Red Flag residual stream

A proven strategy for keeping merchants sticky is to provide value-added services. And one service merchants need is help complying with the Fair and Accurate Credit Transactions Act of 2003 (FACTA) Red Flags Rule, which will be enforced beginning May 1, 2009.

Under the rule, businesses must define procedures for identifying, detecting, preventing and mitigating identity theft; they must adopt prevention programs to verify customers' identities before initiating any credit-related transactions and take appropriate action if identity discrepancies are found.

Complying with the Red Flags Rule can be daunting for businesses, especially smaller ones (mom-and-pop and regional retailers, for example) that lack resources to dedicate to the task.

What if you, as an ISO or merchant level salesperson (MLS), could offer a value-added service that address-es merchant data security compliance while offering a host of other value-adds?

Kennesaw, Ga.-based MicroBilt Corp. believes it can help you do just that. And it has designed its offerings to address several small-business risk management activities in one place.

Snowball effect

MicroBilt has been in the risk management business for 30 years. Initially, the company offered merchants small terminals that pulled credit reports on consumers, providing instantaneous credit information that enabled merchants to qualify potential customers for credit on the spot. Few merchants use those devices today, although MicroBilt still supports them.

Now MicroBilt's customers log onto the company's Web site to access consumer and commercial credit bureau data, as well as automated decisioning, identity verification tools, compliance solutions and collection services. The system allows clients to design a custom package of products from multiple sources that are accessible with one click of a button, the company noted.

Brian Bradley, MicroBilt's Executive Vice President, Strategy and Emerging Markets, said, "There are thousands of regulations dealing with consumer data, and MicroBilt sees itself as a leader in data compliance, business management tools and training. Through our sister company, ComplyTraq, we offer a suite of credentialing tools to help verify that customers and partners are who they say they are and are legitimately authorized to obtain consumer information."

Red Flag beeline

Merchants engage in many risk management activities, not just those centering on payment processing.

In October 2008, MicroBilt launched a hotline designed to assist customers with questions regarding FACTA's Red Flags mandates.

"A large percentage of our customer base are small to medium businesses and independent auto dealers that are clearly subject to the new Red Flags regulations but were just beginning to wake up to the directive this fall," Bradley said.

"We put a lot of thought into how to design a product that would eliminate confusion regarding the new Red Flags regulations. We planned for this hotline to assist customers, as well as prospective customers, in understanding the new directive while eliminating unnecessary work for these businesses."

MicroBilt's Red Flags hotline supplies customers with the requisite insight to understand the law's requirements and determine if the regulations apply to their businesses, the company noted.

The hotline, an e-mail service that answers questions within 24 hours, is also available to the public. Bradley, who spent a week of his vacation in 2008 reading the Red Flags Rule and accompanying notes, fields most hotline questions. In addition, MicroBilt's customer service phone lines are available 24/7.

One question that came in through the hotline concerned proposed legislation to stop merchants' use of Social Security numbers. "I mean, [merchants] hear it and they say, 'Well, that sounds good,'" Bradley said, adding that many merchants don't realize how dependent they are upon the use of Social Security numbers.

To offer additional support, Bradley created a white paper that is available through the hotline. According to MicroBilt, the document simplifies Red Flags compliance while introducing Red Shield, the company's streamlined, low-cost Red Flags certification process that instantaneously analyzes the likelihood of identity fraud; MicroBilt provides the tools, procedures and training for companies to gain complete compliance with the new Red Flags regulations.

The ISO matrix

MicroBilt recognized early on the need to partner with ISOs that are calling on the same clientele MicroBilt serves: small to mid-sized businesses. "ISOs and agents are hungry for new products that will open doors, create value and generate a significant monthly residual income," said Marc Beauchamp, MicroBilt's Bank Card Consultant.

The company has developed customized products geared toward high-margin merchant categories, which include:

• Auto dealerships
• Restaurants
• Rental agencies
• Distributors
• Property management firms
• Jewelry stores
• Furniture stores
• General retailers
• Business-to-business enterprises
• Health care service providers
• Delivery services

"There's a tremendous overlap between the most lucrative merchant processing markets that many ISOs and agents target and MicroBilt's established customer base of 125,000 small business users," said MicroBilt's Chair-man, Bob Raleigh. "Red Flags being fully effective May 2009 gives solution providers a very timely reason to revisit client needs and help make sure they're completely protected."

MicroBilt reported that its Red Shield satisfies Federal Trade Commission requirements for verifying identities, with both small business customers and consumers protected against losses due to fraud for up to $25,000.

"We have been waging an awareness campaign all year and will continue to do so as the authorities begin checking to see whether customers have defined and established all the necessary procedures," Raleigh said.

Multiple tools

MicroBilt believes humor can help mitigate frustration that may arise when dealing with federal mandates. In late 2008, the company worked with the comedy Web site GoRemy.com and comics Rhett & Link to produce two humorous videos: one spotlights the new Red Flags mandates, the other the significance of the weak U.S. economy. MicroBilt will be launching its newly designed, industry-tailored Web site in 2009. Bradley said the new format offers a dynamic way to help MicroBilt's customers and potential customers locate the company's products and services most suited to their specific industries.

MicroBilt also recently launched an ISO and MLS partner program to equip merchant service providers with solutions tailored to specific market segments.

It offers three flexible residual and bonus programs for ISOs and MLSs, as well as weekly and on-demand training, a dedicated sales partner Web site, and the Bilt-to-Close process. Bilt-to-Close provides ISOs and MLSs real-time access to MicroBilt sales reps who will assist in all aspects of the sales process.

MicroBilt feels its inside sales team's availability to close deals with merchants on behalf of ISOs and MLSs - who nevertheless enjoy "exciting" compensation packages - is a major differentiator. "Now our sales partners have the power of choice," Bradley said. "They can manage the entire sales process, or we can assist them and actually consummate the entire sale if needed."

To jumpstart the program, MicroBilt is offering a Quick Start bonus program for ISOs or MLSs closing 10 qualified accounts within their first 60 days.

"We're extremely excited about our new ISO and agent program," Bradley said. "We've always had a long-term approach to sales channel development. That's why we've thrived over the past 30 years. Quite frankly, we're looking for the same type of sales partner, one that's willing to put in the necessary time and effort to create a mutually successful partnership. If you're of that mindset, then we'd love to explore the opportunity."

New ground

MicroBilt is also planning to launch an online social community to provide a place for small and mid-sized businesses to network, share experiences, learn about new state and federal legislation affecting them, and network with individuals within their industries.

"MicroBilt has always prided itself with serving small/medium businesses within a large range of market segments," Bradley said. "We want to continue this support by exploring ways to use social media to inform, connect and build communities, not just for MicroBilt's benefit but for our customers' advantage as well." The company may be vintage, but its ideas are up-to-date.

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