WASHINGTON - In a departure from his usual Web-happy message, Carl Pascarella, president and chief executive officer of Visa U.S.A., has taken a new tone when talking about the Internet, last week telling a credit card conference that the "mad-dash days are over."
In what was billed as a "back-to-basics" speech Friday during Thomson Financial Media's 13th annual Credit Card Forum, Mr. Pascarella said the Internet frenzy has faded for credit card issuers, which now face the even bigger challenge of maintaining profits through a recession.
Gone is the time when "every company rushed to get online for fear of being left behind," he said. "Now the migration online is more consumer-focused, more careful, and more controlled. Companies are looking at their Internet strategy the way they look at any other investment - with their ROI in mind."
While Mr. Pascarella stopped short of saying that Visa was scaling back its e-commerce efforts, his remarks - combined with the nebulous status of the e-Visa online division - might signal some retrenchment. The most recent head of that two-year-old unit, Bond R. Isaacson, resigned last month to join Bank of America Corp. and has talked publicly about e-Visa's ongoing effort to find voice and direction.
After the presentation, Kenneth A. Posner, an analyst from Morgan Stanley Dean Witter & Co., dribbled a little cold water - verbally - on Mr. Pascarella, who left the room quickly without taking questions. Mr. Posner faulted Mr. Pascarella not for his Internet message, but for failing to address a topic that was on the minds of many in the audience: the Justice Department's antitrust lawsuit, yet to be resolved, against the card associations.
Mr. Posner, whose company owns a Visa rival, Discover Financial Services, criticized Mr. Pascarella for not fielding questions, and said he would have asked the Visa exec what he thinks of banks that might like to issue American Express cards.
In an unsuccessful effort to emphasize his point, Mr. Posner asked the audience for a show of hands of which bankers were willing to admit they would consider issuing Amex cards. Nobody raised a hand, so he hastily moved on to the main part of his presentation, an analysis of economic conditions.
He predicted that bankruptcies will rise 20% this year and 15% to 20% next year, with chargeoffs rising as high as 7.2% by 2002 and unemployment up to 5%. He recommended that card issuers focus on risk management and hire more collections employees, moves that Discover has recently made.
Sharing the podium with Mr. Posner was Moshe Orenbuch, managing director of Credit Suisse First Boston Corp., who said that though a recession was likely, it would be accompanied by falling interest rates, which was "not as bad as one with high interest rates."
In his speech, Mr. Pascarella focused on the "speed bump" encountered by the dot-com economy rather than on signs of an overall downturn. He mixed sobering words with enthusiasm for the concept of "u-commerce," or universal commerce, which his boss, Malcolm Williamson, CEO of Visa International, has been pushing for a while.
Right before he spoke, Mr. Pascarella showed a two-minute Visa-produced video with no words, but many images of consumers making payments on devices that are not yet commonly used for that purpose: Palm Pilots, cell phones, and computer keyboards with chip card readers. In this apparent reference to the payment scene of the near future, smart cards were abundant.
Visa is still working on new technology, he assured the audience, and will focus on developing payment methods that he said consumers were clamoring for, such as being able to pay for goods anywhere, "whether that point happens to be the cloakroom off the Senate floor, or the new panda habitat at the National Zoo."
The optimism was a counterpoint to some of the other presentations at the conference, which drew a paid attendance of 400 - about a third of what it drew at its peak.
David A. Wyss, chief economist with Standard & Poor's and a regular speaker at the Credit Card Forum, said the economy was as close as it could be to a recession without actually being in one. In the past year the economic growth rate has slowed from 5% to 1.5% and will shrink to 0.5% in the second quarter, he said.
Shailesh J. Mehta, chairman and CEO of Providian Financial Corp. of San Francisco, opened the conference with a grim prediction.
"Look at the top 10 [credit card] players in 1986," he said. Seven of them are no longer in the top 10, and "this list will look different in 2005 if they do not adapt."
Though Mr. Mehta was among the speakers who predicted tough times ahead for the economy in general, he also said the credit card business was a growth industry. "How can you conduct e-commerce without any settlement?" he asked. "The settlement system will be with cards."
Only the credit card companies that embrace change will thrive, he said. "You must adapt or perish. You cannot say, 'This is temporary.' You have to deal with it."
There were some bright spots amid the talk of economic gloom. Rosemary Cauchon, executive vice president of partnerships and business card marketing for First USA, said the Bank One Corp. division was raising its marketing budget and would focus on new cobranded cards - including a cobranded debit card.
"Partnership marketing will be far more important" in the coming years but will take nontraditional forms, Ms. Cauchon said. Smart cards will most likely evolve into loyalty cards, and First USA is working on putting together a loyalty partnership of several brands on one card, she said.