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The Evolution of the Payment Processing Industry

CardConnect is a full-service, rapidly growing provider of electronic payment technology and processing services for merchants, independent sales organizations (ISOs) and financial institutions. It helps more than 45,000 businesses across the U.S. accept billions of dollars in bank card transactions each year.

CardConnect offers a comprehensive line of solutions for credit and debit cards, gift cards, electronic check conversion, verification and guarantee, as well as terminal services, online Payment Gateway Solutions, ERP Integration and PCI Compliance. Founded in 2006, CardConnect is one of the 10 largest independent sales organizations (ISOs) of First Data Merchant Services, the world’s largest electronic payment processor.

In 2010, CardConnect received a $50 million growth equity commitment from FTV Capital, a multi-stage private equity firm with a track record of successfully investing in high-growth payment processing companies.

Rake Narang: How has the payment processing industry changed over the last 20 years?

Brian P. Shanahan: The payment processing industry has changed very rapidly within the last 20 years.

Twenty years ago, when I was running my first company, credit card processing was still a new concept, and it was common that the merchant or business you were going after was not even accepting credit cards. This made it an easy sale, as you were providing a value add to the merchant (convenience of payment) just by providing them with a point-of-sale (POS) system or terminal.

Today, every merchant accepts credit cards, and the industry has become quite commoditized; 99% of the market you are going after is already accepting credit cards. To differentiate yourself, you must provide superior technology, security, and service. Anything less will make your company irrelevant in the industry.

About Brian P. Shanahan

Rake Narang: How does providing payment processing to a large corporation differ from a small business?

Brian P. Shanahan: Payment processing is very different for large corporations vs. small businesses; the main difference is the type of payment technology utilized. For a small business, a standard POS system or credit card terminal will often suffice. If the merchant accepts payments over the phone or online, a virtual terminal may also be required.

For a large corporation, an integrated payment solution is often required. This means integrating credit card acceptance into the business management software or ERP on which the business runs. At CardConnect, we have out-of-box solutions developed for Oracle and SAP. This means that if a business is running on SAP, it can securely accept credit cards within its SAP system, and then once the transaction settles, it will automatically reconcile with the business’s accounting systems. This type of integrated solution is more complex and sophisticated, and typically takes longer to implement than POS systems or credit card terminals.

Rake Narang: What are the most important traits for payment processing companies to have?

Brian P. Shanahan: A payment processor must be five things: transparent, educated, technologically innovative, creative and flexible. These traits should be part of every stage of the merchant relationship. Merchants should know exactly where their money is – from the moment a customer swipes a card to the point where it’s deposited into the business’s account, and every step in between.

One area where these traits are especially important is security. Every payment processing company should provide merchants with a payment gateway that encrypts customer card data, is compliant with PCI standards and ensures a breach never happens.

Lastly, payment processors should always be aggressively managing interchange rates for merchants, minimizing credit card fees and securing the lowest pricing possible.

Rake Narang: CardConnect recently changed its name from Financial Transaction Services. Why the switch?

Brian P. Shanahan: We changed our name to CardConnect to better communicate our mission: to make payment processing as simple and easy as possible. ‘CardConnect’ better explains what we do. Along with the April 2, 2013 announcement of our new name, we also launched a new website and will soon launch a revamped Agent Center and Merchant Center for our sales team and merchant customers.

Company: CardConnect
1000 Continental Drive, Suite 600, King of Prussia, PA 19406 U.S.A.

Founded in: 2006
Pillar: Brian P. Shanahan
Public or Private: Private
Head Office in Country: Headquartered in King of Prussia, PA, with locations in Cleveland, OH, Chicago, IL, Pittsburgh, PA, Boca Raton, FL and Kansas City, KS
Products and Services: Merchant payment acceptance, business payment gateway, online billing, integrated enterprise solutions, payment security
Company’s Goals: To make accepting payments as simple and easy as possible for merchants.
Key Words: Payment processing, electronic payment processor, electronic transaction processing, payment acceptance, independent sales organization (ISO), payment gateway solution, PCI compliance, ERP integration, digital transactions

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