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Table of Contents

Lead Story

Secrets of the Inc. honorees

News

Industry Update

Proposed interchange settlement: Judge approves, industry objects

Hurricane Sandy's huge impact

EMV on fast track

Harbortouch emphasizes training

Trade Association News

Features

Educational aid for the feet on the street

Selling Prepaid

Prepaid in brief

The gamification of rewards

FinCEN pushes for cross-border prepaid enforcement

Views

Consumer payments in a connected age

Patti Murphy
ProScribes Inc.

Smart ISO-MLS relationships

Jeff Brodsly
Chosen Payments

Education

Street SmartsSM:
Are you a 10?

Jeff Fortney
Clearent LLC

Differentiate yourself: Sell to the medical industry

Jeffrey Shavitz and Adam Moss
Charge Card Systems Inc.

Opportunities in RAN and private-label programs

Mustafa Shehabi
PayCube Inc.

How to propel merchants to shed comfortable habits

Rick Berry
ABC MobilePay Inc.

EMV: Game on!

Dale S. Laszig
Castles Technology Co. Ltd.

Have we missed the window for EMV?

Nicholas Cucci
Network Merchants Inc.

Company Profile

Keep in Touch Systems Inc.

Merchants Choice Payment Solutions

New Products

Helping merchants clinch the sale

Payday Express Plus
Secure Payment Systems Inc.

Capital resource for ISOs, MLSs

Residual cash advance program
ISO Advance

Inspiration

Thinking of starting an ISO?

Departments

10 Years ago in The Green Sheet

Forum

2012 - 2013 events Calendar

Resource Guide

Datebook

A Bigger Thing

The Green Sheet Online Edition

November 26, 2012  •  Issue 12:11:02

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Secrets of the Inc. honorees

No less than 50 payment companies were named to the 2012 edition of the annual Inc. 500/5000 list. The list, compiled by Inc. magazine, ranks privately owned companies by revenue growth over a three-year period. The top 500 ranked companies represent the top tier of the overall 5,000.

The Green Sheet reached out to a cross-section of the payments honorees, seeking to understand the secret of their success. What follows are the companies listed by their Inc. rankings and the reasons why they are among the most successful revenue generating companies in the United States.

1. Unified Payments LLC

To secure the top spot on the Inc. list, North Miami Beach, Fla.-based Unified Payments LLC achieved a three-year sales growth of an eye-popping 23,646 percent and $59.5 million in 2011 revenues. Perhaps Unified's most distinctive offering is its Process Pink donation engine through which a portion of transactions made at Process Pink-participating merchants are given to the National Breast Cancer Foundation Inc.

"It's a win-win situation for the merchant and their consumer," said Anthony W. Holder, President of Process Pink. "There's no cost for the merchant or the consumer for participation in the program because the donation comes from us."

Holder noted the many benefits of embedding charitable giving into a company's business model. "We have reports all over the country that not only are [Process Pink merchants] seeing an uptick in business, but they're having customers that are coming in and repeating just for that," he said.

Unified's success is also a product of its ethics. The company merged eight ISOs in recent years, Holder said. Unified did not abandon the merchant level salespeople (MLSs) of those ISOs, as it could have legally, but instead continued to pay agents their residuals.

"A lot of these agents in the industry would have been thrown upside down and lost a lot of the revenue stream because there wasn't a contractual obligation for us to do so when we purchased the assets," Holder said. "We've been able to take a look at the industry, respect the individuals that built the portfolio, which is the MLS - the agent on the street. And we've given them a home at Unified Payments to produce new business and allow them to retain their earnings."

19. Complete Merchant Solutions LLC

Complete Merchant Solutions LLC processes over $1 billion annually for thousands of merchants nationally. Inc. put its growth over the last three years at 7,531 percent and 2011 revenues at $17.9 million. The mission of the Orem, Utah-based ISO was shaped by a profoundly negative experience. CMS's three founders had once been MLSs at an ISO affiliated with a major national bank that went bankrupt.

At that ISO, "the executives exploited its employees and took advantage of its customers," said David Decker, co-founder and President of CMS. "It was a dysfunctional environment, and the business eventually failed. This lesson in how not to run a business has had a lasting impact on us. And although we are extremely ambitious and competitive, and are always trying to innovate and push forward, we don't embrace a philosophy of winning at all costs." Decker has advice for the industry. "From the beginning, our focus has been to be more than just a sales engine," he said. That focus puts the customer at the forefront.

"Too many companies in our industry view the merchant as a transaction," Decker noted. "In other words, they cold-call businesses from a call center, pressure the merchant into a quick close, lock them in a contract and hope to never have to deal with them again. It's a shortsighted philosophy and breeds discontent in our entire industry."

CMS strives to be the antithesis of that. "The last possible thing we want is to have business owners associate the CMS brand with a negative experience," Decker said. "We strive to be customer-centric, and genuinely try to understand our customers' business so we can tailor specific solutions for them."

