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The Green Sheet Online Edition

October 12, 2009 • Issue 09:10:01

Portfolio conversions done right

By Biff Matthews
CardWare International

Portfolio conversions take two forms: a move from one processing platform to another or the upgrading of applications. They can involve a move from one financial institution to another, be focused on upgrades to hardware or software, or both.

As with all things, the more time you invest in planning, the better the results, and the less the project will ultimately cost. The critical factor is proper communication with merchants so they fully understand what is transpiring, what is needed from them and what direct benefits they can expect to realize.

This is the velvet hammer in action (Here's how you'll benefit from cooperating, and here's what happens if you don't.)

The next concern is making sure merchant data is valid. This involves not just basic data like name, address and type of equipment and application (retail or lodging or hospitality), but more complex data.

The latter would include parameter configurations for the application, the exact make and model of terminals, whether the location has more than one terminal, and whether terminals are from different processors - a seemingly odd, but surprisingly frequent, occurrence.

If this information is not readily available, it must be re-created. A good project management firm can do that, and if the company is qualified on all relevant fronts, that can be a very wise investment.


Regarding the conversion itself, stakeholders in the process on both sides of the equation, including the client, project management company, merchants and so forth, must first understand the objective and what success will look like. This varies with each program, but minimal loss of merchants is a goal common to all of them. Attrition is primarily caused by a cavalier or uncaring attitude exhibited by one of the entities responsible for the project. It is surely the ultimate in avoidable scenarios.

The second principle is that there must be clear understanding of authority and responsibility. The project manager or management company will interact with your merchants, and it's critical they understand exactly what they are authorized to say (and not say), and what can they do (or promise to do) on your behalf. When something arises that is outside this envelope, a liaison must be empowered to decide the issue, and an equally qualified backup must be appointed.

If an issue arises with a merchant, such as his or her wanting to eliminate the requirement for address verification, re-key the last 4 card digits or take other fraud prevention steps, our firm may have the ability, but not the authority, to do what the merchant asks. We can attempt to persuade the individual, but in the end, it's not our decision.


Having a liaison who can run interference in these instances is invaluable both to keeping the program on track and preventing negative fallout. These issues arise with perhaps just 2 percent of the portfolio but require immediate liaison access to resolve. Human resources are critical, and I believe strongly that these liaisons should be full-time, in-house professionals - not temps, part-timers or folks in Bangladesh. It is equally critical that you ask, What is the experience, not just of the company, but of the actual personnel who will do this work? Are these newbies, or have they successfully completed projects similar to yours? Obviously, get references and (not so obviously) call the references. The worse failing is to not make those calls. Without validated references, every startup, amateur and wannabe will be able to put themselves on a footing equal with the most capable full-solution companies. And you will pay the price.

Another criterion for judging a project management company is whether it has an agnostic stance. What I mean is that they are not partial to one vendor, platform or institution, but rather have a broad experience base and have worked with all equipment brands, processes and applications. It is also important that the company understand priorities and the consequences of them.

We like to undertake projects in a "benefit" order: typically, the larger the merchant, the greater the benefit to the financial institution or ISO client. With larger merchants, clients realize early in the project the savings around which the program was structured.

A third point is the ability to manage the entire project, rather than splitting tasks between various disconnected entities. A single responsible entity will always facilitate higher overall efficiency and greater accountability. The ideal is the trio: client, project management company and merchants.

We've seen instances where the group morphs to five and even six entities. Here, one firm does the printing and fulfillment, another the file building, a third contacts merchants and does downloads, et cetera. From my experience, this is a recipe for difficulties, and the finger-pointing that follows usually goes into overdrive.

Most companies bill by the hour; rebuilt files not done right the first time will become an issue. Encryption is another area in which "too many cooks" often produce problems. The alternative is a firm capable of providing an end-to-end, total solution.


There's always much to be learned from a detailed, post-project wrap-up. Was the goal accomplished? How well did the program work? What do the reports tell us? Ah, the reports. My pet peeve is clients who want such-and-such reports and then don't do anything with them. Why did they want them in the first place? Often it is because a competitor provides them or because they've always received them before.

A typical example on the fulfillment side is reports specifying the number of requests versus items shipped. OK, 99 out of 100 were shipped. So what? What would be truly useful would be to identify which record was not fulfilled within the service level agreement or statement of work, and why.

A good project management company respects that every transaction trades time for money. The best ones will also suggest (diplomatically, of course) that you not demand what you don't need; it will recommend reports that have practical use, not reams of mostly meaningless paper. Providing clients with meaningful, actionable tools ultimately distinguishes a company from the competition just as effectively as good, validated references. end of article

Biff Matthews is President of Thirteen Inc., the parent company of CardWare International, based in Heath, Ohio. He is one of 12 founding members of the Electronic Transactions Association, serving on its board, advisory board and committees. Call him at 740-522-2150, or e-mail him at biff@13-inc.com.

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