A Bloodless Conflict

  It's been a busy month. Bank One Corp. pulled a mega-switcheroo by contracting to shift the processing of its 50 million credit card accounts next year to Total System Services Inc. (TSYS) from First Data Corp. Bank One, which plans to license TSYS' software to eventually process in-house, also landed Disney's new cobranded card.
  Capital One Financial Corp.'s chief financial officer quit with the Securities and Exchange Commission sniffing around, suspecting insider trading. And retailer Spiegel Inc. saw its card-backed securities go into early amortization, mainly because of cardholder defaults. Troubled Spiegel indicated it might file for bankruptcy protection because it relied on securitization to fund its operations. The retailer also shut down the bank and store cards issued by its First Consumers National Bank, which it unsuccessfully tried to sell.
  All of this happened at a time of growing national and international fear about a U.S.-led assault on Iraq. Such a war, which might have even started between the time I wrote this and the time CCM mailed, would have big implications for the card industry. Probably the most serious would be a sharp drop in travel-and-entertainment charge volume. The T&E sector accounts for about a quarter of card-industry volume. The battered airlines, still trying to recover from Sept. 11, already are bracing for a further fall-off in travel and have their hats out in Washington yet again.
  We all hope that any war will be short and "normalcy," in the late President Warren G. Harding's words, will return soon. Yet no matter how long the current political and economic turbulence goes on, the payments industry will continue its rapid evolution. That's the theme of our special report on merchant acquiring that begins on page 24.
  Our cover story looks at the widely differing ways consumers worldwide can pay for things on the Web. In the U.S., of course, credit cards have close to a monopoly. But in most of the industrialized world, various forms of account-to-account transfers predominate. The story describes some of those systems and raises questions about whether variations on them could find their way into U.S. payments.
  We also take a look at how eBay Inc., the popular Web auction site, is handling payments now that it owns Internet payment facilitator PayPal. Our conclusion: eBay could mount a serious challenge to credit cards on the Internet if it chooses. Will it? Stay tuned.
  Few people other than CCM readers may be paying attention to these and the other important developments we cover this month, including who is leading in the point-of-sale terminal sales race, but no matter. Wars are fought, regimes change and peace is made, but people keep buying and selling things. Banks, processors and networks constantly have to figure out how to make that happen as technology changes and rival payment forms vie for share. Fortunately, it's a bloodless conflict.