Though there was no ostensible theme for the 16th annual Card Forum in Orlando, which ended Friday, many speakers touched on the joys and pitfalls of partnerships.
American Express Co. and Discover Financial Services Inc. were the most visible potential bank partners discussed at the forum, which drew 400 bankers and 350 exhibitors and sponsors. But speakers also instructed card executives on how to form profitable partnerships with retailers, customers, and employees.
David C. House, Amex's group president of global network and prepaid services, and David W. Nelms, Discover's chairman and chief executive officer, opened the conference (sponsored by American Banker parent, Thomson Media) by pitching their networks as alternatives to Visa and MasterCard.
Discover also manned its first-ever exhibit hall booth at the conference, where Discover-themed giveaways and $25 gift cards were handed out. In promotional literature, the Riverwoods, Ill., subsidiary of Morgan Stanley called the Discover-Novus Network an "alternative payment network" that would be more responsive than other networks while offering competitive levels of payment.
Vikram A. Atal, the executive vice president of expansion markets at the Citi cards unit of Citigroup Inc., talked about how Citi coped with per-account acquisition costs that topped $200 by focusing on card-issuing partnerships.
He gave some details of Citi's purchase last year of Sears, Roebuck and Co.'s $29 billion portfolio, which he said made Citi the second-largest issuer of cobranded cards in the United States and Canada.
The secret to the purchase's success was to be willing to share control, Mr. Atal said. "Most partnerships fall apart" because the partners' goals are not in alignment, one partner makes more money than the other, or customers don't see value. "If you can fix all these things, you have a great relationship."
Citi, which has put 300 employees in Chicago to help handle the Sears business, prefers to do fewer, larger partnerships, Mr. Atal said. "We are selective about who we take on. We cannot have 500 partnerships."
Jeff Trachtman, the vice president of card products at Fifth Third Bancorp of Cincinnati, said he had helped boost card marketing by getting branch employees involved in "grass-roots marketing." He said he set a goal of 10 new accounts per branch per month and offered prizes like baseball tickets to those who made the goal. Fifth Third has also set up an intranet site for bank employees that covers card products and benefits, he said.
Sessions on how to start and manage card-based loyalty programs consistently drew overflow crowds. Dozens of attendees stuck around to listen to the conference's last speaker, Fabio Garcia-Passalacqua, a vice president and manager of cards products at Banco Popular.
He discussed the Puerto Rican bank's Premia program, which awards points not only for credit and debit cards but also for opening checking accounts and depositing funds.
The program ran into some problems when customers earned more points than Banco Popular anticipated and gifts ended up costing more than expected. Mr. Garcia-Passalacqua responded by increasing the number of points required for some prizes and by reducing the points earned for some customer actions. It all worked out, he said. "Otherwise, I would not still have my job."
Jeffrey Shinder, a partner at Constantine & Partners PC, the New York law firm that represented Wal-Mart Stores Inc. in last year's merchant class action, said MasterCard International, of Purchase, N.Y., stood to lose bank partners as merchants consider Wal-Mart's decision this year to stop accepting MasterCard's offline debit cards.
"I have no idea" what MasterCard's debit strategy will be, he said.
