igh-risk and high-volume merchants are fortunate when processors agree to process their credit card transactions. After all, they're considered risky because of their susceptibility to fraud and chargebacks and their potential for being non-compliant with card Association rules and regulations.

To ensure that they do business the right way, these types of merchants need advice and education; they need to be proactive. That means taking their business in for a "tune-up."

Merchant Mechanix, a division of Acquiring Solutions LLC, specializes in advising Internet and mail order/telephone order merchants on issues such as fraud prevention, chargeback management and reduction and compliance with card Association rules and regulations. The company also provides them with bankcard processing services, if needed.

The company's mission is "To protect and serve merchants through superior knowledge, support and training."

Merchant Mechanix works mostly with medium to large merchants who process at least $1 million in credit card sales per year, and who are at risk from excessive chargebacks because of the type of products or services they offer.

The company assists merchants in analyzing their business, preparing a plan of attack to address their business issues and working with them to implement the plan.

"We help merchants 'tune up' their merchant account," said Steven Peisner, Vice President and Co-owner of Merchant Mechanix. "We help them perform preventative maintenance, and in some cases we completely overhaul the way they accept credit cards in order to reduce their risk."

Mike Fisher, President and Co-owner of Merchant Mechanix, said that typical clients include businesses that sell online personal ads and "people-finder" services, as well as companies that sell items through infomercials, offering nutritional products, health and beauty products, kitchen gadgets, exercise equipment and golf clubs, for example.

"We also work with large public utilities, which many agents don't feel comfortable working with due to their size or the complexities that go along with them," Peisner said.

Combined, Fisher and Peisner have more than 35 years' experience in the credit card processing industry in sales, operations and management. Both worked for Cardservice International and E-Commerce Exchange. The latter is where they met.

"We realized that the two of us together was a great union," Peisner said. "We decided that we were just going to go out and service merchants the best that we could, one merchant at a time."

As experts in their field, they both participate in the Merchant Acquirer Committee (MAC), a risk management networking group, and in Visa- and MasterCard-sponsored conferences on fraud and risk management. They are also members of the International Association of Financial Crimes Investigators (IAFCI).

Peisner currently serves on Electronic Transactions Association's (ETA) Risk & Fraud Management Committee, and Fisher serves on ETA's Membership Committee. He is a past member of ETA's Government Relations Committee.

Fisher and Peisner founded the company under the name Acquiring Solutions LLC in April 2001. Peisner said that while working for Cardservice International in the mid 1990s, he got the idea for starting the company after realizing that a real need existed for merchant education.

"I noticed that a number of merchants were suffering from 'electronic shoplifting,'" Peisner said.

"Their chargebacks were getting high, and their losses were terrible, basically from being ripped off by cardholders. I became very familiar with the rules and regulations set forth by the card Associations and realized that no one was educating merchants."

Fisher and Peisner decided on the name "Merchant Mechanix" a little over a year ago "to better express what we do," Fisher said. Acquiring Solutions remains the legal business name. It is a registered ISO/MSP of US Bank in Minneapolis.

Earning Their Keep

As consultants and advisors, Fisher and Peisner work directly with merchants on account establishment, implementation, management and compliance issues.

The company provides merchants with bankcard processing services and then "helps them develop and implement risk management policies and procedures," Fisher said. "But we provide all these consulting services without ever sending them a bill."

"Even if we spend hundreds of hours with a merchant, we don't bill them anything for our time," Peisner said.

So how does Merchant Mechanix make money? "We earn our money from the normal residual income from the merchant account," Fisher said.

"And that's provided that they're looking to move their merchant account," Peisner said. "If they're not, and a bank, processor, ISO or agent contacts us and asks us to work with them, then we'll work as fee-based consultants."

Peisner said that because many of their merchants are in crisis mode, he and Fisher are committed to serving them 24 hours a day. "If the phone rings at 6:00 a.m., one of us will answer it," he said.

They don't have to work like this all the time, however; Fisher said that it comes in waves, and lasts anywhere from a period of a few weeks to a few months.

"Although once it lasted for nine months," Peisner said.

Referrals Pay Residuals

Because the business is primarily a consultancy, Merchant Mechanix does not sell through the ISO/merchant level salesperson (MLS) sales channel, but it does develop most of its business from referrals through that channel and then pays a percentage of monthly residual income to agents who provide the referrals.

"MLSs benefit from our program by having the opportunity to derive recurring income from merchants who do not fit with the MLS' current ISO or processor," Fisher said.

"We normally work with an ISO or MLS who doesn't provide services to the type of merchants we work with, or who realizes that they don't have the resources to be able to spend the time and energy with those merchants."

Most of Merchant Mechanix's customers are high risk or high volume, and many processors aren't willing to take them on, so MLSs who provide referrals can benefit by earning recurring revenue from new merchants who don't fit the merchant account approval criteria of their current ISO or processor.

MLSs can also earn residual income from their current merchants who run into chargeback trouble and are at risk of termination by their current ISO or processor.

"We have been paying residual income to our referral partners monthly since July 2001," Fisher said. "Our revenue share program pays a significant percentage of all merchant account residual income from referred merchants to the ISO/MLS who referred the account.

"Some of our referral partners can earn four- or five-figure monthly recurring income for merely introducing us to a handful of merchants. In many cases, all that's required of the referral partner is to provide a contact person and phone number. We do all the rest."

To set MLS' expectations, Fisher explained that because of the way payment cycles work in this industry, there's normally a one to two month minimum lag time in residual payment from the time an MLS refers an account.

The amount of time required to get an account set up for these types of merchants is also a factor. "To get a merchant set up and processing is often about a 60-day cycle," he said.

"There's a lot of upfront work required."

"It might be a couple of months before any revenue has come in [from the merchant account] before being able to share it with an agent," Peisner said.

Merchants in Crisis

When merchants come to Merchant Mechanix, they're often in a reactive rather than proactive mode. "Most of our merchants arrive on our doorstep as a result of some kind of trouble with their merchant account," Fisher said. "More often than not, they have gotten into compliance trouble with the card Associations.

"Unfortunately, if processors see them heading that way, if they see chargebacks approaching the 1% threshold levels, in a lot of cases, they give merchants notice that they need to find a new home."

As an example, Fisher described one of the company's merchant customers, a "people-finder" business, that had been given a termination letter from its processor because of excessive chargebacks.

"The letter gave them 30 days notice, but no suggestions on how to make improvements and no education on how to fix things," Fisher said. "It was just 'We don't want your business, so go away.'"

Fisher and Peisner worked with a new processor and were able to get the merchant approved for a significant amount of processing volume in a short period of time.

"Something that seems to work well is that we understand the bankcard language, and we're able to talk the processor's language," Peisner said.

Merchant Mechanix analyzed the business and put together a chargeback management plan, which it submitted to the processor along with the merchant application.

"We also made some basic procedural changes, beefed up their customer service, recommended that they no longer accept foreign-issued credit cards, added more information to their Web site for customers, developed risk analysis parameters, and suggested that every day they review transaction activity and purge certain transactions," Fisher said.

Merchant Mechanix is focused on providing high quality service and advice to all its merchants.

"We get involved in the customer's business," Fisher said. "We learn what they do, how they do it, who their customers are and where they come from. We make suggestions to help them protect themselves.

"And we know all the little nuts and bolts; we know where to look and how to tighten things up."

Spoken like a true mechanic.