s a reader of The Green Sheet, you know that merchants continually seek new ways to increase sales, encourage loyalty and attract new customers. You understand that merchants will work with the processors and banks that can help them grow their businesses.

As a member of the financial services community, you also understand that the credit and debit card market is more competitive than ever. Banks, processors and acquirers are always looking for new ways to drive usage and increase revenue.

Finally, as a parent or community member, you realize that many local schools and non-profit organizations are in financial crisis. With the bursting of the tech bubble and the recent downturn of the economy, budgets for these groups have become even leaner. As businesses and individuals have less discretionary income to contribute, multiple organizations are scrambling for the same dollars.

There is one company that thinks outside the box to help bring revenue to all three of these groups, and without changing the way any of these entities process transactions. That company is Nietech Corp.

Nietech provides payment technologies that automate transaction-based philanthropy by distributing a portion of a cardholder's purchases to the charities of his or her choice.

The five-year-old company is based in Northern California and provides transaction processing and payment services to businesses, financial institutions, payment processors, card Associations, card issuers, retailers and consumers.

The Force Behind the Products

Nietech has pioneered some distinctive products, but first it's necessary to understand the engine behind those products, the Nietech Administrative System, or NAS. NAS is a transaction processing and settlement platform that collects and disburses multi-sourced payments and provides flexible Web-based reporting.

With NAS, payments and data generated from cash, checks, credit and debit cards can be split and disbursed to multiple parties. Payments can be of any size, including micropayments.

"We are an application service provider for anyone that processes payments: banks, processors, etc.," said Christine Koncal, Chief Marketing Officer for Nietech. "We are able to send payments to beneficiaries, with complete accounting and reporting transparency."

NAS is the first transaction processing, accounting and reporting platform that can calculate affinity points and cash payments from all transaction types, including credit and debit cards, checks, and cash, and electronically distribute points and cash payments to multiple recipients, with full accountability and Web-based reporting. Major benefits include systems compatibility, scalability and flexible applications.

NAS is different from other transaction systems in that it receives its data from the card issuer or processor, rather than from the point of sale. Since NAS receives data directly from the processor, there's no need to connect directly with POS systems, which eliminates the need for compatibility with all POS systems, protocols and operating systems. NAS requires no custom integration.

In addition to electronically collecting and disbursing cash payments from multiple sources to multiple parties, NAS enables payment processors to electronically collect and distribute merchant rebates and loyalty points from multiple sources to multiple parties.

Payments can be split, and all involved parties have access to electronic reporting. The company markets its products through direct sales to retailers and partners, such as card Associations, corporations and financial institutions.

"Our business is structured to benefit our customers, who then utilize our services and products to market to their customers and consumer end-users," Koncal said.

A Community Benefit

Using the power of the NAS, Nietech has developed two card-based loyalty and rewards programs: COMMUNITYsmart and COMMUNITYcash. Both programs support schools and nonprofit organizations, reward cardholders and offer retailers and financial institutions a tool to generate new and recurring business.

In 2003, Nietech launched COMMUNITYsmart. Through their everyday spending, parents and community supporters can generate recurring cash back to qualified 501(c)(3) beneficiaries and schools, while earning rewards for themselves.

Through NAS, COMMUNITYsmart purchases are tracked, and cash contributions from participating merchants are distributed electronically. At the same time, points are collected toward the cardholder's COMMUNITYsmart personal rewards.

Cardholders can redeem these points for unrestricted airline miles, gift certificates, merchandise or additional cash contributions to schools and nonprofits. No other service allows cardholders to redeem points for cash contributions to schools and nonprofits of the cardholder's own choosing.

Enrollment in the program is free of charge and consumers can choose which type of card they prefer: a MasterCard-branded debit or credit card or a non-payment card. The non-payment card is swiped at the POS to trigger donations when paying with cash or check. Personal rewards and charitable donations accrue from usage of all three cards.

Currently the company has 150 merchants participating in the program. Merchants receive POS signage and decals, and Koncal said that some merchants have taken it upon themselves to aggressively promote the programs, thus drawing more consumers into their stores. For example, some have put the COMMUNITYsmart logo on their bags or stuffed bags with applications for the COMMUNITYsmart card.

In October of 2004 Nietech launched COMMUNITYcash, a program that enables cardholders earning points when making purchases with enrolled MasterCards to redeem reward points for cash contributions for schools and nonprofits of their choice. Like COMMUNITYsmart, COMMUNITYcash is free of charge and uses NAS to electronically disburse the payments. COMMUNITYcash is available to all MasterCard credit card and debit card issuers in the United States.

