Payments Views from Glenbrook Partners

PayPal Adaptive Accounts

2009-11-05T02:59:49Z

I’m attending the PayPal Developers Conference this week and want to share some initial impressions about the Paypal platform and what it might mean in the world of payments.

First off, the combined weight of the new products, partner demonstrations, and new applications is almost overwhelming. There’s a lot here competing for our collective attention.

Do we start with the rollout of the “adaptive” platform, or the new 2010 pricing model? Should we focus on PayPal’s push into B2B payments with SAP as a launch partner? Or do we drill down into third-party reward-to-cash redemption through PayPal? And what about the partnership with FIS that potentially enables PayPal as a P2P payment network for over 14,000 financial institutions around the world?

For my money, the real story is the introduction of Adaptive Accounts. I believe it’s important, and along with Adaptive Payments, a foundational building block for many application developers, in both traditional and new payment segments. Adaptive Accounts, in short, gives third parties applications and websites the ability to open and manipulate PayPal accounts on behalf of their customers. Don’t have a PayPal account, let me open one for you!

The poster-child launch partner was a new startup called FundRazr that does social group fund raising. As part of setting up an account with FundRazr, you have to register with all the usual name, contact information, profile data, etc. FundRazr is going to use PayPal to payout any funds that are raised. If the group already has a PayPal account, they just use it. If they don’t have an account yet, FundRazr can just open the PayPal account, on demand, based on the account information the group already provided. Call it frictionless commerce or greasing the skids — it sure makes customer onboarding slippery.

Adaptive Accounts offers developers a lot of flexibility. Third party applications can open PayPal accounts one at a time or open them in bulk. If a bank were to use PayPal Adaptive Accounts, it could also link their payment instruments to the PayPal account as funding sources. With the right privileges, applications can also update account attributes.

PayPal talked about a lot about anticipated use cases. A marketplace could open accounts for seller payout and fee collection. A social media site could open PayPal accounts to payout royalties to premium content providers.

In the more traditional payment markets, a small business could open PayPal accounts for their employees, presumedly enabled by a payroll application built on top of the PayPal Adaptive Platform. A B2B payment enabler could offer real-time payment of supplier invoices via PayPal. Don’t have a PayPal business account? They can open one in a couple of screens and have payment in the suppliers hands in a just a few minutes. Potential uses are constrained only by imagination.

Mechanically, when the third party application or website opens a PayPal account, they can set up everything needed except PayPal login credentials. Users are redirected to PayPal to establish their password, and agree to terms of use, before being returned back into the original application. Personal accounts can be created on demand by any vetted PayPal application. Business account creation, as well as linking funding sources and changing attributes require “advanced” authorization credentials from PayPal.

Of course, the devil is in the details. Developers will have to follow PayPal best practices to handle PayPal accounts that already exist, accounts that are never “claimed”, and other exceptions. But I was impressed that both PayPal and the developer community are already focused on the edge cases.

PayPal indicated that Adaptive Accounts is in beta now with support for 13 countries. It’s being rolled out on a country-by-country basis to meet local data collection and privacy requirements. To me, the key point here is not that it is only available in 13 countries — it’s that on day one it’s available to open accounts in more than one country.

If Adaptive Payments is the first shoe to fall, Adaptive Accounts is the other shoe. This is an intriguing new capability that I believe is going to open up lots of new uses for PayPal and potentially push the company into new verticals and markets previously unavailable. I can’t wait to see what other new services PayPal offers on its Adaptive Platform.

Amazon PayPhrase – One Size Doesn’t Fit All

2009-10-29T11:53:34Z

Amazon.com fancies itself, with some justification, as a trialblazer in eCommerce. We spoke with Amazon recently to get a better sense of PayPhrase and how it might be used by today’s consumers.

Amazon PayPhrase is a new checkout concept that is designed to provide consumers with a convenient way to use the payment and shipping details on file with Amazon. You’re probably thinking this sounds a lot like Checkout by Amazon. It does. Substitute some names and it also conceptually sounds like PayPal Express Checkout. Heck, it even conceptually sounds like Google Checkout! But it’s not.

Online checkout, as we all know it, is mostly about consumers logging in with a username/password, entering or selecting a payment method from one already on file, entering or selecting a ship-to address from one on file, reviewing the order details, and clicking on “purchase”.

