Credit Card Veteran Saunders Says He’s Hip to Electronic Payments

Visa International Inc. on Tuesday reported that it has named Joseph W. Saunders, the card-industry veteran it selected as interim leader of Visa Inc. in February, as the entity's permanent chairman and chief executive officer as it prepares to unify its far-flung regional organizations and become a publicly held company. But some observers question whether a man steeped in credit is the right one for a payments world in which debit and new electronic alternatives are growing far faster. In a release, Visa said its regional boards of directors unanimously approved Saunders “after an extensive six-month search.” Visa named Saunders, 61, as its executive chairman in February (Digital Transactions News, Feb. 12) with one of his chief duties being oversight of the already-started recruitment of a permanent chief executive. “I didn't lobby for myself,” Saunders tells Digital Transactions News. But he adds: “I'm thrilled, I have to admit I'm thrilled. This was an incredible opportunity.” According to Saunders, the possibility of changing from temporary to permanent captain happened after he became executive chairman. “They asked me to come in and take charge of the process. It involved a number of things that a CEO would have been doing on a day-to-day basis. They thought I represented the best opportunity and asked me if I'd consider that.” Saunders joined Visa in February after a long banking and card-industry career that started at the old Continental Illinois Bank in Chicago and Bank of America. He went to Household International, now part of HSBC Holdings plc, in 1985 and helped turn that non-bank firm into a card powerhouse. He moved to the former FleetBoston Financial Corp. in 1997 to head up card services there. Starting in 2001, he led the effort to revive troubled subprime issuer Providian Financial Corp. and ended up at Washington Mutual Inc., which bought Providian in 2005 to enter the credit card business in a big way. While at Household, he served on the MasterCard International and MasterCard USA board of directors from 1993 to 1997 and was elected chairman of MasterCard International in 1996. “Joe's background is perfectly tailored to this critical position,” said William I. Campbell, chairman of Visa International's board of directors, in the release. “His 30-plus years of industry experience, the leadership role he has played at major companies, his strong integration experience, and his firsthand knowledge of Visa make him uniquely qualified to lead our company through one of the most exciting times in its history. After a thorough CEO search effort, it became clear to us that Visa already had the right candidate for the job.” Campbell added that because of his experience, Saunders wouldn't need the “ramp-up period” an external hire would. But in selecting Saunders, Visa essentially is looking back rather than forward, according to at least one observer. “Certainly Joe has the credentials, but it's the last 30 years,” says consultant and former MasterCard executive Steve Mott, principal of BetterBuyDesign in Stamford, Conn. “It would have raised people's confidence that Visa could stake out the future with someone with a fresher perspective.” According to Mott, executives such as Saunders proved banks could make lots of money by issuing credit cards. But the payments future is one of debit cards and emerging technologies and payment vehicles such as contactless cards and mobile devices, he says. (Visa International statistics released this week show that about two-thirds of network transactions now occur on debit cards.) And Mott notes that Visa, like MasterCard, needs to resolve its conflicts with restive merchants upset about interchange, the biggest element of payment-card acceptance costs and one that is set by the card networks. Saunders, however, says that he's paid attention to the big picture all along. “I may have been on the issuing side, but I have been involved, on and off, on both sides of the business throughout my career,” he says. He adds that the coming of contactless cards and other new payment forms represent a “whole technological tsunami of things that are occurring in the world,” and in which Visa will be deeply involved. Under Visa's previously disclosed plans, Visa Inc. will be formed by the merger of the existing Visa International, Visa USA and Visa Canada organizations, all of which are controlled by financial institutions. Visa Europe will remain a member-owned association and licensee of Visa Inc. Since Visa Inc. will not be formally created until later this year, Saunders is performing his chairman and CEO duties as the company's designated appointee, the release says. Saunders would not provide details of Visa's planned initial public stock offering other than to say it's on track for the first quarter of 2008. In its latest statistical report, Visa International said total volume for Visa consumer debit and prepaid programs, including cash transactions, grew by 17% in 2006, reaching $2.68 trillion compared with $2.29 trillion for 2005. Debit and prepaid cards now account for 60% of Visa's global consumer volume, the report says, and over 67% of Visa transactions, based on total consumer volume of $4.4 trillion and 59.9 billion total transactions. Some $828 billion of this volume occurred in the U.S., up 14% over 2005.