340. TMG Financial Services

TMG Financial Services, the sister company of payment solution aggregator and integrator The Members Group, saw three-year growth of over 1,100 percent and $15.2 million in 2011 revenues. TMGFS, which was spun off from TMG in 2007, manages credit card issuing for credit unions and other financial institutions, and uses TMG to process transactions.

"I can say that starting a credit card company in the middle of the largest recession since the Great Depression, and in today's regulatory environment, certainly wasn't easy," said Jeff Russell, Chief Executive Officer at TMGFS. "Looking at our success, really it has to be attributed to great partners and really supportive financial institutions who not only partner with us in terms of credit card issuing, but also who are investors in our company."

Russell also attributed TMGFS' success to its flexibility. "Being nimble at a time like this is pretty important," he said. "And we've had to modify our strategy and our approach while trying to stay consistent to the value we provide. We've had to modify our approach multiple times. That's what today's marketplace requires, and I give kudos to our management team for being willing to be flexible in a pretty turbulent economic environment."

Landing on the Inc. list is thus a cautionary tale for Russell, as he noted many companies that made the list in previous years no longer exist. "It's a nice recognition in the year that it happens," he said. "But it doesn't mean that you've reached the end of the journey. To some extent, especially in the payments business, which is changing so rapidly, it's really a reminder that we have to continue to provide value and innovate every day."

369. Allied Wallet Ltd.

Allied Wallet Ltd.'s story began in 2002 when CEO Andy Khawaja and his staff set out to improve the quality of payment services around the world. Today, the Los Angeles-based online bankcard processor and multicurrency merchant service provider has approximately 41 million users in 196 countries that use its digital e-wallet to conduct payments online.

The new-money company processes payments in 164 currencies and settles in 25. It reported a .04 percent fraud rate in 2011. Inc. tabulated its three-year growth at 1,005 percent and revenue of $4.2 million in 2011. The company's "proprietary payment gateway and merchant services products stand alongside a digital wallet solution for consumers, connecting a global payment ecosystem and bringing it full-circle," said A.J. Almeda, Marketing Coordinator at Allied Wallet.

The company cited a Parade Magazine survey that showed about 85 percent of Internet users also shop online, but that of those online shoppers, only 61 percent felt their personal information was safe. Allied Wallet hopes to persuade the remaining 39 percent that purchases are secure when using the company's e-wallet.

583. Clearent LLC

From 2008 to 2011, Clayton, Mo.-based Clearent LLC experienced revenue growth of 626 percent and profits of $26.7 million in 2011. While only opening shop in 2006, the ISO now processes over $2.5 billion in bankcard volume annually for about 15,000 merchants. Clearent CEO Dan Geraty attributed the company's rapid rise to its investment in technology. "We built our own back-end processing platform," he said. "And that allows us to differentiate from virtually everybody else that's out there." The platform was also built specifically for ISOs. "So it gives them a lot of reporting features, functionality, flexibility that they can't really get with anybody else," he noted.

Another aspect of Clearent's growth is its dedication to customer service. "Our ISO customers know that when their merchants call into Clearent, they're going to be taken care of," Geraty said. "So that keeps ISOs loyal to us."

It is a point of pride for Geraty that Clearent's success is entirely homegrown. "It is 100 percent organic," he said. "We haven't bought anybody. We didn't pump up our numbers through acquisition."

1219. Security Card Services LLC

Security Card Services LLC of Oxford, Miss., supports over 1,200 bank locations with merchant services. Over a three-year period, SCS grew by 257 percent and made $7.1 million in revenue in 2011.

According to SCS President John Lewis, the keys to the ISO's success are two-fold. "One, we have stayed focused solely on community and regional banks," he said. "All of our efforts are to improve the size of our banks' merchant portfolios through growth programs, product offerings and old-fashioned, quality customer service to our banks and our banks' merchants."

The second key is SCS' employees. "We put a large effort into hiring high-quality people for every position in our company," Lewis said. "When you boil it down, success comes from the people you enable to achieve the goals of the company. We treat our employees with the utmost respect and appreciation, which enables us to have a highly tenured staff. That same attitude flows through to how the employees show respect and appreciation to each bank and customer that we are able to serve."

1340. Electronic Payments Inc.

Finding itself ranked on the Inc. list has become a common occurrence for Calverton, N.Y.-based Electronic Payments Inc. Its 2012 inclusion marks its fifth appearance on the list, with 229 percent growth and revenue of $57.7 million in 2011.

Michael Nardy, CEO of EPI, chalked up the ISO's success to an aggressive business philosophy. At the height of the financial crisis in 2008, when many companies downsized and implemented conservative fiscal practices, EPI went the other way. "We nearly doubled our support staff and invested in our technological assets," he said.

