I had a chance to catch up with Mike Passilla yesterday, the newly announced CEO of Merchant Services at Chase and former CEO of Elavon. Mike did an interview a couple of years back with a publication in Atlanta that did an executive profile on him, shortly after having been named Elavon’s CEO. When asked about his overall philosophy on life, he said something that I think really helps to put his new role at Merchant Services in the proper context:
“I’ve always chosen the option that presents the greatest challenge and provides the greatest return.”
Based on my sense of Chase Merchant Services (CMS) and the opportunities before him, I couldn’t agree more. Here’s how Mike sees things, now barely two weeks into his new role.
On what attracted him to Merchant Services
(Hint … leadership and unmatched assets)
Mike characterizes Merchant Services as a great match for his leadership style as well as a place with assets that are in his words, “unmatched.” He cites JPMC’s depth, breadth and reach as immense, and its history of investing in innovation and growth with a long-term perspective as what both attracted him to the opportunity and sets Chase apart.
On what Merchant Services brings to the payments party
(Hint … assets out the wazoo)
Mike talked about four pillars of the Merchant Services asset portfolio that he believes will fuel Merchant Services’ overall success in the market. Mike’s view is that it isn’t one thing but the sum total of these assets that gives Merchant Services a unique opportunity to deliver a richer and more relevant consumer engagement model that will, of course, be very attractive to merchants. Those assets include:
- A “strong, rich history of capable acquiring and payment processing in Paymentech” which processes 30 billion transactions a year, $650 billion in card volume and drives 50 percent of all online transactions.
- The Chase Offers platform, which Mike says has been further enhanced with its December 2012 Bloomspot acquisition. But the secret sauce of Chase Offers, he believes, is some of the “largest and highest-quality data assets in industry,” which he says will result in the delivery of more targeted, more relevant and better offers for consumers – more on that later.
- The Chase consumer card portfolio, which is massive – some 50 million-plus consumer accounts, and the data assets that go along with that massive transacting customer base.
- The Visa partnership that enables worldwide acceptance, of course, but that Mike also says allows Chase to start to change the dialogue that Chase has with some of its largest existing merchant clients, and with prospects that are looking for a unique value proposition that goes well beyond payment transacting.
On working with Merchant Services stakeholders
(Hint … give them unique value that others can’t)
Mike gets that payments is about issuers and merchants and creating value. On the issuing side, he talked about working with the Chase issuing team, among others, but really zeroed in on what I perceived to be the primary focus (at least to start), which is to “deliver unique value propositions and unique solutions that only Chase can deliver to the merchant community.” Mike seems firmly committed to strengthening the relationships between consumers and merchants, by making it easier for merchants to use Merchant Services data and platform assets to eliminate the friction between merchants and consumers at the point of sale.
On when we’ll see stuff in the market
(Hint … when it’s time :) )
Admittedly, a bit of an unfair question given that he’s only been on the job for a little more than a week, but Mike says he’s committed to having the platform set up and ready for launch by Q4. [But, we will be sure to keep you posted as we learn more!]
On making merchants successful
(Hint … deliver more customers and more sales)
Mike and Chase both have always believed that the voice of the merchant community not only matters, but should have a prominent “role and an influence in innovation” in the industry. He also said something quite interesting – and that is that the future of innovation in payments won’t be defined by players like CMS pushing new stuff to merchants, but rather by a “pull strategy” where solutions are actually defined by merchants – and merchants of all sizes. Mike emphasized that last point several times, acknowledging that the big guys sort of get what they want anyway, but it’s the smaller guys who can (and do) get lost in the shuffle. Mike’s view, and I sense a very strong focus of CMS, will be to work with merchants large and small to define their long-term success. That success? Driving more consumers into their physical or digital storefronts so that they can make more sales, which gets back to having not only data assets, but a platform capable of serving those data assets in real time so that those deep relationships and simple yet powerful interactions can actually be realized.
On what CMS means to the payments industry
(Hint…it’s the right thing at the right time)
Mike views CMS as “evolutionary” – an appropriate next step in the industry that will be comprised of be a little groundbreaking stuff, a little disruptive stuff, and a little business as usual – all rolled into one.
On that last point, I initially thought that Mike was being understated and maybe even a little too modest in his characterization of CMS. But the more I thought about it the more I believe he actually nailed it.
CMS was the appropriate next step for the industry – in a post-Durbin world, it was only natural that more three-party models pop up (that are exempt from Durbin fee caps). But that is certainly easier said than done, not all players have the assets to action such a strategy, and those that may, may not have the execution expertise to action such a strategy. As I said in the piece that I wrote about CMS when the news broke, this is a move that has been rumored for years, and has probably been on the drawing boards for at least three times as long.
But, as the strategy unfolds, I think that it will be more groundbreaking and disruptive than business as usual.
Groundbreaking because CMS does have the assets (plus one Mike didn’t mention: lots of money to invest) to create a very powerful three-party system that also enters the market with a running head start – tens of millions of happy customers, data assets that can deliver lots of new incentives for merchants to sign on, and a senior leadership team that is focused on execution (and has pulled a lot of important stuff off already).
Disruptive because if it does the former, it will really reshape the ecosystem. It could introduce lots of instability to the existing schemes that also have their eyes on ways to deliver new value at the physical point of sale. It could create lots of instability on the part of other large Visa issuers who might be curious to see how Visa itself evolves since, at least at the leadership level, they seem to be channeling their inner-Chase a lot these days. It could create lots of instability on the part of the other networks too, who now see a very formidable player seemingly focused on their sweet spot – and unlike many other challengers, one that could actually take share.
We’ll know a lot more once we see CMS enter the market and evidence of its evolutionary/groundbreaking/disruptive/business as usual strategy takes hold. I really appreciated that Mike took the time on the day the news broke to speak with me. I wish him nothing but the best in his new role, and look forward to speaking again as the CMS strategy unfolds.