Eliminating the need for a third-party gateway allows ECHO to provide better service at a lower cost—it's worth keeping an eye on the company as it approaches acquisition by Intuit.

by Jeff Goldman [February 21, 2007]

ECHO, Inc. (Electronic Clearing House, Inc.) was founded in 1981 as a medical services billing company. According to company marketing director Greg Imlay, ECHO began focusing on credit card processing in 1986, and went public the same year. At the time, he says, the company was also manufacturing credit card terminals, a business it has since left, while the card processing business has grown.

In 1996, ECHO set up an internet payment gateway which is still a key part of its offering. A number of ISPs and software companies use the company's open source software to provide customized payment gateways and shopping carts to their customers.

ECHO, Inc. 730 Paseo Camarillo Camarillo, CA 93010 Help page

ECHO's greatest strength, Imlay says, lies in the fact the company is itself a processor, not a third party that resells processing services. "That allows the merchant and the ISP to connect directly with us, and if there are any issues or questions that come up, they're talking to the processor—they're not talking to a reseller and then getting to the processor through the reseller," he says. "We are it: we're the one stop."

Another strength is the fact that ECHO processes both credit cards and ACH. "We're able to offer one-stop service for merchants that are using us for both credit cards and ACH processing," Imlay says. "And that's through the same gateway, the same code."

Fees
ECHO's fees are generally competitive, Imlay says, noting that the fact that the company is a processor helps to reduce costs. "The merchant does not have to pay a separate gateway fee," he says. "When they have a merchant account with ECHO, they're only paying ECHO for the merchant account—they're not paying for the gateway."

In addition, Imlay says the first five chargebacks each month are fee-free, and all others cost only $5 each. "And we have complete chargeback support here," he says. "We have people that spend all day helping the merchants with their chargeback issues. So the merchants are getting very good value: they're getting good customer support on chargebacks, and they're getting it for very low cost."

Partnerships
ISPs that want to partner with ECHO to resell payment processing services to their customers, Imlay says, can either get a simple referral fee of $50 per merchant—or they can get more advanced. "If the ISP wants to do more to integrate with us, then we can discuss ways for them to get an ongoing residual based upon the type of processing," he says.

OpenECHO, the company's open source software, allows ISPs to customize their own integration with the processor. While most programmers don't have any trouble working with OpenECHO, Imlay says, "We do have an integration support department. Generally, this is for a larger ISP that has more complex issues: the department can walk them through the process."

Imlay says ECHO's online list of developers and ISPs also serves as free advertising for the company's partners. "They join the list, and they can get leads from people that are looking to ECHO for payment processing and don't know where to go for ISP services—they can find them on our website," he says.

Services… and Intuit
Another ECHO service that's particularly useful for ISPs is the Recurring Payments Manager (RPM), a web-based solution that stores and manages transaction data for automatic monthly payments. "It processes the payment up to 12 months in a row before you have to renew the information on the credit card or the ACH," Imlay says.

Level one customer support is available 24/7, 365 days a year, and level two support is available 12 hours a day. Imlay says ongoing communication with ISPs and merchants is a key focus—a newsletter is sent out each month along with the monthly statement, in order to provide ECHO's customers with updates on issues like Internet fraud and other credit processing concerns.

In December of 2006, Intuit announced its intention to acquire ECHO for $142 million, which Imlay says is a logical step for both companies, considering that Intuit has long been a reseller of merchant services through its subsidiary Innovative Merchant Solutions. The acquisition is currently awaiting SEC approval, which Imlay says is expected by the end of Q1 2007.

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