1. FOR BUYERS OF:
• Retail Enterprise Software
• Point Of Sale (POS) Systems
• Merchandise Management
• Customer Relationship
Management
• Payment Processing
• Application Service
Provider
• Loyalty Programs
• POS Peripherals
• Wireless POS
• Supply Chain
Management
• E-Commerce
www.ISMRetail.com
NOVEMBER 2001NOVEMBER 2001
www.ISMRetail.com
INVENTORY
MANAGEMENT
Billion dollar hair care
salon company plans to
decrease its inventory
management costs 10%
to 14% by automating its
distribution channel.
RETAIL
ENTERPRISE
SOLUTION
Jewelry repair company
electronically managed
its paperwork, inventory,
and customer relationships
enabling it to reduce
in-stock inventory by 40%.
IT FORUM
ESRI describes how to use
geographic, sales, and
demographic data to map
customer reach and more.
Charge
TakeTake
Charge
Ray Walsh, VP of information technology, and
Ruth Martin, director of programming, The Men’s Wearhouse
Ray Walsh, VP of information technology, and
Ruth Martin, director of programming, The Men’s Wearhouse
Tired of being nickel-and-dimed
by its payment processing system,
The Men’s Wearhouse took action
and reduced transaction charges
while improving customer service.
Tired of being nickel-and-dimed
by its payment processing system,
The Men’s Wearhouse took action
and reduced transaction charges
while improving customer service.

2. 2 INTEGRATED SOLUTIONS OCTOBER 2001
TTAAKKEE
CCHHAARRGGEE
by Stephanie Roussel-Dupré
hen asked the question, “Will that be cash
or charge?” at the end of a shopping excur-
sion, more and more consumers reach for
plastic – with limited knowledge of what
transpires while they wait patiently to sign.
Although an estimated 48% of consumers still prefer to pay
by check, major credit card players reported an average
increase of 12% in charge transaction volume last year. With
the addition of e-commerce as a shopping channel, con-
sumers are now accepting credit as a viable payment option.
If credit card usage is expected to increase, then retailers
need to think about how the additional transaction traffic
will affect their processing systems. “When I pay with a cred-
it card, I stand there and count. One-one-thousand, two-
one-thousand, three-one…if I get to 15-one-thousand, then
I know the retailer is using a dial-up solution because it is
taking a significant amount of time to get an authorization,”
said Brad Jones, sales and marketing director at ISD Retail,
a communications software company. Customers might not
know why the payment process varies from store to store,
but they certainly take note. Sometimes the delay even caus-
es anxiety as the customer wonders if the pending purchase
Technology User: The Men’s Wearhouse, Inc. (Houston)
sells tailored suits and men’s apparel in more than 650 stores
in the United States and Canada. The $1.3 billion retailer oper-
ates three chains: The Men’s Wearhouse, K&G Men’s Center,
and Moores (Canada).
Problem: The Men’s Wearhouse focuses on customer service
throughout the store, but its credit card authorization process
was taking 40 seconds or more, slowing down the sales
process. Not only was the payment processing system slow
and sometimes unreliable, it was also not scalable and could
not keep up with the store’s nationwide growth or the credit card
companies’ increasing compliance requirements.
Solution: The Men’s Wearhouse chain installed ISD Retail’s
Message Sentry software on a central processing server at its
corporate headquarters. Combined with an always-on connec-
tion to its payment authorizers, this reduced the stores’ autho-
rization time to 3 to 5 seconds. The solution also provided a
more reliable settlement process and regular upgrades from
ISD which ensure the retailer is in compliance with recent fraud
protection requirements. The Men’s Wearhouse is also guar-
anteed to receive the lowest processing rates from credit card
companies thanks to ISD.
▲ Retailers who are tired of getting nickel-and-dimed while processing credit
transactions need to consider the networking options available. The Men’s
Wearhouse took charge of its system, lessened transaction charges, and
increased customer service all with an off-the-shelf software package.
