By Ken Musante
Interviews: Jeff Marcous
I appreciate individuals with a deep history of our industry. They have the knowledge and experience to put current events into historical perspective. Jeff Marcous, President and cofounder of Dharma Merchant Services, is one such individual.
Q: How did you enter the payments industry and what types of jobs have you had?
A: I answered an ad in the paper in 1992 from Harbridge Merchant Services. It was to sell directly to merchants: cold calling. At that time there were many opportunities because many merchants were not yet accepting cards or were not accepting cards electronically.
Merchants were still using warning books and calling in for authorizations above the floor limit. All sales came with a terminal lease. No residual income was paid to sales representatives and I had no base salary. I received a draw that was deducted once we started earning commission.
Card Establishment Services acquired Harbridge two months after I began. CES ran very much like Harbridge. However, I moved from Maine to Colorado. Within a year after working for CES it was acquired by First Data. First Data gave me an opportunity to be a territory manager out of Phoenix.
I managed 15 sales representatives who worked out of their homes. Most representatives were intimidated by the lodging industry, so I learned the hotel applications and consequently we were able to garner a larger share of a very big industry. By teaching that technique to my representatives, they too were able to be successful within the lodging niche.
Next, I was hired by Cardservice International around 1994 to be a regional manager. CSI was the dominant industry ISO and they had just begun hiring regional managers to cover the U.S. They hired six managers and I moved to Portland, Ore., and covered Alaska, Hawaii, Northern California, Oregon, Washington, Montana, Utah, Wyoming, Idaho, North Dakota and South Dakota.
CSI had ample resources and was aggressively boarding merchants. When you think of all the payment professionals that started their careers at CSI, it really gives you perspective of how innovative CSI was.
Q: CSI was a revolutionary ISO. Did you realize that while working there?
A: Because CSI was the one of the biggest and well known ISOs, it was easy to market our programs because partners sought us out. CSI was revolutionary in that they were the first to have a sales force of agents and worked very hard to remove conflict from the channel and [they] thought of the agent as their primary customer. That was revolutionary.
Q: You also worked for Authorize.net during its formative years. Did it seem that the company's actions and activities were revolutionary?
A: I began working for Authorize.net in February of 1998. In August of 1999, the company was sold for $90 million. Yes, it was an interesting story.
While at CSI, I got a call from a guy out of the blue who wanted to be an agent with CSI. Jeff Knowles became a representative for CSI and worked under my territory for about a year. Jeff developed a prototype payment gateway to do real time authorizations...not sales. He sold merchants on this newly developed payment gateway. His intention was not to develop a reseller program for agents but to sell directly to merchants.
Through my involvement, we came up with the reseller model where we offered the gateway to resellers with a buy rate. Originally we did not charge for transactions, but we signed a merchant called Paypal and their numbers were so enormous that we had to start charging a transaction fee in order to keep up with the needed bandwidth.
We were the forerunners in the payment gateway space and there was no script to follow. We did not set out to be revolutionary, merely to solve merchant issues. Unfortunately, because our business plan was innovative, we encountered unforeseen issues. One day upon returning from vacation on Jan. 2, 2001, we received a call from MasterCard informing us that hackers had breached a merchant's site. That's when we discovered we needed real security and developed robust security protocol.
This was a long and arduous journey that was necessary, but if we did not police ourselves MasterCard was going to impose very stern measures. This was a watershed Web security event that changed the direction of our company.
Q: What was among the biggest mistakes/errors/regrets of your career? And what did you learn from it?
A: Not negotiating an ownership position when I went to work for Authorize.net (laughs). I don't necessarily regret this, however, as if I did I would likely not be doing what I do today. Sometimes time grants you perspective on why things occur and now I have a company called Dharma Merchant Services. "Dharma" is a sanskrit word which refers to one's path. Dharma loosely translated means right intentions, right actions, right speech.
I should have started my own company earlier. I did not because I was content to work for others and appreciated the security that provided. I also had a fear of failure and knew if I stepped out or let go of the branch, it was permanent.
Q: Your ISO is innovative in its approach: no ICs, sustainable resources, donating a portion of your receipts to nonprofits. What was the inspiration for your business plan? What, if anything, would you do differently?
A: The genesis was an article I was reading on Life's purpose from a non-profit organization I have been a part of for 20 years. And it dawned on me that the triple bottom line of people, planet and profits could actually be achieved by someone within our industry by leveraging my knowledge in my community.
My heart has always been in conservationism and no one in our industry was catering to green businesses. I donate 10 percent of gross profit to a charity of our merchant's choosing. In speaking to my daughter, Alexia, she also thought it was a great idea. She is our cofounder and my partner. Dharma is a perfect reflection of who we are. We started in March 2007.
I also want to mention that we have come to recognize business' responsibility in making a difference in how our society evolves toward greater stewardship of the planet and caring for its inhabitants. If enough companies take on that role, then we are in line for great change and awakening.
Q: Any other observations you would like to share?
A: The industry continues to provide opportunities. We hear about the commoditization of our industry. However, we have taken a contrarian view and run a successful business by not focusing on the bottom line of profits. We never use the amount of money we are making as the sole measure of success. "Our abundance is not measured by money or possessions" and "Doing the right thing is success" are on our white board.
Jeff is a long time friend of mine. But by interviewing him, I learned things I never would have otherwise. I remain impressed by his continual ability to reinvent himself within our industry.
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