any essential activities occur out of the public eye. No play has a successful Broadway run without a skilled stage manager working behind the curtain. Without expert air traffic controllers on the job, few pilots can safely land jetliners. But as ISOs and merchant level salespeople, who's working behind the scenes for you?

For an increasing number of feet on the street, the answer is Network Merchants Inc. The company provides secure, reliable, Internet protocol-based payment gateway solutions that enable merchants to authorize, settle and manage electronic transactions through Web sites, wireless devices and retail POS systems.

Affiliates rule

Network Merchants works through an extensive network of affiliate partners. It has no direct relationships with acquiring or member banks. This eliminates any chance of competitive behavior between Network Merchants and its sales affiliates.

"Since we do not take merchants directly, all our business goes through our ISOs," said Network Merchants Chief Operating Officer Ted Cucci. "It's a nice mix of e-commerce, MO/TO and everything else, including retail."

"Even if merchants were to come to us, we can't do business with them," added Matthew Schmidgall, Network Merchants Chief Technology Officer. "We feel it would be a violation of our integrity with ISOs and MSPs. We're on their side, not competing with them."

First came fraud scrubbing

Network Merchants was founded in 2001 by Cucci, Schmidgall and James McKenzie, the company's Chief Executive Officer. The trio drew on their combined expertise in merchant consulting, data security and domain registration to develop their flagship product iSpyFraud.

"It's a fraud management product that allows merchants to monitor transaction activities and to deny or trigger transactions to be flagged for review," Schmidgall said. "It helps control risk. Merchants across many industries have used it to successfully reduce chargebacks."

ISpyFraud was initially developed in May 2001 to help domain registrar, ItsYourDomain ( www.iyd.com) combat fraud. IYD is accredited by the Internet Corporation for Assigned Names and Numbers and remains among the top 10 registrars today.

"Back then, the Internet was so new," Cucci said. "IYD was looking for a way to stop fraudulent transactions, but old-style bricks-and-mortar fraud protection didn't work very well for the Internet community. So we developed iSpyFraud. Little did we know what a tremendous tool it would be."

Next step: a gateway. "We took what we learned from iSpyFraud and integrated the bankcard processing with fraud management to provide merchants a seamless, secure solution," Schmidgall said.

Myriad of offerings

Some of Network Merchants' core and bundled offerings include a virtual terminal; application programming interface integration; batch uploading; a free, brandable shopping cart; electronic check (e-check) services; recurring billing; and multipayment platforms. All ancillary services are optional.

"They have the best product on the market," said Drew Sementa, President of Premier Payment Systems, an ISO located in Lombard, Ill. "It's more cost effective than other gateways, and it's very user friendly. It makes it easier to acquire online merchants. And as an ISO it's nice to know we have tools where we can make additional income."

Headquartered in Schaumburg, Ill., Network Merchants is growing rapidly. "We've at least doubled every year since 2001," Cucci said, referring to the company's processing volume.

Compliance leads to longevity

Network Merchants is certified and compliant in accordance with strict industry standards. In addition, in-house engineers develop and support Network Merchants' software to ensure that only secure and high quality products are released. When customers call for assistance, expert engineers tend to their needs.

"One of the most important things about us is the certifications, such as [Visa's] CISP and PCI, that we've achieved over the years and continue to maintain," Cucci said. "We've done the MasterCard RAMP review and SDP certification.

"And we've established relationships with quite a few processors, such as First Data Merchant Services, Paymentech, [TSYS Acquiring Solutions], Global Payments and Concord ByPass. Those are the major back-end processors."

Schmidgall noted that as Visa U.S.A. and MasterCard Worldwide require greater adherence to established industry standards and regulations, "gateways that aren't able to stay compliant are going to disappear. Our compliance and fraud fighting support give us a competitive difference. Any company not in compliance is in jeopardy of being shut down by the card Associations."

Cucci predicted increasing consolidation as regulations are enforced. "Major players will survive, and everybody else will have to consolidate," he said. "The expense to maintain compliance is tremendous; small payment gateways can't afford it."

