Currently serving as the Chairman of Illinois-based C&H Financial Services, Anthony Holder has been in the payment processing industry for over two decades. In his role, he oversees all revenue and customer operations, as well as business development and affinity partnerships for the rapidly growing company that provides online payment processing services in the United States and Canada. CHFS offers a range of products and services helping businesses through credit card processing solutions, whilst also providing CHFS Gateway, a Web-based payment gateway that allows merchants to process payments online; PCI compliance solution that allows merchants to accept credit cards, avoid fees/fines, and minimize investigative objections in the event of a data breach; and Tin compliance solutions. The company also allows merchants and mobile workforce to process payments through their mobile devices by converting smart phones into secure POS terminals; and business loans to the owners of retail, eating and drinking, and service and seasonal businesses.
This month we caught up with Mr Holder, who told Finance Monthly about his company’s journey to becoming the growing force within the financial services industry that it is today.
With an over 8000% growth rate, C&H Financial Services is one of the fastest growing privately held companies in America. As a Co-Founder, can you tell us about the company’s beginnings? How did it develop into the company that it is today?
With over 20 years of experience in our industry, we have been associated with tens of thousands of merchants, dozens of Niche Merchant Focused Associations, Chambers of Commerce, as well as hundreds of sales associates and colleagues. This pedigree in our industry, combined with the level of integrity that we operate under has honoured us the respect and admiration of these incredibly valued partners. When we launched CHFS in 2013 as our lead marketing brand, we put our names on the company. C&H is descriptive and stands for Costanzo and Holder Financial Services. James Costanzo and I launched C&H after nearly 20 years of working together in the payment processing industry. James and I are lifelong friends and business partners and complement each other greatly. While James handles Operations and organic growth initiatives, I find myself spending more time on our strategic relationships and acquisitions.
My brother David L. Holder Jr. and Michael Psaromatis also played integral roles in our growth over the years and within our strategic vertical markets.
CHFS has been privileged to process on behalf of over 8200 merchants. Those merchants have entrusted us with nearly $4Billion per year in payment card processing. With our future plans for growth and incredible M&A activity, we are confident that CHFS is approaching a Top 50 status for merchant acquirers.
As we continue to leverage our position in key niche markets, we will expand upon our offering to various retail and e-commerce segments of our industry. Our new cash discount programme will allow greater margins for our company and pump revenue back into the economy, by allowing merchants greatly discounted and in some cases completely free payment card processing.
For me, the most important aspect of our growth has been our support system. With six children at home, all under 12 years of age, I would not have been able to work the 75-hour work week, travel all over the country and work on the weekends, without my amazing wife Rochelle by my side. She is an incredibly hard-working mother and driven professional. Aside from managing a house of six children ranging from 4 to 12 years of age, Rochelle is also managing the marketing for one of our retail businesses. She is an inspiration, amazing mother, incredible partner and quite frankly, more deserving of being featured on this month’s cover.
What is CHFS’ growth strategy? How do you execute your growth plans?
CHFS has a multiple-pronged approach to growth. First and foremost; our organic growth channels that are split into several sub-categories. Our W2 sales force focuses on our strategic partnerships in several niche markets at the association and ISV level. We continue to grow our internal sales forces in California with plans to expand nationwide in 2018. Our 1099 independent contractors generate sales and referrals on a monthly basis. We continue to recruit and leverage these relationships, taking advantage of market trends or preferential pricing that attracts an independent agent to build a merchant portfolio through us. Paying accurately and timely is essential to maintaining an independent sales force.
CHFS also plans to continue leveraging our revenue to allow for strategic acquisitions. One of our goals for the 2018 is to acquire nearly $4mm in recurring annual EBITDA. We review dozens of potential acquisitions per year and pursue those with a synergistic model to our own.
Can you tell us a bit more about the payment solutions and systems that C&H Financial Services offers?
