Population Statistic: Read. React. Repeat.
Tuesday, May 27, 2021

Something I’d been keeping an eye on: Chase Paymentech Solutions, the joint venture between JPMorgan Chase and First Data Corp. that dominates the multibillion-dollar card-based and electronic payments industry, will be formally divvied up by the end of 2008.

I recently wrapped up an extended assignment (two years) with CPS — ironically coming onboard to help with merger integration right after the company was formed in 2005. The impending break-up has been hanging over the company ever since buyout firm KKR’s acquisition of First Data last year, which triggered negotiations toward an early termination of the JV. Given that I still have friends and colleagues at Chase Paymentech, and that there have been a few false starts on this announcement becoming official before this, I’m guessing this provides short-term closure for them — before longer-term consequences (i.e., the cutbacks that come with such moves) develop.

As for how this cash-cow that generates billions — that’s with a “b” — of dollars will be split:

The companies also have reached agreement about the future of Chase Paymentech’s most valuable asset: its processing platform in Salem, N.H., for card-not-present merchants: Chase gets it, but First Data will get a copy of its software. Originally developed for catalog merchants, the so-called Salem platform serves about 70% of the top 500 Internet retailers, making Chase Paymentech by far the leading e-commerce merchant acquirer.

JPMorgan Chase also will get most of Chase Paymentech’s 2,700 employees, its Dallas headquarters, and Canadian and European operations. President and chief executive Mike Duffy and his senior managers also are likely to go with the bank, though that’s not official yet. “It is anticipated that he and the management team will be moving to Chase,” [CPS EVP of Marketing Mia] Shernoff says…

Although the companies would not confirm it, First Data seems likely to get Chase Paymentech’s biggest customer: Wal-Mart Stores Inc., the world’s largest retailer. It also is getting Chase Paymentech’s independent sales organization business, a highly valued commodity in today’s merchant-acquiring market because of ISOs’ ability to find higher-margin small merchants.

Still doesn’t seem like much of a parting gift for First Data. A “copy” of the Salem platform? Big deal. They could have developed their own competing software system that would have matched or improved upon CPS’ established platform, given that they’d create a scalable model from scratch. Besides, the actual innards of a processing network doesn’t matter to prospective merchants as much as the existing portfolio of clients — peer pressure on a grand retail scale. That’s where keeping Wal-Mart’s business will help, but that alone would be meager spoils. Plus, Chase has an existing head-start in this new competition, since Chase Paymentech has been using (and thus extending) Chase’s branding for a couple of years now.

Anyway, I guess anyone looking to accept credit cards and such will have an extra option starting in 2009. And with Pariter, the new JV from Bank of America and Well Fargo that will focus on automated clearinghouse (ACH) transactions also launching next year, the payments industry should be rollicking for the near future.

by Costa Tsiokos, Tue 05/27/2008 08:58:00 PM
Category: Business
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Um, yeah. I think the pairing of Dan Marino and Larry the Cable Guy represents the nadir of the already bottom-of-the-barrel-scraping NutriSystem testimonial TV commercial.

The most confusing thing? I can’t figure out which guy’s supposed to be lending cache to the other. Maybe it’s the “Git-R-Done” hack who’s supplying the star power, since “Dan M” leads an anonymous existence in NutriSystem’s eyes.

(Via Y! Sports’ Shutdown Corner)

by Costa Tsiokos, Tue 05/27/2008 07:45:53 PM
Category: Advert./Mktg., Comedy, Football
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I hadn’t kept up with Penguin Putnam’s “A Million Penguins” online collaborative novel-writing project, despite making a note of it last year.

So I didn’t notice when the experiment came to an end earlier this month, and, well, the result sucked.

But there is a silver lining to the whole thing, from a business perspective:

After all, you release some trendy high-concept book, and for every person who reads it there are a hundred who just enjoy the concept and ten people who buy it just to put on the bookshelf. Hell, I had more to say about Freakonomics before I read it than after — I got the point by the time I’d read a review and half of the dust jacket. So if the book doesn’t have to live up to its publicity, why not come up with a clever idea and outsource the actual writing?

No surprise, as the entire concept was a marketing exercise to begin with. True, some academic collateral emerged as a byproduct, but ultimately it’s all about creating enough buzz to tickle the cash register.

by Costa Tsiokos, Tue 05/27/2008 08:19:04 AM
Category: Creative, Internet, Publishing
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