Notes from Las Vegas

We (Quadagno & Associates, Inc.) conducted a workshop last week at SourceMedia's 17th Annual ATM, Debit and Prepaid Forum held at Caesars Palace in Las Vegas.  The show and seminar series were well attended with keynoters such as Tim Murphy, Bob Carr and Dominick Ventura.  There was Diebold's entire management team there and vendors that spoke of issuing prepaid cards from ATM or ATM-like devices.  The hall attendance was good (it satisfied the vendors, which is all that matters) and the presentations, at least on the prepaid side, where I spent most of my time, were well done and thoughtful, addressing a wide variety of industry topics from growth to opportunities and how to best exploit them. 

One of the vendors on the floor, Computer Sciences Corporation, was promoting a one-stop shop for software that, besides performing core banking functions, lets you be an acquiring processor, a prepaid issuing processor or almost anything in between.  I have it on good sources that CSC is one of two payments industry firms mulling around inside Verizon (the other being First Annapolis).  We also know about Verizon's efforts to sign up merchants for acquiring processing services in their deal with J.P.Morgan Chase.  Verizon acts as the distribution channel - anyone signing up for a Verizon business line can expect an outbound marketing call selling acquirer processing services.  I've watched telephone companies dabble in payment systems since the days of AT&T's original break-up in the 80s.  They just never seem to get it right.  I wonder if this time will be different.  Especially as we begin to see mobile commerce take root.  Perhaps the stakes are going up. 

Our workshop (Quadagno & Associates and E&S Consulting's principal, Lori Breitzke) was entitled "The Evolution of Prepaid and its Effect on Banks" and was attended by 30 or so industry participants, some of whom could've presented with us (they were advanced in their thinking of how banks can play in prepaid markets).  The larger banks are getting it.  The community banks are farther behind.  Yet, the really interesting issue for community banks is that their opportunities are no less substantive.  The larger community banks have trust groups and commercial bank deposits that could benefit from the launch and sponsorship of prepaid programs.  As these mid-tier banks begin to understand the revenue opportunities, they'll begin jumping in, creating challenges for the program managers that don't do their own processing. 

I liked Carr's speech.  I think it's important to belly-up to the bar when something goes wrong.  And something is always going to go wrong.  So, it's only a matter of choice whether we attempt to sweep it under the carpet or tell what happened in an honest and forthright way.  If we choose the former course, we're making a BIG mistake.  It will always come to light. It's only a question of time.  Choosing the latter course allows us to stay in control.  It permits us to decide how the world finds out and what their perception of us will be after they've had some time to consider our plights and how we elected to deal with it.  Carr got it right.  But then my understanding without truly knowing the man is that he usually does.

Another interesting topic was de-coupled debit, which was declared 'dead' by one of the presenters from Tempo Payment Systems, the former Debitman.  I'm not sure the speaker, Mike Grossman, is right.  The Merchant Payment Coalition doesn't appear to be nearing an end to their lobbying for interchange governance and I'm watching the price per barrel of oil start climbing as winter arrives.  And as long as retailers control what happens at their POS (which I think is a safe statement for the foreseeable future), the topic of discount rates (I don't know why everybody calls it interchange) is not going away any time soon.  So as long as that's true, alternative payment schemes like de-coupled debit have a rosy future.  Just my opinion. 

Maybe it's a topic we'll explore further in my next blog.  Or perhaps my next blog is about the opportunities in prepaid for community banks.  In the meantime, if you didn't attend the event last week in Vegas, pay attention to the writings of SourceMedia's publications over the next few weeks and you'll get a feel for what was presented and discussed.  It was a good show.

Peter J. Quadagno
peterq@quadagno.com

http://www.quadagno.com