Chesapeake Bank’s division Chesapeake Payment Systems Senior Vice President and Managing Director Kate Root talks to Proactive about the group's ability to compete in the merchant card payment services. Root says the group is the only community bank in the fifth district of Virginia that competes in full, direct merchant payment processing and partner sponsorships that enables it to reach beyond its footprint as well as diversifying Chesapeake’s income stream..
CHRISTINE CORRADO Good morning from Proactiv, New York. Joining me today is Kate root Senior Vice President and Managing Director of Chesapeake Payment Systems division within Chesapeake bank. Kate, good to see you. How are you?
KATE ROOT Hi, Christine. Great to see you again. I’m good.
CHRISTINE CORRADO That’s good to hear. So, we are here today to talk a bit more about Chesapeake Payment Systems. So first off, can you maybe talk a bit about how long has just the bank been providing merchant Card payment services?
KATE ROOT Yes, I can. We broached this market in the 1990s. Back in the 1990s, the market was exploding for payment products because people were processing in a very manual way and submitting paper tickets. It went into electronics with the first actual machines that could authorize the transaction. So, we took advantage of that and entered the market right when that was hot.
CHRISTINE CORRADO So why did the bank decide they wanted to offer this service to business customers?
KATE ROOT Smaller community banks want to do whatever it takes to have all the products that help their businesses run efficiently. Entering new markets with this product as a lead was critical. We could literally go out and start and visit merchants and learn more about them, and they’d want the merchant services and then learn to love us and bring over the rest of their banking. We were entering the Williamsburg, Va. market then, and it helped open the door to a lot of success for us in that area.
CHRISTINE CORRADO Given that, how does the program blend with some of Chesapeake’s existing core products?
KATE ROOT It’s interesting because we have three specialty lines of businesses; we have an asset-based lending product called Flexent, which I know you’re aware of. We also have wealth management, Chesapeake Wealth Management. The three of us bring a different aspect of the availability of businesses possibly outside of our region. We round out our business offering to our current customers. And these three products generally aren’t driven by smaller community banks. We’re the only bank in the Fifth District here in Virginia that does the merchant processing to the extent we do; it makes us pretty unique. But it also enables us, as I said, and our other two specialty products to reach beyond our footprint.
CHRISTINE CORRADO And I would assume this service would diversify Chesapeake’s standard income stream.
KATE ROOT It does. I mean, it brings in a different income stream. Interestingly enough, through all of the trials and tribulations of COVID, many banks did very well with the PPP loans. And we had different deposits go up from all the various fundings, but honestly, it was a tough time for us. So, everything was slow because we’re surrounded by payment streams and the retail tourist industry. So, the bank did very well on one side, and we struggled a little bit. But then, on the opposing side, when the bank has hits logged in as loans or deposits, we thrive, typically. So, we offset the bank by keeping it consistent and our net income monthly.
CHRISTINE CORRADO And obviously, you’re not the only bank to be doing this. What makes Chesapeake Bank able to compete with others?
KATE ROOT Many banks do this, but they do it through a third party. They don’t do it directly themselves, which means they may not have a membership to Visa / MasterCard as we do. They may be unable to clear and settle the transactions as we do. We have a full-fledged membership that allows us to help our regional merchants and smart sponsor any sales organizations wanting to enter this business. So, we can take this to the full extreme and process directly with customers through third parties, which allows us to grow and expand in a very diversified manner.
CHRISTINE CORRADO Understood. So, looking ahead, I guess how do you how will you ensure that this kind of revenue stream can continue to perform well?
KATE ROOT That’s a challenge. I mean, many payment types and opportunities are coming in our world today. And technology just is blowing up. And banks aren’t typically FinTech, right? We feel good about our ability to stay connected to technology. We work a lot with software vendors because today, you must not only provide the service to a merchant or a customer, you need to be able to help them with their operating system and all their processes.
In procedures, if we can’t engage and implement into something they’re currently using, they don’t want another piece of hardware sitting on a table that has to operate differently. It’s about really working with the vendors out there, understanding the merchant's needs, and being able to adapt to work into systems they currently have.
CHRISTINE CORRADO All right, Kate was good to see you and speak a bit more about this program. Thanks so much.
