Processing Change

Processing cashless payments requires three basic components.

You need software (website or app that captures card data), a payment gateway (access to processing networks), and a merchant account (bank account for the money).

1. Website/App = Vehicle
2. Gateway = Bridge
3. Merchant Account = Bank

Nelix, Inc built vehicles and provided directions to the highway. TRANSAX collected the money.

In 2001, the company next door to the first Nelix office happened to be a payment gateway. We did some development work for them and they gave us a solid reseller deal. When Nelix had an ecommerce client, we made money on the development and pennies per transaction on the gateway account. This helped stabilize cash flow as pennies quickly added up. Recognizing this opportunity, we partnered with several other gateways in order to provide a full range of payment services for our clients.

In the early days, TRANSAX was designed to become the bank. Gateway accounts provide a fixed charge per transaction but a merchant account could yield a percentage of the ticket. We had the gateway relationships, we needed to become an independent sales organization for merchant accounts. That’s what we did.

We quickly noticed the merchant services market was saturated as call centers were undercutting each other.

1. We didn’t have a unique offering.
2. We were vulnerable to bigger sales teams with larger margins.

Meanwhile, Nelix continued to funnel deals for the gateway through regular business operations. In fact, those accounts had a near zero attrition rate.

 

In 2010, I was the art director/lead front-end developer for Nelix, Inc and the marketing director for TRANSAX.

While in the MBA program at Roosevelt University, I approached leadership with an idea. Instead of an outbound push strategy, what if we tried to get Google to send opportunities organically…. for free? I was quickly given free rein as we had nothing to lose.

The first thing I did was separate our web presence into 3 websites. Each site focused on the target user exclusively.

• Gateway = Business owners
• Developers = IT folks trying to connect to a gateway
• Merchant Resellers = Agents trying to connect to business owners

We put our SEO strategy in place and for a couple months watched the data roll in. Search engine results pages (SERPS) were displaying first page and often first position for keyword terms including a programming language. While independent sales organizations (ISOs) were spending thousands of dollars for placement on terms like “credit card processing” and “payment gateway” we discovered a niche in the development community.

 

I built more pages. Added more content.

Remember the neighbor gateway we helped with some code? Turns out those integrations and the custom software we built for Nelix clients was popular. In fact, over 90% of all traffic pointed to the developer site. Developers were searching on a wide range of technologies to integrate a payment solution. I’m talking old stuff like 4D, Filemaker and VB6. Although antiquated, those technologies were still alive and engineers were actively looking for payment solutions.

It all made sense.

After all, developers were the ones integrating the solution. They had an influential voice in the decision-making process. Nelix had already proved that to be the case. Technology was the key to retention.

It was clear that we needed to make a dynamic shift in strategy. Nelix was already familiar with the bridge, and that’s what we needed to build. We could compete against industry leaders like Authorize.net with features, usability and unique reseller tools. Gateways were mostly behind the scenes and behind the times with very little agent support.

My insights confirmed what leadership had already been thinking. I helped influence that decision with some key performance indicators.

My stance was that we could not just build any gateway and get caught up in the numbers game again. We needed to differentiate ourselves and bring a uniqueness to the marketplace. We needed to build a gateway for developers with multiple access points and features exposed via API. We needed to encourage developers to build payment vehicles directly into their own technology. Our bread and butter wasn’t finance.  We were software engineers and had the opportunity to build something we intrinsically understood as resellers. That’s how I decided to position us in the marketplace.

1. Re-position brand as a development company that does payment processing.
2. Build a responsive gateway interface (nothing had existed at this point).
3. Create unique agent tools for full control over profit centers (things we always wanted as agents).

 

Finally, we had to convince investors that this pivot was vital.

Within days we plucked the top developers from Nelix and started building the TRANSAX Gateway. In August of 2018, our gateway had 160 partnerships, 3,200 active merchants, was processing 676,000 transactions with over $90 million in volume per month. Nickels were turning into dimes as TRANSAX continued to leverage the development expertise of Nelix.

In 2018, the TRANSAX Gateway sold to a Pineapple Payments based in Pittsburgh.

Am I responsible for this huge accomplishment? No, of course not. Credit goes to Matthew Schwartz, Adam O’Hare, Joe Katz and Marvin Doolin for having the guts to build something from the ground up under tremendous pressure.

Did I play a pretty cool part in finding the right path by understanding our audience, core competencies, and using the right data to back up a good idea? I’d like to think so.