Merchant Gripes Led Startup Comparison Site to Focus on Processing

Widespread problems reported by small businesses with their card-processing vendors led a startup comparison-shopping Web site for business-to-business financial services to focus on transaction processing, the co-founder says. Chicago-based Transparent Financial Services LLC, which operates as a kind of Orbitz for entrepreneurs looking for financial services, plans to add health and property and casualty insurance and payroll processing to its site, but began early this year with card processing and merchant accounts because merchants expressed more dissatisfaction with this service than with the others, says Sean Harper, co-founder of the company. “They were more unhappy with credit card processors than with insurance companies,” says Harper. “That was interesting.” Some 58% of the 283 small businesses that responded to a survey the company conducted this winter said they felt little or very little loyalty toward their processors, with one-third reporting very little. Twenty-six percent felt “some” loyalty, and just 16% reported “lots” of loyalty. Forty percent said they would need savings of less than $50 a month to convert to another processor or merchant-account provider. According to Transparent, which publicly released the results last week, the reasons for such anemic loyalty have to do with what merchants characterized as “hidden fees,” “high costs,” “poor customer service,” and “unforeseen rate increases.” Harper, who says the site will add its next financial-service category in November, says the research made it pretty plain that card processing should be the first category it offered. The survey asked about respondents' experience with insurance, payroll-processing, and business-credit providers as well as transaction processors. “That was the result of the market research,” he says. “It turned out [small businesses] were most unhappy with credit card processing.” Respondents represented all geographic areas of the country, he says, and included single-person shops up to businesses with as many as 50 employees. Half were e-commerce merchants. Currently, the site features offers from six processors, whom Harper won't name, and has nearly 100 merchants logging in. The site works like comparison travel sites Orbitz and Travelocity, with providers presenting deals and pricing and users selecting what they want. As with sites like Hotwire or Priceline, however, the site doesn't name providers until the user has made a selection. Harper says that might change. “We're a new company, and we're still figuring this out,” he says. Harper says he and a co-founder started the company to make it easier for small businesses to compare products, features, and price on a range of financial services. Both had been entrepreneurs, with Harper working with e-commerce sites and in venture capital. The sentiments merchants expressed in the survey about merchant-account providers, he says, is “sort of how I felt when I was shopping for that stuff, as well.” So far, Harper says, the survey has stirred up interest in the site, http://transfs.com, which still carries a “Beta” label. “We've been in quiet mode, but we're coming out of that and marketing ourselves more aggressively,” he says. For one thing, the survey has drawn some response from processors?though not to rebut any of the findings. “We did get a handful of calls from processors saying, 'We didn't know you guys existed,'” and wanting to know how to get listed on Transparent's site, Harper says.