Installation Profile
WW
“Our response time was 40 sec-
onds or more to authorize a credit
card, and we were adding 50 stores
a year, so we needed a system that
was scalable,” said Ray Walsh, VP
of information technology at The
Men’s Wearhouse. He and Ruth
Martin, director of programming at
The Men’s Wearhouse, worked to
decrease authorization 92%.
Photos by Paul Schmidt

3. sent them over the credit limit and deeper into debt. As
thoughts of bankruptcy run through the customer’s head,
something else goes through the retailer’s. How can I make
this faster and reduce the charges I am racking up? Rest
assured that there is a way to become more in charge of
credit card charges.
Before Dialing 9-1-1, Try Central Processing
The speed of processing a credit authorization depends on
the connection established between the stores and the cred-
it card companies. Using dial-up processing terminals results
in a 12- to 15-second lapse from the time the card is swiped
to the time the customer signs. The
cost of running these hard-wired
phone lines is about $35 per
month, and the connection is not
always on. If a 500-store retail
chain has two lines in each store,
maintaining them could total
$35,000 each month just for the
connection – $420,000 a year.
Then comes the per transaction
fees from the merchant acquirers, like FirstData Merchant
Services or Vital, to dial the transaction, as well as another
set of fees to direct the charge to a credit card company, like
Visa or MasterCard. Each set of fees costs about 3 cents to 5
cents per transaction. The authorization ultimately comes
from a card-issuing bank such as Citigroup or Chase,
which just adds another stop in the transaction chain. It’s
like a fast-paced game of hot potato; the authorization
request passes through the hands of three other companies
before the music stops, and the retailer is left holding an
extensive list of fees. In the payment processing chain of
command, there is no reason for retailers to pay addition-
al fees to third parties when they can manage much of the
process internally with little maintenance.
Reduce Processing Time By 92%
The Men’s Wearhouse (Houston), a men’s apparel retailer
that operates 480 stores across the United States, abandoned
individual payment processing terminals almost 15 years
ago. At that time, it decided to
route store transactions through
one central server connected
through a frame relay to a mer-
chant acquirer. Frame relay is a
high-speed telecommunication
service designed for data trans-
mission between the end points
of a WAN (wide area network).
The Men’s Wearhouse then had a
continuous, dedicated connection from its headquarters to
its merchant acquirer without having to pay for a full-time
leased line. This provided one central pipeline through an
internal computer.
But even this network did not provide enough scalability
for the company’s store expansion, customer service goals,
or credit card compliance requirements. “Our response time
3 INTEGRATED SOLUTIONS OCTOBER 2001
▼
▼
▼ Payment Processing
Connectivity
POS (point of sale)
“We were not
getting the lowest
transaction rates
from the credit
card companies....”
Ruth Martin,
The Men’s Wearhouse
Consumers may think that credit cards lead to budget chaos,
but retailers don’t need to feel out of control in regards to pro-
cessing credit transactions. Unfortunately, the
structure of most payment processing pipelines
makes it difficult for retailers to command much
about payment processing, unless retailers take
matters into their own infrastructures. ISD Retail
(Holland, MI) offers a suite of software called
Message Sentry. It enables the retailer to become
its own message switch, thereby routing its credit, debit, check,
credit application, or private label credit card transactions from
any store application to any external authorizer or internal data-
base. ISD’s Message Sentry is certified with over 50 external
clearinghouses, which enables retailers to send authorizations to
any set of networks to keep transaction fees as low as possible.
Message Sentry consists of two main applications: Message
Server and Draft Capture. Message Server connects directly to
external merchant acquirers or credit card companies in sec-
onds, making the authorization process a nonissue when it
comes to customer service. “Our payment processing system
used take 40 seconds to return an authorization, but now it
takes 3 seconds or less,” said Ruth Martin, director of pro-
gramming at The Men’s Wearhouse. Draft Capture settles the
authorized funds with a daily deposit to the banks. This appli-
cation also supports electronic bank acknowl-
edgements and provides internal reporting capa-
bilities for easy reconciliation.
