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Making ISOs Rich

W hat do you do when over the course of the last decade you've successfully written software that is used extensively throughout the payment-processing industry, then founded (and subsequently sold) a very successful payment- processing company that set industry standards? Go to Disneyland?

The Green Sheet asked Bill Pittman, an MBA engineer and seasoned veteran of the financial services software trenches. His response: "I asked myself, 'If you could do it differently, what would you do?' Well, this is what I've done: I've taken all my experience and understanding of how the payment-processing industry works, combined with my understanding of technology, and started a new business - RichSolutions."

Based in Redmond, Wash., RichSolutions has quickly become a leading provider of innovative e-payment Web services for processing credit, debit/ATM card and check services. RichSolutions develops integrated e- payment solutions that work on any device, anytime and anyplace.

RichSolutions technology is an alternative to the stand-alone, single- function bank terminals many businesses use to process payments, and it provides a full suite of e-payment Web services that can be integrated into electronic commerce environments or retail point-of-sale systems. Because of Pittman's background, RichSolutions has established longstanding relationships with banks and institutions that support electronic payment transactions.

Pittman learned the payments business by writing POS software years ago and integrating payments into his POS applications. He has brought that ability to understand payments as well as the technology side together to create a business that incorporates those strengths in the ISO channel. Pittman recognized that not every ISO understands both pieces, and he believes the key is integration.

"I've built this business around one thing - helping ISOs make more money," Pittman says. "The way I see the current market is that ISOs are in an extremely vulnerable position - their offering is becoming commoditized where their products are undifferentiated. Their margins are being squeezed, and they are losing customers to churn. These are the issues I've tried to address with my new business model."

Pittman believes the future is in integrated solutions, solutions in the form of Web services that tie together business processes. RichSolutions functions on the premise that these new Web services will improve merchants' operations by speeding up transaction times, eliminating double entry and the errors associated with these processes. These services will allow ISOs to grow their market, differentiate themselves, generate new revenue streams so they can make more money off each customer and, most important, enhance mechant retention.

As Pittman sees it, this approach is truly a win-win situation. The merchants win because they have an integrated solution that increases their operational efficiencies, and the ISOs win because they have a true value- added offering that locks the customer into their services.

As a result, the merchant can't easily change the business process to save a penny a transaction. Integration gives ISOs ability to go after bigger businesses because it's no longer economical to have a two-step process. Big players have it all integrated and it allows for more transactions, locking merchants into their service. Pittman believes it's time for all ISOs to have that advantage.

So how does RichSolutions work? Pittman took everything he learned over the years and engineered out all the problems while enhancing the benefits that software offers. He built a platform that uses server-based technology for the dynamic components (processor certifications and setup) and inter- business processes (integration) that utilize a thin client technology. This approach enables RichSolutions to deliver platform-independent, feature-rich applications faster and at less cost.

RichSolutions strives to achieve client-side portability while reducing certification time, cost, help desk complexity and simplifying deployment. As for security, RichSolutions sports a fully redundant system with multiple layers, using SSL for security and two firewalls running on separate platforms.

All the activation and setup is easily done by the ISO over the Web using a browser. There are no downloads and it is simple, easy to do and takes only a few minutes. This eliminates the merchant from having to know all the setup information, which has been a major problem with software.

Once the account is set up, an e-mail is automatically sent to the merchant with the login information. It is a thin client implementation, so all the merchant needs to know is the login information to administrate the account and get reports with a browser.

The solution uses the Internet for communication (no modem issues), so transactions are fast even when sending large blocks of data-like receipts. The merchant then can interface RichSolutions from its new PC application, RichPayments for Windows, its virtual terminal, browser-based solution (a new low-cost, open-platform network computer solution called the PaymentApplicance), from new terminals like Ingenico's eN-Touch 3000, wireless via palm pilots and cell phones - whatever the ISO's choice of selling tool may be.

RichSolutions can process credit cards, debit cards (online) and check services, having already certified its platform with two major processors - NOVA and Vital for retail, restaurant, mail order/telephone order (MOTO) and e-commerce. RichSolutions intends to add others as demand warrants. RichSolutions supports card present, card not present, ECI, CVV2, Commercial Card level II, recurring, etc.

RichSolutions' first value-added service offering was electronic signature and receipt capture service (ERC). The ERC service creates a paperless system that securely stores and retrieves electronic receipts on demand, virtually eliminating bank chargebacks and the need for merchants to store and manually retrieve paper receipts.

RichSolutions sees this as a good example of a value-added service that ISOs can use to grow their market, differentiate themselves and generate new revenue streams while enhancing customer retention.

RichSolutions plans to continue to develop product and services for where it believes things are going to be tomorrow. "The Internet is not going away. The value it brings is still there," says Pittman.

What might be the best part of RichSolutions is the fact that it sells its services exclusively through ISOs, so there is no channel conflict. RichSolutions doesn't even have retail prices.

"The ISO is our customer, and that is who we bill for our services," says Pittman. "The ISO in turn can resell those services for whatever the market will bear."

In addition, RichSolutions provides all of its enabling technology at no extra cost. Again, ISOs can resell the product for whatever they want for immediate profits. RichSolutions bills the ISO a low monthly service fee for access to services - an ISO AOL, if you will, with the ISO able to put the service fee on the merchant's monthly statement. Fees are negotiable, relatively low and adjust in relation to number of solutions requested.

"We bill using a subscription model versus a transaction model," says Pittman. "There are some caps to keep things reasonable, but for the most part, we have designed it with the average small and mid-size merchant market in mind to meet their special needs. By giving away a lot of our client-side solutions, we are heavily incenting them! We have tried to make it so that ISOs can make as much selling software as they can hardware."

Pittman adds, "The thing you've got to do is keep it simple. File issues, modem issues, set-up issues - all complicate the solution. I've engineered all this out so the ISO gets a thin client implementation. We have turned software from a product into a service and provided an easy way for ISOs to lease it, something they previously could not easily do."

RichSolutions also provides free enabling technology, including a Software Development Kit (SDK) to help Independent Software Developers (ISVs) integrate payments into their point-of-sale and/or shopping cart solutions.

The merchant service industry is made up of thousands of ISOs who sell merchant services, i.e., the ability to process credit, debit and check services.

The Channel Partner Program brings together these two organizations, thus making each aware of the other's products and services so that they can sell and/or refer leads to each other, resulting in new income opportunities, expanded markets and the ability to differentiate themselves.

Benefits to the Channel Partner Program include a free Software Developer Kit (SDK), free Web and PC solutions that partners can resell, and free training and technical support - all providing for expanded markets, cross- selling and upselling other partners' products and services.

RichSolutions also has developer partners it works with, such as software developers writing retail POS programs, e-commerce solutions, kiosk applications, etc. The channel partnership program has brought together the merchant services industry with software developers.

The benefit is that an ISO who signs up to become a RichSolutions partner gets immediate access to these development partners, thus providing leverages sales and cross-selling opportunities.

"Now an ISO can refer a merchant to a point-of-sale development partner, offering the merchant a much more sophisticated solution knowing that they will still get all the transaction business," Pittman says. "Once again its a win-win-win."

RichSolutions' commitment extends to training - it can send qualified personnel to educate the ISO both technically and supportively. RichSolutions is working with at least a half-dozen ISOs, and the response has been overwhelmingly positive. ISOs can sign up today for RichSolutions' products and sell them tomorrow for whatever their market will bear.

In Pittman's words, "Their destiny is in their own hands!" ISOs looking to change their destiny should visit www.richsolutions.com.