The Green Sheet Online Edition
May 09, 2011 • Issue 11:05:01
Tapping the government and education markets
With budgetary cutbacks an ongoing concern, many public agencies and educational institutions want to trim costs and, until now, accepting card payments online was cost-prohibitive for most such organizations. ConvenuPAY by Electronic Merchant Systems offers a Payment Card Industry (PCI) Data Security Standard (DSS)-compliant, web-based credit card payment application that enables agencies to process card transactions in real time and mitigate costs with a convenience fee.
According to EMS President Dan Neistadt, card acceptance in this space has been minimal. "Quite often, they are not accepting cards or they accepted cards in the past," he said. "Especially in a municipality situation, they stopped taking cards. They didn't think it was fair passing that cost across all constituents, including ones that don't pay by credit card. So [ConvenuPay] gives them the ability to charge a fee for the convenience of using that plastic card for payment."
While card company rules vary, a provision exists whereby public agencies and educational institutions can charge a convenience fee to cardholders who have chosen to opt in. Neistadt said the fee is set to cover interchange and service costs; in the case of ConvenuPAY, these include a licensing fee for each account activated. Agencies are then able to integrate an unlimited number of individuals on multiple levels at no additional cost.
How it works
ConvenuPAY's Virtual Point of Sale program features a virtual terminal interface for processing face-to-face or back-office transactions. A unique identifier function permits clients to update internal and external billing systems. The navigation tools direct office personnel to a secure payment page that integrates with existing websites. The fill-in form on the customer-facing payment page includes the required cardholder opt-in and calculates convenience fees automatically.
According to EMS, a city government can implement the program across all city departments that accept credit card payments. Clients can control which departments employees have access to and define user roles. ConvenuPAY allows each department to maintain compliance with card brand convenience-fee requirements regardless of merchant category code, acceptance environment or card types accepted.
The ISO appeal
After extensive research, EMS determined the time was ripe to enter these virtually untapped institutional markets, but it had to eliminate cost and regulation as barriers to card acceptance. EMS was also convinced that payment volume in these markets is more stable than in the traditional merchant sphere and could ultimately lead to steady, long-term revenue for merchant level salespeople.
As to what the sales cycles are for these entities, Merrell Sheehan, Vice President of Product Development for EMS, said, "In a small entity, we're seeing 30 to 60 days; larger entities take longer. It all depends on where you start and where they are in their budget cycle. We have found that this is somewhat of a specialized sale. We're here to help our agents and direct salespeople relative to the sale, but we do need somebody that has sold in this space before."
According to Sheehan, finance directors typically make purchasing decisions for educational institutions, but this is not the case for government agencies. Depending on the size of the city or municipality, buying decisions can be made by a mayor, an executive director or a department head, he said.
For ISOs interested in creating a service bureau-type of payment offering, ConvenuPAY's aggregator can centralize payment processing with an unlimited number of institutions. The company offers a web-based, on-demand training program for agents and prospective clients.
Electronic Merchant Systems
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