Amazon shortened this process in the mid-1990s with its patented 1-Click checkout process. Their observation at the time was that many customers repeatedly pay with same payment method and the same ship-to address. By keeping them on file, and establishing clear defaults, Amazon could shorten the purchase process down to a single click — and eliminate a ton of friction at the same time.

Amazon’s observation this time around is that convenience still matters — in fact, it matters more than ever — but that not everyone uses the same payment method and ship-to address on every purchase. One size doesn’t fit all.

Here’s how it works:

You go to Amazon.com to set up a PayPhrase (and PIN) that uniquely maps to a payment method and a ship-to address. You can set up multiple PayPhrases that are all tied to your Amazon account. You could, for example, establish one PayPhrase for when your want to use your personal card to have something shipped to your home, another for when you want to use your corporate card to have the goods shipped to the office, and a different one for when you want a gift shipped to your parents.

When I’m shopping at J&R Electronics, for example, for a replacement toner cartridge for our overworked Glenbrook printer, I simply toss what I want in my shopping cart, click on checkout, enter “Glenbrook Office”, my PIN, and I’m done. The cartridge is shipped to my office address, charged against my corporate AmEx card, and the receipt is in my email inbox.

We’ve all seen many things labelled as “easy” or “convenient”. But I’ve got to say this really does look like a new convenience. The key here, I believe, is that PayPhrase keeps the checkout in the merchant context. I didn’t leave their store. I wasn’t redirected to another website. Instead of selecting my checkout options, I simply enter the relevant PayPhrase. The purchase confirmation page, where I enter my PIN, is a pop-up on top of the merchant site.

PayPhrase is built on top of Amazon Payments and works today on Amazon.com or any third-party merchant that uses Checkout by Amazon. So its potential impact is somewhat broader than the original 1-Click — maybe more so, given how large the Amazon user community has grown.

If that’s all there was to PayPhrase, I would like it. But wait! There’s more! In addition to mapping payment and shipping preferences to each PayPhrase, you can also set up assorted limits and approvals with each PayPhrase. You can, for example, limit how much can be purchased with a PayPhrase or what approvals are required.

An office manager could enable their staff to order supplies from Amazon.com, but require all PayPhrase purchases come back to them for approval. Before order acceptance, the manager receives an email purchase approval request from Amazon. In addition to approval, PayPhrase in this context offers the manager the added security of constraining the ship-to address to the office.

Parents can use spending limits to handle online allowances. They can setup a PayPhrase with unique spending limits for each child knowing that purchases can only be sent to the home address and are within their online allowance. For larger purchases, there’s even a configuration setting that lets unused monthly allowance budgets rollover to the next month.

Amazon is positioning PayPhrase as an innovation in eCommerce convenience, which certainly seems like the case. But I’m intrigued by the online security possibilities that are inherent in its structure. Separating the Amazon login credentials from the Amazon spending credentials seems like a good idea. And I really like being able to limit the spending power of payment instruments, restrict the purpose of a purchase, etc.

I’ve long argued with Glenbrook colleagues that payment cards today are too spend-centric and too easily abused. Maybe the banking industry could learn something from Amazon about both convenience and security.

Customer Engagement Through PFMs [ATM, Debit & Prepaid Forum 2009]

2009-10-29T01:54:06Z

I am a strong proponent of using Web 2.0 to develop relevant offers. For a bank it can mean finding a relevant context to present offers to customers; moving from intrusive selling to customer goal realization. Web 2.0 also allows for collective learning and an increased sense of engagement that transforms passive customers to advocates.

At the ATM, Debit & Prepaid Forum 2009 conference, Wesabe, Mint (recently Acquired by Intuit) and Billeo shared a panel to discuss their value proposition for consumers and banks.

These latest incarnations of personal financial management tools and transaction management have moved the Web from a discussion forum to truly contextualized product offers that support the consumer in reaching their goals.

Billeo characterized themselves as more of a transaction management company than a PFM. Traditionally banks have focused their loyalty programs to offers that exist on their website. Billeo offers the opportunity to target offers to the consumer off the online banking site and in the search engine or merchant website as online shopping is happening. (See prior post on Billeo) Billeo also tracks the consumer’s shopping receipts all in one place.

