arketing pundits are quick to point to defining a narrow niche as the sure path to success. But consider this: Your narrow niche may be part of your customer's multiple-supplier headache.

Electronic Clearing House Inc. (NASDAQ:ECHO) has forged its own path to success, ignoring the marketing hype and instead focusing on being a full-service POS management provider. ECHO offers front- and back-end processing for credit cards, debit cards and checks and takes pride in the quality of service provided.

Opportunity still there

If you think the check is on its way out anytime soon, think again, or you may miss some good selling opportunities. Research firm Celent LLC reported that 34 billion checks were written in 2005 and estimated that 20 billion checks still will be written in 2010.

By ECHO's estimates, those 34 billion checks can translate to $510 million in revenue for resellers offering check guarantee to their merchant clients (not to mention the boost from sales of check readers or imagers).

ECHO, in fact, reported a 28% increase in check volume in 2005.

Sharat Shankar, ECHO's Senior Vice President of Strategic Partnerships, believes that the need for check guarantee services will grow rather than decrease in the coming years due to the higher risk associated with check acceptance in a declining market.

The acquisition of the National Check Network (NCN) in 2000 has enabled ECHO to provide merchant check verifications and authorizations from the NCN database (one of four in the nation). The database is a shared pool of negative and positive checking account data contributed by more than 260 affiliated collection agencies across the United States.

Shankar said that the NCN check writer database, Visa POS Check conversion service and ECHO's risk management capabilities are unique to the company and at the heart of all its check services.

A one-stop shop

But while checks are still kicking, cards are still king. ECHO processed $1.5 billion in credit card payments in 2005. And it is the full concert of offerings that wins ECHO kudos from ISOs and merchants. "We really are the one-stop shop for resellers," Shankar said. "Our full control of front-end and back-end processing of both credit cards and checks makes us one of very few processors that have such control." He said this brings operational efficiencies that enable the company to offer more competitive pricing.

"ECHO is small enough to care but big enough to perform," he said. "The bottom line: You get the full range of service and services from one source."

That strategy seems to have its appeal: ECHO's customer list is 120,000 merchants long and includes large national retailers such as Burlington Coat Factory, Pearle Vision Inc., O'Reilly Auto Parts, and U-Haul International Inc. (to name just a few).

But according to Shankar, ECHO's core customer is "a small mom-and-pop type of merchant who utilizes one or more of our various payment services" through a POS terminal or through the Internet.

Customer service counts

To succeed against larger competitors, customer service for both merchants and partners is a key factor in ECHO's focus, Shankar said.

"We conduct monthly and bi-annual surveys of our merchants to determine their satisfaction level and unearth any problems," he said. "In our most recent annual survey, our merchants rated us 4.5 out of five in terms of overall service."

ECHO has U.S.-based company employees manning toll-free phone lines 24/7/365. It also sends merchants a monthly newsletter about processing. The newsletter is one part advertising of ECHO's services to two parts helpful articles on topics such as gearing up for the holidays or fraud detection.

"We operate with the philosophy that both our merchants and our partners deserve our devotion to their success," Shankar said.

A little history

ECHO was founded in 1981 and entered into the credit card payment market in 1982. It went public on NASDAQ in 1986. In the early days, ECHO sold custom-designed hardware as well as payment processing, but in 2000 it shed the hardware sales and began concentrating solely on processing.

In addition to the purchase of NCN, other acquisitions helped the company build its business into both a major credit card processor and one of the top four check processing services in the United States.

In 1999, ECHO acquired both Magic Software Development, an electronic check services company, and Peak Collection, a collection agency. In 2000, ECHO purchased Rocky Mountain Retail Systems, a check verification and electronic check conversion provider.

Today, in addition to processing credit and debit cards and checks for merchants, ECHO offers check risk management services and processes Internet checks, telephone authorized checks and point-of-purchase transactions, and provides real-time authorization services (such as Visa POS Check).

Working with ISOs and other partners

"We believe banks, alliances, ISOs and other trusted sales channels have the best relationship with locally based merchants and, as a rule, we will work through them to reach such merchants with a wholesale-priced set of services, including lifetime residual compensation to the sales partner," Shankar said.

"We maintain a very limited inside sales staff, limiting the market conflict with our trusted resellers."

He said that depending on the ISO's focus, ECHO can craft specific programs that will work effectively with the ISO's market. In general, its resellers fall into five categories: agent banks, referral partners, value-added resellers, software solution providers and independent agents.

Referral partners are usually entities that serve merchants or represent merchant associations and choose ECHO as their preferred processor.

"We pay an upfront fee for each new account referred to us and, in some cases, an on-going share of transaction fees," Shankar said. "Banks, VARs and ISOs sell our services on a buy rate commission basis. Our entire line of credit card and check services features lucrative opportunities for re-sellers."

To earn its partners' loyalty, he said ECHO will go the extra mile by concentrating on fast and easy underwriting and service. "We have ISOs with us that have continued to receive residuals continuously for 10 years and more, a remarkable achievement in this business," Shankar said.