Bankers who set out last weekend for the national bank card conference in New York may have felt as if they made a wrong turn onto the information superhighway.
By Wednesday noon, when the presidents of the U.S. MasterCard and Visa organizations had finished their conference-closing speeches, those who made the trek realized they were only following signs strategically placed by the American Bankers Association and its planning committee.
Though credit cards for years have been the banking industry's biggest and most consistent source of profits, and despite the ever-greater attention being paid to debit cards, the ABA was no longer content to put on just a card conference.
It might better have been dubbed the "electronic payments of the future" conference.
Keith D. Coughey, group vice president of PNC National Bank in Delaware and chairman of the ABA's bank card executive committee, said the old credit card-oriented format so needed revamping that he at one point halted the planning effort and sent everyone back to the drawing board.
In the interest of this "revolution," Mr. Coughey and ABA officials extended the deadline for completing the conference agenda and took the unprecedented step of hiring an outsider - James Shanahan of the Business Dynamics consulting firm in Nyack, N.Y. - to assist in the overhaul.
Mr. Coughey said he had heard no complaints about the conference losing its plastic grounding in favor of the "electronic commerce" phenomena that might turn out to be shorter-lived.
"The payment systems have gotten so intertwined," he said, suggesting it is becoming harder to tell where plastic cards leave off and some form of digital money picks up. "We had to move more in the direction of Internet commerce."
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The program was so thoroughly spiced up with topics related to information technology and on-line commerce that the aura at times was more that of a leading-edge computer show like Comdex or PC Expo.
Problem was, many of the attendees were getting their first taste of "Electronic Commerce: Positioning for Tomorrow," as the conference was titled.
Or maybe this wasn't a problem at all. Many of the 2,300 people in attendance - a larger than expected crowd - seemed unperturbed by the fact that sessions on credit card acquisition, cobranding, risk management, and "traditional acquirer issues" were relegated to small, mid-afternoon discussion groups.
A couple of hundred people arrived early on Sunday for the "Internet primer" taught by Rosalind Resnick, whose Florida-based company, NetCreations, helps companies build and promote businesses on the World Wide Web.
After the two-hour course, the class moved into the "Internet Demonstration Room" where the ABA, Mitre Corp., and several other technology suppliers had assembled computer workstations to show what a little surfing can do.
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Ms. Resnick, co-author of the book "Internet Business Guide," was a cautious evangelist, which may have helped her credibility while allowing the audience to work through some healthy skepticism.
"The Internet is revolutionary, but it won't solve your business problems," she said. "It won't automatically cut costs or cause customers to come knocking down your doors."
She urged the card industry people to get account numbers for Internet access and start using it, simply for the sake of experience and understanding "what it is and isn't, what it can and can't do. Begin to use it for what it is - a tool."
Later, in a panel discussion on technology, David Black, chief technology officer of the card software firm CCS Technology Group, predicted "the Internet will be used to connect the vast majority of computer users (with other people and data bases) outside their organizations. What is an opportunity now will in a few years be a necessity...I suggest you learn to use it."
But the panel moderator, William Gregor of Gemini Consulting, added, "There's still one tiny little detail: it's about how you make money."
Mr. Gregor, among others, pointed out that little, if any, money has been made in Internet commerce. Ms. Resnick cited one projection of $118 million in product and service sales over the net for 1995, though many experts expect this will rise into the billions within a few years.
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Carl Pascarella and Alan Heuer, the chief executive officers of Visa U.S.A. and MasterCard's U.S. region, respectively, more surely personified the issues raised by the revamped card conference.
In conversations before their talks on Wednesday, both noted the creative tensions they must manage between core business concerns and pressures to deal with futuristic concerns like smart cards and Internet payments.
Credit cards still account for the vast majority of MasterCard and Visa activity and resulting member profits. Association performance measures and compensation schemes are based on payment volumes and brand power more than research and development - despite the importance of, and serious money thrown at, the latter.
"While it's very important to develop the role of payment systems in the electronic commerce area," said Mr. Pascarella, it's just as important "that we have our core people continuing to focus on the core business.
"If we don't do that we might find we've left the gate too soon and some new players could come in and steal the business."
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In his speech to a well-attended final general session, Mr. Pascarella said "the good old days of traditional competition are over. The era of strategic alliances and partnerships has arrived."
What's at stake, he said, is the electronic delivery of financial services, information, entertainment, news, education, and shopping.
Visa's snappy video following Mr. Pascarella's speech, implied that affluent consumers would be the primary beneficiaries of the emerging technology. The video featured a man driving a Porsche who paid a police officer for a speeding ticket with a credit card, while a young affluent couple chatted with friends, withdrew funds from the bank, and made dinner reservations in their living room using a smart card to access an interactive television.
During an interview, Mr. Heuer said despite the upscale image portrayed in the video, he does not see the new technology excluding a core segment of card users. Instead, he said devices like interactive televisions provide consumers with more options. "They are add-ons that enhance the core card," he said. In his address, Mr. Heuer stressed the importance of issues that are enduring and MasterCard's "strong heritage of partnership with members.
"We live in a world where life often seems to be on fast-forward," he said. "Still some things do endure."
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If the MasterCard and Visa CEOs had gotten with the program, then what about the rest of the crowd?
Anne Habza, vice president in charge of the credit card business at National Bank of Alaska in Anchorage, said the conference agenda was "too futuristic. "I think it would have been better if there had been more sessions concentrating on the core business," she said, speaking for smaller banks. "None of us are planning to start surfing the Internet any time soon."
In the exhibit hall, electronic commerce in various forms was a popular attraction. Both MasterCard and Visa issued hundreds of smart cards that people could use as tickets to numerous interactive displays and demonstrations that had little to do with traditional credit.
Verifone Inc., which no longer wants to be known as a point of sale equipment vendor because "transaction automation" better describes its business line, used the conference to outline its aggressive electronic commerce strategy, in alliance with Cybercash Inc., Oracle Corp., and others.
Visa's big news announcement of the show was a screen-telephone banking program with Bank One Texas.
Cardservice International of Agoura Hills, Calif., an independent service organization for processing retailers' credit card receipts, announced an Internet initiative. It became a value-added reseller of Netscape Communications Corp.'s IStore software, which merchants can use to put virtual storefronts on the World Wide Web, with Cardservice doing the transaction processing.
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Vendors at banking conferences always grumble, whether about their exhibit locations or customer traffic, and the 140 here were no exception. Some groused that the ratio of bank employees (their market) to others (vendors, staff, consultants, news media, etc.) was 1 to 8 or 1 to 9; some complained about the fact that exhibits were spread across three levels of the New York Hilton Hotel, rather than on one sprawling floor of a more typical convention hall.
And a few - who tended to represent companies that support core aspects of the credit card business - criticized the ABA's embrace of, and emphasis on, the new.
They asked not to be quoted in this article by name. One said, "I think they (the ABA) went too far. They have gotten more competition and suffered from lower attendance the last couple of years, but you can lose focus, and I think that's what they've done."
"I don't think they went too far," countered John C. Cahill, senior vice president in First Data Corp.'s card services group. The big processor - and Mr. Cahill himself - have been big boosters of the ABA card conference and strong supporters of the new thrust.
"The conference needed that bigger dose of electronic commerce," Mr. Cahill said. "A lot of people don't seem to realize how fast the change is coming. The problem the ABA had this year was it was a little late in doing the promotions."
Lisa Fickenscher, Mickey Meece and Beth Piskora contributed to this report
