Major changes are taking place in the ISO marketplace with agent movement about to heat up in a very big way, according to sources. Large-scale producers for Cardservice International are crying fowl, as they complain about the corporate office competing with agents and representatives. We have been told by several sources that the problem runs deep, and that some offices may ultimately move away.
The first is the Cardservice Laguna operation, which gave notice to Cardservice International of their intent to move on in the industry on June 5th. The broadcast fax opened with, "After six years of building Cardservice International's most successful independent sales organization, Cardservice Laguna has discontinued operations effective June 5, 1998. Founder and CEO Darrin Ginsberg has formed a new company named E-Commerce Exchange, LLC.
E-Commerce Exchange will continue to specialize in the internet, mall order/telephone order, direct mail network marketing, home based businesses, and similar industry sectors, where transactions typically are not processed with a face-to-face "swipe" of the customer's credit card but rather taken over the phone or via the internet. E-Commerce Exchange will provide a suite of merchant support services similar to those previously provided by Cardservice Laguna, including solicitation and referral of merchant credit card accounts, on-line processing, electronic checks and check guarantee, equipment and software, leasing and other services. All management and day to day operations of the company will remain otherwise unchanged.
Operating as Cardservice Laguna, the company has been rated Cardservice International's largest sales affiliate office for past three years in a row, with a staff of approximately 75 employees and consultants and 80 sales representatives generating as many as 2,000 new merchant accounts a month. Cardservice Laguna is believed to have produced as much as a third of Cardservice International's overall new application volume each month. Although doing business under the banner of Cardservice for the past six years, Cardservice Laguna always has been independently incorporated, owned and capitalized, rather than owned by Cardservice International. Ginsberg and other employees of Cardservice Laguna have not been employees of Cardservice International.
Ginsberg has announced that E-Commerce Exchange has signed an independent sales office agreement with Electronic Card Systems, Inc, ("ECS") of Los Angeles to process and help manage accounts generated by E-Commerce Exchange. Merchant applications previously submitted to Cardservice International for referral to banks for underwriting now will be submitted to, processed by and managed by Electronic Card Systems, Inc."
We are also told by another source that the notice from Ginsberg was expected by Cardservice, as negotiations to improve the compensation package for offices had already broken down, and that Cardservice International employees had already begun contacting downstream sales representatives, alerting them to the possible change.
E-Commerce Exchange in Laguna Hills, California, can be reached at 800-748-6318. Cardservice International, in Agoura Hills, California can be reached at 818-878-8200.