Nietech can customize COMMUNITYcash for financial institutions of any size. Participating institutions determine point accumulation criteria and redemption levels that best suit cardholders' expectations. The platform provides transaction reporting, including a Web-based interface, to simplify reward account management and customer service and to provide transaction-detail tranparency and accountability for all program participants, including cardholders, card issuers and beneficiaries.

Benefits for All

Both the COMMUNITYsmart and COMMUNITYcash programs offer benefits to cardholders, card issuers, processors, merchants, and of course, schools and non-profit organizations.

Cardholder Benefits

Research has shown that many loyalty points are never redeemed. Either consumers don't have enough points to redeem them for something they want, or they aren't even aware of a loyalty program. With COMMUNITYcash, cardholders can redeem their points for cash contributions to the organizations of their choice.

With COMMUNITYsmart, a merchant rebate is automatically generated for the cardholder's designated organization when the COMMUNITYsmart card is swiped at the point of sale. Cardholders can choose up to three organizations to receive their points, and they can change their beneficiaries as often as they wish. They are also free to choose the percentage each group receives.

Card Association, Issuer and Processor Benefits

Card Associations, banks and processors benefit from both the COMMUNITYsmart and COMMUNITYcash programs by becoming an integral part of their community, local schools and non-profit organizations.

However, this is business so the benefits are not all altruistic. Banks and card Associations also benefit by increasing the number of cards they issue, as well as the activity on those cards.

Nietech cannot disclose how many cards are in circulation with Summit State Bank, its partner in the COMMUNITYsmart program, although Koncal said, "We can say that issuing this card has caused an increase in their [Summit State Bank's] accounts without much formal marketing. Their card base increased by 20%.

"The average ticket is above industry average. We have nine months of data, and what it suggests to us is that consumers know they can convert points to cash, and it is a motivator."

Merchant Benefits

Both Nietech programs benefit merchants because cardholders visit their establishments to benefit their chosen charities and schools. For the COMMUNITYsmart program, merchants determine what percentage they contribute, usually between 3% and 20%. They also set their own minimum transaction amount, usually around $25, depending on the merchant type.

They are free to change the contribution amount or the minimum purchase at any time, and can tailor the program to drive sales. For example, Koncal said that some restaurants offer "Smart Tuesdays" as a way to drive business on what would otherwise be a slow business day. Merchants can also "pulse" the card. For instance, if a slow time is between 2:00 p.m. and 3:00 p.m., merchants can offer double points during that time to attract more customers.

Merchants also benefit from the online reporting and the transaction level detail. "Merchants are paper averse; it's just one more complication," Koncal said. "With this solution, there's no paper to manage; it's all online." Merchants can go online and see what amounts are going to which charities. They can also track usage to determine what days or times the program is being used.

There are also potential tax benefits for merchants. Since tax laws vary by state, merchants should check with their accountant. However, since all rebates are documented, any accounting or tax paperwork needed is simplified.

Non-Profit Benefits

Obviously, the schools and non-profits benefit from the contributions they receive. Sixty to seventy percent of the money donated goes to the beneficiaries, with the remainder going to Nietech for processing costs and back to the cardholder in the form of additional merchant-funded points.

"We have structured the programs to keep the administrative costs low," Koncal said. "We don't mail out paper statements; there is a lot of self-service involved." The non-profits are paid once a quarter, usually via the automated clearing house.

Going Beyond Community Programs

Nietech is not just about COMMUNITYsmart and COMMUNITYcash, or even retail applications. "NAS not only serves as a platform for loyalty programs," Koncal said. "Since it is able to process transaction data from multiple sources to multiple parties, the technology can be extended to other applications, such as the insurance industry."

The technology has market applications in the banking and health care industries as well. Koncal said it is an ideal fit for any entity that accepts micropayments or payments that have to be split. Currently Nietech works only with MasterCard, but the company hopes to develop partnerships with other organizations as well. "We are interested in talking with anyone right now," Koncal said. "Our target market is issuers and financial service providers, but we are open to talking with processors and other types of companies."

If your company is a processor, bank, card Association or other entity seeking new ways to increase business, Nietech may be your answer. Through its COMMUNITYcash and COMMUNITYsmart programs, you can earn revenue, benefit local non-profits and increase your company's brand recognition, all with the swipe of a card.