Move over, MasterCard and Visa. First Data Corp. is taking a seat at your table.
That was the message First Data, the No. 1 company in credit card processing, hammered home last week, at great expense and in no uncertain terms, during the American Bankers Association's bank card conference in Chicago.
In a promotional blitz that became the talk of the show, surpassing anything seen in the trade since MasterCard and Visa stopped trying to outdo each other in dueling receptions for conference attendees, First Data muscled its way into the industry's consciousness.
The company just may have confirmed for itself, if not quite for all of the 1,600 people in attendance, that it has achieved in considerable measure the leadership status it was aiming for.
If nothing else, this most aggressive of for-profit payment service providers bought a seat at that exclusive table heretofore reserved for the two bank-owned associations.
On one level, it was a tour de force of salesmanship and showmanship, backed by an expenditure that by many observers' estimates reached high into six figures.
There was also a crucial strategic objective, said Wayne Johnson, a First Data executive vice president and architect of the weeklong campaign for recognition and respect.
"When we look at our commitment to this industry, there are three associations we are committed to - Visa, MasterCard, and the ABA," Mr. Johnson said. "This is a way we can demonstrate that commitment."
On top of that, as Mr. Johnson would tell anyone who inquired at First Data's glitzy display in the exhibit hall, "We're having a lot of fun."
Here is some of what First Data got for its money, and the benefits that filtered out to customers and others, including the ABA, which probably had its greatest financial success in 23 years of card conferences:
* Sponsorship. Judging by the placement of 18 sponsoring corporations' logos on the wall of the Chicago Hilton's International Ballroom, First Data
bought parity with MasterCard and Visa.
These three occupied the top rang of a pyramid-shaped array that had companies like Equifax and Fair Isaac on the second tier, and First Data's credit card outsourcing rival Total System Services on the fourth and lowest.
* A speech and a plug. First Data was responsible for procuring the services of John Naisbitt, author of "Megatrends" and the more recent "Global Paradox," as keynote speaker last Monday. He lists in the lecture-circuit catalogue for $25,000.
The speech was a success; Mr. Nasbitt's parsing of technological changes and their impact on business and politics held his audience in rapt attention.
When he was discussing corporate structures and the need to keep business units small to be effective, he said, "First Data is moving in this direction."
* Prime location. First Data's exhibit space was one of the largest, and perhaps the best situated, in a basement hall that many exhibitors complained was poorly arranged and uninviting to browsers.
Exhibitors benefited by being close to one of the three centers of gravity -- MasterCard, Visa, and First Data - and Total System was "lucky" enoug h to be next to First Data.
While First Data had plenty of product information and people to dispense it, the center of attention was a little television studio, where the company held its own conference within the conference.
Practitioners and pundits were paraded in (including this. reporter) for interviews and panel discussions on industry issues, paced by professional moderators, including former White House chief of staff and CNN commentator John Sununu. First Data taped the sessions for training and promotional uses.
* People everywhere. Of the 8,100 employees in First Data's Card Services Group - the $1.5 billion company has 20,5000 all told, including those in processing and information-service areas outside the card area -- about 140 were in Chicago.
That amounted to almost 10% of the conference total, and there was one First Data person for about every four financial institution attendees.
Much of the contingent flew in from First Data's operating hub in Omaha. They were led by Walter Hoff, executive vice president, and his two high-profile hires of the past year, Roger Peirce and Jerry Craft, formerly of Visa and Wachovia Corp., respectively.
First Data had almost as many people in Chicago as MasterCard and Visa combined. MasterCard's traveling staff was around 100 and Visa's around 55, both led by their chief executive officers.
* Entertainment. The Rolling Stones' Voodoo Lounge tour just happened to stop at Chicago's Soldier Field the opening night of the conference, Sunday, Sept. 11. First Data treated 100 of its friends to the concert.
The following night, it held a big party with a Roaring '20s theme at a local establishment called the Excalibur.
First Data customers who preferred a more intimate setting might have been lucky enough to be invited to a breakfast.
On Monday they could have hobnobbed with the guest speaker, Mr. Naisbitt, and on Tuesday with Charles Russell, the former Visa chief executive who is now a First Data director.
Reactions to First Data's onslaught were generally positive, if wide-eyed.
"It's very interesting. It shows they are having quite an impact on our industry," said Eileen Friars, president of card services at NationsBank Corp. She is a member of the ABA's bank card executive committee and conference planning committee, and her bank uses Total System.
"You have to remember that, unlike MasterCard and Visa, [First Data doesn't] have an annual meeting where all its customers come together," said Keith D. Coughey, the conference planning chairman and group vice president of PNC National Bank in Delaware, a First Data software user.
"It may be more useful and cost effective for them to meet all their customers here," Mr. Coughey said. "Many of them come from small banks and wouldn't be expected to travel to too many other places."
First Data's card services and related units, in their rapid growth and diversification over just the last year, need the contact with customers and with association "peers," Mr. Johnson said.
Many employees have been added, some new to the card and payments businesses, and traveling to the ABA meeting "got them firsthand experience," Mr. Johnson added.
"We have been repositioning ourselves not just as a service provider to, but a partner and a leader of, this part of the industry," Mr. Johnson said. "We have been doing the things that leaders are expected to do."
"What you see here is a company paying attention to a core business, and this is one of the most important events in all of banking," Charles Russell said.
"I think that if you talk to the associations, particularly Peter Dimsey [U.S. president] and Bill Brennan [head of member relations] at MasterCard, you'll find they like our new positioning," Mr. Johnson said.
Mr. Johnson's failure to mention Visa in that context was no oversight. Visa officials, most outspokenly Visa U.S.A. president Carl Pascarella, have questioned First Data's motives.
Mr. Pascarella says he is concerned that First Data, or if not First Data someone else, will use its growing power in both cardissuing and merchant servicing to create a "closed loop" for transactions that bypasses card association rules and risk controls.
Despite Mr. Russell's ties to both Visa and First Data, and attempts by Mr. Hoff to lay out his business plan and mollify the suspicions, Mr. Pascarella still gives the impression that he is not ready to admit First Data into the highest councils of the industry club.
Though not commenting directly on First Data's moves last week to capture the industry's hearts and minds, he said he still has a wait-and-see attitude.
The ABA conference gossip mill was buzzing about the fact that Mr. Pascarella and Visa International chief executive Edmund Jensen were seen at a Total System shipboard reception last Monday evening, and not at First Data's Excalibur party.
Philip Tomlins0n, president of Columbus, Ga.-based Total System, kept a respectful distance from the fray.
He spoke understandingly about what his processing rival was trying to do.
"Now that it is independent [from longtime owner American Express Co.], First Data is flexing its muscles," Mr. Tomlinson said.
Even as First Data raises its strategic sights, Total System is still seen as the main competition for banks' credit card servicing.
Total, a subsidiary of Synovus Financial Corp., handles about 40 million card accounts for 114 issuers, and has 350,000 merchant accounts; First Data's Card Services Group has 75 million accounts, 700 financial institution customers, and 1.3 million merchants.
"We keep each other honest," Mr. Tomlinson said. "Having two strong competitors benefits the industry.
"I have great respect for them, but I think we are more focused. This is our niche, this is what we do... We've always been a conservative company, and we'll never be very flashy."
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