The future, one niche at a time

Any ISO approaching 30 years in business must be doing something right and Michigan-based ABTEK Financial has been in operation since 1986. The privately held company incorporated under the name American Bankcard Processing, adopting the ABTEK acronym as an official trademark in 1998 to better reflect the company's ongoing commitment to changing payment technologies and providing the expertise to support them.

Tami Cohorst, Vice President at ABTEK, said the company is a full-service ISO. "We run our wholesale agreements with Chase Paymentech, Wells Fargo and First Data," she added. "We support a full-service, in-house technical team and a whole administrative department. From a technical standpoint we're pretty much a standalone shop."

ABTEK offers a complete menu of payment processing hardware, software, Internet and wireless connectivity options, along with Internet shopping cart and gateway products, and virtual terminal capabilities for card-not-present merchants. In addition to traditional credit and debit card processing, the company also offers gift card programs and check payment services.

While its core business is focused primarily within the five-state region encompassing Michigan, Wisconsin, Illinois, Indiana and Ohio, ABTEK's territory has expanded in recent years. Through the integration of its payment gateway and payment product suite with a variety of niche-market software providers, the company has expanded within the United States and Canada.

Vertical market spotting

When penetrating new vertical markets, education is often a critical factor. According to Cohorst, government entities represent a lucrative market, and most within this sector understand regulatory and security standards. "It's been refreshing with my government contacts, how well they understand their own regulations," she said. In other markets, where there is less familiarity with the payments industry, additional briefing may be required.

One market in which ABTEK is gaining traction is the education sector. "We do a lot of community colleges," Cohorst said, adding that there is little differentiation in software deployed across the sector. That said, having different entities within colleges interact with one another online remains an issue. "That's one of our first meeting requirements," Cohorst said. "We actually pull all of those entities together within the college to sit down and discuss the issues they're having."

Cohorst works closely with colleges to streamline their processes so they can eliminate paperwork and function more efficiently. "That's why the bridge should be the same - introducing them to the web and educating them about convenience fees, whether they want to charge them or not, the different changes in the arena for education," she said.

ABTEK was apparently ahead of the curve when it introduced pass-through pricing over a decade ago, a time when three-tier pricing was prevalent. Cohorst said making the leap early on created opportunities to enter niche markets, because the pricing model was considered straightforward.

One such example is a Michigan-based software-as-a-service provider for lawn care businesses. "A lot of our customers are smaller operations," said Jim Christie, Controller for Real Green Systems, which partnered with ABTEK in integrating payment processing as a software option for its lawn care clients. "Their Customer Assistant Website accepts the payment and then automatically updates the customer that's paying their account, so the payments get squared away on the customer's account. They've been a great partner for us."

Cohorst noted that ABTEK implemented its gateway into Christie's software. "Once we got into soft integrating into POS systems, that's what sent us out nationally and into Canada," she added. "To us, that's a market I really want to get more involved in ... just getting integrated into different software. And there is a lot of new software out there every day. It's just finding the right avenue."

She warned U.S.-based ISOs considering expansion into Canada that a different set of interchange and bank regulations is applicable, which can be challenging. "It's a whole open channel for us," she said. "Once you understand the learning curve of the different interchanges and the regulations that Canada has, it's a wide-open environment."

Another direction for ABTEK is its entry into the mobile arena for merchants with storefronts interested in making the switch from traditional POS terminals to tablet devices. Cohorst said the company is helping sales reps introduce merchants to the advantages of tablet devices and encouraging ABTEK reps to visit merchants with tablet devices in hand so they can demonstrate to merchants "how they can be mobile within their storefronts." Later this year, ABTEK plans to launch a mobile program that interfaces with its web-based service assistant.

The MLS as employee

It is common for MLSs to sign on with ISOs as independent contractors. Not so with ABTEK. Having adopted the independent contractor approach initially before abandoning it later on, the company now hires MLSs as employees. Cohorst said employing MLSs has helped ABTEK strengthen its brand recognition and reputation within the payments industry.

"We don't do any kind of 1099," Cohorst noted. "We want them to value the company as much as we value them, and that hasn't changed since the early 1990s. All of my MLSs are employees, benefits, the same value as an employee in-house. There is no difference between my outside salesperson than my inside salesperson as far as backup support, the deployment, all of it." And when there are local sales leads, ABTEK forwards them.

MLSs undergo a rigorous six-week training program. New recruits are flown into ABTEK headquarters just north of Detroit where they learn all aspects of the payments industry, from history and pricing to the sales process itself. Two weeks are devoted to working with ABTEK's technical support group for an inside view of technical issues. Another segment is spent with the inside sales team to understand the obstacles that will be encountered when selling in the field.

Sub-ISOs welcome

In addition to MLSs, ABTEK boards sub-ISOs as well. "We feel that is one of our niches, taking care of the smaller ISO as far as people getting started and building an ISO, so that they have the back-end support that they're not getting from the bigger processors," she said.

Cohorst believes ABTEK's internal technical support and education go well beyond what larger entities typically offer. "They're trying to maneuver through those large companies with no support, and they feel like they're spending all the money paying minimums and not getting any support," she said.

Because every sub-ISO is unique, ABTEK is flexible with its programs. "They could be their own company and process for us," Cohorst explained. "We have a couple of different pricing programs. If they already have enough revenue stream that they've built, then most of them just want to go into a revenue share program."

Another possibility is ABTEK's full-support option, which provides a straight split on revenue share. With ABTEK, full support includes merchant support as well, which covers all deployment and equipment needs. "That's where they seem to struggle," Cohorst noted. "They try to get a terminal deployed. They're getting it for cash. They have so many problems, and then they can't get it fixed. They end up calling us."

To keep it simple, ABTEK does not lease any of its equipment. "We don't allow any leasing of equipment," Cohorst said. "Our salespeople do not make any revenue from that. They have to sell the terminal or we provide an ABTEK terminal, which is the free terminal." Even so, the nominal annual fee ABTEK charges for its dual-communication voice over IP terminals still makes them extremely competitive in the marketplace, she added.

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