t takes a very special entertainer to pull off a Jimi Hendrix tune on acoustic guitar. Now imagine that entertainer singing "Green Acres is the place to be" but with Hendrix-like inflection and tone, or pairing an AC/DC sound with a Dan Fogelberg folk song or even a Led Zeppelin rhythm with a Dr. Seuss poem.

Mike Rayburn, "the world's funniest guitar virtuoso," astonished attendees at the 2006 ETA Annual Meeting & Expo by demonstrating how taking a different, innovative approach to well-known music creates a pleasant and unexpected result.

Compare this to what the electronic transactions industry has done over the last 30 years. It is an industry built largely by entrepreneurs and innovators, who through fresh approaches to payment processing, using the varied rhythms and tempos of business, have grown the industry into what it is today.

Visa U.S.A. President and Chief Executive Officer John Philip Coghlan, ETA's opening keynote speaker, pointed out how far the event has come, referring to the 30 or so tables that once made up the exhibit hall in the early 1990s. (This year, nearly 185 companies set up booths.)

In spite of this advance, however, Coghlan said that even more innovation is needed to drive electronic payments growth around the world and that Visa is continually looking for new "ways, reasons and places" to do this, but it can't do it alone.

He spoke of a $21 trillion opportunity to migrate cash and checks to electronic payments, and the need to improve collaboration, innovation and security in the payments system.

Even though fraud rates within the Visa system are at historically low levels, as electronic payments continue to increase, the dollar value of fraud is increasing. "If consumers don't trust us to protect our data ... it will go south for all of us," he said.

"We need your help, and we need your merchants' help. We have to do much more. ...We are all partners in this business."

Focused on security

According to Carla Balakgie, ETA's Executive Director, more than 3,100 individuals (500 more than last year) attended this year's Annual Meeting and Expo, held April 18 - 20 at the Mandalay Bay Resort & Casino in Las Vegas.

Preconference activities on Monday and Tuesday included ETA University courses, the annual President's dinner, a golf tournament, a technology super session: "Payments Security, Mystery Solved," Compliance Day, and a cocktail reception for new member, first-time and international attendees.

And Women Networking in Electronic Transactions (W.net), an organization independent of ETA but comprised largely of ETA members, had its third meeting (see "W.net: One step at a time," in this issue of The Green Sheet).

On Wednesday, educational sessions covered hot topics such as background checks, compliance with the Payment Card Industry (PCI) Data Security Standard, five ISO success stories and vertical market opportunities. Thursday's topics included recruiting and retention, the future of payments, and contactless payments.

It's no coincidence that many of this year's sessions addressed security. As Visa's Coghlan pointed out in his keynote speech, it's the number one issue facing the industry.

He said the industry's most important objective should be compliance with the PCI standard. "We expect to reach two-thirds of the merchants by the end of the year."

This year ETA offered "Compliance Day," an all-day unprecedented preconference event. More than 230 individuals attended. Representatives from each of the four major card brands: Visa U.S.A., MasterCard International, American Express Co., and Discover Financial Services, discussed their policies on registration, PCI compliance and security.

Although the card brands are competitive on many levels, PCI is one area in which they have joined forces to fight fraud and improve security across the payments system. They are also collaborating on a number of other initiatives, including the use of industry terminology.

All four card companies agreed that their use of different terms to define the same entities has created much confusion, so they are working to focus more on job function in defining entities than on job title.

At times, discussion during Compliance Day became heated, with ISOs and even merchant level salespeople in attendance firing questions at the card companies' representatives about their operating rules and agent registration.

One attendee questioned the benefits of agent registration, which requires hefty fees (in other words, what does he as an agent get for registering?).

A Visa representative responded by saying, "The value in registering is that you are a trusted, known entity within the Visa payments system, and people market that.

"The fees help support the staff and resources behind PCI, which helps facilitate the payments system and makes it easier for you to play in it."

A MasterCard representative added that registering is a way to protect the system's integrity so all parties involved know with whom they are doing business. It's a common risk management factor.

"If someone is a registered ISO, MasterCard wants to know who that registered ISO's employees are selling under that name," he said. "We are especially concerned about the employees (other agents) who go off on their own and sell under a different name."

According to Visa, about 1,300 ISOs (which includes third-party processors and member service providers) are currently registered.

Visa is developing what it calls the Agent Identification Service (AIS) to assist the processor-risk and agent-risk programs of VisaNet, Visa's global transaction processing network.

AIS will systematically identify third-party servicers and merchant servicers (collectively "agents") and report activity to acquirers. It will also advise acquirers of instances when unregistered agents use their bank identification numbers.

Interchange debate continues

A panel presentation on the future of interchange at last year's ETA Strategic Leadership and Networking Forum was so popular that ETA included it on the 2006 Annual Meeting's agenda.

Brian Wallach, a Partner at Howrey LLP, a firm involved in the current interchange litigation; Alex Pollock, Resident Fellow at the American Enterprise Institute; Thomas Brown, Vice President and Senior Counsel at Visa U.S.A.; and Tom Wimsett, President and CEO of the merchant acquirer Retriever Payment Systems, each gave his view in the debate over interchange.

Here are some highlights:

"At this point in the litigation [47 lawsuits concerning interchange filed against the card Associations have been consolidated in Brooklyn, N.Y.], the only thing I know for certain is that the lawyers are the big winners," Wallach said. He predicted that the earliest a trial would start is 2009.

Visa's Brown attempted to put the issue into context. "Visa used interchange to drive innovation in the industry," he said. "We want to use this mechanism to take transaction volume from cash and check to [electronic payments]. The interchange debate is distracting us from that. People need to assume responsibility for the system that we have."

Providing an acquirers' perspective, Wimsett said, "I don't think the [interchange] system is broken, but it certainly could use some tweaking." No one can dispute the value the acquiring side brings to the current structure: servicing merchants, providing transaction authorization, processing and settlement, he said.

"But there are significant costs to acquirers for this: underwriting, risk management, compliance, information technology, costs of running our businesses. Not having a direct relationship with the consumer [like the card issuers do] when it's a consumer-driven economy is a little disturbing."

Expo exhibits

This year the exhibits were a lot less flashy - a far cry from the sculpted ice bars, chocolate fondue waterfalls, Vegas show girls, and snatch-the-cash money booths of 2005.

"It seemed to be less of a party atmosphere and more of a let's-get-down-to-business expo," one attendee said.

Balakgie agreed. "There seemed to be a greater level of professionalism and focus."

Exhibitors demoed new products, promoted their services and new partnerships; some even announced company name changes (see "Name change: Vital is now TSYS Acquiring Solutions" in this issue of The Green Sheet).

There were still plenty of fun giveaways: from iPods, giftcards, Xboxes and wireless POS terminals to SIRIUS satellite radio systems; even a trip to Hawaii, was offered. Retriever Payment Systems held a Texas Hold'Em poker tournament, which culminated in ETA attendee John Mayleben of the Michigan Retailers Association winning a $10,000 jackpot.

This year The Green Sheet awarded 12 $250 Ticketmaster gift certificates every hour.

We also handed out hundreds of complimentary sets of Paul H. Green's books Good Selling! The Basics and Good Selling! Thirteen Weeks to Personal Success to those who stopped by our booth.

Mark your calendars

The 2007 ETA Annual Meeting & Expo will return to the Mandalay Bay Resort & Casino, April 17 - 19, 2007. For more information about ETA, visit www.electran.org