HQ location: Atlanta
Number of employees: 24,500
Jonathan Judge, CEO
Despite First Data's size and diversity — it handles payments for six million merchant locations and several thousand credit card issuers, its STAR network runs 20% of PIN debit transactions, it provides payroll processing and check verification; it's the largest merchant acquirer in the U.S. and a distributor of merchant terminals — First Data moved nimbly into mobile payments this year, teaming up with Google, Citigroup and MasterCard to create Google Wallet. In fact, First Data's participation could well be the secret sauce that catapults Google's mobile payment offer ahead of competing models from the telecom consortium Isis, PayPal and others.
What First Data brings to the Google Wallet team is access to a well-established back office that processes high volumes of credit and debit transactions in the U.S. The company is used to storing card account data and provisioning cards to cardholders, so its new role in processing mobile payment transactions and provisioning cardholder credentials, account data and transaction data for Google Wallet is not a stretch. "All the payment action is the same as it was before mobile," Chief Executive Jonathan Judge says. "The difference is, you're not going to take out a credit card and give it to somebody, you just tap your phone and you're done. What happens from that point forward, we take care of just as we've always done."
Another opportunity First Data seized this year was created by the Durbin amendment to the Dodd-Frank bill, which limits the fees banks can charge merchants on debit card transactions. Under Durbin rules issued by the Fed in June, each card issuer must participate in two unaffiliated debit networks by April 2012. As of Oct. 1, merchants can control the routing of debit card transactions to the lowest-cost network. First Data has prepared for these changes in two ways: it has increased the capacity of its STAR network to take on higher volumes (as banks are forced to expand beyond their exclusive relationships with debit networks), and it has developed routing capability that lets merchants choose the cheapest transaction path. "When Durbin was announced, it was pretty clear to us that when the dust settled, all banks would be required to have a second network where prioritized routing would be important," Judge says.
Judge also sees opportunity in prepaid cards. "[Prepaid]'s now evolved into paperless payroll. A lot of companies are interested in trying to get out of the paper part of the payroll business." And merchants, Judge says, are using analytic tools First Data rolled out this year that help them understand the sales for each store, spot weaknesses and use a prepaid card mailing to drive consumers to the store.
