The American Bankers Association's 25th annual bank card conference in Orlando last week coincided with the 25th anniversary of the Oct. 1, 1971 opening of Walt Disney World.

Many of the nearly 2,500 people at the conference made the pilgrimage to the Magic Kingdom for celebrity sightings or just to check out Cinderella's castle repainted as a birthday cake.

But business was serious back at the meeting site, where at least one person - the retired Banc One Corp. executive John Fisher, there to receive a lifetime achievement award (see facing page) - recalled that Dec. 1 will be the 30th anniversary of the first credit card interchange transaction between two banks.

MasterCard International, formed for that purpose in 1966, when it was known as Interbank Card Association, made a not-so-subtle point of it by arranging for the Dolphin Hotel room keys - plastic cards, of course - to carry the MasterCard logo with the words "Celebrate MasterCard 30."

On the reverse side was a plug for MasterCard's booth in the exhibit hall.


Visa U.S.A. didn't exactly suffer from MasterCard's commemoration. Anyone visiting MasterCard's location couldn't miss Visa's. Most of the big-name exhibitors - including First Data Corp., Total System Services Inc., Hypercom Inc., and Verifone Inc. - were clustered together.

Visa, usually as glitzy as anyone with its booth, "scaled back," in the words of several officials. There were no autograph-signing Olympics stars, a recent Visa trade-show trademark. The company deems other shows, notably the Bank Administration Institute's retail delivery conference in December, as more worthy.

A few dozen unlucky vendors with smaller displays were relegated to a remote tent. Getting there was a hike, which the ABA tried to make worthwhile by placing an "emerging technology" pavilion at the far end, with Internet-surfing terminals and demonstrations by Concept Five Technologies of Burlington, Mass.

But the tent may be better remembered for the flood it suffered after one too many of Florida's patented cloudbursts.


Card bankers who could remember the 1970s, or even just the 1980s, marveled at their industry's progress - and at the much-remarked fact that a vice chairman of American Express Co., Kenneth Chenault, was among the speakers, while chief executive officers from MasterCard and Visa were not.

"Times change," as Mr. Chenault said in an American Banker interview last week.

Some tangible signs: the banners of 10 corporate sponsors that were hung on the ballroom walls, five on each side. Visa's and MasterCard's headed each row, showing they still throw around enough bucks for top billing.

Next to Visa, front to back, were First Data, which has unabashedly sought promotional parity with the bank-owned associations; Electronic Data Systems, Total System Services, and Hypercom.

Behind MasterCard were the independent merchant processing agent Cardservice International, the Banc One software venture Triumph, Verifone, and TRW Information Services.


A. Douglas Adamson, the ABA's executive director of bank programs and professional development, asked members of a panel he was moderating to propose a card conference agenda for 2001.

"What we call payment systems will be much more information systems - the transfer of information that has value, for which fees will be paid," said Richard P. Yanak, an elder statesman of automated teller machines. He administered the first shared ATM, in Washington State, 22 years ago, and retired Monday as chief executive officer of NYCE Corp.

In the same vein, Walter Hoff, head of First Data Corp.'s card services group, said, "The electronic payments industry will merge very much with the marketing industry."

Randall Chesler, a Visa senior vice president, said, "I hope American Express is not on the agenda." He then launched into a sarcastic rejoinder to Mr. Chenault's sales pitch to bankers:

"The banks are everywhere American Express wants to be," Mr. Chesler said. "The banks have made their choice to vigorously compete with American Express."

Jody Hancock, a MasterCard senior vice president, took off from Mr. Chenault's use of a metaphor involving the X's spray-painted on trees to be chopped down in his community.

Visa-MasterCard membership restrictions should have a "big red X," Mr. Chenault said.

"Mr. Chenault's dead trees are not MasterCard trees, they are American Express trees," Ms. Hancock said. "Let American Express focus on its own products and healing its own trees, rather than the trees of the banks."


On-line debit cards are ripe for high-tech crime, warned Douglas D. Anderson, chairman of Card Alert Services in Arlington, Va.

Criminals are moving from low-tech methods, such as "shoulder surfing" for personal identification numbers, to skimming the data on cards' magnetic stripes.

Mr. Anderson said the likelihood of compromise "goes up exponentially," threatening "losses into millions of dollars."

He suggested bankers strengthen internal controls, manage PINs better, and monitor cardholder activity.

Smart cards or biometric identification techniques like fingerprints are promising but not yet feasible. "We're not going to spend $1 billion to fix a $100 million problem," Mr. Anderson said.

An audience member made a low-tech proposal: "Why not ask customers to routinely change their PINs?"


There was some debate about smart cards. Mr. Hoff of First Data said "telecommunications are just too cheap" for chip-based cards to fly soon in the United States. Hatim Tyabji, chief executive officer of Verifone, reiterated his faith in the technology, saying all global indicators are favorable and will spill over to the more resistant U.S. market.

Smart cards, Mr. Tyabji said, hold the key to automating - and earning revenue from - the 80% of transactions now done in cash. In other words, stored value services can be fee generators, while cash is mostly a cost center.

Richard J. Schroth, a Maryland-based consultant who gave the keynote speech courtesy of First Data's sponsorship, said he advises corporate chief executives that "private scrip" is on the way. Companies would attach their brand names to cards that represent value to them and their customers. It could be a throwback to the private bank notes of the last century.

"You could get a discount on scrip, which you can't do with real money," said Mr. Schroth, wondering if banks will play a role in private scrip or leave it to competitors.


An indication that the merchant processing business is thriving: Well- attended sessions that, conference veterans remember, used to be "saved for the end of the last day," said Gregory Brintlinger, national sales manager of SPS Payment Systems in Chicago.

The experts were consistently aggressive and upbeat.

*Fred O. Gumbel, president and chief executive officer of Vital Processing, the company set up by Visa and Total System Services to keep banks in control of merchant-side transactions, vowed to stay "focused one- to-one" on its customers. He chided the industry leader, First Data Corp., for "competing against the banks."

*Richard N. Speer, chairman and chief executive officer of Speer & Associates in Atlanta, said, "By 2000, First Data Corp. will have a market cap of $30 billion, which very few banks can approach."

He added, "Merchants would like to do more business with the banks but don't believe banks will deliver on services."

*Walter Hoff, the First Data executive vice president, was unapologetic for the Hackensack, N.J., company's recent spate of acquisitions, including First Financial Management Corp. He said they yielded impressive synergies, allowing First Data to build the scale that is crucial to lowering costs.

"We want to beef up in size so we can be small," he said, meaning close to customers - including the growing number of banks with which First Data cooperatively provides merchant processing services.

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