Merchant Maverick Sees Growth with Star-Rating System for ISOs

The culture of ratings and reviews, so prevalent in the online world these days, has come to the business of merchant acquiring as a slew of sites has emerged to size up processors and independent sales organizations. Merchant Maverick, a 2-year-old site in Orange, Calif., takes the concept a step further by rating ISOs as if they were restaurants or movies, handing out anywhere from one to five stars in the manner of familiar rating sites like Yelp.

The site, which since its startup in July 2009 has reviewed more than 100 ISOs and processors, rates the providers on a range of criteria, including online complaints, length of contracts, whether there are cancelation fees, testimonials, and customer service. The provider’s pricing is not considered. “It is really a fairly comprehensive approach,” says David Fish, a senior analyst at Mercatory Advisory Group, Maynard, Mass., who follows the acquiring business. That approach seems to be working. The site’s traffic has doubled since August of last year.

Intended to help retailers evaluate merchant-account providers, Merchant Maverick is the product of a 31-year-old e-commerce consultant who stumbled into the arcana of the acquiring business when he and a cousin tried to start a travel-related Web site. The consultant, Amad Ebrahimi, found himself trying to decipher the industry as he and his cousin set out to establish a merchant account. Faced with unfamiliar language and confusing terms, Ebrahimi soon found it nearly impossible to evaluate and compare acquirers. “I said, ‘Why is this so hard?” he recalls. “This seemed like a frustrating industry in desperate need of a problem to be solved.”

Sensing that other small businesses were struggling with the same questions, Ebrahimi launched Merchant Maverick soon after he and his cousin gave up on the travel site. “I said, ‘Okay, I’ll do all the research for you,” he says. “I’m a user of Yelp,” he notes, so the idea of assigning star ratings seemed natural to him. For data, he relies heavily on social networks and other public sources, such as the Better Business Bureau and RipoffReport sites.

Aware that dissatisfied users are more likely to post than are happy clients, he says he looks for patterns in complaints, assigning more weight to issues that come up repeatedly. He also looks for testimonials on provider Web sites and notes whether the provider makes use of social networks. He allows merchants to post on his site, but he requires them to disclose their identities and demonstrate they’ve actually had dealings with the acquirer in question. Posters of negative reviews must hand over a valid e-mail address and prove they’ve dealt with an acquirer, but the e-mail and other identifying information are not publicly disclosed. Rebuttals from acquirers are also posted as long as posters give full identifying information.

Ebrahimi, who often spends hours researching a single review, makes money by earning referral fees from ISOs that get business from his site. He concedes this may appear to some to be a conflict of interest, but he discloses his revenue policy on his site and says it has not influenced his reviews. “If it’s good, I’m going to say it,” he says. “If it’s bad, I’m going to say it. I want to educate people but I have to generate some income as well.”

Fish at Mercator says the site’s referral policy isn’t by itself problematic, pointing out that many consulting and research firms (such as Mercator) and magazines (such as Digital Transactions, this Web site’s sister publication), earn revenues from the industries they cover. “It doesn’t necessarily create a conflict of interest,” Fish says.

Ebrahimi doesn’t disclose his commission or site statistics but says he is doing well enough from Merchant Maverick that he will soon be able to devote himself full time to the site, giving up his consulting role. He also plans to expand the site, hiring staff and offering more articles on acquiring terms and updating his reviews. “That takes a lot of time,” he notes. He already has plenty of competition to contend with. At least a dozen other sites have appeared to offer reviews of merchant-account providers, some of them predating Merchant Maverick. One Chicago-based site, Feefighters.com focuses on acceptance costs, running an online auction that allows business owners to take bids from processors and offering calculators that compare the costs of well-known online and mobile processors. Until September 2010, the site was known as TransFS.

Ultimately, though, Ebrahimi says his hope is that his efforts will put review sites out of business as transparency in the acquiring market increases. “Hopefully, there will be no need for a site like mine in the future,” he says.