Success Is In The Cards For Moneris Solutions

As Canada’s largest payment processing company, Moneris Solutions is solidly positioned as a leader in providing technologically advanced, point-of-sale solutions. Established in December 2000 as a joint investment between Royal Bank and Bank of Montreal, the company delivers innovative information management solutions, linked to payment processing, to approximately 300,000 Canadian customers.

According to Kevin Tait, Senior Manager of Communications with Moneris, “The company was established to give the business community something they’ve wanted for a long time – a single point of access for all their debit and credit card acceptance needs.”

Tait explains, “In Canada, what happened is a company who wanted to accept both MasterCard and Visa as payment from customers had to deal with two separate institutions. For instance, Royal Bank, CIBC, TD and Scotia Bank are all Visa banks…so a business would have to go to one of those banks to get set up for Visa and [visit] a MasterCard bank to get set up for MasterCard. Bank of Montreal is a MasterCard bank and Royal Bank a Visa provider, so what we decided to do was merge those divisions of each bank together so we could effectively offer businesses one source for all their point-of-sale, credit and debit card needs.”

Competitive Advantages

While two banks are investors in Moneris, it is a stand-alone organization, which enables it to offer a number of significant advantages to customers. “We really are a separate company distinct from our parent banks,” explains Tait. “Companies have looked at the Moneris model and decided they like it. There are a lot of other companies out there that have aligned themselves [like us]. Usually an American payment processor will align themselves with a Canadian Bank…by partnering what they’re doing is bringing a MasterCard member and a Visa member together so they can offer both card brands, but the reality is it’s still two separate companies. When there’s a customer service issue customers may still have to phone two numbers; they may have to apply for both cards separately - so Moneris Solutions is really the only fully integrated company in Canada that does this.”

As a stand-alone company, Moneris has its own databases, its own sales force and its own back-end processing - all competitive advantages, which, according to Tait allows them “to be a little more nimble in the market.” For instance, the company’s online information management tool, Merchant Direct, enables businesses to review their daily card transaction information online and download the information into spreadsheets for accounting, trend analysis, or business planning purposes.

Tait explains, “What it does is enable merchants to go on our web site and sign into a secure area to view their daily card transactions, so they’ll see how many, and the value of sales, returns, voids, for all their Visa, MasterCard and debit transactions. Normally, businesses would have to wait for their monthly statement to see what kind of transactions they did. By putting it online we’re enabling them to see it on a daily basis.”

Moneris also has a huge competitive advantage in that it allows customers to maintain their current banking relationships. Tait says, “We have a buzzword here - ‘change your processor, not your bank’. What we’ve come out loud and clear on is we will move your money anywhere you want. We know your primary banking relationship, no matter who it is with, is really important to you and guess what - we’re not going to ask you to change. We want the processing business so we’re very happy to send a merchant’s funds to wherever the merchant does their banking. We don’t force the banking relationship.”

Moneris’ competitive advantages have positioned it as the leader in the Canadian payment processing market.

Regional Markets

While Moneris does most of its business in Canada, it also has a presence in the United States. “The US is a smaller piece of business for Moneris, but it is also the one that basically holds the most potential,” says Tait. “We’re a North American acquirer right now.” By operating on both sides of the border, Moneris is able to bring best practices from both its US and Canadian experience to all of its customers.

Tait says, “The American market has been very competitive for quite a number of years. They’ve always been able to offer a variety of credit card products to their customers whereas in Canada you either offered Visa or MasterCard processing, but not both. So, we’ve learned a lot from our US operation about how to operate in an ultra competitive industry where processing a variety of credit cards is the norm. In Canada, we happen to be the strongest debit market on earth. The US isn’t nearly as advanced in accepting debit cards as Canada is. So, in turn we are able to provide some of that debit knowledge to our US operations.”

Moneris’ US operation was previously Harris Bank Merchant Services. Bank of Montreal owns US-based Harris Bank, so when Royal Bank and Bank of Montreal merged their Merchant Services divisions, the Harris Bank Merchant Services became part of Moneris Solutions. Moneris’ US operation is very strong in the Chicago land area, quite strong in Florida and has its share of national accounts.