EPI is an entirely in-house operation, with 24/7 tech support, "something that many competitors are unable to provide," Nardy added. But EPI also goes the extra mile in other ways. It is not uncommon for Nardy to drop in on EPI's local merchants or to personally respond to merchant complaints late at night and early in the morning, according to Amber R. Josi, EPI's Director of Marketing.

Years ago, EPI developed the Agent and Customer Bill of Rights, which outlines a code of conduct for the MLS-merchant relationship. "The long-term partnerships we've established are a testament to the importance and value of integrating our core values into our daily business practices," Nardy said.

1538. YapStone Inc.

Cloud-based payment platform provider YapStone Inc. took a different approach to success. The specialty processor fashioned a three-year growth rate of 193 percent and made $51.2 million in 2011 by focusing mainly on rental payments, such as apartments, self-storage facilities and vacation rentals. "We are extremely niche," said YapStone co-founder and CEO Matthew Golis. But that isn't a limiting factor, as the verticals YapStone taps combine into a $5 billion-plus payment ecosystem. "It's all very big markets," he said. "That's the key."

YapStone operates exclusively in a card-not-present environment. Its online gateway combined with the rental markets make for a perfect marriage because payments are recurring. "That means the vast majority of our payments are initiated online many times by the cardholders themselves," Golis said.

YapStone is also making strides into the mobile realm, which coincides with its entrance into the faith-based payment sector. Its ParishPay acquisition in April 2012 makes YapStone the largest processor for the Catholic Church, the company noted.

1562. Central Payment Co. LLC

In August 2012, processor Total System Services Inc. (TSYS) acquired 60 percent of Central Payment Co. LLC (CPAY). The joint venture seems to have paid off for CPAY, as its 2012 Inc. ranking (190 percent growth, $103.6 million in 2011 revenues) positions the San Rafael, Calif.-based ISO as the 89th fastest growing company in the financial services industry.

"We attribute our success to our sales agents and employees who constantly go above and beyond to be part of a company that is doing great things in the industry," said Zachary Hyman, who co-founded CPAY with his twin brother, Matthew, in 2005. CPAY prides itself on being a cutting edge, tech-savvy company. In April 2012, CPAY unveiled SpotOn, a new digital loyalty network for local merchants. The SpotOn program involves the installation of tablet computers at merchant locations; customers can check in and earn rewards at the POS via the SpotOn loyalty card or its mobile app. It is that kind of program that sets CPAY apart from the competition, Hyman said.

"Sales agents not only work for Central Payment because of a great compensation package or for a low transaction fee," Hyman said. "They partner with us because we treat them like family and give them the support and tools they need to succeed in an extremely competitive marketplace."

2352. Federated Payment Systems LLC

Inc. reported that Melville, N.Y.-based Federated Payment Systems LLC grew by 106 percent between 2008 and 2011 and realized $26.2 million in revenue last year. "A large part of that is our growth in Canada," said Evan Schweitzer, Chief Financial Officer at Federated. "Because up until five years ago, they went to the banks. That was it. And the rates were huge. And we were able to go in there with a much better rate." At first, Canadians were a little skeptical about Federated. "They weren't used to free equipment," Schweitzer said. "What's the catch? The only catch is - process with us. It's really beginning to catch on now."

Another factor of Federated's success is its transparency, which Schweitzer said is reflected in its Inc. ranking. Federated could have been listed higher if it reported total processing costs, not just revenue. But Federated doesn't play that game. "We report just our total revenue, not including the other $200 million we do in processing," he said.

And that honesty filters down to how Federated deals with merchants. "The way we report ourselves to Inc. is the way we deal with people all the time," Schweitzer added.

2397. SignaPay Ltd.

Inc. pegged SignaPay Ltd. at 103 percent three-year growth and 2011 revenues of $11.2 million. But numbers cannot describe SignaPay as vividly as did Kevin Jones, President of the Irving, Texas-based ISO, who said SignaPay is "the premier hi-tech/hi-touch boutique for strategic partnerships."

SignaPay differentiated itself by making its services payment technology agnostic. "This is valuable to our partners because they can now access all of the major platforms while avoiding the costly minimums and middleware necessary to be successful," Jones said. "It's given us access to all of the strengths of these platforms with none of the restrictions."

Additionally, Jones believes the business mindset has to evolve for payment companies to stay competitive. "Payments has become a technology industry, so we can't be thinking and acting like bankers," he said. That ethos filters down to the talent SignaPay recruits.

"We have hired creative, bold, dynamic, intelligent team members who embrace change and have a genuine care for our partners' success," Jones said. "We don't hire order takers; we hire leaders and disrupters."

Ink your own success

While cutting-edge technology and innovation are hallmarks of the ISOs and processors on the Inc. list, dedication to the old-fashioned concept of customer service is equally important. Not all ISOs, or most payment industry businesses for that matter, can make the list. But what these honorees teach is that profits are not the only measure of a company's success.

Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.

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