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This article appears in the May 21, 2009, edition of ISO&Agent Weekly.
Maverick Network Solutions, a Wilmington, Del.-based ISO, soon plans to begin piloting merchant private-label PIN-debit cards.
The cards will use First Data Corp.'s Star network as a gateway to other card networks, including Visa, MasterCard, Pulse and NYCE, Jim Shanahan, Maverick CEO, tells ATM&Debit News, an ISO&Agent Weekly sister publication.
Maverick will route the card transactions through the networks and pay switch fees but not interchange, and the networks will process the transactions, Shanahan says. Maverick will debit cardholders' checking accounts through the automated clearinghouse system using account and bank-routing information from cancelled checks participants provide when registering.
The nine-month pilot with the undisclosed merchant is designed to illustrate how merchants that offer the cards can save 50% to 75% in card-acceptance costs versus the cost of accepting credit cards. The pilot will involve multiple locations in New York, says Tony Newshel, Maverick chief technology officer.
"With the money a merchant saves in interchange fees, the company can put that into rewards programs to ensure customer loyalty," Shanahan says.
The company is in the midst of talking with other ISOs about distributing the product, Shanahan tells ISO&Agent Weekly.
"We're more of a product-development and technology company," Shanahan says. "It would make sense for us to work with a couple of large ISOs or a boatload of smaller [ones]."
Maverick has two revenue plans for its potential ISO partners, Shanahan says. One is a revenue-share plan based on a percentage of the revenue generated by the program. Another is based on per-transaction fees. Combinations of the two are possible, Shanahan says.
The critical factor, he says, is the size of the ISO and the merchants it serves because the Maverick program has fixed expenses not suited to mom-and-pop merchants.
Maverick sees merchants with annual sales of $10 million or more as best suited, Shanahan says, though that figure is in some flux.
An ISO's sales agents, however, should have little trouble selling the program to merchants because of its similarity to traditional credit and debit card processing services, he says.
"A lot of the cross-selling efforts tried historically haven't worked because the products were so far a field from what [agents] normally sold," Shanahan said.
Besides reduced costs for accepting Maverick transactions versus credit card transactions, merchants also can benefit from converting customers in their loyalty programs to this system, Shanahan says. A merchant also could use a loyalty program provided by Maverick or another provider, he says.
Because Maverick's transactions are processed via national card networks, merchants would not need any new equipment or software.
Frederick H. Lowe is editor of ATM&Debit News. Kevin Woodward, the editor of ISO&Agent, contributed to this story.