“You are purchasing a package that is capable
of managing the payment process with minimal
intervention from the IT staff,” said Brad Jones,
sales and marketing director at ISD Retail. “Not
everyone has a 700-person IT staff, but they still want to compete
with those that do.” The system allows retailers with mid-sized
computers to control their payment processing functions the way
large retailers do with large and expensive mainframe systems.
Martin agreed that this was the plus of working with an off-the-
shelf software package like this one. “We are a small IT depart-
ment of about 100 people. We rely on ISD because that is their
business,” Martin said. “Anytime we don’t have to worry about
things like compliance regulations and software upgrades, it is a
good thing.”
Software Creates Retail Message Gateway
Go To www.isdcorporation.com
For More Info. On ISD Retail

4. was 40 seconds or more to authorize a credit card, and we
were adding 50 stores a year, so we needed a system that
was scalable,” said Ray Walsh, VP of information technology
at The Men’s Wearhouse. Since the retailer already had a cen-
tralized network in place, it installed ISD’s Message Sentry
software on two IBM RS6000s to act as the internal switching
system, that is to act as the host server that directs each trans-
action to the appropriate place. Message Sentry enabled the
stores to decrease 40-second credit card authorization times
to 3 to 5 seconds, even during peak traffic times.
The Credit Card
Compliance Guarantee
George Zimmer, CEO at The Men’s Wearhouse, is known
for his satisfaction guarantee that any man who buys a suit
from his stores will love the way he looks. When the retail-
er needed a solution that would keep the stores up-to-date
with the latest credit card compliance requirements, ISD
gave the retailer its own guarantee. “We know that with the
previous system, we were not getting the lowest transaction
rates from the credit card companies because we could not
easily modify the system to adjust
for compliance updates,” said Ruth
Martin, director of programming at
The Men’s Wearhouse. Every year,
credit card companies require retail-
ers to supply them with more infor-
mation about the card transaction in
the hopes of authenticating the
identity of the cardholder. An exam-
ple of a policy revision is AVS
(address verification services),
which requires the retailer to pass
along both billing and shipping
addresses in the case of a card-not-
present transaction. Most of the
updates to compliance items have
to do with fraud protection. Those
retailers who are able to provide the
correct information get a reduction
in processing fees and can avoid
absorbing the cost of fraud. “These
are maintenance issues that retailers
would have to assign someone to
track, but The Men’s Wearhouse is
able to take advantage of ISD’s
experience,” Jones said. Martin said
many times, the software upgrades
and patches that ISD Retail provided
let The Men’s Wearhouse know
about policy changes even before
its merchant acquirer did.
Control In The Front And Back Office
For retailers who don’t have a cen-
tral server or WAN in place, the cost
justification for establishing this
infrastructure is found in areas other
than decreased transaction process-
ing fees. For example, a retailer can
route transactions, such as stored
value gift cards or employee dis-
counts that need approvals from
internal databases, through the
same server that talks to the outside
▼
▼
▼ Payment Processing
Connectivity
POS (point of sale)
Smart cards don’t contain the cure for
world hunger or provide payment plans to
lessen credit card debt. It’s not that kind of
intelligence. Smart cards get
their high IQs from an embed-
ded microchip that stores data.
The data can range from fre-
quent user points to retail dis-
counts, and the cards are
designed to work in both
brick-and-mortar stores
and online. Even a con-
sumer’s identification
information can be stored
in the card and electroni-
cally inputted into a Web
page through a special
card reader connected
to a PC. These are
just some of the practical
applications credit card companies hope
Americans will soon take advantage of.
American Express pushed its Blue Card
last year, looking to attract the young
Internet generation to use it online, and now
Visa plans to put 7 million smart cards into
circulation this year. MasterCard, too,
speaks of plans to introduce similar cards in
the near future. But the jury is still out as to
whether these chips will be helpful or hype.
