Exclusive Q&A with Greg Schaub, EVP of U.S. Business Development, Chase Paymentech
Barnes: What are the approaches that businesses are taking to grow their business, and what are you hearing from them in the marketplace?
Schaub: I think with the clients we’re talking to day in and day out, our vantage point is unique. We have connections with Silicon Valley and the startups, but we also have a pretty big listening post collectively. We have 5,600 branches that do business with two million plus small-businesses owners everyday. Small businesses and clients are looking to be more efficient. Our product set has evolved to keep up with that from traditional retail acceptance and transition into the newer technologies in our applications that we now market to a lot of these small businesses. We have our own ‘Checkout’ solution that is part of the smartphone and tablet market that has been well received by SMBs and we sell through the Chase brand across the United States and also direct through our Chase Paymentech website and through third-party partners.
Barnes: What are the merchants telling you about customer experience, and how do they want the point of sale experience to look like from a technology perspective?
Schaub: I think merchants generally want to make things simpler and take the friction out. Consumers themselves love things that help them speed through the purchase process. For example, take Chase Mobile Checkout, which customers use as a line busting application. Merchants can securely and efficiently accept card payments from their smartphones with the Chase Mobile Checkout app and encrypted card reader. Our focus is around the checkout experience, so if you think about a lot of the applications around the marketplace today - and there are a number of them that we work with and connect to, our focus isn’t on inventory management and a lot of the downstream parts of the POS application. It’s really on making sure that payment happens as quickly, securely, and easily as possible. Then we support that with all of the financial reporting that occurs in the backend with the security and soundness that you can expect from a big firm like JPMorgan Chase. I see the innovation going on with tablets and POS systems as phenomenal, and in a lot of cases it adds real value to the consumer experience and it’s one that coupled together with what we do with the payments side of that transaction is one that makes a better experience for the customer.
We’re often asked if we compete with these different mobile and tablet payment providers out in the market place. It’s true to some extent that the Chase checkout solution works for all small businesses but it’s not designed to be a vertically focused application that you see a lot of the emerging companies specializing in.
Barnes: What is your opinion on the traction and lifespan of the mobile wallet and its adoption in the marketplace?
Schaub: We tend to think of the mobile wallet as an extension of the ecommerce space but more of our clients are increasing purchases through smartphones and tablets. We support various mobile wallets and those are in place used in traditional merchant environments. Our goal is to stay as connected with the apps that are out there that focus on these niches but still allow transactions that are safe and secure through Chase.
Barnes: What’s the process of working with startups? Does Chase have a way to interact with startups as it relates to adoption of their services and advising merchants on Paymentech’s suites?
Schaub: We have the good fortune of working with a lot of the early stage startups. Our proprietary platform is geared toward some of the largest global corporate clients that do business in this space. It’s the idea that at some point as a new startup you need to monetize your business. When we come in, we want to help monetize and bring them to scale not only in a particular merchant segment but also internationally. Our focus in the marketplace is around having our own set of tools that these merchants can connect easily into Paymentech, be able to utilize the platform that we’ve have and the methods of payment that we support with an international capability so that they can have customers not only in the U.S. but also around the world. When we talk to some of these clients, they express that it’s a very desirable product set and a desirable solution for them. It becomes a very fragmented ecosystem; it’s easier as you scale your business to use one provider in the payments platform that will give you the product suite you need, and to enter new markets. I find that it’s one of our core strengths when working with startups.
Barnes: Do you have a group tasked with that interface into the startup community?
Schaub: Yes. JPMorgan Chase is a well-known brand and various businesses that we work arm and arm with, whether it’s the business banking side or investment banking side, all of these are touch points that these clients that we deal and interface with. So for us, it’s a very natural conversation and oftentimes the leverage and value we bring transcends just the payment capabilities that Paymentech provides. For example, small-business startups typically work with a banker to get established and have a financial relationship and that evolves into needing more services and bringing in the merchant component to it at the right part of that conversation. As the client grows and their needs become more complex, the banker is part of that service model. What we find helpful for our clients is that it’s a very coordinated and collaborative effort. It’s not just a one-off relationship traditionally in the payments industry.
The relationship can have stages to it from a small-branch startup opening a checking account to a revolver loan, to going public or mergers and acquisitions activity. All of these are things that growth-oriented companies are working with JPMorgan to do, and we’re right there alongside of them. So our product fits very nicely across the firm and is very integrated into client conversations.
