The Green Sheet :: Company Profiles

An ISO-centric program provider

Selling strategies today are much more than POS terminals and card processing. If ISOs and merchant level salespeople (MLSs) desire success, they must find new and creative value added services in order to board new merchants and retain the ones they already have.

The trouble is there are so many products and services to choose from, and sometimes steep learning curves need to be surmounted. Thus, the process of selecting and selling value added products and services can be daunting. Stored value provider Card Group aims to alleviate this dilemma. "Card Group was started with the single focus of taking the complexity out of stored value while giving control and choice to the ISO community," said Brett Silberman, the company's President and Chief Executive Officer.

Card Group offers a self-service, stored value platform that enables ISOs and banks to control programs in-house. "ISOs are no longer at the mercy and behest of the processor to create accounts, generate card files, build terminal profiles, and so forth," Silberman said. "ISOs control all of these functions in-house."

Significant expertise

As a former Director of Operations at a New York-based stored value company for more than seven years, Silberman worked with small banks and ISOs to retrofit closed loop prepaid card products. He found the demands of ISOs were very different from those of merchants. He learned that most stored value providers build proprietary systems for themselves and then try to find reseller partners to sell it. "That doesn't suit the needs of an ISO," he said.

Knowing there was a vital market for closed loop services designed for ISOs, Silberman branched out to start Card Group in 2002 with David Pugh, Card Group's Director, Channel and Direct Sales. Pugh had gained valuable experience as a reseller for a stored value company. Silberman invited Pugh (with whom he had worked at two previous companies) to join him.

According to Silberman, ISOs get frustrated when their work is stalled or interrupted. Many times, ISOs complain their processors are to blame. Since processors often control merchant programs, ISOs get grumpy when programs are not implemented as quickly as they would like.

"The ISO is at the beck and call of the processor," Silberman said. "He is always waiting for someone to do something for him before he can make the sale or deliver the product."

That is why Card Group designed a program ISOs control themselves. "Card Group was started with the single focus of taking the complexity out of stored value while giving control and choice to the ISO community, giving the ISO ongoing product enhancements and support to be able to cut costs and provide a higher level service to their merchants," Silberman said.

No strings attached

Since Card Group is not involved or affiliated with any merchant processor, Card Group's resources are focused on ISOs and banks that resell Card Group's services. But Card Group's partners also have a stake in the programs themselves.

"Our philosophy is radically different from conventional thought as it relates to stored value," Silberman said. "We actually put the ISO first." ISOs own the programs, the contracts, the revenue and, most importantly, the client relationships.

Therefore, ISOs are free to build portfolios and sell them to whomever they wish. Card Group requires no exclusivity. "We aren't holding anyone hostage," Silberman said. "We aren't standing in the way. Our philosophy is that if we are as good as we say we are, you will have no reason to go anywhere else."

Card Group licenses products and services to banks, advertising agencies and marketing companies, but sells its products primarily through the ISO channel. Silberman and Pugh understand the ISO market because, up until a year and a half ago, they sold their products directly to merchants. Silberman and Pugh have taken what they learned to benefit their ISO resellers.

One way Card Group does that is through its new marketing, communications and data management platform, Proactive Retail Intelligence and Stored Value Management Platform (PRISM), which provides tools to run gift card, loyalty, reward and promotion campaigns.

Many flavors for many sizes

Card Group has solutions for ISOs of all stripes. The company offers an "ISO lite" version of its program for smaller ISOs, in which the fixed costs are lower and the variable costs are slightly higher. Therefore, smaller ISOs can benefit from marketing campaigns of the same scale as larger competitors. For big ISOs that want to own everything and process in-house, Card Group will package its platform for sale.

Card Group also processes internationally with merchants in Canada, Mexico, Africa and the Caribbean. In 2009, the company will expand to support customers in China, Vietnam and Korea.

According to Card Group, a significant benefit to ISOs owning and managing their own programs is that they are able to have merchants up and running almost immediately. "Time to market is real-time, not hours, days or weeks, but literally minutes," Silberman said.

ISOs only need access to the Internet and Card Group's predesigned inventory cards customizable with merchant names and logos to get a program going. Card Group's Card Design application enables ISOs or merchants to design cards in four steps.

Since ISOs own merchant contracts, they can benefit from lower pricing as they build their portfolios. "Card Group offers buy rates to ISOs for its products and services that are competitively priced so that the ISO has lots of room for margin," Silberman said.

Card Group charges a monthly fee per merchant, as well as a per transaction fee. ISOs are able to mark up fees to merchants. The only fee ISOs would not charge merchants is the monthly platform license fee - a fee charged to ISOs and banks for access to the self-service tools. Silberman said this fee is typically absorbed by ISOs but can easily be recouped once they have signed 20 merchants.

Gaining access

Merchants are tightening their belts in the current economy, and Silberman believes phone book advertising and coupon packs are money wasters. He maintains that Card Group's programs can be a more effective use of merchants' advertising dollars.

"Retailers are looking for ways to generate new business and bring customers in," Silberman said. "This is a powerful tool in the new economy when people are skittish.

"We can show ISOs how to generate three to four times on their merchants. We do that through the loyalty side of the platform. Merchants are willing to pay $100 a month or more to bring customers in the store."

Card Group has worked with ISOs of every size. POS Payment Systems Inc., an ISO in Riverdale, N.Y., has been using Card Group's platform for several years.

"Card Group cares," said Ken Sturm, President and CEO of POS Payments. "They continually improve the product feature set and are constantly asking for our feedback. We have seen many of our suggestions make their way into the platform. We have had enormous success with our Card Group programs."

Money Movers of America located in Westchester, Ill., has been a happy customer of Card Group for almost a year. "MMOA uses the platform to board and support merchants across the country for a variety of stored value programs, including a local chamber of commerce program recently launched in Pennsylvania," said James Costanzo, President and Chief Operations Officer of MMOA. "The Card Group platform is a no-brainer for any ISO."

First in line

Being in control and having ownership of programs can make ISOs' jobs easier, as well as increase revenues. Card Group's team works to empower ISOs with the flexibility and benefits generally enjoyed by processors.

"We are experts in creating completely unique programs other providers are afraid to touch," Silberman said. "Our experience is your best tool. We encourage and teach our customers to think outside the card."