No resolution presented herein reflects the policy of the Minnesota State Bar Association until approved by the Assembly.  Informational reports, comments, and supporting data are not approved by their acceptance for filing and do not become part of the policy of the Minnesota State Bar Association unless specifically approved by the Assembly.

 

Report and Recommendation on Affiniscape Merchant Solutions

Recommendation:

The MSBA should offer Affiniscape Merchant Solutions as one of its MSBAdvantage programs. 

 

 

Overview of Affiniscape Program:

Affiniscape is a credit card processing company that was established in 2000.


Affiniscape Merchant Solutions is a law firm merchant account offered exclusively through state and local bar associations.  It is a custom designed payment system that allows attorneys to accept credit card payments from their clients.  The program offers not only reduced fees for association members, but also provides a system for processing transactions.  It resolves the ethical issues of credit acceptance by safeguarding and separating client funds into their trust and operating accounts.  Fees are never comingled because all service charges or charge backs come only from the operating account – never the trust account.  The system works as follows:

 

  1. Earned fees deposit directly into the firm operating account.
  2. Unearned fees deposit directly into the firm trust/IOLTA account.
  3. Visa and MasterCard processing fees for either transaction type are only deducted from the operating account, never from the IOLTA.
  4. A chargeback would come from the operating account. 

 

 

Opportunity: 

 

Affiniscape would be a new turn-key affinity program from which the MSBA would receive a royalty share based on monthly credit card volume for each participating member.

 

 Benefits to MSBA Members include:

 

 

 

Benefits to the MSBA include:

 

·       The program provides non dues revenue.

·       The MSBA would be paid 7.5 basis points on every dollar in Visa/MasterCard transactions.

·       The program is turn-key for the MSBA.  Affiniscape handles all of the payment processing, billing and delivery.

·       The program provides a personalized service representative for each of their member companies through an account manager (for companies with 14 or more attorneys) or an inside sales representative at a call center (for companies with less than 14 attorneys.)

 

Marketing

 

Projected Revenue:

The following revenue model* is based on a conservative estimate of 5 members joining each month for the first 2 years, with a monthly credit card volume at $4K for each participating practice.

 

Year 1 Projected Revenue for MSBA

 

 

 

 

 

 

Total Accounts

Total Volume

Revenue

Month 1

5

$20,000

$15

Month 2

10

$40,000

$30

Month 3

15

$60,000

$45

Month 4

20

$80,000

$61

Month 5

25

$100,000

$76

Month 6

30

$120,000

$91

Month 7

35

$140,000

$106

Month 8

40

$160,000

$121

Month 9

45

$180,000

$136

Month 10

50

$200,000

$152

Month 11

55

$220,000

$167

Month 12

60

$240,000

$182

Total Revenue Year 1:

 

$1,182

Note: Revenue is projected based on 7.5 basis points

0.000758

 

 

Year 2 Projected Revenue for MSBA

 

 

 

 

 

 

Total Accounts

Total Volume

Revenue

Month 13

65

$260,000

$197

Month 14

70

$280,000

$212

Month 15

75

$300,000

$227

Month 16

80

$320,000

$243

Month 17

85

$340,000

$258

Month 18

90

$360,000

$273

Month 19

95

$380,000

$288

Month 20

100

$400,000

$303

Month 21

105

$420,000

$318

Month 22

110

$440,000

$334

Month 23

115

$460,000

$349

Month 24

120

$480,000

$364

Total Revenue Year 2:

 

$3,366

Total Two Year Revenue:

 

$4,547

Note: Revenue is projected based on 7.5 basis points

0.000758

 

*Based on information provided by Affiniscape

 

 

Below is a pricing comparison of a Standard Merchant Account versus the Affiniscape Law Firm Merchant Account.

 

Pricing 

 

Standard

Merchant Account

Law Firm

Merchant Account

Fees

 

 

Application Fee

$75- $195

None

Contract Terms

1-3 Years

None

Cancellation Fee

$70 - $300

None

Set Up Fees

$100 - $300

None

Annual Fee

$50 - $200

None

Monthly Minimum Fee

$20 +

None

Service

 

 

Processing Rate for Swipe (In Person) Debit

1.69%

1.59%

Processing Rate for Swipe (In Person) Transactions

1.85%

1.79%

Processing Rate Keyed ( Internet/Mail/Phone)

2.65%

2.19%

Processing Rate Mid & Non-Qualified (Corp, Biz, Pur. Cards)

1.50%

.86%

Transaction Fee (includes authorization and settlement)

25 - 35 ˘

20 ˘

Monthly Statement/Service Fee

$10 - $15

$5


 

Features

 

 

PCI Compliance Fee

$9.95

Included

Quick Books Module

No

Yes

Billing Presentment and Electronic Invoices

No

Yes

Online Bill Pay for Clients

No

Yes

 

 

Current Legal Associations promoting Affiniscape:

 

Currently over 50 bar associations recommend Affiniscape, including the Massachusetts Bar Association, the Iowa State Bar Association, and the Indiana State Bar Association, all of which are voluntary. In addition, Affiniscape has recently added several state bars to their list of clients including the Florida Bar, The Vermont Bar, and the State Bar of Texas. 

 

Member Interest:

 

A survey was conducted in October 2008 to gauge member interest in credit card processing. Twenty-four members responded.  100 % responded that they would be interested in using such a service.  Of these, 62% do not currently use such a service.  When asked the average dollar amount charged in an average month, six of the ten respondents stated that their average monthly charges were in the $1,000 to S10,000 range.  Two reported average monthly charges of $500 or less and one indicated over $10,000.

 

Cost was viewed as the most important factor in choosing a credit card company, followed by factors specific to attorneys/law firms.  The biggest reported concern about using a credit card processing company was charge backs (65%).  92% of those who responded were in the solo/small firm category. 

 

 

References:

The Indiana State Bar, New York City Bar, Macomb County Bar, and the Massachusetts Bar Association were contacted.  All references reported that the company has been very customer friendly, their fees are competitive, the services met with the approval of their disciplinary commissions and no complaints were reported.