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Table of Contents

Lead Story

Interchange: What gives?

Patti Murphy
The Takoma Group

News

Industry Update

Sun setting on PCI version 1.1

Bohemia, payments style

No wiggle room with Red Flag Rule

Processing for newbies

VeriFone turns triple play

Features

GS Advisory Board:
What's up in this downturn? - Part II

The payments doctor is in

ISOMetrics:
Interchange in brief

Industry Leader

Stuart C. Harvey Jr. –
In the zone

Views

Building relationships - priceless

Biff Matthews
CardWare International

Education

Street SmartsSM:
MLS compensation options

Jason Felts
Advanced Merchant Services

PCI vendors: Welcome to the jungle

Tim Cranny
Panoptic Security Inc.

What's your business?

Daniel Wadleigh
Marketing Consultant

Admit, own, fix your bloopers

Jeff Fortney
Clearent LLC

Reduce stress, raise retention

Curt Hensley
CSH Consulting

Be calendar-wise

Adam Atlas
Attorney at Law

Sweet-spot MLS training

Christian Murray
Global eTelecom Inc.

New Products

Mobile computing for feet on the street

Dolphin 9900 Mobile Computer
Honeywell International Inc.

Back office synergy online

Synergy Express
Jack Henry & Associates Inc.

Inspiration

Revamp that problem mindset

Miscellaneous

POScript

Departments

Forum

Resource Guide

Datebook

Skyscraper Ad

The Green Sheet Online Edition

September 08, 2008  •  Issue 08:09:01

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What's up in this downturn? - Part II

Economic indicators in the U.S. economy aren't rosy right now, but each time we go through a downturn, we do recover. And every time, our country bounces back stronger. The Green Sheet wanted to know what our Advisory Board members are doing to strengthen their companies in an uncertain economy, so we asked them the following questions:

The first portion of responses appeared in "What's up in this downturn? - Part I, The Green Sheet, Aug. 25, 2008, issue 08:08:02. The following answers conclude this two-part series.

Biff Matthews
CardWare International


A. We've always been a lean operation, so we don't anticipate staff reductions. In fact, we're hiring. In addition to new clients, our growth is driven by increasing numbers of transactions along with new business starts, both of which - on what I'll term a "same client basis" - are decreasing.

From our experience, consumers are making fewer purchases at our clients' merchants, plus our clients are seeing fewer new businesses start up - what new business they are gaining is at another company's expense. Given today's economic conditions, it simply means our sales staff must be more diligent in addition to being more attuned to new and different opportunities that then lead to answering the next question.

B. A slowdown or downturn can be a welcome relief that permits introspection. We are assessing opportunities outside our core business and competency - opportunities that leverage our key assets: people and their training, our technology and systems, and then our facilities and experience. Our foundation is rock-solid; just what do you want to do with it, what direction do you want to go?

A founding principal is that we don't compete with our financial institution or ISO clients, and we won't go counter to that because it brings us new business. I've never understood why a financial institution or ISO does business with a vendor that competes against it, particularly one that is covert about it.

We understand a few marginal competitors have exited the market and that even those with critical mass have had substantial layoffs. Both provide opportunities for us to provide service where a hole now exists, as well as step in with our level of service as others falter in that area.

C. The company exists today simply because it has reinvented itself four different times in 30 years. And this, for all I know, may well be a fifth evolutionary experience. I envision the company retaining and building on its founding principals of integrity and honesty, as well as consistent delivery of high-quality services and products at a competitive price.

Steve Norell
US Merchant Services


A. Keep expenses to a minimum. Spend money only on ventures that are mandatory. Become more aggressive on up-sales and retention.

B. Integrated medical programs such as Preferred Health Tech.

C. Leaner and meaner.

David H. Press
Integrity Bankcard Consultants Inc.


A. No change at this point.

B. We are seeing more requests for merchant portfolio risk reviews. And we are continuing to provide the same services for our clients with a continued focus on risk and compliance.

C. No real changes, just a few more clients.

Charles W. Salyer
Ladco Leasing Inc.


A. In the leasing business we have seen a rise in bad debt and delinquency. As the environment becomes difficult, businesses that may have been on less than solid ground fail. The need for processing comes to an end, which means an equipment lease payment becomes less than a priority.

Business continues to grow, although at a much slower rate than prior years. We are a little more diligent in our credit process and ask ISOs to provide us with as much information as possible in order to make a reasonable decision.

