Visa U.S.A.'s president and chief executive, Carl F. Pascarella, jolted the global payments industry Thursday by announcing his plan to leave in September 2005.
Mr. Pascarella, 61, has steered the San Francisco company through considerable changes and challenges during his 11-year run, including the soaring popularity of debit cards, huge advancements in processing technology, and the $2 billion settlement of a class action brought by merchants.
"We have never in the history of the organization been any stronger than we are today," Mr. Pascarella said at a press conference Thursday.
Two board members appearing with him echoed that sentiment.
"The association really is in great shape," said John G. Stumpf, who is also Wells Fargo & Co.'s head of cards and group executive vice president.
Mr. Pascarella, who said he is looking into a new career in investment banking or investment management, said he will actively participate in the search for his successor. Visa is looking, both internally and externally, for a candidate with an "understanding of the payment industry."
G. Patrick Phillips, the Visa board chairman who will lead the search committee, said he is "not worried at all … because we think this is going to be a sought-after job."
The new CEO would help the board "revalidate" Visa's priorities, said Mr. Phillips, who is Bank of America Corp.'s president of card services.
Mr. Pascarella said he had been talking to board members for "several months" about his plans not to renew his contract, and he insisted that the announcement's timing was not influenced by the resolution of issues that have dogged Visa in recent months.
"I didn't look retrospectively and say, 'This is behind me' and 'I had to get over this,'" he said. I am very pleased that things are where they are and that we don't have any clouds on the horizon."
Those challenges have centered on Visa's debit card business, which was at the heart of last spring's settlement of the merchant class action known as the Wal-Mart suit. Both Visa and MasterCard International made major policy concessions on debit card acceptance and fees, but Visa's debit volume has continued to rise. It has also gained share in the PIN debit market and has locked up relationships with its biggest issuers.
Last week Visa notched a victory as J.P. Morgan Chase & Co. resigned from MasterCard's board - a sign that Visa had won JPMorgan Chase's business after its recent acquisition of Bank One Corp.
Richard C. Kovacevich, Wells Fargo's CEO and a former Visa director, said in an interview that the next chief needs leadership, marketing, and technical skills. "This is still very much a brand-based business, and technology is what makes the whole thing go," he said.
Charles T. Doyle, the chairman of Texas First Bank in Galveston and a Visa board member since 1990, said, "I hate to see him leave right now."
Though he understands the reasons for Mr. Pascarella's decision, Mr. Doyle said he is concerned about the volatile state of the industry. "I've never seen another time when the payments system - not only for us community bankers but also for the big banks - has been in a state of more flux."
Major changes in technology, competition, and regulation present challenges for issuers, he said. "Carl is right in saying that he leaves a good team together, but some big questions remain to be solved."
The 14 months' notice was "one of the most reassuring parts" of the announcement, Mr. Doyle said. It will be difficult to find someone as diplomatic as the outgoing chief in negotiating the often competing interests of Visa's members, but "we have time to look."
Other sources said Visa will probably take its time and give insiders special consideration.
William A. Cooper, TCF Financial Corp.'s CEO and a vocal critic of Visa management during the Wal-Mart proceedings, credited Mr. Pascarella with overseeing "tremendous expansion in credit cards and building the debit card business into a dominant player."
"The only dark side at all is what happened with Wal-Mart," though Mr. Pascarella should not be blamed for the dispute, he said. TCF, of Wayzata, Minn., is the country's No. 11 issuer of Visa debit cards.
Lloyd Constantine, the lead plaintiffs' attorney in the Wal-Mart case, disagreed with Mr. Pascarella's sunny outlook for Visa - at least on the litigation front. "I am positive that for the next decade or so, they will definitely be in court."
Mr. Constantine mentioned numerous offshoots of the Wal-Mart case; a still-pending antitrust suit by the Justice Department that could spawn fresh complaints by American Express Co. and Morgan Stanley's Discover Financial Services; and actions by the regional PIN debit networks.
"There is an awful lot of litigation in Visa's future," he said.
Mr. Pascarella has been known to complain about the distractions of litigation. In December he hired a new general counsel, Joshua R. Floum, after Paul Allen, the longtime counsel who supervised the Wal-Mart defense, retired.
William F. Keenan, the president of DeNovo Corp., a payments consulting firm in Hockessin, Del., and a former credit card executive, said Visa will need another payments strategist at the helm.
"Essentially, the strategy for the industry has not been terribly creative," Mr. Kennan said.
One of Mr. Pascarella's earliest moves in that regard was to let Visa issuers offer cobranded cards. "It would have damaged Visa's market share if they had stuck to their initial decision," Mr. Keenan said.
During the press conference Mr. Pascarella shared some preliminary second-quarter results: Credit card dollar volume rose 11%, and debit volume spiked more than 20%. Volume on commercial cards grew 23%, while PIN debit volume soared 95%. Last year Visa's network volume topped $1 trillion for the first time.
Mr. Pascarella was the CEO of Visa's Asia-Pacific region for 11 years before taking charge of Visa U.S.A.
