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The concept of issuing debit cards to access customers' demand deposit accounts at other institutions has been floating around for some time. But to actually get such so-called "decoupled" cards into the market, it took the foresight and ingenuity of someone looking for a creative way to win over consumers by melding all their payment options–debit, credit and rewards–into one product and making the payment process simple.
For spearheading such an effort, Daniel J. Eckert, senior vice president, payment products, card and retail services at HSBC-North America Inc., has won the 2008 Cards&Payments Best in Payments Outstanding Payments Executive award.
"Ideas are a dime a dozen," says Eckert, who teamed with Tempo Payments Inc. to launch a decoupled, multi-purpose card pilot. "But exercising ideas in practice enables you to understand what you have."
What HSBC and Tempo have in their ongoing decoupled-debit pilots in New Jersey and Indiana has yet to be definitively determined, although they say consumers are enthusiastic about the card.
If their idea succeeds, and Capital One Financial Corp. finds success with its scaled-back decoupled-debit project (see News story on page 10), it could revolutionize the debit card business, according to many in the industry.
That would be quite an achievement for Eckert, 34, who is relatively new to the payments field.
Eckert got his first real exposure "to the full depth and breadth of the U.S. payment system" while working for Bank One Corp. (now JPMorgan Chase & Co.) seven years ago. At the time, he was with the firm's global treasury services group, designing and developing new products to help financial-services clients meet their consumer and corporate payment needs. Part of his job involved facilitating payments for such major clients as Ford Credit and Harley Davidson Financial Services.
"It was kind of a fun time to be introduced to payments," he says, noting that for the first time check payments were beginning to decline. That is when Eckert learned the value of giving consumers flexibility in their payments choices.
When the former U.S. Marine Corps officer joined HSBC three years ago, he was asked to explore ways the bank could distinguish itself from other credit card issuers. "The white board was completely blank," he says. "We had no preconceived notions."
So he listened to customers to learn what platforms could be developed to meet their needs.
"Through that research, we clearly were starting to see another emerging trend: Consumer payment preferences were continuing to shift from paper-based instruments ... to debit cards," says Eckert.
That was a new direction for the company, but it was one Eckert believed HSBC should pursue because he recognized that consumers wanted more flexibility in their payment options. They also wanted to reduce the amount of plastic they carried with them and to consolidate their rewards programs, Eckert says.
To meet those consumers' desires, Eckert and his team at HSBC turned to the decoupled debit card. However, Eckert wanted more than just a card detached from individuals' primary banks.
"How do you create a magnetic stripe device that allows for a customer to have all available payment-access methods available to them on one card"–debit, rewards and credit? he says. "We came up with a multifunctional mag-stripe card that allows consumers to take control of their payments, and then we set out to build it."
Eckert believes innovations in the payments industry will continue to focus on bringing value to the stakeholders and convenience to consumers.
"You'll see a lot of folks say they're doing that, but the market will dictate where the evolution takes us," he speculates.
Eckert says he enjoys developing products that consumers use every day. "This is a business that you can explain to your grandma," he says. CP