C&H Financial Services is licensed to distribute every make and model of payment processing hardware available to our markets. We remain agnostic to hardware and software preferences to fulfill the needs of each merchant. What works for a hair salon doesn’t necessarily work for a retail store front. Through our various processing platforms and Bank Sponsorships, CHFS has the unique position of never walking away from a merchant relationship because of technological hurdles. Since our inception, we have integrated with dozens of specialty management systems, catering to a wide range of niche markets; restaurant, retailers, e-commerce websites, educational and instructional facilities, automotive retailers and quick lube stations, as well as medical and dental practices. With our consultative approach to merchant services, we customise our solution to fit each market segment’s demands.
Can you tell us about CHFS’ plans for expansion worldwide?
CHFS is currently acquiring merchant accounts in Canada, Australia and New Zealand with plans to expand into the European and South American markets. Our cross-border relationships and software partners will take us into the most opportunistic areas of our Global Economy. As our partners expand into International territory, CHFS will stand ready to license and open our acquiring abilities to support their payment processing needs.
What is CHFS’ acquisition strategy? Can you tell us about CHFS’ recent acquisitions? What attracted you to these companies and what do these acquisitions mean to the future of CHFS?
Our recent and future acquisitions are all similar in nature. Our acquisition targets have a synergistic operating structure that mirrors our own. Independent sales organisations or merchant acquiring companies that have a portfolio of merchants that generate a recurring revenue based on payment processing receivables. CHFS targets those competitors that process on the same platforms as us, specifically First Data and Tsys. This allows us to seamlessly integrate customer service and technical support by routing 800 numbers and websites to our service team. While solid historical performance is important, synergistic profiles are key for a smooth post-closing integration and merchant retention. We also look at those portfolios that are comprised of similar merchants. CHFS has a large footprint in educational and instructional facilities along with retail automotive, parts, labour and service - we are also looking to target acquisitions for those acquirers.
CHFS moved offices in July last year– what was the rationale behind this decision? What has been the impact of moving offices thus far?
The new office allowed us the environment to grow and scale our operations staff and provided the cosmetic and professional presence we could be proud of. The expansion allowed us the proper support facility, training resources and staff accommodations to allow for a healthy and comfortable working environment. With over 30 full-time employees on board, this new facility will allow us to expand to over 50 team members in customer and technical support. In addition, we are happy to host individual sales agents or referral partners to our new facility for in person training seminars. Lodi is centrally located, only 45 miles South of Sacramento, and makes us a hub for sales and marketing efforts in California and throughout the country.
What further goals are you currently working towards with the company and what’s your vision for the future of its services?
We continue to expand upon our initiatives as our industry and economy evolve. While we have firm business plans and initiatives in place that we are enforcing, we review and adjust the model monthly. We will listen to our economy, our merchants and sales partners to evolve and respond to the market demands and trends. Hosting our own payment technology and software is a strong vision and initiative outlined for our future. We want to make sure that we are never leaving revenue on the table with our merchant relationships. Cross selling of products in our industry, such as check services, merchant cash advances or small business loans, gift and loyalty programmes as well as the new cash discount programme are critical for merchant retention. While our core competency is electronic payment processing, we want to ensure we become the preferred source for all merchant services.
What does C&H Financial Services do in order to keep up with technological advancements in the financial services industry?
Technology continues to be the Rutter that navigates us through this competitive and ever-evolving financial services industry. Along with security and regulatory compliance, equipment manufacturers and software developers are constantly updating the design of our payment devices and security controls. When we first started in the industry, we were providing any one of four payment terminals that offered limited reporting and data analytics. We have evolved into an Omni-channel focused service industry, taking advantage of mobile devices, EMV Chip card readers, Near Field Communicators (NFC/Apple pay), gateways offering recurring payment vaults for membership services, to POS systems that manage an entire business from accounting to marketing needs. CHFS intends to manage and host some of our own internal technology applications but will always remain on the forefront of market demands by licensing and distributing various applications to comply with market demands.
What are your predictions for the development of financial services in the future?
