It has high ideals and a low profile.
In October 2000, Peter Burns started his tenure as the director of a new think tank, focusing on payment cards, within the Philadelphia Federal Reserve Bank. He had a borrowed room, a borrowed computer, even a borrowed phone.
Though the accoutrements have changed, enough to support a full-time staff of six, the Payment Cards Center is a well-kept secret, but one worth knowing and sharing.
Unlike programs that compile studies funded directly or indirectly by sponsors with a decidedly vested interest, the Philadelphia Fed's card center gathers and disseminates information objectively.
"We are not part of the regulatory and supervisory part of the bank. We do not write or enforce regulation," Mr. Burns said. "We don't see our role as one of advocacy. We don't take positions on matters of policy in respect to the regulatory environment or industry issues."
Instead, the center strives to be "an honest information broker and source of knowledge in the payment cards and retail payments area," he said.
Paul Jamieson, the president of FiSite Research of Lakewood, Colo., said he had never heard of the Payment Cards Center, even though he frequently visits Federal Reserve Web sites for research. "The government puts a great service together with a great deal of value for the banking community," he said, "but their lack of promotion of it means that nobody is aware of the extraordinary resource that is out there."
Its low profile and seemingly narrow focus are not an accident.
"This is a relatively new initiative, and we have consciously shied away from broad based 'marketing,' " Mr. Burns said. "We view the center as having a national scope, but, logically, [we] have more regular contact with the many firms in the industry located in our area."
The center has numerous conferences under its belt and pumps out a research paper or two every month. Though the orientation leans to the academic - there is a visiting scholars program, and Mr. Burns was the managing director at the University of Pennsylvania's Wharton Financial Institutions Center for four years - there are other constituencies in mind.
"We are striving to create a program agenda that is not only meaningful to policymakers within the Federal Reserve but also speaks to the interests and addresses the market realities faced by the industry, the consumers who use payment cards, as well as the academic research community's more theoretical interests," Mr. Burns said. Most of the center's output is available on its Web site, at www.phil.frb.org/pcc/.
A main reason the Payment Cards Center was established at the Philadelphia Fed, Mr. Burns said, is that the district contains a concentration of companies in the industry. "We have reached out to many of these firms personally for guidance as we develop the center's agenda of activities," he said.
Some of its workshops - with topics such as credit bureau records and the securitization market for credit cards - are aimed at educating Federal Reserve bank professionals about industry trends. Some of its treatises address modern, practical matters in the industry, such as trends in arbitration clauses; others are of historical interest.
Mark J. Furletti, an industry specialist, recently detailed how credit card prices, particularly through the annual percentage rate, have declined over the past 10 years because of increased competition, consumer awareness, and risk-based pricing. With consumers aware of the rate drop, , he wrote, card loyalty plummeted, so there is now a wider range of prices as the card companies shift on the fly.
"Instead of one price for all you have a customized price for each," Mr. Furletti said. "So no one person will be charged the same price for the product, because it's based on both usage behavior and risk profile."
Issuers, therefore, have been hard pressed to disclose precisely the pricing of a card to consumers - "to take a generic disclosure framework and put this customized structure into it," he said. "The card issuers are obeying the regulations and doing what they're supposed to. I think they're innovating at a pretty fast rate."