B. We are working closely with existing customers to help them get the most out of their endeavors. We have been in the business of financing larger systems for many years. Now we have expanded this area to help our vendors go back to growing businesses and provide them with better tools for processing their business transactions.

We have also expanded the types of equipment we finance to allow entrepreneurial vendors to expand the types of products they sell. We have expanded our target market to include areas outside of the United States to support our vendors with business in other countries. We have added new programs and pricing that allow vendors to share in our growth.

C. Diversified, stronger and better prepared for the future.

Jeffrey I. Shavitz
Charge Card Systems Inc.


At CCS, we have imparted to our sales partners that the weakening economy is actually an opportunity in the payments industry because business owners are that much more aware of their bottom-line profitability. In the past, a merchant processing $20,000 per month may not have been interested in converting for a nominal savings; however, today, merchants now need to secure their best program and every dollar helps in this regard.

In addition to savings, we need to promote and educate our merchants to the benefits of next-day funding, automated clearing house (ACH) tools, Check 21, gift and loyalty programs, ATMs. In short, we need to decommoditize a commoditized industry.

How is this done? Value. Cost and pricing are just one component of value. Does it really matter what the merchant's reward card rate is when the merchant is panicking because his or her funds are being held by risk? Is it worth the merchant paying five basis points more to have a dedicated sales agent who can quickly resolve these matters?

Too many times, sales agents in our industry equate everything to the pure rates. To provide a real-life example to highlight this matter, when was the last time you choose your doctor exclusively on price for a medical procedure?

With these difficult times and merchant turnover, we are exploring new and creative ways to strengthen our "retention program." Of course, we always want to add new merchants, but we cannot forget our existing merchants.

For example, we are doing a monthly analysis to ensure that merchants written years ago are now enjoying debit rates and that their mid- and non-qualified fees are appropriately priced; it is too easy for a competitive agent to develop a cost analysis and demonstrate savings by all of the hidden fees.

J. David Siembieda
CrossCheck Inc.


A. At CrossCheck, we anticipated changes in the economy and, in response, launched Optio Solutions back in 2007. This nationally licensed and bonded debt management company addresses businesses especially hard hit by the economy that need an affordable profit recovery solution to manage their accounts receivables, while maintaining customer loyalty in the process.

B. We see unlimited growth potential in the debt-management sector at this time and are the first collection company to focus on the payments industry. Optio Solutions' debt-management services offer payment providers and ISOs a lucrative revenue stream, plus it's something they can use themselves to maintain valued merchant relationships.

Our unique, fixed-fee written and verbal demands and 24/7 Online Client Portal provide greater flexibility and control than most collection companies, and early intervention demonstrably improves the effectiveness of profit recovery efforts.

C. I believe we'll come out of this stronger than ever with the innovative services we've introduced in recent years. Not only is CrossCheck changing course in response to the economy, but Optio Solutions gives us an opportunity to lend greater stability to the payments industry in general.

The services that Optio Solutions offers are now available through CrossCheck. With headquarters in Rohnert Park, Calif., Optio Solutions recently opened an office in Dallas, has a sales presence in the Midwest and plans further expansion throughout the United States in the years ahead.

Matt Whitaker
Smart Payment Solutions


At Smart Payment Solutions, we have maintained solid growth through the past several years by focusing on our core business of ACH processing.

We have seen some impact of the current economic situation on some of our small-business clients, but we have also found many others, determined to survive, who are looking for ways to operate their businesses more efficiently and attract new customers by offering alternative payments, like ACH.

We have also found some great salespeople who were shaken out of the mortgage industry - quick studies who have learned the payments industry and helped us accelerate our growth.

The overall volume of ACH payments continues to grow at close to 15 percent per year. Back office conversion and remote deposit capture (RDC) offer great new opportunities. Our check recovery business continues to perform strongly. We are finding some substantial partnership opportunities that are helping us to reach more and more business owners who have never before taken ACH payments.

We are also taking this time to rejuvenate our agent program, as more and more agents continue to look for alternative products to maximize their existing client bases and have something new to talk about in addition to credit cards.

We remain optimistic about the future, and we expect Smart Payment Solutions to be stronger than ever when the economy begins its comeback.

We'll have a solid lineup of products, featuring ACH processing, RDC and check recovery. We'll have some productive new partnerships. We'll have more high-quality agents than ever. And we'll also have lots of customers with testimonials of how ACH processing saved them time and money and helped them attract some new customers.

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

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