Gassed Up and Ready to Go

W ith more than $100 million in venture-capital money and plenty of processing services to complement any ISO program, there's a service provider in the marketplace that has the pedal to the metal for unique and flexible credit card processing solutions.

Back in 1994, a small group of senior executives that had been a part of Bank of Boulder's bankcard processing division made a decision to break away with the hope of funding a start-up in the bankcard processing industry with particular focus on community banks.

TransFirst (formerly ACS Merchant Services) was founded in 1995 and successfully launched an agent program, largely because of those execs' expertise and understanding of the banking mentality and customer point of view.

TransFirst began processing in the second quarter of 1995. By 1996, the company had tripled its volume and signed its 50th agent bank. From the beginning, TransFirst strove to be a leading provider of merchant bankcard processing and related payment products to community banks and merchants throughout the United States.

In July 2000, TransFirst received a commitment of more than $100 million from GTCR Golder Rauner LLC, a private equity-investment firm and long-term strategic partner. The recapitalization of TransFirst centered not only on cementing its position as one of the industry leaders in acquiring strategic partners to complement sales growth but also to expand its commitment to the ISO community.

That commitment includes offering quality point-of-sale (POS) processing, clearing and settlement products and services directly to independent sales organizations. TransFirst provides:

+ Dial terminal and PC software applications.

+ Address Verification Service (AVS).

+ Corporate and purchasing card processing.

+ Integrated point of sale ATM debit card and EBT processing.

+ E-commerce solutions (bankcard and electronic check processing) for Internet merchants.

+ Check verification and check truncation processing services.

+ Audio Response Unit (ARU) transaction processing via telephone.

+ Wireless bankcard equipment and software solutions.

+ LAN solutions allowing multiple terminals to use a single phone line for card processing.

+ Leased-line solutions for merchants with high on-line transaction volumes.

+ High-speed dial phone line solutions for processing high volumes of authorizations.

+ Batch processing solutions that process up to 250,000 transactions per file.

These services are provided for merchants in all areas of business. TransFirst tailors processing solutions for any specific business type, including retail, restaurants, hotels, car rental, mail/phone order, B2B and Internet/e-commerce.

TransFirst provides processing for all major credit cards (Visa, MasterCard, American Express, Discover, Diners, and JCB) as well as a variety of electronic terminals, printers and PIN pads that can support all business types. TransFirst also works with ISOs to set up third-party software and hardware packages to facilitate all of their merchant transactions.

With its core competency in serving the community bank niche of bankcard processing marketplace, TransFirst is able to offer a full line of products and services that have exceptional flexibility.

"The key to our success is our flexibility," says TransFirst President Rusty Schaeffer. "At the same time, we don't intend to be a product- development company. We don't have an interest (in being) the first kids on the block with a brand new technology. We are not a product-proving ground."

TransFirst settles its own transactions, maintaining full control and responsibility. TransFirst is a non-banking entity but performs as though it is a bank, doing all its own charge backs and retrievals.

"We move the money ourselves," says Schaeffer. "We take full liability across the board. We like being able to drive our own bus."

TransFirst also offers a superior Web-based information system for all of its customers, whether they be ISOs, merchants or agent banks. That proprietary system is called Web Trak, provided in a password-protected environment and capable of holding data for a year.

"Web Trak is a heck of a product, a tool for us to use in appealing to ISOs selling on our behalf," says Schaeffer. "What clearly makes the difference is the speed and accuracy with which we provide information and service."

What TransFirst hopes will appeal to ISOs is that, relative to price, Web Trak frees up ISOs to provide much needed information to merchants in a timely and stress-free manner, thus ensuring customer loyalty and retention. "We believe that value is important," says Schaeffer. "We appreciate folks selling on our behalf who do business the same way we do."

TransFirst is working with 20 ISOs, 400 banks and more than 40,000 merchants and is determined to increase those figures considerably. Competing with the usual list of suspects, TransFirst works from a number of different playing fields. It is actively looking to acquire companies, targeting community banks and aggressively seeking ISOs and ISAs to resell their products.

TransFirst recognizes that its growth depends on generated sales at a healthy pace. Because bankcard processing is a sales-consolidating industry, TransFirst knows that to stay competitive it must acquire portfolios as well as sales-generating companies. Its key strategy is to complement its internally generated sales with community banks as well as downstream ISOs and ISAs.

TransFirst's target market is ISOs and banks servicing small to midsize merchants.

In addition to the comprehensive suite of products, TransFirst believes its 24/7 customer support also will make a difference for those entities looking to join up with a solid service provider.

Both ISOs and agent banks are resellers, and each one has a relationship manager, someone who deals specifically with them. This is part of TransFirst's strong support system at its reseller level.

"ISOs can make one phone call into our office and know their relationship manager will take the call," says Schaeffer. "We will seek out the solutions and not make them have to go all over the company."

And with TransFirst's internal-tracking capabilities incorporated in Web Trak, exceptional help for customer support is automatically built in for ISOs on a Web-based level as well.

Again, because TransFirst owns, operates and controls this system as well as an in-house risk management division, it believes it delivers superior customer service on many levels.

For more large-scale things such as back-end accounting and authorization networks, TransFirst finds a comfortable and efficient reliability with outsourcing these services. Its turnaround time is within 24 hours for an MID, setting up merchant accounts for ISOs that same day in most instances.

TransFirst has two levels of credit analysis for merchant accounts - gold and silver. Gold is for those rock solid, let's go type of accounts. Silver requires a bit more approval time.

"We want to give resellers a second option if the merchant is going to be iffy on approval," says Schaeffer. "They can move the account over to our silver program and get a much better chance of approval." Obviously, there are differences in rates and requirements for these two separate distinctions.

TransFirst has invested heavily in a strong management team. When TransFirst opened its doors six years ago, two employees were on the payroll. Today, that number is 120, headed by Chairman/CEO Thomas Rouse. Not a member of the original management team, Rouse joined TransFirst later and, as a true strategist, is leading TransFirst on a path of increased growth and revenue.

What does this all mean for the ISO community? The good news for ISOs is that TransFirst is in a serious acquisition mode.

"As a private company, we have significant advantages to offer, including the fact that the capital market dried up after we got our funding," says Schaeffer. "We are wide open for acquisitions. No set market, no money parameters. Just be in the ISO industry. That's how picky we are!"