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Taking It to the Next Level

A re you an ISO building a base, starting to get your just desserts but missing a few pieces of the payment-processing pie? If the answer is yes, a solution might be found in a self-proclaimed true wholesale distribution company that is getting a lot of notice these days.

A subsidiary of Electronic Cash Systems, Level2 Distribution focuses on product procurement, delivery, execution and service. This stand-alone business unit, which opened its doors in 2001 in Dove Canyon, Calif., north of San Diego, offers to both ATM and POS ISOs an extensive source for product, carrying more than 25 manufacturers and 1,500 products. These products range from simple thermal paper to the more elaborate vaults, check-cashing machines and wireless POS terminals, all offered at wholesale prices.

Level2 Distribution also offers a wholesale approach to services. Having heavily invested in a strong infrastructure and relationship maintenance, Level2 is branching out to allow others to access its service network, which includes terminal processing, statement preparation and direct mailing - services that traditional ISOs don't like to do themselves.

ISOs want to sell, not get stuck in stressful and time-consuming service areas. Level2 Distribution helps them get unstuck.

Level 2 Distribution believes ISOs should go in and sell full suites of services, a single multifaceted solution for merchant needs rather than slivers of the sales pie. That belief has translated into a business model centered on building relationships with providers and manufacturers of product that will benefit those ISOs whose passion is in selling, not in seeking product and providers.

Instead of taking away from their earning potential and adding elements to their business that they weren't looking for, ISOs can opt for Level2 to make them look good.

As many ISOs can attest, once they are partnered with a processor, they usually face a "my-way-or-the-highway" ultimatum. At Level2, they understand their customers are growing and don't want them to lose budding relationships with processors and providers. Level 2 offers the backroom services that will support ISO growth.

"We want to stay in the backroom. We represent and support the ISO and give him or her what they need to get out there and sell," says Gregg Mahoney, President of Level2 Distribution Group. "Merchants will never know who Level2 is. We just want to facilitate services for the ISO."

Having the right list of services and product coupled with the right pricing is at the core of Level 2's commitment.

"When I started looking at the market, prices were all over the board," Mahoney says. "It was making it too expensive for the merchant to participate. We examined what was a reasonable profit to make for everyone."

That approach certainly is a plus for ISOs who know that once you sell a merchant who has been overpromised or overpriced, the merchant doesn't stay as a customer for long.

What's the hottest product and service in demand at Level2? According to Mahoney, it's installation and long-term packaging.

The marketplace is clamoring for knowledgeable installers. Level 2 meets the equipment at site, installs it, trains the merchants, decals it for the ISO, sets up a support system and leaves a happy merchant who believes the ISO made it all happen.

"ISOs are the face to the merchant," says Gregg. "We're not proclaiming to know how to sell to merchants better than ISOs. We enable them to do what they do best."

What Level2 Distribution does best is enjoy relationships with product and service providers, including leasing companies, processors, vault cash providers and technical service networks such as Cross, Triton and Tidel for ATM equipment and Lipman, VeriFone, Thales, Linkpoint and Hypercom for POS equipment.

"It is extremely difficult for a reseller in the marketplace to arrange product procurement, installation, processing, leasing, maintenance, ACH services, statement preparation, the list goes on - we fill the gap," says Mahoney. "We're not an ISO. We're not in competition with them. We are a straightforward provider of services and products. It is all about core competency. If it is not a core competency of the customer, we step in."

The target customer at Level2 Distribution is the established, proven and reputable sales professional or sales office. The other key type of customer is an established office that may be POS-centric. Level2 Distribution provides these types of customers a turnkey, customized private-label ATM program.

"We're not the solution for every ISO," says Mahoney. "If someone has already built their infrastructure and spent time developing product and offerings, for us to call them is redundant. But on the other side are people just getting into the market. They need hand-holding and training. They call us."

In general, Level2 Distribution is looking for ISOs who have been doing business for more than a year either incorporated or with a definite business plan.

"There are no hard-and-fast rules," says Mahoney. "We think there are lots of opportunities for us to service many customers. We have designed our program to insure mutual relationships, but we don't just want to be used for one service. We're looking for long-term relationships. At the end of the day we look for partners."

Those long-term relationships don't include long-term commitment, though. Level2 doesn't concern itself with a myriad of documentation, non-disclosures, non-competes and the like.

"Our thrust is, 'Do you want to develop solutions together, not straddle the relationship with burdensome paperwork and documentations?' " says Mahoney. "We don't engage in binding and long-term agreements."

Level2 Distribution and its customers have no volume, length of term or strict contractual obligations to each other. The single request from Level2 is that its ISO customers be ethical, honest and forthright in all business dealings with Level2, as an independent supplier and with their respective merchants.

Shouldn't the money go back into the street? That's the question Mahoney asks. Level2 answers that by getting prices in line that encourage merchants to continue to buy product and allow sellers to continue to drive those purchases.

Level2 boasts an aggressive pricing and residual payment program, in part because of a strong residual infrastructure and management with years of expertise and experience in the payment-processing field. As Mahoney says, "We know what we're doing."

How many customers is Level2 doing it for? According to Mahoney, it's a small list at present and probably will always be fairly small. "We are selective," he said.

For those selected, Level2 can process their needs in one day. Whether an ISO signs up over the phone, by fax or via the Web site, it can be done within 24 hours. If ISOs just want to buy product, it's a simple process with a shopping cart that can be filled with more than 700 line items. Level2 has many modules to meet product and service needs, including in-person contact to discuss the best processing solution.

One module it doesn't believe in is stockpiling inventory. Level2 believes that carrying lots of inventory is neither economical nor beneficial. Level2 works with third-party logistic providers that carry product for it. Inventory management, warehousing and logistic shipment and returns all are outsourced because it is the most cost-efficient way to run the business. But Level2 doesn't outsource customer support. It's 24/7 with a real voice.

With an internal staff of just a few, how does Level2 provide this support? As a subsidiary of ECS, Level2 enjoys the support infrastructure of its parent company. But make no mistake - Level2 is an independent-thinking offspring. Its ultimate goal is to build a highly cost-efficient model in which products and services flow to users more effectively.

"It is not really difficult," says Mahoney. "It is just tying all the pieces together that is difficult. Getting the suppliers and providers lined up is the hardest part of the equation."

But through due diligence, hard work and persistence, Level2 is picking the right provider.

"If you don't legitimize the supply-chain issues in the way in which merchants interact with suppliers and resellers, you end up hurting long-term growth of the industry," says Mahoney. "Merchants will get burned. We want to facilitate ISOs and fuel the market in a consistent way. We're fueling the merchant to say, 'This is great. I can't live without this product now.' "

Level2 Distribution Group Inc. ISO contact: Greg Mahoney, President Phone: 866-4LEVEL2 E-mail: greg@level2distribution.com

Company address: 31991 Dove Canyon Drive Dove Canyon, CA 92679 Phone: 949-888-3045 or 866-4Level2 Web site: www.level2distribution.com

ISO benefits: - Takes care of service issues, allowing ISOs to concentrate on selling. - Provides installation and long-term packaging. - Is link to product and service providers, which means ISO can have a choice. - No long-term commitments. - Full 24/7 customer support.