Most payments executives found themselves pulled to the center of a perfect storm this year, and Pamela Joseph, U.S. Bancorp's vice chairman of payment services, has weathered it remarkably well.
"She's impressed me as much as ever, if not more," said Richard Davis, the Minneapolis company's chairman and chief executive. "Pam has continued to power through on developing innovation and next-generation products in the space, even when a lot of others would have just battened down and waited for the weather to pass."
Payments has been hit particularly hard at most institutions this year, due to mounting losses on credit cards and lowered consumer and corporate spending - and the headwinds from a new law that is already restricting card issuers' profitability. Joseph was on the front lines of the industry's efforts to shape that law: she was the only woman representing the credit card industry when President Obama met with executives at the White House in April, a month before he signed the bill.
"I'm not sure we were able to change anything dramatically, but at least you could walk away and feel like we had our shot," she said. The president "had a very clear understanding of the industry, and the pluses and the minuses to what he was about to do."
The payments storm could have been particularly damaging to U.S. Bank, which depends on Joseph's division for over a quarter of its annual net income. The unit was not immune to the economic downturn - second quarter net profit fell over 60 percent from the year-earlier period, to $179 million, and revenue was flat at $991.4 million. But it still outperformed other major issuers. (U.S. Bank's credit card losses, for example, rose to 7.36 percent but are still well below the chargeoff rates at its largest competitors.)
Joseph has bulked up collections resources to handle these increased card losses, but, like Davis, she is more focused on new opportunities and innovation. "We have signed a lot of bank partners and credit unions who've wanted to either sell an asset - meaning their card portfolio - or to move to an external processor to save expenses," says Joseph. "So we've seen some real benefit because of the downturn." This year alone, her division has unveiled Syncada LLC, a business-to-business payments network joint venture with Visa Inc.; bought credit card portfolios from companies including Citigroup Inc. and Town North Bank; and launched a new "FlexPerks" credit card rewards program to replace the loss of a lucrative co-brand partnership with Northwest Airlines Inc. Joseph says U.S. Bank has "exceeded" the expected customer retention rate as it converted the cards to FlexPerks.
Joseph also responded to a broad pullback in corporate travel-and-entertainment spending by launching an initiative to get more business from government agencies that received stimulus money. That program has increased U.S. Bank's penetration of the federal government, which has become "a big piece" of the corporate payments business, she says.
This strategy has won her boss' respect, and his wallet. "Pam always has my first dollar," Davis says, who adds that Joseph has the "ability to understand the marginal and absolute value of a transaction."
"As a CEO, of all the people who will come to me with an opportunity," he says, "no one has a higher level of walk-in-the-door trust with me than Pam does."