The Cost Of Change
Smart chips were added to cards through-
out Europe in 1990 to curtail fraud and
provide a less expensive way to transfer
data, without extensive telecommunica-
tion networks. However, smart cards have
been slow to appear in American wallets
because the United States’ telecommuni-
cation infrastructure is already well estab-
lished and relatively inexpensive. This
makes traditional magnetic stripe cards a
popular form of payment for retailers and
customers. The cost of smart cards is
decreasing as the technology evolves,
going from $10 apiece two years ago to
about $3 today, but this price still cannot
compare to $0.30 to $0.40 apiece for mag-
netic cards. An additional cost for retail-
ers and customers is hard-
ware to read the
i n f o r m a t i o n .
Customers who want
to use the card on the
Web have to purchase
readers for $25, unless
they snagged one dur-
ing free promotions by
retailers or credit card
companies. Compaq is
currently designing a new
keyboard with a built-in
reader, and Visa hopes
other computer companies
will follow suit; but this won’t
matter much unless more con-
crete applications for the cards appear
soon.
Smart cards have the potential to
become loyalty cards, tracking frequent
flyer points or the number of card punches
a customer needs before they get a free
lunch. Target Corp. announced that it will
put several million chips on its new Target
Visa credit cards this fall and install card
readers at its checkout lines, with the
option for customers to download coupons
from the Web site to the smart cards to
use in the stores. But even Gerald Storch,
Target’s vice chairman, said the microchip
option is an effort to make the cards look
different and innovative. Until smart cards
become embedded in American retail
society, the microchip’s intelligence will
remain untapped. It almost seems like a
matter of inventing the solution before
acknowledging that there is a problem to
solve.
Smart Cards — Fancy Plastic With A Memory
Visa is one credit card company
with plans to distribute smart
cards to the consumers. The
cards contain microchips that
can store data from coupons to
ID information.
4 INTEGRATED SOLUTIONS NOVEMBER 2001

5. authorizers. This is the type of solution that only the inter-
nal IT departments of large retailers could control before;
but with the cost of networks, applications, and platforms
coming down, it is now possible for small- to medium-sized
retailers to also operate within this kind of environment.
The Men’s Wearhouse also benefited from Message
Sentry’s Draft Capture, which allowed the retailer to per-
form its own settlement, thereby reducing reconciliation
and account balancing problems. “Because the communi-
cation links between third party settlement processing were
unstable with the old system, sometimes transactions did
not process on the day they were made. Sales audits
would catch the discrepancy the next day, which would
require the store to re-ring the transaction,” Martin said.
Now if a connection is broken, ISD updates files with the
data already captured by the POS (point of sale) system
and notifies the merchant acquirer once the connection
is regained.
Being in control of your company’s payment processing
functions can reduce headaches at the stores and head-
quarters, as well as decrease the possibility of 5-cent fees
adding up to hundreds of thousands of dollars per year. If
your retail operation chooses to take on an infrastructure
redesign like The Men’s Wearhouse, you and your cus-
tomers will like the way it works. I guarantee it. ❏
▼
▼
▼ Payment Processing
Connectivity
POS (point of sale)
Stephanie Roussel-Dupré is editor in chief of
Integrated Solutions For Ret@ilers magazine.
She can be reached at:
stephrd@corrypub.com.
Cash or check is still the preferred form of payment, but the
world marketplace is expanding. With that comes a need to
accept foreign currency. The Men’s Wearhouse operates
some stores along the northern U.S. border that accept
Canadian currency. The retailer recently installed
ChelseaStore POS (point of sale) software from Chelsea
Market Systems (Houston), which automatically calculates
the exchange rate for the stores and can display the dollar dif-
ference on pole displays or screens when appropriate.
Customers can see exactly how much they owe and the sys-
tem allows them to split-tender the transaction between cash
and credit. The only foreign currency The Men’s Wearhouse
deals with is Canadian, but the Chelsea system is equipped
to handle any currency including the emerging European
Euro. “We see accepting Canadian currency in the stores as
a matter of customer service,” said Ray Walsh, VP of infor-
mation technology at The Men’s Wearhouse.
Don’t Make Exchange Rates
A Foreign Concept
Posted with permission from Integrated Solutions. Copyrighted 2006.
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