hange is a given in the payments industry. Managing change can be the tricky part. Prepaid provider Q Comm International is on the move, but its moves are carefully mapped. Mike Keogh, Q Comm's President and Chief Executive Officer said, "If you don't look to the future, you can find yourself swept away by change rather than swept forward."

Q Comm has made impressive changes while positioning itself for the future: Externally it has more than doubled its merchant locations and increased its revenues from $16 million in 2004 to $47 million in 2005. And its first quarter 2006 revenue was up 58% to $13.4 million from $8.5 million for the same period in 2005.

"Internally, there was a lot of strengthening and restructuring to support continued growth," Keogh said. "We made a lot of changes; we built a new management team and made some key hires. It was a lot of change, but at least in my perspective, we upgraded in every case."

Retooling for results

Q Comm faces the same challenges as many others in the industry: tooling and strategizing to be ahead of the curve - and profitable - in a low-margin, high-volume business with a constantly changing environment.

"The economic and ethnic changes our culture is going through right now all point to a great potential for prepaid products," Keogh said. "The technologies may change, but the market for prepaid products is not likely to go away."

Q Comm targets retailers that attract prepaid consumers. These include wireless dealers, convenience stores, gas stations, grocery stores, mass merchandisers, pharmacies, check cashers, postal shops, rent-to-own stores, pawn shops, dollar stores and auto supply stores.

"We view our terminals as a store within a store - in six square inches on your countertop," said Keogh. "Anything you can buy, you can buy prepaid."

In the last year, Q Comm has greatly expanded its product offering in both traditional prepaid products (like wireless and phone cards) and prepaid Visa and MasterCard debit cards, bill payments, and money transfer. It is something of a one-stop shop, providing all aspects of prepaid products - from product procurement to the electronic distribution of goods and services.

Its proprietary POS terminal, Q Xpress, and supported credit card processing terminals can generate the entire range of products electronically on demand. This enables retailers to sell prepaid wireless or other prepaid services without carrying inventory.

Burgeoning benefits

With little to no upfront costs, a wider selection of retailers can sell such prepaid services as phone cards, wireless communications, prepaid debit cards, home phone service, prepaid Internet, bill payment and money transfer. Just-in-time electronic distribution of these products also reduces customer dissatisfaction due to out-of-stock products.

Only inactive products are displayed in stores, and POS terminals require a unique password for each employee. This creates an auditing trail that greatly reduces the possibility of internal theft, as well as the resultant time spent counting and reconciling hard inventory at the beginning of every shift.

The system's reporting capabilities are an additional benefit to retailers. They can access sales activity online 24/7. They can print reports directly from their POS terminals, and they can drill down to sales activity at individual locations by product, clerk, day and time.

Such specific data can provide valuable marketing information and be analyzed to determine the best product mixes for any given location. The consolidation of over 100 prepaid products into one convenient - and space saving - platform is one of Q Comm's strengths. But Keogh believes Q Comm differentiates itself in many ways, and no one thing alone can ensure success.

"It's the total package," he said. "Pricing in this industry is all within a quarter point of each other. I think trying to position yourself in this market based on pricing alone is a road to nowhere.

"We differentiate ourselves in several ways: We're very focused on customer service. Our platform has considerable flexibility.

"With some companies, what they offer is what they have, and you shoehorn yourself to fit their platform. But we can add other products - not only our own - to our platform, and make it work in a number of ways."

Keogh thinks differentiation goes right down to the smallest details. "Take, for example, our thermal cards," he said. "Our customers really like them even though they pay for them.

"They can use them for advertising of their logos, or whatever. Every sale produces a pocket-sized billboard to promote their business."

Safe, sound and profitable

Security is achieved through a three-tiered network architecture sporting redundant, clustered servers with no single point of failure.

Q Comm cites a better than 99.99% uptime rating. It also has an off-site data center and generator backups.And its system is scalable to quickly support increased transaction loads.

To protect merchants against fraud, Q Comm uses fraud-detection algorithms, secure password access at the POS and adjustable credit limits for transactions.

Keogh expects more changes ahead for the industry but said Q Comm's future will be steady and profitable. "There is a fair amount of consolidation taking place in the industry right now," he said. "Over the next five or six years we'll see even more. I think we'll see fewer people in the industry, but they'll be offering more products.

"Our first priority is to achieve profitability across the entire business, and we're on track for that. Our Canadian operations are profitable, our terminal counts are up, and we're engaged in efforts to increase terminal productivity. We're pleased with our results so far."

Keogh hinted there may be strategic acquisitions in Q Comm's future, suggesting the company is poised to integrate any future acquisitions seamlessly.

"While some aspects of the industry overall might not look so good, the potential for prepaid looks pretty doggone optimistic," he said.