By Ken Musante
Eureka Payments LLC
This month's pillar of processing is Trent Voigt, Chief Executive Officer of JetPay LLC. I have known Trent for a decade and found him to be opinionated and engaging. I trust you will agree Trent's tenure and experience make him an ideal candidate for this column.
Q: Briefly describe your business.
A: JetPay is both a front-end and back-end processor. Many people in the industry think of JetPay as a gateway, but actually we are a full processor. JetPay can use and support the major front-ends like Paymentech, FDC and TSYS; however, we do not need to employ them in routing a transaction. The only major processor we are not compatible with is Global.
Q: Does JetPay have distinct departments or divisions?
A: JetPay has three divisions:
ISO services is our fastest growing segment. We fill the niche between the largest players, like FDC and the very smallest. ISOs often come to us as a secondary provider, but after utilizing our services, migrate to us as their primary processor.
The unique aspect of JetPay is we are an engineering shop first and a processor second. We engineer solutions for the merchant.
We are not a big-box, pure play processor; we are a boutique engineering processor that gives top support to our customers. We have tremendous flexibility, which allows us to customize our services. The downside of this approach is, because we spend time working on customizations, we do not have hundreds of applications for each terminal type.
However, JetPay supports the standard dial-up applications for retail, restaurant and lodging on the standard brands like VeriFone and Hypercom. JetPay has great terminal applications for the IP market, but as a last resort, JetPay relies on other front-ends to support the myriad of dial-up terminals available and just handles the settlement on JetPay's own back-end.
Q: When and how did you enter the payments industry?
A: I began in the industry in the late 80s. A computer engineer by schooling, I was hired by 7-11 - which owned Ticketmaster at the time - to assist in placing ATMs in 7-11s to sell concert and event tickets.
Although I advised them to accept debit and credit at these machines, they only took cash. Through my interaction with 7-11, I learned transaction processing and learned the transaction routing business very well.
I was then hired by National Business Services as Director of Engineering in the United States. They designed and sold the Taltek 727 terminals, a proprietary terminal that served petroleum resellers and money order companies. I worked there for four years, but because they were Canada-based, they closed their U.S. division and consolidated operations in Canada while I was interim President.
This background and experience served me well and gave me the opportunity to open a new business. I launched Triumphant Enterprises in 1990 and continued servicing the same niche I served while at NBS: high-end POS systems, large petroleum resellers and money order companies that needed complex, integrated solutions.
We then developed a deep niche with casinos because we had a money order dispensing solution and working knowledge of their unique needs. We brought our own propriety front-end online in 1994 and continued growing the business. In 1999, at the height of Internet boom, I sold Triumphant Enterprises to a hedge fund, Hicks, Muse, Tate and Furst, which was consolidating companies within the Internet space.
They were the owners of the Dallas Stars and were also the owners of the Texas Rangers. Since the Internet boom crashed in 2000, we obviously picked an ideal time to sell, and the buyout was very lucrative.
Q: You sold your business and then bought it back. How did that come about? What was the sale price and repurchase price?
A: My company was consolidated into a company named Vectrix. It was a part of Vectrix from 1999 until 2001. I worked for Vectrix from the time of the acquisition until 2000, when they installed the former CEO of Jamba Juice to run my division. His inflexibility lost many long-time and large customers and drove the company into bankruptcy.
I bought what was my former company out of bankruptcy court; at the time, the company was losing $380,000 per month. While the purchase price was not disclosed, I purchased it for a fraction of what I sold it for, and after 11 months, the company was again making money under its new name and banner, JetPay.
Q: How is your company owned?
A: As of June 4, 2010, I am sole owner.
Q: What is the most difficult aspect or threat to your business?
A: Dealing with all the unique personalities within this industry. ISOs are unique entrepreneurs and their requests can be numerous and diametrically opposite from one another. One ISO may want to use us for statement preparation but not for mailing.
This industry never ceases to amaze me in terms of creativity and revenue assessments, and my system must keep up with these diverse requests. Also, having to understand everyone else's business for risk reasons is fascinating.
Q: What is your biggest challenge?
A: The banking industry: ensuring we have sponsor banks through the banking crisis to support our customers and provide ongoing stability. There are just not enough banks in the acquiring space, so we are always looking for a new bank player that wants to make money.
Q: What is your company's greatest competitive advantage and why?
A: Flexibility. You can connect to our front-end without a gateway. This allows for a unique solution for Merchant A without impacting Merchant B. JetPay offers feature sets other processors could not dream of offering, including nonpayment data processing and custom reporting.
Our new Orange Label Solution allows ISOs to get into processing by licensing our front-end technology. This allows them to control their destiny and significantly raise the value of their portfolio.
Q: What do you consider your greatest success?
A: Turning around JetPay after the bankruptcy to a top 10 player within this industry.
Q: What was your biggest failure and what did you learn?
A: I built a terminal and trademarked the name "Cardswipe." The terminal was shaped like a pill and could fit in your shirt pocket. It ran off the power from a phone line. It was meant for mobile merchants - plumbers, electricians, home party merchants and other tradesmen - and could have revolutionized our industry, but I did a crappy job of marketing. I learned I should have hired a good marketer to sell this product.
Q: How will the Durbin Amendment impact JetPay?
A: There is a ton of uncertainty around this amendment. Although most of our pricing is interchange-plus and we should not have significant impact, it will really hurt issuers.
Because our ISO division is the fastest growing, we will have some impact because of the regulation and complexity, but it won't be an overall killer to our business. I am hoping the regulators pause and better consider how this will impact our industry, along with the reporting we must provide to the IRS, because the reporting is based on gross and not net, which is likely not helpful for the IRS.
I remain interested in a niche approach to markets. Acquirers can essentially focus on price, technology, service and/or underwriting. Risk management is the ante needed to even participate.
In the end, we all provide transaction processing; each of us selects inputs to determine pricing and service outputs to offer our customers. Clearly, Trent and JetPay are technology focused.
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