ometimes people must be resourceful to solve a dilemma. In a pinch, bags of frozen peas are used as cold packs. Pieces of corrugated cardboard, sugar packets or matchbooks are shoved under the legs of wobbly tables. And who hasn't seen duct tape used to remove lint from clothing?

Such instances of ingenuity can also occur on a scale as grand as a company's inception. It may seem unbelievable, but the genesis of Dee Karawadra's company, Impact PaySystem, has something in common with those stand-in frozen peas.

Karawadra, Impact PaySystem's President and Chief Executive Officer, began his financial services career as a merchant level salesperson (MLS) for an ISO that never paid him his residuals. After a year of frustration, Karawadra had had enough. He went searching for his "perfect partner ISO."

Karawadra tested four ISOs but did not find a partner that met his criteria. He was looking for an ISO that offered "a straight split with no padding, a dedicated customer service [staff] for agents that actually answers calls and returns e-mails, liberal underwriting guidelines, a speedy boarding process, accurate and on-time residuals, petroleum and fleet card support, and a friendly risk department," he said.

At that point, Karawadra decided to create his own ISO. He determined the risk was worth taking, if, in the end, he could have an ethical business that treats MLSs with respect. "I had enough residuals to support me," he said. "And the worst-case scenario was that I would lose $10,000 [in association registration fees] and re-register the following year."

Karawadra founded Impact PaySystem in Memphis, Tenn., in 2001. "We are just an honest, upfront business," he said. "There is no padding. We have two different buy rates with two different processors. If you write with Paymentech [Chase Paymentech Solutions LLC] you get one rate, with Concord [First Data Corp.], another. That's it."

Karawadra's calculated risk turned out to be a good move. Concord was being sold to First Data, and Karawadra hired many industry veterans who were getting laid off as a result of the merger. "The timing was just right. We were able to grab some really good people and bring them on board to grow with us," he said.

Building his dream ISO

Impact PaySystem offers credit card and debit card transactions, check processing, gift cards, prepaid cards and ATM services. Its 39 employees in six offices nationwide have more than 50 years of combined industry experience. "Our team has worked in every facet of the processing and service industries and has combined to form a combination of technology and service that is unbeatable," Karawadra said.

Impact PaySystem's main sales channel is MLSs. Karawadra has striven to build the type of ISO he was seeking when he was shopping around for agents. "We return calls," he said. "We build relationships. There is a sense of urgency in everything that goes on."

In the past year, Impact PaySystem has quadrupled its processing volume, as well as the number of applications processed each month. "We have spent the last two years laying foundation and infrastructure to provide our agents and merchants the full support that they deserve," Karawadra said.

In March 2004, the company signed a deal with Paymentech (now Chase Paymentech), and by November of that year, it surpassed the 100-applications-monthly mark. In April 2006, it surpassed the 200 mark. A month later, it re-signed with its other processor, First Data. The contract will last three years.

Karawadra works hard to fulfill his company's business model and philosophy, which is "Do business in an honest, ethical and reliable way, and we will build a good business." This ties into his vision: "Build a brand where, when someone sees our name, they associate it with integrity."

Taking care of everyone involved

Having high standards doesn't rule out having a good time. "We are all very easygoing," Karawadra said. "The majority of us are in our early 30s. Thus, we like to have fun, yet still get business done." The company believes it has created an atmosphere where every employee takes ownership in the business and looks forward to coming to work. In describing his approach to customer service Karawadra said, "That's also very simple. The customer is always right."

Since Karawadra puts a premium on integrity and honesty, he and his company look for the same in sales agents. "We are not looking for a car salesperson," he said. "We are somewhat picky in who we bring on board. If you are doing shady business, we don't want to deal with you."

Karawadra is well-acquainted with the concerns of small businesses. "Having been in retail I can really relate to merchants," he said. "It's tough when you are holding someone's funds for seven to 10 days. It could be their payroll, rent or utilities."

Impact PaySystem provides all merchants, regardless of size, with the same quality service. "We take extra measures to make sure merchants/agents are fully satisfied," he said. "If a merchant does $100 a month or $100,000, we treat them all fairly." The company checks in with each of its merchants every 90 to 180 days.

Karawadra said that should a merchant be dissatisfied, his company will do whatever it takes to make things right. It will even buy back a lease, which it has only had to do once.

"Lots of companies say this, but we are serious about it," he said. "If a rep misrepresents the fees structures or other information, we take this serious enough to give away equipment, refund application fees or even switch them to their original processor without any early termination fee."

ISO/MLS benefits

Impact PaySystem's compensation structure for the MLS channel is flexible and can be modified, depending on an agent's production. "Our partners actually get a true split, not a tempered one," Karawadra said.

"We do not offer free equipment and make it up elsewhere, or other gimmicks that are out there. Our buy rate from the processors is the same buy rate our agents get." He also noted that the company has never missed paying a residual check on time.

Impact PaySystem provides partners who are new to the industry with training, including continued support, every quarter. It also provides agents with leads. Karawadra said these leads are more than just cold calls; they provide agents with set appointments.

Impact PaySystem's training is distinctive in that it focuses on general industry knowledge and education. "The training doesn't include a lot of company stuff," Karawadra said. "We are pushing basic industry knowledge."

Training is provided in person by industry veterans, usually in small classes of just three or four people. It can span up to three days and occurs monthly, or as needed. Impact PaySystem has found that in-person training is the best for its business model.

Topics covered are vital to MLSs' success, such as how to read statements from start to finish or how to prepare a proposal. "Boy, I could have used help with proposals," Karawadra said. "I had previously been in the retail and transportation business. At that time I could have used some kind of training but [it] was not there."

Another benefit to Impact PaySystem's MLS partners is access to the same health insurance Karawadra and his family use. "It's true health insurance, not one of those bogus, discounted types of deals," he said.

A minimum of 10 accounts per MLS is required to enable the company to deduct the premium from residuals.

According to Karawadra, many MLSs are confused about petroleum and lodging accounts, but he doesn't think they need to be. Therefore, his company's training focuses on how easy it is to sell to those markets.

"We are very good at petroleum and lodging," he said. "That's how I got started because I knew a lot of hotel owners. It's easier than retail.

You don't have to go back. We will find the petroleum equipment company ... and take care of it from start to finish. The agent doesn't have to do much of anything."

And, while gas price hikes can be bad news to most, it can mean money in the pockets of ISOs and MLSs who choose to serve those industries. Karawadra pointed out that it is like making time and a half, since the residuals are percentage based.

He is so certain that petroleum can be an easy profit, he and his staff developed a free petroleum webinar for all agents, regardless of whether they work for Impact PaySystem. "We don't have to work with them," he said. "We just want to show agents how easy the business is."

The shining lining

Karawadra's unfortunate initiation to the industry may have been the best thing to happen to him. He really does understand MLSs' frustrations because he has been there.

That is why it is so important to him that MLSs be treated fairly, and he stakes his name on it. "I can relate to the agents," he said. "Hopefully we will stay grounded and relate to people for a long time."

Through his trials, Karawadra was able to build a successful business and maintain a positive outlook. "This is an awesome business," he said.

"Where can you sign up or sell a merchant and get paid for 36 months or more?"