Competing against the Web for Sales and Information
 s ISOs, we know that today savvy merchants have more ways to educate themselves about bankcard acquiring than ever before. Competition is tough, and every merchant, even a new one, is solicited for business regularly by ISOs and banks. With the current competitive environment, it would seem that retailers would have plenty of knowledge about the choices they have in service providers, pricing and even equipment, but ISOs always have been able to reach the multitude of smaller merchants that are too expensive for a bank or bankcard acquirer to reach with their own employees or marketing efforts.
As the hype about the Internet grew over the last few years, many in the industry had come to wonder if the Internet would eventually replace the need for ISOs in reaching the small and medium-size retailer, or - perhaps even as devastating to ISOs - that pricing information, choices in equipment and even services would eliminate the potential of profit from their business.
The Internet was expected to be one of the most robust resources for gaining knowledge about bankcard acquiring. With the many dot.com failures over the last year, as well as a slowdown in new-equipment investment, we decided to take a look at how bankcard acquiring information has changed on the Web over the last two years and to review how good that information is today.
Some Information about Our Review
We took a look at the methods that a retailer might likely use to find information on the Web, and we searched these chains of data from start to finish. We began our search with the expectation that a retailer would choose one of two methods to begin: search the Web site of a particular bank or financial institution based on name recognition, or use a search engine to find related topics.
We will review the specific acquirers' sites in a moment; however, our initial look is at search criteria that might lead a retailer to an ISO or acquirer Web site. The top 10 search engines ranked in order of highest to lowest use are Yahoo!, Lycos, Excite, AltaVista, Netscape Search, HotBot, Teoma, AOL Search, Open Directory Project and MSN Search. In addition, the highest search word (see chart "Top Keyword Searches") is Bankcard, and the numbers decline rapidly to such things as Merchant Credit Card Services, Charge Cards, Merchant Services, Electronic Transaction, Visa/MasterCard Processing, Account Status, Visa/MasterCard Services, Small Business Processing, Credit Card Transactions, Visa Services, American Express and Discover Card.
With these choices of how to search, retailers also would need to determine whether they are looking for Web sites or general information. This choice is very important to the success of a wild-card search, and a good example is the Yahoo! search engine using the words "Bankcard Acquiring." This search finds only two choices, the New England Bankcard Association and the Southeast Bankcard Association sites, both of which were developed largely to address the questions of financial institutions that might be interested in joining the association. While retailers might find their way to a member's site from here, it is unlikely.
Setting the Bar for All ISOs
While the choice "Bankcard Acquiring" listed above is a highly unlikely search choice for a retailer and would be more likely used by someone in the business and familiar with such terms, other words such as bank card (BankCard), Visa, MasterCard, credit cards and even merchant credit card are more likely choices.
While the number of possible hits on such searches differs significantly between words and search engines, generally speaking the most often located sites are on the top of the lists, with additions to these lists now being supplemented by paid placement. That is the case with Yahoo, which places what it calls "Sponsor Matches" ahead of the highest-traffic sites that actually meet the word-search criteria.
As an example, the number one Web site listing using the search criteria "Bankcard" utilizing the Yahoo! search engine is Bankcard Solutions (www.bankcard solutions.com), and the number one Web page listing using the search criteria "Bankcard" utilizing the Yahoo! search engine is Meramak (www.meramakbankcard.com). However, Yahoo! now has three paid sponsors, the first of which is Merchant Warehouse, which has a front-page listing for equipment pricing (www.merchant warehouse.com/?source=goto).
Since Yahoo has the greatest search traffic and "Bankcard" is the most often used search word1, it is safe to say that Bankcard Solutions and Meramak set the bar for information on this subject for all other acquirers when a retailer is searching the Web with these search criteria.
Bankcard Solutions is an Yreka, Calif.-based ISO representing U.S. Bank and Universal Bank. Bankcard Solutions notes, "We pledge to inform our clients about all costs and fees 'up front' during the quote and application process. We believe that honesty and integrity are the most important things that we can offer when working with our clients."
With this statement, its site provides clear pricing and fees, noting that its lowest rate is 1.58% for swiped transactions with a 21-cent transaction fee and a $10 monthly statement fee (see chart on Page 10, "Bankcard Solutions Merchant Account Processing Rates").
Meramak, an ISO located in Manalapan, N.J., lists three acquirers with which it has a relationship: HSBC Bank USA, NDC and National Bank of the Redwoods. Meramak has both an initial application and something called an online application; however, it appears that retail businesses are expected to complete the initial application, with a subsequent visit from a sales rep, while the online application is really intended for non-physical businesses.
Meramak notes that its prices range from 1.46% to 2.2% plus a $12 monthly service fee, which may or may not have an application fee.
We found that by choosing just the first Yahoo! search (sites or pages) under "Bankcard" and picking the first natural listing, plus the first paid listing, a retailer is equipped with both a range of relatively low bankcard acquiring rates and low equipment pricing.
Providers and pricing are not all that retailers can find on the Internet. Assuming that retailers are going to the Web for some pre-sales call information, they also can find out that applications for bankcards can be processed quickly by some acquirers.
