U.S. Bancorp's Elavon merchant processing subsidiary is using a simplified enrollment service that American Express Co. developed to help boost small and midsize merchants' acceptance of its cards.
The Atlanta processor said Tuesday that it is offering the Amex OnePoint program to more than 170 independent sales organizations and 1,500 banks, which can use it to encourage more merchant clients to accept Amex cards.
Under OnePoint, merchants that want to accept Amex cards can check a box on an application form. Elavon sets up the clients' Amex accounts, handles the processing and settlement, provides customer service and compiles monthly statements — everything but setting pricing and owning the customer contracts, which remain Amex's responsibility.
This arrangement "allows American Express to preserve what is unique to their card type, but at the same time they benefit from our economies of scale," Stuart C. Harvey Jr., Elavon's chief executive, said in an interview.
Previously, merchants had to complete a separate application to accept Amex cards, and received a separate statement for Amex transactions. Those purchases are now included on a consolidated statement that Elavon creates and that includes information about the merchants' other card transactions.
Harvey said the service makes it easier for ISOs and banks to get merchants to accept Amex cards, though he would not estimate how big a bounce Amex might get.
Amex receives the same data on each transaction from Elavon that it would if it handled the acquiring relationship itself, Harvey said. "Elavon, in this capacity, acts as a service agent," he said. "We basically perform several processing functions."
Elavon began using OnePoint with its own merchant customers in February, and said it is the first processor to offer the service to third-party acquirers.
Mike Passilla, Elavon's executive vice president for global business development, said the processor plans to make OnePoint available to Canadian merchants, but he would not say when.
Amex has said that expanding acceptance by small and midsize merchants is an important goal. Until 2007 it handled all of its own acquiring, but it has since struck partnerships with Elavon, First Data Corp. and Heartland Payments Inc. — handing off the work of pursuing acceptance with small and midsize merchants and freeing Amex to focus on large merchant clients.
A spokeswoman for First Data, a Denver unit of Kohlberg Kravis Roberts & Co., wrote in an e-mail Tuesday that the processor also offers OnePoint to its merchant clients, and plans to make it available to third-party sales companies in the third quarter.
An Amex spokeswoman said executives of the New York company were not available to discuss OnePoint.
Elavon will have a "little bit of an edge" on its competitors until they also adopt OnePoint for their third-party sales partners, said Adil Moussa, an analyst with Aite Group LLC. "Everybody realizes the top 10 acquirers are going to be offering this very soon."
Aside from the splash of being first to market, Elavon also stands to gain by eliminating multiple statements for merchants, Moussa said. "That'll give the merchant much better service by having everything in one single contact point."
Moussa expects acquirers to aggressively sell the consolidated accounts.
Under the previous system, acquirers had to wait until AmEx approved a new account and then hope that the merchant activated it, he said. Now, the responsibility for ensuring those accounts are activated rests with acquirers.
"Acquirers will really go after this," he said.
