In February 2004, brothers Dan and Lucas Price founded electronic payment processor Gravity Payments. The company's core values revolve around lowering merchant costs, increasing revenue and being an active participant in the communities it serves.
Based in Seattle, Gravity provides credit and debit processing, electronic check processing, gift and loyalty programs, and e-commerce solutions to merchants nationwide.
This January, it acquired a 400-plus merchant portfolio that is expected to boost the company's volume by $120 million and 1.8 million transactions annually.
Like many who came before them, Dan and Lucas Price began their careers as independent merchant level salespeople (MLSs) for an ISO.
Dan, Gravity's Chief Executive Officer, said, "We soon realized how little part of the pie we were making. … The company didn't do a bad job in how they treated merchants, but the amount of money I was paid is one-third of what I pay my reps today." They did it their way So, the Prices opened their own shop on their own terms. For example, they took a page from a conventional business model and elected not to use the independent MLS channel.
All Gravity's staff members, including MLSs, are direct employees who file W-2 forms with their yearly taxes. They are not independent contractors. Every team member also receives health benefits.
The company has 17 full-time staff members. Half are involved in company operations and the other half work in sales and marketing.
It is atypical in the payments industry for a company to hire MLSs who work exclusively for one company as employees and who are expected (and want) to hang around for a while.
The Price brothers knew what they were getting into when they chose to use a direct sales channel exclusively. The largest drawback is that employees are more costly than independent contractors. But Gravity feels its merchants are worth it.
"It's very expensive but we believe in investing in people," Dan said. "We have high standards for merchants. We are as merchant-centric as you can imagine." Gravity endeavors to attract high-quality sales reps who dedicate their professional efforts to the company. While the majority of its MLSs are in the Northwest, Gravity does employ people throughout the country.
When launching their venture, the Prices decided to focus locally. It has paid off: Gravity reports that it is now the largest payment processor in the Seattle area. It works to provide one-on-one local service, as well as contribute to nearby communities.
"Gravity Payments strives to be a merchant-centric MSP that brings value to our customers, employees and vendors through our educated and driven sales force and our philosophy of customer service," Dan said.
Additionally, the company donates 2% of all its revenues to charity.
The Price brothers are young: Dan is a 22-year-old college senior and Lucas, Gravity's President, is 28. However, this doesn't mean they lack experience, skill or industry knowledge.
They grew up around the financial services industry, specifically the merchant services channel.
Their father, Ron Price, owned Merchant Services Consulting, an ISO. Both brothers played active sales roles in the business.
And today, each has more than four years of experience in recruiting and developing sales and marketing programs within the payments industry.
Due to Gravity's direct-sales philosophy, its operations are highly cooperative.
In our industry, it is not uncommon for one MLS to field referrals, make sales calls, perform statement analyses, activate merchants and install equipment.
The MLS is responsible for understanding and executing the entire sales process. At Gravity, a different person executes each step in the sales cycle.
"One person handles the incoming referrals and marketing," Dan said. "Another determines the best rate. A third performs activation and installation. There is a lot more teamwork here."
Unlike many of its competitors, Gravity's primary emphasis is on small to medium-sized merchants in the immediate area. And that's where it devotes most of its marketing efforts.
Dan said the company is passionate about small businesses. Clients become friends, and "that is a good feeling."
Mixing business relationships and friendships can be a double-edged sword. All of Gravity's merchants have their sales agents' cell phone numbers, so MLSs are always available to their merchants.
This may be inconvenient, at times, for an employee, but it "enables you to do a good job servicing [merchants] so you know that they will stick with you as long as they are in business," Dan said.
Gravity's dedication to community and customer service allows it to reap the rewards of referrals. Fifty percent of Gravity's new business comes by word of mouth. "It's the No. 1 way I like to get customers," Dan said.
"It really cuts down on marketing costs, which allows us to give merchants better rates and pay our employees better."
Dan said his company saves merchants 10% to 15% on processing costs, translating to more than $1,000 per merchant annually. He added that last year it saved merchants $1 million, and it is up to $2 million this year.
However, the company does not tell prospective merchants it will save them money. "We are very honest with merchants," Dan said. "If a merchant asks, 'Will you save me money?' I typically say I am not sure."
Instead, when a merchant meets with a sales rep, the rep projects what the savings could be. The rep then monitors the account for the first three to six months, and then annually, to assure that savings are being realized.
Occasionally, a projection is incorrect. In that case, Gravity immediately writes the merchant a check for the difference and adjusts the rate so the savings goal can be attained. "We are making sure we don't over promise on the front end so we can keep that promise," Dan said.
So, what does the future hold for Gravity and the Price brothers? "A lot of people are interested in exit strategies," Dan said. "We don't spend a lot of time thinking about that."
Dan fondly recalls his introduction to credit card processing and describes himself at that time as always looking over his dad's shoulder. He was lucky enough to find his chosen career early in life.
"I've been doing this since I was in high school," he said. "It's what I've always wanted to do.
"Lucas would always want to have some involvement in the company, too. He would say the same."
Regarding being Seattle's largest processor, Dan said, "We are proud of that, but we feel we could increase market share and double our sales force locally."
Gravity is also interested in growing its business nationally. "We would like to take local community orientation nationally, particularly in metropolitan cities," Dan said. "Our goal is not just to have MLSs in markets, but a whole team in each market focused on … doubling in size every year."
The company is open to the idea of franchising its business and is always looking for ways to motivate employees, possibly by opening up new markets.
So, if you want a steady job in the lush Pacific Northwest or are drawn to breaking ground in a promising locale, give Gravity a call. As Dan said, "There's not a whole lot that is secret here."
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Dan Price, CEO
Phone: 866-701-4700, ext. 802
1434 Elliott Ave W, Suite C
Seattle, WA 98119
Web site: www.gravitypayments.com