The sixth listing on Yahoo! using "Bankcard" for the word search is Premium Bankcard Service (PBS), www.premiumbankcard.com. The PBS site notes, "As all of us trek into the new millennium, the Premium Bankcard unique method of doing business has positioned us at the forefront of the bankcard industry.
"Founded as 'Premium Bankcard Service' in October 1999, coming from a four-year journey in the Internet technology and banking industry, the defined goal was to build an organization with a "PREMIUM" level of performance to the industry with an emphasis on customer service. This is still a 'point-of-sale industry.' We may have altered the necessity of the physical presence by utilizing the Internet for transactions, but we have not altered the formula of success ... it will always be 'serving the customer.'
"The philosophy of Premium Bankcard is simple -- do everything right that all other companies in the industry do wrong! This philosophy has quickly turned PBS into a doer, not a talker. The corporate office, located in Canoga Park, California, is responsible for all operational functions with departments dedicated to servicing merchants, independent sales personnel and other business clients."
This site notes that Premium Bankcard Service is a registered ISO for NBR and that Cardsync Processing is a registered ISO for Quad City Bank, Bettendorf, Iowa, making it less than clear how these two ISOs or banks interact with each other.
What the site does say clearly, however, is that a merchant can be approved to accept bankcards in 10 seconds and be live to actually take bankcard sales in one hour.
So What Can a Retailer Learn from a Simple Web Search?
They will find that only a few of the most often viewed Web sites disclose their pricing structure, but for those that do, the average price is 1.48% and 25 cents a transaction for retail sales and 2.25% and 27 cents for Internet (non-swiped) transactions. They also will learn that there may be statement or other monthly fees, monthly minimums, annual fees, application fees and programming fees.
Last but not least, they will find that a word search is by far the most direct path to bankcard acquiring information. While one might think that the acquirers with name recognition might be building sites that would be easily found and easily navigated, this is in fact rarely the case.
Looking Directly at the Top Acquirers' Web Sites
Part of the problem for many of the big players is that they are just that - big. This means that they each have a million things they want to tell any would-be visitor to their site, and, therefore, finding bankcard acquiring information can be a challenge.
By way of example, it is virtually impossible to find your way to the bankcard acquiring information on the Chase Merchant Services Web site, www.chase.com. Given that Chase is the largest bankcard acquirer in the nation, this almost seems unbelievable. On the other hand, one must also realize that this is not how Chase expects to get business. While the site has much to say about bankcards, it is highly "issuer" related.
In spite of knowing what I was looking for, I was reduced to using the word search capability on the site, and it still took several attempts at a "word" that would get me to the acquiring information.
A retailer finally finding the meager information that does exist is given nothing more than, "If you would like to open an account with Chase Merchant Services, LLC so that you can accept credit cards at your place of business, call 1-800-801-0392 (Monday-Friday, 8:30 a.m.-6:30 p.m. ET)" - hardly a triumph in Web utilization.
As the number two acquirer in the country, NPC's Web site (www.npc.net) is about as far from Chase's as it can be. It is bright, informative, easy to navigate, and speaks directly to bankcard acquiring (I said it was everything Chase's is not).
Upon entering from the home page, a reader can choose merchant services and a merchant application, all in two strokes. While no pricing information is available, the site makes quick work of signing up although it isn't compelling about why a merchant should want to.
Paymentech, while on our charts among the top word-search results, is not in the first search and was number 18 in the second search at the time we did this research. The Paymentech site (www.paymentech.net) is quite robust, being more complicated than the NPC site and yet more easily navigated than that of Chase.
While it does take a couple of extra strokes to get to an application process for Paymentech, it is clear that the expectation is that physical merchants will begin with a face-to-face visit and virtual merchants will be taken down a separate path.
While the site does have references to pricing and the "apply now" application pop-up has a pricing tab, it is either simply cosmetic or was not working on the day that we tried.
U.S. Bancorp's (U.S. Bank Merchant Payment Services) Web site (www.usbank.com/merchant) is a lot like the Chase site, partly because there are both large financial institutions that have many other profit centers and business segments to promote.
The U.S. Bancorp site does have some straightforward information about why a retailer should be interested in choosing the company for a merchant account, and its application seems prepared to handle any kind of merchant, physical or virtual. No pricing information is available on the site.
The Concord EFS site (www.ceft.com/resellers) is not built to support a retailer looking for a processor at all. This site, while it is rich in information about Concord, is really a media site, with support information provided for sales channels.
Conclusion
As I noted at the outset of this story, many in the industry had come to wonder if the Internet would eventually replace the need for ISOs in reaching the small and medium-size retailer. And from the ISO perspective, some were concerned that disclosing pricing information on the Web, wider equipment choices and discount pricing would eliminate the potential of profit from their business.
For all of these concerns, we found the Web's development so far to be a very poor source of information about merchant bankcard, other than for the totally virtual business. In this case, a virtual sale seems to meet the need.
While discount equipment pricing or even bankcard-rates teases may keep a new merchant from accepting the first deal that is presented, so far, at least, it does not make an ISO's job much more difficult.
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