Outsourcing Merchant Services


ICBA Bancard’s merchant services program helps avoid fraud risk

By Nicole Swann

There really should be no bank that is under $5 billion in assets that should even consider doing its own [merchant payments services] program,” contends Scott McComb, president and CEO of Heartland Bank in Gahanna, Ohio. “You can’t possibly make enough money, stay compliant and take an acceptable amount of risk in this space.”

Merchant Solutions

ICBA Bancard offers payment services that allow your bank to strengthen relationships with merchants in its local community. Services include:

  • Multiple POS payment products;
  • Equipment and terminal suppor;t
  • Electronic draft capture/batch processing;
  • ACH settlement;
  • Business credit and debit cards;
  • Risk management and security screenings;
  • Online reports and trend analysis;
  • PCI compliance support, with available breach insurance;
  • Zero liability/risk-free referral program option; and
  • EMV chip-card terminal support.

To learn more, visit www.icbabancard.org and click on “Merchant Solutions” under the “Products and Services” tab at the top of the page.

Free EMV Terminals

Community banks that sign up for FiNet Inc.’s services through ICBA Bancard, ICBA’s electronic payment services program, will get some assistance in building a business case for EMV security technology—free EMV retail transaction terminals for their merchant customers.

“EMV is a huge deal,” says Scott McComb, president and CEO of Heartland Bank in Gahanna, Ohio. “We’re trying to educate [merchants] on the importance of EMV and switch machinery” in light of last month’s transaction-fraud liability shift to merchants that don’t have terminals that can process EMV smart-chip cards.

To learn more about ICBA Bancard’s merchant services and how to obtain complimentary EMV terminals, contact client services at (800) 242-4770.

That was McComb’s contention 25 years ago when his then $50 million-asset community bank entered the merchant payments services business, and that’s his position today after Heartland Bank has grown to nearly $700 million in assets.

However, to avoid risks and the costly overhead to maintain a merchant services program, Heartland Bank outsources the process through FiNet Inc., a merchant services provider program available to community banks through ICBA Bancard, ICBA’s payments services program. In this way the bank is guaranteed a revenue stream and a dedicated customer service representative (similar to ICBA Bancard’s credit card agent program) and the opportunity to establish relationships with potential customers.

“We use [the merchant services program] as a lead-in to talk to customers on a cold-call basis and as a warm call when we see companies at the Chamber of Commerce or Rotary Club or at local festivals,” McComb says.

McComb also has been pleased with the ICBA Bancard program’s flexibility.  FiNet worked with Heartland Bank and even made “exceptions to its policy based on our recommendation,” he explains. Knowing that FiNet will do its best to accommodate the needs of the bank’s customers, he says, is important to his community bank.

The program also provides an online portal from which community banks can enter merchant information and generate an automated email message noting a change in a merchant’s status. Community banks also can go on that same system and view customer service notes so that they can better respond to merchant inquiries, explains Richard Camardo, president of FiNet.

“It’s another part in the marriage between us and the bank to drive home the working-together philosophy,” he explains.

Camardo insists that when you factor in a community bank’s overhead associated with not only selling and servicing merchant services on its own but also managing fraud, the risks for community banks can be considerable.

“There really should be no bank that is under $5 billion in assets that should even consider doing its own [merchant payments services] program.”
—Scott McComb, president and CEO of Heartland Bank

He offers an example of a merchant that expanded its product lineup to include pricy sewing machines after previously only selling more modestly priced knitting supplies without notifying its community bank. So when a transaction came through for $500 (average ticket sales were $50 to $60), the system prompted a call to the merchant, which was able to validate the transaction and FiNet was able to reconfigure the merchant fraud parameter to avoid similar alerts in the future.

“For a bank to do that would require a lot of resources,” Camardo says.

Nicole Swann (nicole.swann@icba.org) is ICBA’s director of marketing and brand strategies.