Wesabe and Mint offer consumers a community environment for financial management and an opportunity to receive tips on saving money or reaching goals (See previous post on Wesabe Mint Web 2.0 and consumer financial goal setting). Some consumers behave in such a way that a prepaid card would be better than a debit or they carry a large revolving balance and should move to a lower APR. Contextualized offers based on shopping patterns and peer experience have the potential to change the way financial services are sold to consumers – personalized and based on what they need.

Merchant Funded Rewards – Retailer, Bank and Rewards in Concert [ATM, Debit & Prepaid Forum 2009]

2009-10-20T15:12:51Z

I was particularly interested in the merchant funded rewards session put on by Jonathan Silver of Affinity Solutions and John MacMillan from Comerica Bank. Having listened to several discussions point to debit card rewards as important to consumers, this session focused on how to develop compelling rewards programs.

First of all, rewards need to be compelling with an advertisable value proposition. This is very different from the now common online mall. Rewards programs should include everyday spend and ideally cover up to 15% of the customer spend at the point of sale where they want to spend it. Merchant Funded Rewards are often an extension of current rewards programs e.g. Bank of America “Keep the Change” has an online mall to support further merchant funded rewards for the consumer. Chase and Citi also extend their loyalty programs this way.

Comerica selected merchant funded rewards as a strategy to encourage signature authorization. Some customers like cash, some like stuff, and some like experiences. A loyalty platform should offer all three with analytics to support customization and personalization of offers. Offers can be targeted based on how the consumer spends and where they live. Comerica uses points to encourage behavior and provides employees with the authority to give “happy points” to at risk customers who may have had a bad experience. Employee training and engagement in the loyalty program is critical to its success. The Comerica program with merchant partners and Affinity Solution has experienced success in higher number of transactions and spend.

Many debit card programs can now be found to have rewards. The debit rewards programs are encouraging merchant-funded components to offset the challenges with the lower revenue than credit cards. Citibank ThankYou points offers a relationship rewards program to encourage the consumer across all product lines. Citizens Bank also has a cross-product merchant funded approach while Bank of America Keep the Change focuses on the Visa Check card. For now, Comerica is focused on their signature debit product. With Debit overdraft fees under attack by consumer advocacy groups and legislation pending, merchant funded rewards are an essential part of the debit rewards strategy.

Investments in the Payment Sector [ATM, Debit & Prepaid Forum 2009]

2009-10-20T15:05:29Z

Of the Monday morning sessions at ATM, Debit & Prepaid Forum 2009, I was particularly interested in the analysts’ views of the payments sector. The session included perspectives on transaction volumes, impact of consolidation and potential for new M&A activity, and areas the analysts are watching for investment and regulatory changes. On the panel were representatives of Morgan Stanley, J.P.Morgan, Keefe, Bruyette & Woods and the moderator was from Oliver Wyman.

[Editors note: it goes without saying that Glenbrook Partners, LLC is not a licensed investment adviser!]

Generally the panel was positive in terms of expectations of transaction volumes and revenue growth as we move into 2010. Although the US consumer has a higher saving rate, the increase in income projected by economists is expected to drive improvements in payments volumes. Improvements in payments volumes are already being reflected in MasterCard and Visa volumes and foot-traffic in stores. The headwinds the industry has been facing in gas prices and foreign exchange are also expected to normalize. Unemployment is still a key concern.

In terms of investments, banks have been increasing reserves and there are even more requirements to hold reserves going into effect with FAS 166/167. While this may be difficult for banks to increase reserves in the short term (takes affect at the end of this fiscal year) it is a one-time event. As banks relax and draw reserves down this should be reflected in a stronger bottom line.

Examples of areas to watch:

Prepaid program managers – Investors like the free cash flows generated by these businesses
Processing – Looking for businesses effectively transforming through platform consolidation and emerging with lower costs and innovative offerings
Mobile Players – While the analysts are watching these businesses, they still consider them up-starts and niche when it comes to payments
Card Issuing – despite the ride, credit card assets are lucrative. Watch for capitalization structures and reserves. As the market reaches an inflection point of a strengthening financial position and economy, there may be M&A activity.
Micro payments and International processors were also mentioned

Regulatory environment

In the wake of the Credit Card Accountability, Responsibility, and Disclosure Act, Issuers are getting ahead of the changes. The Private label and sub-prime categories are relatively more affected due to risk based re-pricing. The problem will come in the next market downturn where issuers will be unable to reflect the increased risk of default through pricing. The analysts are watching for possible fee income regulation; it has been proposed that fees be “reasonable and proportional to the actual cost to the financial institution.” Just today Senator Chris Dodd proposed legislation targeting overdraft fees (See Payments News).

