ISOs and merchant level salespeople (MLSs) could average $5,000 a month in commissions for each client they land for Digitzs Solutions Inc., according to Laura Wagner, Chief Executive Officer and co-founder of the Santa Monica, Calif.-based company launched in 2014.
Why so much? Because instead of contacting merchants individually, Digitzs salespeople make their pitches to platform providers that serve multiple merchants. "If you're sick of going out after Ma and Pa Kettle for pennies in a hugely competitive space, turn your focus on the high-tech world," Wagner said.
But finding those potential clients requires new ways of prospecting and a long sales cycle, Wagner added. The company's salespeople seek third-party software platform providers, sometimes called independent software vendors. The platforms help units of government levy fines, nonprofits solicit donations, entertainment venues charge ticket fees, property managers collect rent, marathon organizers register runners and retailers receive payments, Wagner noted.
Take the example of a platform serving nonprofits. According to Wagner, the platform might develop cloud-based technology that can help a charity enlarge its community, inspire audiences, build a database, plan events, manage memberships and track volunteers. Digitzs can help the platform accept donations and thus look like a payment facilitator (payfac) in the eyes of its customers. Payfacs typically offer payments and provide business services software or simply handle payments for software platforms.
Wagner described how the process works without Digitzs:
According to Wagner, platforms also benefit because Digitzs shares the merchant services fee with them. If the platform merely tells a client to find its own merchant services provider, the platform doesn't get a portion of the revenue, she said.
Wagner noted that another advantage accrues for platforms because Digitzs splits fees. In the example of city traffic fines, suppose the platform charges 2 percent of a $100 fine for the value-added software. Without Digitzs, the person charged with the fine would pay $102 to the city, and the platform would invoice the city monthly for its fee. Digitzs would instead split the payment, sending $100 to the city and $2 to the platform.
Also, platforms take on no risk and pay no upfront costs with Digitzs, Wagner pointed out. If the platforms were to become actual payfacs - taking on the risks and tasks of acquiring – they would have to register with the card brands, maintain lines of credit and underwrite clients.
Besides Wagner, the team of founders at Digitzs includes David Jaques, former Chief Financial Officer of PayPal Inc.; Linda S. Perry, former Head of Acquirer and Processor Sales at Visa Inc.; Edward Katzin, former Worldwide Head of Payments at Apple Inc.; Stacey Moore, the Digitzs platform architect; and Ben Way, who has built a reputation as an artificial intelligence marketing expert.
Digitzs hasn't appeared on Shark Tank, but the television show's Kevin Harrington, who has equity in the company, said, "Digitzs will be the next big disruptor in payments." At press time, Digitzs was No. 1 among private companies on the CNBC Crowdfinance Index with commitments of more than $8 million.
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