Cut to the Chase

"Our mission is to provide expeditious transactions for the ISO community." - Drew Freeman, Senior Vice President, Third Party Business, Chase Merchant Services It's a noble statement indeed, and certainly one that ISOs across America have heard before - but not from the premier financial institution in the country! In 1997, two leaders in the payment-processing field, First Data Corp. and Chase Manhattan Bank, came together under an LLC structure to acquire merchant accounts. First Data wanted not only to provide a stronger presence in the Northeast region of the U.S. but also create a formidable payment-processing figure under the umbrella of First Data.

Chase Merchant Services was born.

With footprints in New York, Connecticut, New Jersey and Texas, this entity has become a powerhouse, and the point of power is its Chase ISO Group Program. If the fact that its ISO hotline rings 20 times each day is any indication of the heat surrounding this program, Chase ISO Group is burning up the boulevard.

"Our core competency is flexibility," says Drew Freeman, Senior Vice President, Third Party Business for Chase Merchant Services. "We can adapt to any terminal, any platform. Many providers limit their partners to how they can make money. We allow our ISOs to choose which way they want to go."

Under the Chase ISO Group program, independent sales organizations have options. They can take the liability or turn it over to Chase. They can sell services from an a la carte menu of more than 70 line items, picking and choosing which aspects of Chase's offerings work for their merchants. ISOs can choose which services they want to perform and which they want to outsource.

Throw in the ability to see real-time transactions through Chase's online reporting capabilities, same-day approval on merchant accounts with the Emerald program, 50% autoscore on low-risk accounts and even on-site ISO training, and it's not hard to see why Chase's phone is ringing off the hook.

But the most sought-after product, by far, has to be the brand. In addition to the unique options and a dedicated ISO support staff, Chase is a world-recognized brand. That power, coupled with First Data's full suite of products, is formidable indeed in this highly competitive space.

"Nobody can provide what we can," says Freeman. "We have no capitalization issues, and not too many can put the power of First Data in their products combined with the magnitude of JP Morgan Chase. No one else has these resources. There are imitators but no competitors."

While Chase's target market is also flexible, it does not have an agent program and prefers to go after the bigger guys.

"We can do business with everyone," Freeman says. "We embrace the VISA and MasterCard associations. We embrace the new and enhanced ISO standards. The industry is now very credible, and all ISOs we do business with must be registered. We are by the book, but that's OK because we want ISOs that are by the book."

That credibility translates into nearly 60,000 merchants enjoying the fruits of Chase ISO Group's programs. With the benefits of scale, Chase has established a business model for ISOs that is so strong that its financial potential is limitless for resellers. "We open the door, and how far ISOs go is up to them," says Freeman. "We want to do business with people who are into long-term relationships.

And Chase is very clear about the fact that that relationship is with Chase Merchant Services. All tier-one support is via Chase.

"First Data's part is only for services provided," says Freeman. "The relationship is with us. The ISO deals with Chase. We hand the ISO a blank piece of paper and ask, 'How do you want to do business?' "

But don't be fooled into thinking Chase is open to any direction. According to Freeman, "It obviously has to be profitable for all."

Chase monitors its relationships closely. Account managers are in daily contact with ISOs, listening to issues and problems, educating their partners on products and services and providing solutions in person, via telephone or e-mail.

According to Freeman, Chase communicates with its reseller partners on a regular basis. Initial on-site visits that are required by VISA and Master Card are followed up by periodic Chase team revisits. Those periodic audits of ISOs ensure the viability of Chase's program.

"There's so much need for (an approach that is) not the typical ISO mentality of the past," Freeman says.

Instead, there's a need for a program of integrity, reliability and world-class services. He sees the industry as very much an expansion opportunity. And Chase is definitely expanding with 10 new hires in support, project management and sales.

"We want to make sure that we support our ISO customers and that they are satisfied that their merchant customers are happy," says Freeman. "We even added dedicated finance people so we can ensure the expeditious and accurate payment of residuals."

Ah, the magic word - residuals.

"We have a beautiful, automated residual payment program with lots of data and lots of reports for our customers," Freeman says.

ISOs have online access to merchant databases, and merchants also can get reporting via Web sites. With Chase Merchant Services processing nearly 2 billion transactions a year and more than $120 billion in annual credit and debit card sales volume at the point-of-sale and over the Internet, that's a lot of data.

The process of compiling all that data is arduous for Chase, especially with a 70-line-item menu. Chase no longer outsources data-entry services for its ISO partners. Just a couple of months ago, Chased changed to in-house data entry because of the rapid growth of the ISO program. There now are dedicated Chase keyers and dedicated financial staffers to strengthen reporting opportunities.

"We are trying to help ISOs control their own destiny," Freeman says. "They outsource to us, so we want to keep it in house and take control to support them so they can just sell." By doing so, Chase is also controlling its own destiny.

Also in the last few months, Chase brought in relationship managers and added sales support. That support is in the form of resources to help ISOs efficiently and quickly get their merchants through the online process.

What brought about all this expansion? Chase's ISO Program ramped up in 2000 and grew phenomenally in 2001. "We are growing at least 18% month over month in transactions," says Freeman. Chase attributes this impressive growth to two factors: key management change and a change in approach.

Chase altered its focus by expanding its small business initiative outside of New York, New Jersey and Texas, recognizing a great opportunity to provide small businesses with quality branded services. As many astute players know, this industry can provide a great opportunity for profitability in a low-cost acquisition channel. Hail, ISOs.

The key addition to management was Freeman, who has solidified the program's success. Freeman brought an understanding of the needs and wants of ISOs and developed an infrastructure to meet those needs, taking it down to a turnkey approach. Hail, Drew.

Freeman says the payment-processing marketplace is toughening up. He believes it is going to be more difficult for ISOs to do business if they are not registered. That's why Chase is focused on providing solutions for the committed players.

"Our desire is to be in sync and provide the best possible solutions," he says. "It comes down to products, pricing, support and the power of the brand."

And, according to Freeman, it's not a numbers game, it's not about the amount, it's not about signing up as many ISOs and merchants as possible. Chase is not looking to do high-risk business by any stretch of the imagination.

"We are not a high-risk provider," Freeman says. "Our specialty is quality."

This quality-based organization is resourced between New York and Florida. Sales support is based in New York, relationship divisions are in New York and Maryland, and management and training is headquartered in Florida.

For more information, visit the company's Web site at www.chasemerchantservices.com