Those most affected will be issuers using teaser rates as a customer acquisition strategy. American Express Charge card is expected to benefit and increase in attractiveness to frugal consumers and those looking for good rewards. The public attention over overdraft fees may also turn consumers to charge card or prepaid models. Card issuers have many levers to pull to offset any expected lost revenue including product bundling, annual fees, and merchant funding of rewards.

Alternative payments and mobile…

The investment advisers were not concerned about alternative payments as a disruptive technology but rather a compliment to the main players. Their rationale is that it is hard to change consumer behavior and hard to change the merchant point of sale. If a new payment scheme does not have ubiquity, it is hard to compete. Current networks work extremely well for consumers ease of use and for merchants getting paid. The large networks are able to under-price or acquire any serious contenders.

In addition, many alternative payments are using ACH. The ACH system may not be designed with these alternatives in mind. Some niche products have small tickets, no authentication, no rules for chargebacks etc. – growth and scale will push these issues to a point at which they can no longer be ignored. It is worth watching what PayPal can continue to do off eBay.

Mobile phone enhances current payments and can be seen as a new channel and not a disruption. Interestingly in the US the mobile network operators seem not to want to enter mobile payments as processors or underwriters of risk. This may change but it differentiates the mobile payments dynamics in the US market from other countries.

“Why Visa trades at a premium over MasterCard”.

In June 2009 J.P. Morgan North American Equity research put out an analyst report on the Top 10 reasons why Visa trades at a premium to MasterCard. In summary it suggests that the difference comes down to Visa’s escrow fund that provides a fence around corporate litigation risk and the US market debit mix. In addition, Visa has a high mix of issuers with a focus on deposit taking which is also reflected in their debit success. Should, at a future date, there be stronger growth in Europe than the Rest of the World, that might skew valuations back towards MasterCard as Visa Inc. corporate structure excludes Visa Europe.

Highlights from the ATM, Debit and Prepaid Forum 2009

2009-10-29T01:55:43Z

Glenbrook Partners’ Jacqueline Chilton is attending the ATM, Debit and Prepaid Forum 2009 in Las Vegas this week. Sessions focus on self service and cash management, the debit portfolio and prepaid products. Additionally, non-traditional, alternative payments have a dedicated track. Jacqueline’s posts from the conference are here:

Justification for End to End Encryption [ATM, Debit & Prepaid Forum 2009]

2009-10-19T14:56:59Z

The second Keynote speaker for the ATM, Debit & Prepaid Forum 2009 was Robert O. Carr, Chairman and CEO, Heartland Payment Systems. Proud of their reputation for full disclosure with merchants, they had to put it to the test with their Jan 20, 2009 announcement of their data breach.

PCI compliance is intended to target data at rest. One of the things that changed after the Hannaford payment breach announced in March 2008, and also in the Heartland example is that the criminals targeted data in-motion. Additional potential techniques for added security include:

Chip & PIN
Tokenization
End-to-end encryption (E3)
Dynamic Data Authentication

Heartland has shown an interest in end-to-end encryption with Voltage and dynamic data authentication. Visa recently published new global industry best practices for data field encryption (see Payments News post here).

Interestingly Heartland is not pursuing tokenization, which has gained traction in some merchant environments. Tokenization is one of several approaches used by merchants to avoid handling and storing a bankcard PAN (primary account number). The merchant uses a token or hash of the PAN to represent the customer in their systems. Should they need to identify the card information, the token provider can decode the token. This approach is best suited to protecting long-term data storage of card data and is already in use at a number of major merchants particularly to support their understanding of customer purchases for loyalty programs.

Who better to lead the charge for End-to-end encryption? Heartland has developed a framework and a strategy for E3. They have been working with American National Standards Institute to support standards and FS-ISAC to support anonymous sharing of data amongst competitors. The cost of their data breach experience should provide other companies justification to invest in new technologies and approaches to protect cardholder data.

The US Consumer – After the Storm [ATM, Debit & Prepaid Forum 2009]

2009-10-19T14:53:22Z

Kicking off the ATM, Debit & Prepaid Forum 2009 was the keynote address from Tim Murphy, Group Executive Core Products, Global Debit & Prepaid, MasterCard Worldwide. He predicts that great companies will emerge from the economic downturn’s storm by showing true leadership in supporting the changing customer needs.

