Associate Publisher

As I looked over the card industry's healthy numbers for 2004 and the industry's prospects for 2005 early in January, I couldn't help but think about Dee Hock. As most of you know, Hock is probably the single most influential person in the history of the card business. In 1970 he founded what became the Visa payment network out of the primordial chaos of Bank of America's BankAmericard system.

It's always fun when contrarians question the conventional wisdom, even if their cause seems lost. Take checks. They're the dinosaurs of the payment industry, right? That's been the conventional wisdom since the 1970s.

We're about to close out one year and start another, and for the most part, things are looking pretty good for the card industry.

I have to give my colleague Frederick Lowe, editor of Thomson Media's CardLine daily news service, credit for some snappy headlines. On Oct. 6, when CardLine reported that Lloyd Constantine was Discover's attorney in the card issuer's new lawsuit against Visa and MasterCard, the headline for the item said, "Discover Lawyer Constantine Says to Visa and MasterCard, "'Haven't We Met?'"

The golden days of autumn are upon us, a time of basking in comfortable days and cool nights before the cold sets in. Also upon us are the 2004 elections, which, depending on your point of view, could produce a four-year-long summer for the card industry if business-friendly President Bush is re-elected, or a winter of freezes on issuers' freedoms if the Democratic challenger, U.S. Sen. John Kerry, sends Bush packing.

America has a love/hate relationship with the credit card industry. On the one hand, statistics would indicate Americans love credit cards. After all, they charged $1.5 trillion on them last year, up three-fold from a decade earlier. There are 650 million general-purpose cards in circulation that can be used everywhere from McDonald's to supermarkets to the fanciest hotel.

It was just about dinnertime on a fine early-July evening when I opened the front door to check the mailbox. Pretty much a routine haul-a bill, some third-class marketing pitches for this or that, and credit card solicitations.

It's been said that at the right price, everything's for sale. Maybe it's just me, but lately it seems like prices must be right because there's been a rush of selling.

It's always dangerous making predictions, especially regarding something so fluid as the payments business. About the only thing one can say with certainty is the obvious-that cards and other electronic payment forms will continue to capture more share from cash and paper checks.

Take out all the turmoil surrounding the card industry lately, focus only on the numbers, and things look pretty good.

As 2004's winter turned into spring, outsourcing to foreign countries had become America's latest bogeyman. John Kerry, the presumptive Democratic presidential nominee, compared companies that move American jobs overseas to

There's just too much change in life. Take banking. Get used to one bank, itself the product of various mergers and acquisitions, and it merges again-witness the pending union of Bank One Corp. and J.P. Morgan Chase & Co. Millions of consumers will be customers of this new company because they were customers of predecessors such as the original Banc One, Chemical Bank, Chase Manhattan, NBD, and First Chicago-all of whom had consumed many local or regional banks themselves. No doubt some customers will feel trepidation about the future of their local branch or whether their paycheck still will be deposited electronically into the right account.

Antitrust actions, interchange wars, media criticism for allegedly helping consumers take on supersized debts, and a host of other woes could make members of the credit and debit card industry pessimistic about the prospects for the month-old year.

Anything Wal-Mart Stores Inc. does naturally attracts a lot of attention. So when the world's largest retailer in early December made an example of MasterCard International by saying it would no longer accept MasterCard's signature-based debit cards, it was big news (See Card Watch, page 6). MasterCard earned the dubious honor of being the first card brand to have its debit cards rejected by a retailer that will continue to accept its credit cards. Visa and MasterCard now allow that under the new rules of the card-acceptance game arising out of the retailer class-action settlements last spring.

Every year has its superlatives, but it will be hard for the card industry to top the events of 2003. Of course, the ultimate news story was the settlement by Visa and MasterCard of the retailers' debit card class-action lawsuit lead by Wal-Mart Stores Inc., just as the trial was about to start. The main details are now quite familiar: Visa and MasterCard will drop their "honor-all-cards" rules that forced merchants to accept signature-based debit cards; they lowered debit card interchange for the last part of 2003, and they'll pay the plaintiffs more than $3 billion.

If the card industry had its own version of the TV show, "Survivor," the retail card would be my pick. Back in June of 1989, this magazine ran on its cover a picture of an anxious-looking purple dinosaur (no, it wasn't Barney) under the headline, "Are Store Cards Headed for Extinction?"

Back in July, with incredible foresight, I predicted that the implications of the $3 billion Visa/MasterCard debit card settlements with retailers "just won't quit." And, thanks to Visa, I've been proven right.

Many things in life ebb and flow. That's true for legislation and regulation, and right now, the card industry is getting a lot of political attention.

I usually do not write about the same topic two months in a row. But let's face it, folks, this debit thing just won't quit. I'm referring, of course, to the spring settlements by Visa and MasterCard of the class-action antitrust lawsuit brought against them by merchants led by Wal-Mart Stores Inc. As information slowly dribbles out about the settlements, which still await final court approval, it's becoming clearer that the traditional way of doing things in the card business will change.

I was sorely disappointed when MasterCard and Visa settled just as trial was about to start in the retailers' mega-class-action lawsuit against them over debit cards. The curtain hiding the inner workings of the card associations, and to a certain degree their bank members, was about to be pulled back. Ranking executives, not used to being second-guessed, would be squirming in the witness chair. Secrets would have been exposed. Oh, the fun!