Personally having been at Paymentech for a number of years now, it’s been exciting to be able to see that transition. By taking a best in class product set revolving around payment processing and marrying it to the JPMorgan Chase infrastructure, service model, safety and soundness around anti-money laundering (AML) and ‘know-your-customer’ (KYC), and very centric to keeping your payments secure has really been – for me anyway, the most exciting part of this proposition.
Barnes: What do you see on the macro trends of security? What are you making sure happens in the marketplace around security and who will the winners and losers be?
Schaub: Around the payments space, security is going to play more of a role than it has in the past. I think technology has done a great job and is really transforming the payments space. The thought leadership is very much centered on technology fueled by the cool apps and social media applications that are out in the marketplace today. Though there’s a lot of excitement there, what hasn’t been the focus is the backbone, meaning some of these compliance and controls that go around traditional financial institutions and around the movement of money. As that becomes much more in the consciousness of consumers, they’re asking “whose got my data/how is that transaction moving” then it can only help that you’re a part of a financial institution or that you are affiliated with someone who has those controls in place. The winners will be the providers who can integrate into technology coupled with the backbone provided by, say Chase Paymentech, around safety and security. The losers seem to be standalone technology applications that don’t have the ability to have all those safe controls around the transaction. If you look at the payments industry it’s really dominated by a lot of third parties. JPMorgan is unique because we are the largest firm to really take payments and the acquiring component of that and move it in-house. We did it back in 2008 when a lot of the other big financial firms were outsourcing payments because they didn’t want to be in it so they sent it to third parties.
If you look around the industry, JPMorgan Chase is unique in the way our operating model works today around payments and so I feel really good about how we’re positioned. There will always be new applications and new technologies emerging. Our viewpoint is that those companies that come up with new technologies appear on the landscape, we want to be the backbone provider for that client. Paymentech offers a global payments platform that’s able to adapt to all the technologies around mobile and different international currencies and the other product sets that these clients need with all the safety and soundness that comes from moving money. If you think about where VCs invest money and where new capital comes into the payments space, it feels like it will flow to those companies that are able to have a strong compliance agenda coupled with the latest and greatest technology. I’m not sure if that was the case two or three years ago. I think there was more focus on enablement in new ways of moving money but it will need to be balanced with the compliance and controls part of that agenda. We spend time talking to all the stakeholders through the JP Morgan Chase bank relationships that we have in place in the market.
The community has gotten a lot bigger and there’s a lot more complexity to it and it’s a very exciting time for us, we’re in a great position. I wish we had a crystal ball to see which mobile wallet are going to win or which tokenization standards will be there. When you’re JPMorgan Chase with a large percentage of the payment card base and these huge scales, we’re very confident that whatever those emerging technologies are, we’re going to be there to support them. I think our customers count on that and over the long run that drives more value for us and I hope it puts us on the right side of the winners and losers equation.
About Chase Paymentech
Chase Paymentech, the global payment processing and merchant acquiring business of JPMorgan Chase & Co. (NYSE: JPM), is a leading provider of payment, fraud and data security, capable of authorizing transactions in more than 130 currencies. The company’s proprietary platforms enable integrated solutions for all payment types, including credit, debit, prepaid stored value and electronic check processing; as well as alternative and mobile payment options. Chase Paymentech has combined proven payment technology with a long legacy of merchant advocacy that creates quantifiable value for companies large and small. In 2013, Chase Paymentech processed 35.6 billion transactions with a value of $750.1 billion. More information can be found at www.chasepaymentech.com.
About Greg Schaub, EVP, Chase Paymentech
Greg Schaub is executive vice president for Chase Paymentech’s business development efforts in the U.S. He and his team engage clients across multiple payments channels including eCommerce, strategic partnerships and digital, as well as within JPMorgan Chase. Greg has more than 25 years of sales and marketing experience – 15 years with Chase Paymentech – in the payments and Point-of-Sale (POS) industries.
Andrew Barnes, Senior Executive Writer, Emerging Markets
Barnes is a self-confessed payments and commerce “geek” working in Silicon Valley and San Francisco. He utilizes c-level relationships in tech, startups, retail, and financial institutions to identify emerging market opportunities and analyze challenging business models. Barnes recently launched “Digging Deeper,” a published series focusing on startups and key innovators that are solving digital payments and mobile commerce problems worldwide. He has held executive business development positions in Asia with Sprint, Global One, and 2Roam Mobile, and is an Advisor to the Electronic Transactions Association (ETA). Barnes has an MBA from Waseda in Tokyo 早稲田大学大学院 and a BA from Penn State. He can be reached on Twitter @AndrewinSV and Linkedin.