In just its first six years, PE Systems LLC, a Spokane company that helps merchants reduce the credit-card fees they pay, has exploded to employ 44 people and has developed a customer base of more than 600 clients.


Among those clients, says company CEO Tom Parrish, are the Seattle Seahawks football team, the Minnesota Twins baseball team, the American Dental Association, Duke University, and the University of Southern California.


Because of the sensitive nature of the financial information disclosed to PE Systems by its clients, Parrish cant disclose the Spokane companys revenue figures, but says they are growing rapidly. He adds that based on expected growth, PE Systems should employ more than 200 people within the next five years.


Weve doubled or tripled our revenue every year since we started in business, and hope to continue at that pace, Parrish says.


More than half of the companys employees are telephone salespeople trained to bring in new clients, and the biggest obstacle to growth PE Systems faces is recruiting qualified people to fill those and other jobs, he says. Because telephone salespeople for PE Systems speak with chief financial officers of large businesses on a daily basis, theyre well-trained and well-paid, Parrish says.


He says the companys telephone salespeople receive a base salary of $30,000 a year, plus commissions. He says some of PE Systems top salespeople earn six-figure incomes.


Other workers there are analysts who study information generated by the companys patented software, contract administrators who make fee adjustments to save money for clients, and operations personnel who work with clients on an ongoing basis to maintain low fee rates.


PE Systems is located in 8,000 square feet of office space at 123 S. Wall, just above Europa Pizzaria & Bakery, but is looking for larger space because of its growth, says Terri Meck, the companys human resources manager.


Parrish says, What we do is work with merchants that accept credit cards for payment and help get for them the lowest costs possible for accepting those cards.


PE Systems does that by analyzing a clients credit-card transactions, normally for the previous year, says Parrish. He says PE Systems downloads financial information onto its patented software from secure sites to which a client has given the company access, and within 30 seconds the software will determine what changes need to be made in that clients credit-card fee schedule to save the most money for the client.


PE Systems developed the patented software in conjunction with a Seattle software company.


Parrish declines to share information about the steps taken to translate the software-generated data into savings for PE Systems clients, saying thats our secret sauce that makes the company profitable. Normally, a client will begin experiencing credit-card fee savings between two and six months after its data are downloaded to PE Systems software, Parrish says.


There are 177 categories that determine how a credit-card fee is charged, he says.


In a credit-card transaction, a merchant must pay a combination of small fees to entities that process and underwrite the transaction. For instance, if a cardholder uses a credit card to make a $100 purchase at a department store, the store only gets about $97 or $98 of that money, and the rest goes to credit-card transaction fees.


Those fees are distributed among the financial institution that issued the card, the company that processes the transaction over secure Internet lines, and one of the big underwriters of the loan to the cardholder, such as Visa or MasterCard, Parrish says.


The per-transaction savings that PE Systems might find for a client are small, perhaps just 1 basis point, which is the equivalent of one cent on a $100 transaction. Yet, those savings can add up to a significant amount of money for a client that accepts millions of dollars in credit-card transactions over the course of a year, he says.


PE Systems might find that one client, say a university, is paying $3 in fees for every $100 it receives in credit-card payments, while another university not far away is paying only $2 in such fees. When it finds such an inequity, the Spokane company will help the university thats paying too much reduce its fees.


The company collects large volumes of data from its clients to analyze. For example, Duke University maintains a total of 130 bank accounts into which money could flow from credit-card transactions, and each needs to be analyzed, and USC has 90 such credit-card accounts, says Parrish.


Thats where the software comes in, he says. If we had to record these transactions manually, it would take forever, Parrish says.


Sometimes, PE Systems tracks down accounting errors, then helps its client get a refund. More commonly, however, the savings come through reduced fees the client will pay in future transactions, he says.


Part of the service PE Systems provides to its clients is a flow of updated information about possible changes in the credit-card transaction industry to help them ensure theyre getting the lowest fee structure possible.


Every time Visa or Master Card makes a change, it usually means the merchant will have to pay more, he says.


Parrish and his partner, Alan McElroy, launched the company in 2001 under the slightly different name PE Systems Inc. Last year, the company changed its name to PE Systems LLC after a Blue Bell, Pa.-based private-equity firm, Capital Solutions LLC, bought a 40 percent stake in the company. A management group called Jaguar Capital Partners LLC, of Conshohocken, Pa., discovered PE Systems for Capital Solutions, earning a finders fee that along with its own investment gave it a 30 percent share of PE Systems, Parrish says.


Parrish and McElroy, who has retired from day-to-day activities at PE Systems, retained the other 30 percent ownership in the company through a business called Wa2 Inc., of Spokane, and Parrish manages PE Systems LLC as the companys CEO.


Contact Rocky Wilson at (509) 344-1264 or via e-mail at [email protected].