ISO & Agent: ISO’s New Name, CardConnect, Reflects Tech Offerings
ISO & Agent | April 22, 2013
By Ed McKinley
Financial Transaction Services is rebranding by taking on the name of its recently acquired payments gateway—CardConnect—and moving its headquarters to King of Prussia, Pa., to consolidate its operations.
“We didn’t feel like [the old name] really stood for anything,” says Jeff Shanahan, company president.
The new name reflects the company’s growth from a basic independent sales organization into an ISO that offers some processing services, he says.
In other words, the company has progressed in its seven-year history from signing up merchants for card transaction services to providing much of the technology that makes the transactions possible.
That move into the technological realm began in February 2012, when the company acquired Princeton Payment Solutions, Shanahan says.
The acquisition included a payments gateway known as CardConnect, which has now become the name for the entire company, he notes.
Buying Princeton also gave the company some Fortune 500 transactions clients, including Adobe, The New York Times and AmeriGas.
“We wanted to continue with that customer base and grow that, but also take that gateway downstream … for the mid-size business-to-business merchants,” Shanahan says. The gateway’s certified with virtually every processor in the United States and globally, he notes.
About the same time it was buying Princeton, the company that would become CardConnect began reviewing merchant-reporting portals that some acquirers and processors provide, and it saw what it considered gaps in the way they worked, Shanahan says.
That led the company to create its own portal, making another foray into technology. The portal enables merchants to monitor transactions, view processing history and provide customer service.
While becoming a technology provider, the company also kept busy buying other ISOs. Last year’s acquisitions included Dependable Payment Processing and Discount Payment Processing, two affiliated Pittsburgh-based companies known collectively as DPP that had 8,000 merchants.
Other acquisitions of ISOs last year included Charge Card Systems of Boca Raton, Fl., and Marathon Solutions of Kansas City.
Those activities and organic growth are combining to increase last year’s transaction volume of $11.5 billion to a projected $14 billion this year, Shanahan says. Acquisitions also created a decentralized company, and management decided to pull much of the company’s operations together into a single location, moving the headquarters from Cleveland to King of Prussia, Pa.
The company has closed its offices in Cleveland and Detroit, while downsizing operations in Pittsburgh and Chicago.
Employees simply didn’t want to move to Cleveland, Shanahan says. Besides, he had lived and worked in Philadelphia as a management consultant before relocating to Cleveland to help guide the company, and he looked favorably on a move back to the Philadelphia area.
The company turned down incentives to move to Pennsylvania because it did not want to delay the move by waiting to obtain approval for the programs. “We were a bit impatient,” he concedes. “We just wanted to get here.”
Of the company’s nearly 100 employees, about 50 are on the job now in King of Prussia. Roughly half of those 50 moved from Cleveland and the other half from Chicago. A few came from other spots.
About 20 of them work in sales, and strengthening that internal force interests the company more than recruiting more sub-ISOs and independent sales agents, Shanahan says.
Although the company doesn’t work hard to recruit independents, it does take on some of industry veterans who choose to approach the company.
Of several hundred ISOs, sub-ISOs and agents that send business to the company, the top 15 bring in most of the contracts from the independent channel, Shanahan says.
The company has funded much of its growth with a $50 million commitment capital raised in 2010 by selling a majority stake in the business to FTV Capital, a private equity firm that invests in payments and transaction processing companies.
“We started as your generic ISO with a growing portfolio, and we’ve really tried change our business model to add value to the merchant as opposed to just being … a go-between between the processor, the sponsor bank and the card associations,” says Shanahan. “We looked upon that as a commoditized business.”
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