Government

Cook County jail contract gives local firm big boost: Government Payment Service could double business

July 25, 2005

Government Payment Service Inc.'s credit-card-based jail bond service has proven to be a successful alternative to traditional cash transactions.

Now the Indianapolis-based company, which has experienced tremendous growth since its founding in 1997, could double in size, having secured a contract with the country's largest jail system in Cook County, Ill., home to Chicago.

Cook County, with 5.3 million people, is the second-most populous county in the nation, topped only by Los Angeles County in California.

Processing credit card bail payments for the Cook County Department of Corrections with its roughly 100 jails is a huge boost to business, said Dale Conrad, CEO of GPS.

GPS hopes to eventually process credit card payments for other fees, such as traffic tickets and parking fines, for Cook County, which collects more than $4 million in fees a year.

"All in all, the potential of that contract for us is very large," Conrad said.

In a business in which revenue is measured in number of transactions, GPS is on a roll.

GPS processed 3,360 transactions in 1998, its first full year of business. Three years later, GPS had increased the number more than tenfold to 35,600. And, this year, the firm is averaging 10,000 transactions a month.

GPS charges a percentage of the bail, traffic ticket, property tax or child support payment it processes.

The more than $40 million of transactions it processed in 2004 translated to $3.3 million in revenue. Even before the Cook County contract, the company was on track to surpass $4 million this year, Conrad said.

"Based on estimates of population and jail figures [in Cook County], we believe it could possibly double our size in terms of revenue," he said.

But it wasn't easy landing the contract, which adds one more client to its list of about 900 government agencies in 31 states.

"We'd been working on that contract for three years," Conrad said. "There are a lot of levels of bureaucracy to go through."

In fact, the time it takes to land these contracts is one of the main stumbling blocks to getting in this business, said Joe Helleny, president of CourtMoney.com, an Illinois company that processes fines and fees via the Internet.

"You're dealing with government agencies, so there's a slow turnaround," Helleny said.

Plus, processing bail and other fees with credit cards hasn't always been the norm, which makes some agencies wary of the new idea.

So, before Conrad pitched GPS to Cook County, he sold it to smaller agencies. GPS counted on the weight of processing transactions for agencies in several of the surrounding counties to aid his entry into Cook County.

"It's taken a long time because we're a small company from Indianapolis and there's only one Cook County," Conrad said.

GPS employs about 50 call center operators, plus another 16 who handle sales, marketing and administration.

Still, its size didn't seem to hinder GPS much in the bidding process for the Cook County contract, which considered proposals from Bank One and Discover Card.

The edge is personal attention, Conrad said.

Most of GPS' competitors do not have a live call center. Instead, they rely exclusively on Internet portals, like Court- for some agencies, bail payments are all processed via GPS' call center.

GPS' biggest seller is the faster speed in which bail payments can be processed vs. the cash method, said Sgt. Don Smith with the Westchester County Department of Corrections in New York, a GPS client for two years.

Faster processing of an inmate's bail gets the prisoner out of the system quicker, saving taxpayers money, Smith said. A jail inmate's average two-day stay in Westchester costs taxpayers $456, he said.

Processing cash bail requires at least three jail employees who must count and recount the money, lock it in a safe, recount it the next morning, then take it to the bank.

Money.com.

"I know of only three companies in the country like GPS," said Helleny, who declined to say how many clients he has, but said he got into the business because of GPS.

Most of the big-name competitors also provide a myriad of other financial services, which makes it difficult for them to offer the customer service GPS can, Conrad said.

"We've chosen to stay with the live call center," Conrad said. While GPS also provides Internet access to pay certain fines With the GPS method, the transaction is processed and payment is wired to the jail's account within 15 minutes.

And there's no risk to the jail; GPS assumes all risk of chargebacks and fraud, in addition to paying the credit card fees. But the risk isn't high, Conrad said.

"If someone's already in trouble, they're not going to risk fraud," Conrad said. "They're not going to dig their hole deeper."

Conrad is next taking his pitch to Los Angeles County, where there exists another large pool of government fees and fines. He also hopes to add the company's "home" county jail system to its list of clients.

In Marion County, GPS processes payments for tax warrants and commissary accounts. While the county has a contract with another vendor to process credit card transactions online for traffic tickets and parking fines, the Office of the Clerk of the Circuit Court, which processes bail payments, does not accept credit cards for posting bail.

"There's no demand for credit card payments," said Chief Deputy Tony Schafer. "No one's asked for it."

Still, Conrad says he's waiting for the expiration of the existing contract but will not approach them seriously until then, nor does he need to.

"With 3,000 counties and thousands of municipalities around the country," he said, "there are enough out there for us."
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