This article appeared in the March 5, 2009, issue of ISO&Agent Weekly.

Some merchant-service providers are using a Web-based system called CardFellow.com to find and communicate with potential merchant clients, according to Ben Dwyer, founder and managing member of the Web site.

Merchants and providers register using the Web site, which disperses merchant information to providers and facilitates dialogue and quote negotiations between parties, says Dwyer.

"We're trying to facilitate the business of building a relationship between merchants and providers from start to finish," says Dwyer. "We're helping them find each other."

The service, which is in a test phase, is free for merchants. Providers can register for free but must pay a fee to send a quote to a merchant, says Dwyer. East Berlin, Conn.-based CardFellow does not get a portion of the provider's residual or income from any agreements signed using the site. Providers can choose to be listed in the provider directory, which merchants can search to view provider profiles, for a flat fee, Dwyer adds.

The quote prices providers pay change based on merchant type. A provider will pay between $7 and $8 to send a quote to an established, high-volume merchant, while a newly established merchant may cost $3 or $4, says Dwyer.

The site can make it easier for providers to reach new business, says Cheryl Bousquet, a consultant with Central Payment Corp., a Larkspur, Calif.-based ISO. "These merchants are actively looking for something we offer. It opens doors to business opportunities we didn't know existed," says Bousquet.

Merchants can "get three, four proposals all in one place without having to search 18 different Web sites to get it. It allows [service providers] to tap into markets we may not know are out there," she says.

Bousquet has not yet closed a deal using the Web site, "but it's led to dialogue and merchant-relationship building," she says. "That's extremely important. Most deals come from relationships." Bousquet says she has sent up to 10 quotes to merchants using the site.

The Web site is a cost-effective way for service providers to market themselves to numerous merchants, says Mitch Lichterman, president of Autolink Payment Services, a Los Angeles-based processor. "I knock my head on the wall every day trying to think of how to reach businesses," says Lichterman. "We don't want to spam businesses, and we can't afford to buy radio ads." Lichterman has sent quotes to six merchants using the site but has not had any responses.

How It Works

A merchant can register with the site and create a business profile that includes the current transaction rates it is paying, the type of business and its credit standing, says Dwyer. The CardFellow system sends the merchant profiles to merchant-service providers that have registered with the site, he says.
After reviewing a merchant profile, a provider can choose to send the merchant a service quote. Merchants also can search for registered providers on the site, review provider information and request quotes.
A merchant interested in a quote or service provider can communicate with the provider via an online message board monitored by CardFellow, Dwyer says. The message board "keeps a log of the communication between the merchant and the provider," including all rate and fee negotiations, he says. "If a merchant or provider hits a snag in the sales process, they can hit a button and bring a CardFellow person in" the discussion, says Dwyer.
The Web site launched in a beta version Jan. 15. Dwyer hopes to release version 1.0 of the site by Aug. 1.

Dwyer continues to solicit feedback from site participants and make changes. "We've gotten great feedback from providers who are using it," he says. "We're looking to add services, like support for cash advances, in the future." The site currently offers processing quotes only.

Attracting Merchants

One of the challenges for the Web site is to attract merchants, says Dwyer.
"Merchants are going to be the biggest hurdle," he says, adding that CardFellow has not marketed heavily to attract merchants because the site is still being tested.
Reaching merchants on a large scale will be a challenge, says Lichterman. CardFellow's "biggest challenge is going out and marketing," he says. "The real question is whether merchants will join."
Many of the merchants registered with the site are start-up telecommunications or online businesses, says Tom Nesbitt, a senior financial advisor with Pinnacle Payment Solutions, a Miami-based ISO. Nesbitt has seen only two requests from existing merchants.

Though Nesbitt has not communicated yet with a merchant using the system, he believes the system is a "great concept" for service providers. "From the point of being able to see a request from a merchant, go in, read what they want and realize if we have it, it's so easy," he says.

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