Of particular interest are behavioral changes by the US consumer. MasterCard’s Spending Pulse data shows consumer spending on discretionary items has been hit much harder than necessities and what consumers define as “necessities” may have changed – online shopping for example has not been nearly as affected as full-service restaurants. Tim talked about research that identifies budgeting, control, savings and value as new priorities for the US consumer. Savings rates are higher and customers have moved from a “Friday night out” to a “Friday night in” mentality with game nights or movie rentals. Each of these changes present opportunities for banks to support customers in achieving these goals.

Some key points:

Research is showing that debit card rewards are very important to consumers. 46% of debit cardholders become dissatisfied based on limited or no debit card rewards.
Prepaid cards have reached the tipping point and are no longer a niche product. Prepaid cards are a way to meet evolving consumer needs and target new customer segments like the underbanked. Consumers are not the only ones using prepaid. The government is moving benefits programs to prepaid cards and businesses (e.g. Wal-Mart) are removing checks from payroll with payroll cards.

Interestingly he dodged the question when asked if CHIP & PIN would come to the US. (See Payments Views blogs on CHIP & PIN challenges for travelers). Beyond the fraud considerations that might encourage, but do not justify, changes at the point of sale to CHIP and PIN, there are currently interoperability considerations as other countries move to a new standard leaving US magnetic swipe technology behind.

Blinging it Home? A Look at Bling Nation

2009-10-19T14:50:21Z

One of the good things about having a really odd company name is that people do remember it. We mostly heard skeptical laughs when Bling Nation first emerged from stealth. But lately we’ve been getting more questions…. I spoke recently to co-CEO and founder Wences Casares.

Wences and co-CEO Meyer Malka have an interesting background, having worked together in a series of successful financial services and telecom investments in Latin America. They’ve taken venture financing from Lightspeed Venture Partners, added former Bank of America Vice-Chairman Luke Helms to their board of directors and have pulled together some impressive advisors – including John Reed (former CEO of Citicorp), Carl Pascarella (former CEO of Visa USA) and Jeff Stiefler (former President of American Express).

What They Do

Bling has their eyes firmly on the prize – point of sale transactions and the huge payments industry revenues associated with that. Their approach, however, is quite unique.

Bling is creating a series of community-based local payments networks. The mobile phone is a piece of the puzzle, but not the defining one – instead, think of the mobile form factor as an enabler of the core payment service.

Bling targets a small community which has a decent population and financial asset size, and which is served primarily by local community banks. They sign up one or more of the banks, and an assortment of frequently-visited local merchants (movies, pizza, dry cleaners…). The banks provide customers with a payment sticker (co-branded with Bling and the bank’s brand) and instructions on how to enroll their phone in the service.

The merchants are given a stand-alone device (called a “Blinger”) for payments acceptance. At time of purchase, the consumer taps the Blinger, the transaction is processed and the consumer and merchant both receive confirmation of payment – the consumer to their mobile phone and the merchant on their Blinger. Bling also supports a variety of merchant rewards, loyalty, discount, and couponing programs, all tied to mobile phone messaging.

Sounds like any debit card or open loop network-branded prepaid card, right? Wrong! There is no network brand on the sticker or the Blinger. Transactions are authorized by the consumer’s bank – Bling looks like a foreign ATM to the bank. Settlement in batch is done at night, between Bling and the banks, as a private, not network, settlement. The merchant doesn’t have to submit any clearing transactions – as long as they got the Blinger confirmation, they know their account will be credited that day.

Bling is finding that the operational management of this is pretty straight forward – and, significantly, that the processors which are serving many of their target banks are willing and able partners.

The Pitch

The pitch to the consumer is “coolness” and convenience – and the ability to access merchant rewards programs. The pitch to merchants is primarily cost – transactions are about 50% cheaper than traditional card acceptance.

But a secondary, and very strong, part of the pitch is the ability to deliver rewards based on things like the frequency of visits to a merchant – which the consumers can redeem instantly as they pay. Neither the merchant nor the consumer needs to keep track of anything – and, says Wences, “merchants love that.”

The pitch to the bank is the opportunity to get local merchant POS business – a business that many community banks have given up on as much of that business has migrated to large, national acquirers. When compared to a transaction where the consumer uses the bank’s own traditional network-branded debit card, the bank’s revenue can be three to five times higher.

