Truly cooperative merchant services

Three years ago, Ben Levitan consulted with friends Irwin Grossman and Evan Hackel to tackle a business challenge he'd identified. All three men were C-level leaders from diverse industries; together, they worked to outline the solution. And soon Delta Payment Solutions was born. Grossman, chief executive officer of the Westin, Mass.-based venture the three men launched, said Levitan described the challenge: the merchant processing industry has become "more complex, less transparent and more expensive" in the last 10 to 15 years.

After considering the landscape, the trio concluded some business sectors were getting hit harder than others. Among them were midsize companies, especially those at the low end of the bracket.

"We wanted to figure out how to help these companies work with an industry where there are hundreds of agents, ISOs and resellers that make the industry very difficult to navigate and really understand what truth is," Grossman said. Hackel's career was in the franchise and cooperative arena, and it was his knowledge that ultimately led the men to look at the payments industry through a similar lens. "We decided to start a company that managed a cooperative, and we believe we're the only true cooperative in the merchant processing space," Grossman stated. Sweetening the value Grossman said introducing the cooperative business model into the merchant services world enables Delta "to use buying power to negotiate really great rate structures to pass on to merchants who are members, without adding obscene amounts of margin." He also noted 50 percent of the revenue earned by the cooperative is returned to the merchants in the form of rebates. "By combining that structure with a co-op, we're providing merchants with a value proposition that is hard to beat," he said.

Delta offers its members access to a growing network of credit and debit card processing providers and financing partners as well as an accounts receivable management program. Grossman noted that the cooperative is also working with a partner that provides larger merchants and business networks with private-label credit cards that include full loyalty programs.

"All of the products and services we give the merchants will work with the 50 percent rebate, and as we grow, that incremental rebate will grow in 5 percent increments until we give back 75 percent," Grossman stated.

Members only

Delta's cooperative works exactly like big-brand, community bank or credit union cooperatives. Members pay a small fee upfront to own a single share of stock, and if they leave the group, that investment is refunded. The Delta cooperative manages vendor relationships, negotiating exclusive rates for its members, and assists members with submitting new merchant account applications.

"They [cooperatives] work for the benefit of their members to get advantageous cost positions and share best practices," Grossman stated, adding that Delta's partners and members view the cooperative as a credible organization that looks out for small and mid-sized merchants. "Many back-end processors and large ISOs don't go after the small side of the mid-sized company sector," he said. "Our whole approach is to be simpler, very transparent and lower cost."

Benefits for all

Delta has a complement of referral partners who connect them to decision-makers inside merchant organizations or service providers that might consider optimizing their solutions. Grossman indicated these partners range from individuals who make introductions and set up initial meetings to very experienced professionals who take on the majority of the marketing and sales process. "We have a strong compensation program that continues throughout the life of every client associated with each referral partner," Grossman said.

Delta's founders affirmed that as the company continues to evolve, they will continue to seek new ways to serve members and expand the cooperative's value. "This is unheard of in the payment processing industry, and to some it's counter intuitive, but it provides merchant members with yet another way to enhance profitability," Grossman said.

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