was the decision to organize a well-rounded board of directors, which today includes experts in banking, entrepreneurship, and sales- and customer-facing team building. "We wanted to pick the best people that we could find to shepherd the company through the tough times of being a startup," Geraty said.
As a startup, much of the early emphasis was on building its platform. "We were founded in April 2005, and programmers were building our settlement platform before we ever had a single merchant," said Jeff Fortney, Vice President, ISO Channel Management for Clearent. He joined the company in November 2006 as one of the first employees who wasn't involved in programming. He was tasked with developing the company's partner channel program.
"We settle all our transactions," Fortney said. "We do all the chargeback management, statements, all the funding to merchants, everything that a settlement platform does. We don't use a third party for any of that functionality." Instead, Clearent deals directly with the major card brands and works with ISOs to ensure all regulations are followed to the letter, he said.
Clearent has since grown to more than 100 employees in multiple departments. "Our IT organization is about 20 percent of the team," Geraty said. "For a company our size, it represents a big investment and commitment to technology." In April 2013, Clearent appointed technology veteran Marc Sundt as Chief Technology Officer to spearhead development of innovative payment technologies and new products.
Fortney believes that being able to keep pace with advancements in technology has been an advantage for Clearent. "We were the first platform in 14 years to be certified on MasterCard, Visa and Discover," he said. "But we used .NET technology, which means we're not like anybody else's platform. That's today's technology, not yesterday's."
Geraty described the differences today from when Clearent first certified with the card brands in 2008. He said what is most notable is that the company has added platform functionality through enhancements to its boarding system, extension of its next-day funding deadline, expansion of online reporting capabilities, and advancements in its merchant-facing portal and online residual systems.
In the process, Clearent said it has reduced application approval and processing time for most low-risk merchants to under an hour. The company introduced an online Application Status Report in November 2012 to provide real-time progress as to whether applications are in underwriting, pended or approved. When an application is pending, an explanation is given that details what information is missing so that issues can be resolved, all downloadable of course.
Developments in online management tools for ISOs through Clearent's Compass program include at-a-glance business intelligence with customized charts, graphs and reports. "They can analyze and look at all their residual reporting going back as long as they've been with us," Fortney said. "So if they want to compare year over year, it's there." Additionally, ISOs can view a list of top 20 merchants for performance, amount billed and locations billed for each merchant.
Another step forward was the extension of its daily deadline for next-day funding. "Our cutoff time is 9 p.m. Eastern time for real ACH [automated clearing house] going out," Fortney said. "So now restaurants that are open for dinner until 8:30 have the ability to have next-day funding, and it would be real money. It's not like I'm going to hold their batch or something, because we just take it and generate it. That's something you can develop when you have your own platform."
As the creator of its own back-end processing platform, Clearent has also enjoyed great flexibility not only in terms of pricing, but also with ISO co-branding of merchant applications, statements and collateral materials. And there is logic behind every aspect of its platform, the company said.
"Our applications and everything we've done are designed with the thought that we need to make sure merchants don't feel we deceived them and also conceptually that it makes sense," Fortney said. "We created a statement that gives them everything they need to know, plus more, and we did it in a form and fashion they can understand without a bunch of detail that they don't need."
Clearent also designed its online Payment Card Industry Data Security Standard questionnaire to make it easy for merchants to understand and complete. "It's intuitive," Fortney said. "It does not ask them a question that is not applicable to them. If they say they're on a dial terminal, it's going to ask them dial terminal questions."
Fortney also noted that the transparency of Clearent's residual reporting and tracking systems is another benefit for ISOs. "The residuals are very accurate, very transparent, so there is seldom, if ever, a question about what's in my residuals or why did I get paid this much, because all of the data is up there and online," Fortney said. "That makes it very easy for them to do their own residuals and then pay their own down lines accurately and timely, as well."
Clearent welcomes ISOs of all sizes, from sole proprietors to those with 30 to 50 merchant level salespeople. "I work with all the partners and one of the things that I find, the ones who understand the benefits and can leverage those benefits are growing," Fortney said. "Our partners tend to be more bought-in. Most are active and involved, use Compass as a tool to sell, as well as a tool to manage. Compass is the same tool that our customer support teams use."
Geraty added that because Clearent's customer service teams are technology-enabled, technical issues can usually be resolved with a single phone call.
Clearent reported that in 2012, it processed nearly $3 billion in payment transactions and added 99 new channel partners. Early indicators suggest positive revenue gains for 2013, as well. "Our rapid growth continues," Fortney said. "The second quarter is on track to set new records for processing volume and new merchant applications."
When asked about what has driven recent gains, Geraty pointed to heightened activity in residential rental payments, the education and trade school vertical, and aggregators; he added that since Clearent is a settlement platform, the door is open to virtually limitless vertical markets for any ISO that chooses to work with Clearent.
"We're not subject to the restrictions of billing tables or pricing grids or anything like that, so we give our customers literally infinite pricing options, so that they can bill their merchants appropriately for whatever market they're in," Geraty said.
Clearent noted that as a payment processor, it supports all forms of payment, including credit card, signature and PIN debit, gift and prepaid card, petroleum and fleet card, electronic benefit transfer, electronic check, and ACH payments. Its platform also supports mobile, e-commerce and wireless transactions, and integrates with most POS systems.
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Vice President, ISO Channel Management
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