A Designed-for-ISOs Remote Capture Product Begins to Win Business

Wausau Financial Systems Inc., which late last year introduced a version of its remote deposit capture product specifically designed for independent sales organizations, has signed one ISO and will have three more on board by the end of the month, according to a company executive and company reports. Wausau, a Mosinee, Wis.-based processor of check and automated clearing house transactions, has been marketing its remote-capture service to ISOs since December, when it launched a series of lunches in various cities to meet with local ISO executives (Digital Transactions News, Jan. 8). The company, which retooled its WebDDL remote capture product to suit ISO reporting and management requirements, has also promoted the product at trade shows geared to card acquirers, such as the Electronic Transactions Association conference in April, the largest gathering of ISOs in the country. To reach small businesses, banks, processors, and other solutions providers have begun recruiting ISOs to sell remote capture, a service that allows businesses to make images of the checks they accept for electronic deposit under Check 21 rules. The process can speed up float time for merchants and eliminates trips to local bank branches to make deposits. But Wausau is not quite as far along as it had projected it would be. In December, the company expected to have three ISOs on board and processing transactions by the time of the ETA show. Currently, it has one publicly announced, Solveras Inc., Franklin, Tenn. “I'm about a month behind [in signings],” says Mary Winingham, a former bank card acquiring executive hired by Wausau last fall to spearhead its foray into the ISO market. The delay, she says, came about early in the year when the company realized it needed to revise its policy of requiring ISOs to assume the risk of fraudulent checks. Some ISOs balked, Winingham says, which led her to approach her senior management to regear the product. “I said, 'Here's what we're facing, here's what ISOs are telling me, and here's the business I could be losing to the competition,'” she says. “I was so impressed with the way they took this, this was [something] brand new for Wausau, and this [policy change] was a very fast turnaround.” After working out the math, Wausau decided just before the ETA show to revise its policy, taking on fraud risk itself except in cases where ISOs were willing to do it. These ISOs, Winingham says, stand to earn somewhat higher fees. “The only option we had was for ISOs to hold the risk,” Winingham says. “We looked at the competition and the feedback, and it was clear this [no-risk policy] was something we had to have to compete.” The policy required Wausau to customize risk-management tools for remote capture, some of which have been installed and others of which will be ready in about 45 days, Winingham says. Now, she says, she has “contracts in hand,” including the three she says will be on board by month's end. And the company is continuing its promotion to ISOs with lunches and trade-show demonstrations. Some critics argue ISOs won't find checks to be as lucrative as cards, where the interchange pricing system generates enough fee income to compensate third-party resellers more handsomely than checks' per-transaction fees do. But others argue the availability of remote capture allows ISOs to enter business-to-business and high-ticket markets where they have been shut out for card acceptance, such as lawyers' offices and jewelry stores. ISOs could earn revenue, also, from leasing or renting check scanners, some observers say. One ISO executive who responded favorably to Wausau's pitch in December in Chicago says he intended to start selling remote capture earlier this year but held back after the manager who was to head up the effort left the company. “I just haven't had time to go after it,” says Gary E. Peterson, of Arlington Heights Merchant Banc in Mount Prospect, Ill., a Chicago suburb. “It's definitely an avenue that I think is a viable revenue stream. I'll look at it again to revitalize the effort.”