This higher revenue is made possible because the middleman – Bling in this case – is taking significantly less from the merchant discount fee than is taken, in aggregate, by the many players in the traditional bank card value chain. As the community network grows, a bank can also earn money if their consumer shops at a merchant served by another Bling partner bank, but this is not a significant piece of the economics currently.

For both the bank and merchant, the “stay local” aspect of Bling is highly attractive. In fact, Wences said they were surprised by how strongly the “local” aspect of the pitch resonated with local merchants. Frankly, I’m not at all surprised – in my small community there is a terrific energy around several community programs promoting support of local merchants – but my community’s banking needs are served primarily by local branches of national banks. Bling is staying away from those communities – for now. I asked Wences how they were dealing with the local branches of big banks in the communities they are serving. “Right now,” he said, “we’re not approaching them.”

So just how big an opportunity is this? It often amazes people from outside our industry – or outside our country – that the U.S. banking market is as unconcentrated as it is.

Our estimates show that the “big three” banks – Bank of America, Chase, and Wells Fargo, even after recent acquisitions, account for only about 25% of bank deposits (consumer and commercial, bank and credit union) and only about 35% of debit card transactions. There are over 8,000 credit unions and over 5,000 community banks out there, serving local retail customers. Bling is betting that a lot of these smaller institutions will be interested in a new payment service that gives them a shot at playing a new role in their community’s merchant business.

Common sense tells us there is a lot of volume in local purchases. I remember seeing statistics years ago about what percentage of phone calls were made locally – I don’t remember the number, of course – but it was very high! If anyone has seen an analysis of what percentage of POS transactions are done in the cardholder’s home town, I’d love to know about it – I’m sure it’s very high. Then just factor in the percent of transactions done in small communities – certainly seems that it is a big enough number for Bling to pursue!

The Future

Bling clearly has its work cut out. Just pursuing the many small banks and communities that fit its profile will take time and resources. They are active in four communities right now, and expect to be in ten by year-end 2009.

At Glenbrook, we’re always interested in studying just how these new payments propositions are likely to evolve in the future. One development, of course, might be the move to NFC-based contactless payments built-in to the mobile phone – rather than the use of contactless stickers. Wences was pretty philosophical about that. “We are not,” he said, “waiting for that to happen….I expect non-financial applications will lead the way for NFC”.

Longer term, it is extremely interesting to note that while Bling is taking a community-by-community approach in its initial market development, they are also building a larger infrastructure. If my community bank issues me a Bling sticker and I travel to your community…. that sticker works when presented to the Blinger of your local merchant! A new network is born?

Maximizing Your Debit Portfolio [ATM, Debit & Prepaid Forum 2009]

2009-10-19T15:45:01Z

This is one of a series of posts with highlights of the ATM, Debit & Prepaid Forum 2009 preconference workshops. You can find an index of posts from the conference here.

Successfully Navigating the Debit Payment Evolution provided food for thought for debit portfolio managers and was led by Tony Ficarra and Jeff Fazio of FIS. The session began by providing an understanding of how the economy has affected the usage of debit by consumers and opportunities with new target groups like the under banked.

The FIS workshop also provided a valuable reminder of debit portfolio imperatives:

Penetration: increase the number of cards issued
Activation: increase the percent that are activates
Utilization: use incentives and strategies to increase consumer usage of the card

Many issuing and activation policies are more conservative these days than modern risk management techniques might require. Transaction risk monitoring and tools like POS denial at big risk merchants significantly reduce risk from Debit cards. For customers that are having trouble qualifying for a debit card, consider prepaid or debit for ATM use only.

To improve activation, it is possible to provide the consumer with instantly issued debit cards that are activated by the customer service representative in the branch as a new customer gets a new checking account (DDA). Putting hurdles between the customers and activation reduces the percent of the cards issued that will become active.

Utilization is primarily about loyalty and merchant relationships and FIS offers clients a loyalty platform with flexibility for a variety of rewards. One of the suggestions that stood out for maximizing revenues was developing a small business debit strategy. Segmenting small businesses from the consumer card portfolio allows the bank to manage risk for lending purposes. It also is another opportunity to offer a debit card. Businesses tend to have higher dollar volume and higher ticket sizes ($/transaction). These cards tend to bring higher revenues for the bank.