Evolve Systems Is Paying It Forward

Evolve Systems Is Paying It Forward

Evolve Systems is selling the next level of e-payment services.

Evolve Systems, a Roseville-based web services provider, is evolving. Founded in 2003 by business partners and spouses Marnie Ochs-Raleigh and Don Raleigh, Evolve offers services including website design, web content management, and social media and search engine optimization strategy—services that remain the base of its business.

A few years ago, the Raleighs ran across a new opportunity, and late last year, the company introduced a digital solution that educates businesses on how to use Level 3 online payment systems, a more secure and less costly method of processing card and online payments. The solution also provides a streamlined, industry-compliant, and easy-to-use way for Evolve’s customers to process such payments. Current customers for Evolve’s new product include both small businesses and larger organizations looking to simplify their payment systems and save money.

According to Ochs-Raleigh, most companies using e-payment systems don’t know that there are actually three levels of credit card processing (see box, page 26). In general, the more information sent during a transaction, the cheaper the processing fee because companies can perform and sell more business analytics with the extra data. Level 3 purchases require the use of a purchase card, or P-card, a special credit card issued by banks to government entities and high-volume businesses.

The price difference between a Level 1 transaction—the most common—and a Level 3 transaction is usually “between one-half and 1 percent—not very much,” Raleigh says. But the totals can add up with large volumes. “If a company processes $1 million a day, its fees will probably be around $10,000,” Raleigh says. One percent of that is $100, so switching to Level 3 processing could save that company $12,500 to $25,000 over the approximately 250 business days in a year. Level 3 processing also results in faster payment to the merchant and access to the collected data.

The difficulty for most high-volume businesses? “Nobody has figured out how to automatically inject all that data—except Evolve,” says Raleigh, who serves as Evolve’s president. The company says that it also knows how to make a seamless transition from standard, Level 1 processing to a system that can complete Level 1, 2, and 3 transactions. “Our sales pitch is to the CFO, but our installation is with the geeks,” Raleigh says.

Raleigh and Ochs-Raleigh estimate that more than $1 trillion is spent using P-cards every year—a huge untapped market for Level 3 transactions and Evolve. “Most banks know about P-cards, but not about Level 3 transactions,” Raleigh says. “And they’re the ones who usually set up processing.”

While Raleigh and Ochs-Raleigh want to expand their e-payment innovation as much as they can, they aren’t putting all of Evolve’s eggs in the Level 3 basket. “We’re developing other product lines, like a person-to-person payment system, [and] ways to help businesses adapt to ever-increasing government oversight of e-commerce,” Ochs-Raleigh says, along with a few others Evolve is keeping under wraps for now. The company passed the $1 million mark for the first time in 2011, up 30 percent from 2010. It also expects revenue for 2012 to top $1 million. Ochs-Raleigh thinks that the company could double 2012 revenue within three years.

According to Ochs-Raleigh, all of Evolve’s services will continue to grow, but e-payment processing will soon leap ahead of the rest. “We’ve hit on a way to help some merchants save thousands annually,” she says. “It’s just a matter of time before they find out about it.”