Article originally appeared in The Green Sheet Issue 130101
Merchant Statement Analysis - The Green Sheet :: Company Profile
Better approach to statement analysis
Many ISOs spend an inordinate amount of time performing merchant statement analyses on behalf of their merchant level salespeople (MLSs). After facing this challenge firsthand, ISO sales and recruiting veteran Chris DuPont decided to build a company that would allow ISOs to outsource this function. He founded Merchant Statement Analysis in 2009 to reduce this ongoing burden for midsize ISOs cost effectively, with accuracy and speed.
"Some ISOs have programs in place," said DuPont, who now serves as a Merchant Account Analyst for MSA. "Their relationship managers or their recruiters will do these statement proposals for their agents, but it's not a priority with some companies. It's something they get to when they have time. That's what I noticed with the ISO I worked with, and I'm sure it's a common problem."
DuPont also observed that not everyone has the requisite skill-set to become an expert on interchange fees and reading statements, nor is training an overnight process. Recent shifts in pricing models make ongoing education essential.
With the protracted learning curve involved, any turnover in relationship managers within an ISO organization can lead to delays in processing statements or increase the potential for errors, he noted.
How it works
DuPont said becoming an MSA client is a simple process that begins with an initial phone consultation to assess an ISO's specific needs. Areas addressed include types of pricing to be included in each statement analysis, number of statements to generate each month, and color schemes and logos to be integrated into the client's customized design template. Once the basic parameters and client template have been established, MSA is ready to begin processing statements.
"They start sending statements, email or fax, and I start turning them around via email," DuPont said. Creating a PDF file, MSA will either complete the statement analysis in a single interaction or revise the pricing once an ISO has reviewed it. "Maybe I send it back with an interchange 30 basis points, and they think they need 15," he said. "Or, 'Can you do it 12 cents instead of 10 cents?' So we do that, and we shoot that back real quickly."
ISOs receive several itemized breakout pages with each statement analysis, including a side-by-side comparison of fees charged by the merchant's current provider and the ISO's proposed quotes, a detailed agent profit analysis and a savings analysis.
DuPont noted that the depth of analysis provided in the profit analysis depends upon the level of data ISOs share with MSA. At minimum, the profit analysis will reflect "100 percent over cost," he said.
"If they have a BIN [bank identification number] sponsorship fee or a per item fee, the basic ones that reveal the profitability of the account, and they provide that to me, I can get real close to what they can expect to make on that account each month," DuPont stated. "As far as I know, nobody is doing that in the industry. And it's fully customizable in the sense that when they get the quote back, it represents their company. I'm behind the scenes."
That formula appears to be working well for MSA client Dustin Wilkins, a partner with MLS Direct Network of Eastern Alabama. "The presentation end of his quotes or analyses are very professional looking and wildly accurate," Wilkins said. "He reacts quickly to pricing changes in order to maximize our profit or to reduce our profit if we feel like we need more from the merchant." Wilkins is especially appreciative that MSA doesn't produce cookie-cutter responses. "I can call and say, 'I need you to project about twice the volume, because they're new,'" Wilkins said. "Or, 'Could you just run the analysis for me and then let me decide how much room we have in it?'"
That said, turnaround time for MSA clients is generally less than 12 hours, DuPont said. Wilkins noted that MSA's turnaround time for his business has been more expeditious than expressed.
"For example, I sent him five statements to run an analysis yesterday at 6:00 p.m. Central Time and I had them in my in-box at 11:00 p.m. Central," he said. "The average turnaround time has been about three hours."
Gaining ISO support
Another reason MSA's services appeals to ISOs involves basic math. According to DuPont, the average midsize ISO retains from five to 10 relationship managers, each producing on average five statement analyses per day, which can easily absorb up to three hours per manager per day.
"Resources are precious," DuPont said. "If they have a real small team, they can't afford to have their team shut down to do statement quotes. They need to have their team calling and getting agents calling. They can spend their time more wisely building their business and leaving these calculations up to us, the experts."
MLS Direct's Wilkins agreed, noting that, "If you're an ISO trying to grow, the absolute biggest thing you're looking for is more time to either recruit reps or go out and look for business on your own.
In my case, it is rep recruitment and rep support. Historically, I had to do the analysis, the cost comparison breakdown, on my own. I don't know what the exact percentage was, but it had to take up to 30 percent of my time, and it was constant."
Wilkins stated that as a result of the time saved using MSA's service, he has managed to more than double the number of agents selling MLS Direct's merchant services, which has translated into expansion of his merchant base. "If I'm saving 30 percent of my time, my business is growing 30 percent faster," Wilkins said. "It's almost a direct tradeoff."
In addition to freeing up time for ISOs to grow their merchant portfolios, MSA's service also permits ISOs to focus on other equally important merchant-based account activities.
"Let's say I don't want to grow my business, but I want to use that 30 percent extra time to go out and touch base with my current clients in order to slow my attrition down," Wilkins said. "It's the same thing. You're still going to make your money back."
DuPont said the ideal MSA candidate is a small team or midsize ISO that averages between 60 to 70 applications per month. "They're not going to be sending me every statement for every business they acquire," he said, noting that most ISOs this size sign up for MSA's 25 quote per month prepayment program, with the balance of statements handled either by the ISO or its MLSs.
A final, yet critical piece to the puzzle is MSA's strict adherence to confidentiality for the purpose of protecting its ISO clients. "The one thing that they'll get with our company is a nondisclosure agreement," DuPont said.
"We only use the statements for the purpose of their proposals. It goes into their folder, and that's where it stays. The ISOs that have worked with us know our integrity."
Wilkins summed up his experience working with MSA as "big company results with individual attention." For ISOs interested in reducing the in-house costs associated with merchant statement analysis functions, MSA offers three pricing tiers.
The most basic plan offers a single quote per month rate, the standard plan provides up to 25 statement analyses per month, and the top tier offers a negotiable bulk plan for larger ISO clients.
