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Education

ISOs take power I never returned to the post office.
Consolidation was as much a part of the industry then During this time, Visa saw little benefit from small banks,
as it is today. In 1996, Roger Pierce left Visa to join First Humboldt Bank and Bank of Oakland, for example, run-
Data and was going to consolidate the many First Data ning an acquiring operation. Visa viewed small banks,
platforms onto First Data North or CES. The Omaha au- especially banks accepting non-traditional merchants, as
thorization platform was to be decommissioned, and all greater risk—and with no measurable additional revenue.
clients would be serviced in an alliance model where First Visa was implementing a matrix that limited acquiring
Data managed nearly all aspects of merchant services for volume based on the acquirer’s volume, capital, charge-
its banking clients. back threshold and card entry method. Had the plan
been implemented, Humboldt Bank would not have been
Clients revolted. First Data serviced many of the large ISOs able to continue on our growth trajectory. The Bank of
of the day, and they would not turn over their servicing to Oakland’s acquiring manager, Tim Jochner, and I formed
a corporate entity and have their portfolios managed like the Bankcard Acquirer’s Rules Committee (BARC) and
a bank portfolio. Omaha remains a relic, and its legacy solicited other small banks to petition Visa to modify its
tech stack is expensive to maintain. But its functionality pending implementation of the matrix. To my surprise, it
and real-time fraud capabilities were a necessary tool for worked, and Visa backed off. Stay tuned for the next in-
many risk-seeking acquirers and ISOs during the mid to stallment of "Payments, a retrospective: One professional's
late '90s. journey."

Back then, each chargeback notice came to the bank in an As founder of Humboldt Merchant Services, co-founder of Eureka
individual orange letter. The post office loved us. We were Payments, and a former executive for such payments innovators as
single-handedly responsible for half the mail in Eureka, WePay, a division of JPMorgan Chase, Ken Musante has experience in
Calif., and each envelope had my name on it. One day, I all aspects of successful ISO building. He currently provides consulting
went to the post office to pick up a certified envelope. I services and expert witness testimony as founder of Napa Payments
gave my name to the clerk. Her eyes went wide. She had a and Consulting, www.napapaymentsandconsulting.com. Contact him
smile only a postal employee could muster. “You get ALL at kenm@napapaymentsandconsulting.com 707-601-7656 orwww.
the mail!” she yelled with excitement. linkedin.com/in/ken-musante-us.

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