The Value of a Combined Issuing and Acquiring Partner for Merchants: A Conversation with Kimberly Fitzsimmons, U.S. President of Enterprise and eCommerce, Chase Commerce Solutions

Navigator Edition: September 2016

kim-fitzsimmons_-chase_webRecently we had the opportunity to speak with Kimberly Fitzsimmons, U.S. President of Enterprise and eCommerce at Chase Commerce Solutions, regarding Chase’s approach to the merchant community. In this Q&A format, we cover topics such as how Chase approaches the merchant acquiring business and how Chase is leveraging the overall bank’s payment capabilities to offer unique propositions to merchants.

Kim Fitzsimmons is responsible for driving all client delivery activity for U.S. Enterprise and eCommerce client segments, including marketing, relationship management and sales to ensure long-term growth and profitability.

Kim has more than 25 years of experience in the payments industry. Before joining JPMorgan Chase, she served as Chief Executive Officer for Cynergy Data. Prior to this role, she held several leadership positions at First Data, including President of Independent Sales and General Manager of Merchant Services and Community Banks. She was also Principal and Co-founder of EFS Card Services.

Recognized as a leader in the payments industry, Kim was previously President of both the Electronic Transaction Association and wNET (Women Networking in Electronic Transactions). In 2013 and 2015, Payments Source and Bank Technology News named her one of the Top 20 Most Influential Women in Payments. She received a Lifetime Achievement Award from the Midwest Acquirers Association in 2008. She also serves on the board of directors for the Healthy Kids Foundation. Kim is a graduate of the University of Mississippi School of Business Administration.

1. Currently, what is your core focus for Chase Commerce Solutions?

We want to bring the acquiring and issuing sides closer together through our ChaseNet platform and through Chase Pay.

We believe we can help spur further adoption and growth of mobile wallets through the combination of our scale on the issuing and acquiring sides, along with our strategic relationship with MCX. When you think about companies that are successful in the mobile space, Starbucks is truly ahead of the pack. Its success and usage is largely driven by its fiercely loyal customers who consistently use the Starbucks app.

Merchants across the country look to Starbucks as the success model, concluding that it’s all about loyalty. I personally enjoy watching my gold stars accumulate at Starbucks. To promote customer engagement, retailers are finding that they have to tie in some type of loyalty program – that is the foundation that will drive additional products such as Chase Pay. Through Chase Pay, merchants will be able to incorporate loyalty programs into payment processing – and drive additional purchases. We are driving all new and existing merchants, from the smallest to the largest, to the ChaseNet platform.

2. What is ChaseNet?

ChaseNet is our own payments network that we lease through Visa. We control and offer merchants certain economic elements we couldn’t under the traditional Visa/Mastercard model.

3. From the merchant’s perspective, what are the benefits to using ChaseNet?

We offer merchants the flexibility to offer non-traditional pricing structures as well as lower pricing, enhanced security features, and access to the vision and the future of our product roadmap.

Security is paramount to merchants today, with data breaches becoming an almost daily occurrence and fraud an ever-present concern.  In addition to our EMV capabilities, ChaseNet offers merchants additional security features.

We also see ChaseNet delivering enhanced products surrounded by a complete Chase product suite. These include enhanced authorization, loyalty capabilities for merchants revolving around Chase Pay with integrated targeted offers, and other capabilities that will allow merchants to drive higher sales.

4. How does MCX and its recent announcement of halting its pilot impact your story, if at all?

It actually strengthens our story. MCX accounts for roughly 25% of all U.S. retail transactions, so MCX provides us size and scale.  We’ve issued more than 90 million credit, debit, and pre-paid card accounts. Couple those assets with our merchant relationships and the MCX retailers and you have an extremely strong network. We are solving for the chicken-and-the-egg dilemma in parallel – and that is why mobile wallets, and Chase in particular, are going to succeed.

5. How is Chase structured organizationally to optimize ChaseNet?

We have our own lines of business on the acquiring and issuing sides. The issuing business has its own individual roadmap and cardholder benefits. The acquiring platform does the exact same thing for merchants.

In the middle, and this is critical, there is an entire division and team focused solely on tying those two divisions together. We are bringing it together, really through ChaseNet, but ultimately through Chase Pay, because the consumer experience is more through Chase Pay than ChaseNet. The division tying it all together is thinking about issues such as offers and analytics and how to drive the right targeted offers to our cardholders. It is considering what our cardholders want and how to best tie merchants into the story while integrating all of these solutions into the retailer’s unique environment.

This fundamentally changes the conversation from solely economics and security issues to answering questions such as: How can Chase help merchants grow their business through driving the right offers? That has been another puzzle that the industry has been trying to solve for years that we are now delivering in force.

6. What is your distribution strategy on the merchant acquiring side of the equation to help propel the ChaseNet vision?

We utilize our direct sales force primarily with referrals from our bank branches. We recently divested our legacy ISO portfolio because it was not strategic to the bank.

We are starting to target the ISV (the software developer) and VAR (Value-Added Reseller) channels in earnest. There are a number of conversations around the ways in which ISVs and VARs could develop into strong strategic partners to deliver ChaseNet and Chase Pay to retailers. We are primarily targeting segments of the market that customers use. Where do you use your consumer card? Where do you shop regularly? Which gas stations? Supermarkets? Quick-service restaurants? That’s who we want to target. eCommerce is another vertical that is always top-of-mind for us, but it can be a whole different animal. We are already the largest eCommerce acquirer in the U.S. The pattern of so many people shopping online dovetails nicely into the ChaseNet strategy.

For many reasons, we plan to be extremely strategic around which ISVs/VARs we choose to partner with going forward. First, we talk about compliance and the regulatory environment and the fact that ISVs and VARs have a critical role as they are often the face of the customer. From a JPMorgan Chase standpoint, we want to make sure we are partnering with the right entity. Therefore, we will have certain regulatory and compliance hurdles that the ISVs and VARs are going to have to make in order to do business with the bank. That’s another reason why we exited the ISO business. Many ISOs, especially the smaller ones, aren’t going to be able to meet our hurdles to comply with Anti-Money Laundering and Know Your Customer requirements.

Some acquirers have begun to be both the acquirer and the software developer. We don’t see this strategy as a good fit for us. We should focus on what we do best, partnering with ISVs and VARs rather than developing software solutions.  Now, does this mean that if we came across the right acquisition, we would not explore it? We talk about an acquisition every month it seems. The industry will certainly change and evolve and therefore, our strategy must evolve as well.

7. What keeps you up at night? What are your fears for the business?

I sleep pretty well, thank you. I saw the strategy and the vision of Chase when I chose to join the firm more than two years ago. And I feel even better about it now.

Of course, we have to execute many things as a team, making sure we are hitting on all cylinders. We have a unique and compelling value proposition. We just need to follow through and execute.

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