Making complicated easy

While Network Merchants' services are a challenge to create and maintain, they are easy for customers to use. "With the Internet and technology, sometimes the software is difficult for merchants to use," Schmidgall said. "So it's been very important for us to create a system that is very easy and intuitive."

Alex P. Duhamel, President of Osterville, Mass.-based The Duhamel Group LLC, said Network Merchants' technology is easy to integrate with e-commerce. His company provides management services primarily to nonprofit golf associations, a number of which use Network Merchants' gateway.

"Technically, it's probably the most solid solution of the gateways that we use," he said. "Our clients really like the search and reporting capabilities on the back end. And they have true QuickBooks integration. A lot of times, companies say they're going to do that, but Network Merchants actually did it."

Affiliate partner benefits

Network Merchants is privately owned and debt free. "We develop software in-house, and all of our hardware is completely owned by us," Schmidgall said. "We're not utilizing any managed services. We believe it's important to maintain control so we can provide a better product to our affiliate partners.

"It's also important that we have our redundancies in place so that we can provide an uptime that is more than acceptable to the industry. Since our inception, we've experienced over 99.5% uptime."

Following are some key benefits Network Merchants provides affiliate partners:

· Private labeling: For ISOs wanting their own identity on the gateway, Network Merchants helps them "create a truly transparent solution that's completely branded toward them," Schmidgall said.

"From domain names and security certificates to the look and feel of the actual gateway, we remain transparent and work behind the scenes 100% of the time," Cucci added. "With the private-labeled gateway we support the ISO, and the ISO does the support for their merchants. They call us for clarification.

"This helps our partners gain credibility and strengthens the relationships they've already built."

· Multitiered tracking: Schmidgall said when an ISO builds its own gateway, it can bring its own ISOs and agents into the mix. "This allows them to build a network underneath them, as well to gain maximum residual income from their system," he said. "Any sale they do directly or any sales their salespeople or sub-ISOs or agents do, that's another opportunity for them to generate additional income."

· Easy payer authentication: Network Merchants' straightforward payer authentication program enables stress-free addition of Verified by Visa and MasterCard Secure Code to merchant Web sites.

· Multiple revenue streams: Network Merchants has created many ways for its affiliate partners to generate revenue and residual income. "An ISO can create revenue streams through credit card transactions as well as through e-check programs, iSpyFraud, and the Verified by Visa and MasterCard SecureCode programs," Schmidgall said.

· Advanced transaction routing: Network Merchants has a patent pending for its advanced transaction routing interface (ATRI), which enables merchants with multiple merchant IDs to process all of their transactions through one gateway account.

The routing system automatically routes transactions to the appropriate processor. This is something Schmidgall said other gateways cannot do.

"When a merchant gets an account, usually they have to specify what they're going to be processing to that account," Cucci said. "They may have said they're going to process low-risk transactions. Then they have to get another account for higher-risk transactions.

"With us, instead of having to pass transactions individually to each processor and set up two gateway accounts, they can set up one account through our system and pass all transactions to our system.

"We'll automatically spread them to the correct processor. Our system will know where to send each transaction, based on the criteria you configure."

Schmidgall said the response to ATRI has been strong, especially from companies with multiple divisions using several merchant accounts for processing. It also works well for high-volume customers that employ multiple banks for processing.

· Global reach: Network Merchants has been integrating several offshore banks into its operations. "We're starting to see more people looking for offshore solutions," Cucci said.

"For the ISOs there's plenty of room for growth in the domestic market, but the international market opens a brand new door to tremendous possibilities.

"We truly are a worldwide, global processing gateway company. And we make sure any banks or processors we integrate with have appropriate security and meet international compliance."

Network Merchants aims to provide software that's easy to use, while "continuing to add features and functionality that's cutting edge, and provide support that is second to none," Schmidgall said. "And we strive to ensure that our affiliate partners and ISOs have plenty of opportunities to make working with us very profitable for them."

It looks like Network Merchants hits all the right notes and lets its affiliates accept the applause.