Moneris also operates in the US market by developing processing relationships with regional banks. The US banking system is very fragmented so there are many local banks that like to offer a full range of services to clients, but find it difficult to compete effectively on their own. Tait says they have around 150 agent-banking relationships where Moneris will provide processing solutions and customer service on behalf of the bank. This enables the agent banks to maintain their client relationships and reduce their costs.

Moneris also has a number of ISO relationships. “Because the US is so big and competitive what we also do is hire ISOs who are given pricing guidelines and full de-briefing of the products and services we sell - then we go ask them to sell on our behalf,” explains Tait.

Market for POS Terminals

In addition to offering E-commerce and payment processing solutions, Moneris provides a number of hardware options. Of the products and services Moneris offers, Tait explains that point-of-sale (POS) terminals are a prominent product. “So much of what merchants require is driven by consumers. If you add up the number of credit and debit cards in Canada there’s around 102 million payment cards. And, Canada has a population of approximately 30 million. There’s just so much demand to be able to accept these payment cards that point-of-sale terminals, which are designed to do that, are still strong. And will continue to be for the foreseeable future.”

Tait continues, “Canada does about $220 billion in card payments per year, and that is number is growing at approximately 12 percent. Right now there are about 600,000 business locations that accept some form of payment card (debit or credit)…and about 80 percent are enabled with some sort of POS terminal.”

Moneris sees demand for POS terminals in both business-to-consumer and business-to-business transactions. Tait explains, “We’re strongest in the B-to-C market because retail as a segment is our strongest industry, but we are also seeing growth in travel and entertainment - restaurants, hotels, motels. We’re also seeing a lot of strength in professional services - doctors and dentists for instance. As provincial medical plans start to cover less and less people now have to pay for physiotherapy and other services that aren’t covered by medical plans, so we’re seeing jumps in that industry. B-to-B is definitely a strong and growing segment for us."

Wireless POS Terminals

According to Tait there will be growth in wireless POS terminals. “Wireless terminals have been around for a while. I think we will see growth – it’s just a matter of businesses finding the best ways to use them. Right now we see them being used for delivery services - pizza, grocery stores to order online and pay at the door. Where we’re seeing some growth is at tradeshows. Tradeshows are places where companies can do a lot of business. Also, seasonal type shops – a garden center, for example.”

Tait doesn’t think security issues will necessarily have a negative impact on wireless POS terminal adoption. “The reality is that once the card is swiped the encryption is so significant it’s not really any different than swiping a card through a POS device at a retail location. Lots of dollars and work have been invested into making these devices as secure as possible and I’m not aware of any transactions in Canada – and these have been around for at least five years now – that have ever been compromised because a card has been swiped through a wireless device.”

Future POS Terminals

In terms of the future of the POS terminal, Tait suggests it will become a more robust device that will be much more integrated into the whole POS system. “Rather than having a cash register, a POS device, and a printer for receipts, what we see really is a much more integrated POS system that will have a lot more functionality for merchants - better at capturing information and for reporting services. We’re already at the point where we can upgrade POS devices by downloading software through phone lines. It’s fairly common but in the future we could be using the Internet for the same type of thing, so there could be much more done with POS environments beyond just processing a transaction.”

One example provided by Tait is the use of POS terminals for electronic gift card programs. “Basically a value is put on a card and you can swipe those cards through a POS device. With a gift certificate if the customer didn’t spend the amount the merchant would have to give change. With the gift card, if it’s not all spent, the amount stays on there – and is available for a future shopping trip.”

There are POS terminals that provide reporting capabilities to merchants enabling them to identify whether particular sales strategies are effective. Tait says, “We have POS terminals that will do debit and credit card processing, but they can also find out how much is remaining on a gift card for the customer and through regular reporting, it will tell the merchant how much money has been spent using gift cards, and how much money remains on the cards in circulation. So different functionalities can be built into terminals.”

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In today's fast-paced, ever-changing payment processing and information management environment, businesses need to provide the most effective payment technologies to gain customers, maintain customer satisfaction and stay competitive in the market. In less than two years, Moneris has provided businesses with the solutions they need to be successful. As a result, the company is the largest payment processing company in Canada, and is a prominent force in the point-of-sale and card processing industry.