First Data Corp bullish on Internet
NEW YORK, Jan 30 (Reuter) - First Data Corp, one of the largest U.S. processing companies for credit card issuers and for
merchants accepting cards, is bullish on the potential of the Internet as a place for commerce but cautious on the outlook for the
"smart card" to become popular.
"I think there will be a lot of false starts in that (the Internet) marketplace," First Data chairman and chief executive Henry "Ric"
Duques told a news conference. He said the industry will have to work out solutions to security issues due to the potential for
fraud but once that happens "I think there wil be an explosion of activity there." He said eventually there will be "billions of
dollars of charge volume and billions of transactions allowing "anyone around the globe to have access to buisness services in
an attractive way."
He said First Data, with its expertise in meeting the needs of merchants who accept credit cards, "would be one of the
processors of choice to handle those (Internet) transactions."
But in assessing the outlook for "smart cards" to become commonplace as a means of paying for goods and services, Deques
took a cautious stance, saying some cynics are questioning the need for another U.S. test of smart cards.
Smart cards, most frequently used in the U.S. on various mass transit system, store a monetary value which a user taps to buy
goods or services. After a test in Atlanta last year during the Olympics turned out to be a disappointment, another major test is
planned later this year in New York City. Duques said the cynical view is that everyone knows the cards work so why have a
another test.
Asked in a subsequent interview with Reuters to amplify his concerns, Duques said, "someone has to prove the value to either
the consumer, the bank issuer or the merchant, and the proof of that is yet to happen."
Duques said while First Data believes a magnetic stripe credit card can do everything a smart card can do his comapny is not
fighting the smart card but is "waiting to see what happens." He added, "we want to be able to handle those tranactions when
they start to come at the point of sale." He said First Data would like to have a vehicle to reload the card.
He said widespread use of the smart card would require retrofitting of 1.7 million merchant locations. "It will never happen
overnight, it will take a fairly long period of time, I'll say a decade."
Meanwhile, he said, the U.S. infrastructure that exists for processing credit card purchases is a very low-cost, efficient system.
He conceded some of his points may sound like a blacksmith saying "'I don't know why we need those cars, I can shoe a horse
faster than anybody.'" But he said his point was that you need the economics to drive a change. |
