A consulting firm that helps companies reduce their transaction costs is now flipping the model upside down to maximize acquirers’ pricing.

So far, Philadelphia-based PE Systems LLC has analyzed the fees charged by three independent sales organizations and awarded them a “mixture” of letter grades, Joe Bizzarro, the company’s CEO, tells PaymentsSource.

He chose not to reveal what grades the ISOs received but did describe their reactions to their report cards and what the marks signified.

“Our clients were surprised” to find out they could be earning more on interchange, he says.

But those opportunities to reap greater profits from pricing didn’t shock Mary Winingham, a senior consultant for Omaha, Neb.-based Planet Payment Group Inc. That’s because so few industry players have more than a basic understanding of interchange rates, she says.

The rates’ complexity and their frequent changes stymie most attempts at profound understanding, Winingham notes. In many cases, an ISO could keep merchants’ rates the same but earn more from them, she says.

Only a specialist truly could fathom interchange, Winingham maintains.

And that’s where PE Systems comes in, according to Bizzarro. The company has devoted itself to transaction pricing since 2001 and just won a fifth patent on its technology-backed analytical process, he notes.

PE Systems, originally called “Profit Enhancement Systems,” started by finding the best transaction pricing for colleges and nonprofit organizations. Seven years ago, those categories accounted for 40% of the company’s business.

By 2005, PE Systems was taking on retailers, and today colleges and nonprofits represent about 10% of the company’s business.

PE Systems usually provides clients with a price range deemed reasonable for the company’s size, type of business and transaction volume. The company also offers advice on factors other than price–such as customer service–so the lowest bid does not always represent the best deal, Bizzarro says.

However, the company stops short of recommending specific acquirers and is careful to avoid conflicts of interest when working with ISOs, he says.

The company, which makes money based on how much it saves clients, tends to have its biggest successes with clients posting $25 million to $750 million annually in card receipts, Bizzarro notes.

It takes on clients above and below that range, but the largest firms generally have staff specialists that monitor transaction fees, he says.

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