Technology continues to evolve at lightning speed. Advancements in biometric reading devices, wearable wallets in the form of a ring or small chip placed in the sleeve will continue to evolve into faster, more reliable ways to pay and exchange funds. Person to Person (P2P) payments will also continue to be a growing trend over the next few years as social media platforms open the ability to exchange goods and services. While the demand for faster and more reliable payment experiences grow, so must our ability to protect and secure the payment environment and exchange of data. Blockchain and cryptocurrency payments continue to be the topic of the day. As these systems and payment platforms evolve, we could all expect regulation and controls to evolve alongside it. There continues to be much confusion around how to capitalize and invest in Blockchain and crypto, but where there is confusion, there is opportunity.
We are excited for the continued growth of our industry and to continue being a growing force within it.
As CEO, how do you ensure you are directing the company in the correct direction? How do you advise your team to make the correct decisions for the company alongside clients?
While I’m a firm believer in best practices and not micro managing, I stay involved in every aspect of the company at all times. We have built an incredible support staff that has grown and evolved over the years to know and exceed upper management expectations. It is crucial to have and follow your Standard Operating Procedures (SOP). If you do not have these SOP’s outlined, you are setting your team for failure. I check in with our team on a regular basis from the entry level customer service representative to senior management, my door is always open to them. Keeping my door open is the only way to keep my ear to the ground. I encourage my team to make decisions that would empower our merchants, sales associates and staff. Empower people and they will perform for you at every level. This is how we maintain an A+ rating with our Better Business Bureau.
CPRAS are the UK’s pre-eminent payment processing consultancy. They have designed and delivered Europe’s first Payment Services Framework to be available not just for governments but for private sector enterprises as well. In this interview with Finance Monthly, Andy Flavell (CPRAS’ Partnerships Director) explains how their vision for local councils and trade associations is changing the UK payments landscape.
There is a lot of talk about the CPRAS Payment Service Framework. I know that, in most interviews, you like to focus on the innovative aspects of the Framework which allow the public sector to effectively remove themselves from PCI DSS compliance, but could you tell us more about how and why you set up a Public Sector Framework with a Private Sector mirror image?
The payments industry tends to surround itself in mystique, but under the surface it’s just like any other. If you are a massive client placing a huge order, then you can negotiate better quality and price deals than the small business can ever hope to get.
When we were building the PSF, we were actually putting together probably the biggest tender for payment services in EU history. We knew that we would get the best value service packages ever seen in the Public Sector and it seemed obvious to create the mechanisms that would allow Private Sector businesses to access these market-beating packages.
And what are those mechanisms?
We call it the Optimiser. Essentially, it’s an app which cuts through all the complexity around payment services.
The problem is that there is a very real difference between providing payment processing services to a business than to a government office. Processing payments carries risk – for example, a furniture business could close after taking deposits but before delivering the goods. In that case, the processor would have to repay the business’ debts. Risk costs – more “risky” processing will always be more expensive.
In the PSF, we asked the service providers to give a cost matrix for every type and size of business. In fact, the PSF had over 200,000 cost input options.
When we give an Optimiser to a Local Council, they can use it to identify and introduce the best payment processing rates and service packages available for any local business, from a corner shop to a global corporation. The Optimiser provides that business with a detailed breakdown of all the savings that they could achieve.
It’s all risk-free, but when businesses select a PSF service package, the provider will pay the Local Council a small % of the processing fee – for every transaction processed. Everyone wins: The Council has more profitable local businesses which recognise the additional help they have provided. The business benefits from service packages that have been based on one of the largest tenders in history. Even the service provider benefits, as they get new customers across a broad range of risk profiles.
So businesses should ask their local council if they have a CPRAS Optimiser?
Yes, or they could ask us who has an Optimiser that they could use. We are providing Optimisers to accountancy firms, Trade Associations and business support organisations.
The payments industry seems to be changing far more rapidly than ever before. Obviously CPRAS are right at the front of this FinTech explosion so what’s next on the horizon for you?
Christmas.
