Discover’s Joe Hurley Talks PayPal, UnionPay and More (May 2013)
Joseph Hurley has been with Discover since 1985 when the then-small company with the big idea—cash-back rewards—got started. He has held positions in marketing, product management, government relations, and network products and services. From 2008-2010, Hurley was deputy president of Diners Club International, and from 2003-2008 he served as head of global client relations and vice president of Discover Network strategic development. For more than three years now, Hurley has been at the helm of global business development for Discover Financial Services, overseeing strategic partnerships; such as the point-of-sale acceptance deal with PayPal; merger and acquisition opportunities, including equity investments; and managing international network alliances, such as UnionPay, JCB and RuPay.
In April, Hurley, fresh off a flight from India, sat down with Paybefore at Card Forum in Boca Raton, Fla., to discuss Discover’s growing global footprint, the rise of domestic payment schemes, and Discover’s continued emphasis on innovation and partnerships.
Paybefore: What does heading up global business development entail?
Discover’s net-to-net partners like BC Card in Korea include Discover, PULSE and Diners Club marks on the back of their cards, so cardholders know what acceptance marks to look for overseas.
Joseph Hurley: I’m responsible for three key areas—M&A, global net-to-nets and strategic alliances. For example, I spearheaded the acquisition of PULSE and Diners Club, but we also take equity positions in small payments technology companies and my team is responsible for that. More often than not, we keep those investments under the radar. My team also handles global net-to-nets, as well as larger strategic deals. Recently, business development for prepaid also came under my purview.
Paybefore: Can you explain what you mean by global net-to-nets? Would that be like your alliance with UnionPay?
JH: Depending on which research you’re looking at, there are probably 40 to 50 substantial payment systems around the world. Those systems are generally domestic and there are more today than there were a few years ago—RuPay in India, China UnionPay, SmartLink in Vietnam. What we’re seeing is that governments in a lot of countries don’t want to be told how to run their payment systems, but they know they need them to further their economies and societies. I just came back from India where we just finished our first ATM transaction in that country through our partnership with RuPay.
Paybefore: What are the advantages of a net-to-net? Why not just increase Discover acceptance in those markets?
JH: Those domestic networks provide us, many times, with full acceptance in their countries. They have great relationships with local banks and merchants, and they can help us. At the same time, they need a global footprint because they need their cards to be able to be used around the world. We can provide them with the infrastructure to do that. So, in their country, the transactions run on their network and under their rules. But internationally, the transactions run on our system.
In the case of India, RuPay just turned on 110,000 ATMs in the country for us. They are the national switch, controlling 95 percent of the transactions. Next we’ll work with them to push out POS acceptance. We have a three-phase process with our net-to-net partners—ATMs, POS and then cards. The partnership is very beneficial for both parties.
|PayPal and Discover Teaming up for POS Acceptance
Perhaps one of Discover’s most talked about partnerships is a deal it struck with PayPal last summer that will enable the eBay subsidiary to reach millions of U.S. merchant POS locations in the U.S. through the Discover Network. Starting on April 19, the companies began rolling out to Discover merchants and are on target for PayPal to be accepted at 2 million merchant locations by the end of this year, according to a PayPal spokesperson.
Speaking at Card Forum in Boca Raton, Fla., in April, Don Kingsborough, PayPal’s global vice president and general manager of retail and prepaid, shared the stage with Discover’s Joseph Hurley, senior vice president, global business development, to talk about their partnership and their vision for the future of payments.
“All of us are at the beginning of this revolution,” Kingsborough said. “Our relationship is ever-expanding,” he added, describing the companies as yin and yang counterparts. “We’re two companies that have a vision for the future that is very similar … and Discover will help us get there much faster than we could on our own.”
In addition to providing PayPal with ubiquity at Discover’s U.S. merchant acceptance locations, Hurley said Discover brings great relationships with merchants and acquirers to the partnership. Meanwhile, he said PayPal offers a new perspective on technology. When asked what makes for a good payments partnership in today’s evolving industry, Hurley said, “Companies realize they need help … and are looking for complementary capabilities.”
It’s also about having a common vision, and “having the guts to go do it,” added Kingsborough, who said he envisions a world in which you don’t pull out a card or wait in line to pay. Although Kingsborough didn’t specify details about exactly what the rollout would entail in terms of how consumers would use PayPal at the POS, he said the company will begin by focusing adoption efforts on the most active PayPal customers and retail partners will later offer incentives to consumers to pay with PayPal.
When the partnership was first announced in August, PayPal said it would issue payment cards to American users that could be swiped at any Discover-compatible payment terminal, and customers also would have the option of accessing their PayPal accounts by entering their mobile phone or PIN numbers.
Paybefore: How long does it take for each phase?
JH: It’s usually a six-month implementation cycle for each one. Of course, when you’re up against a vast geographic area and 1.3 billion people, it can take a bit longer.
Paybefore: When you get to the card piece, would it be Discover cards being issued in these markets?
JH: If you look at Korea, we have a relationship with BC Card. The front of the card (shown above) has the BC Card logo and on the back it has PULSE, Discover and Diners Club. When cardholders are traveling, they look for those marks on the back of the card. We refer to them as marks rather than brands. The brand is theirs. We’re supporting our network partners in their branding, not trying to take them over. I think that’s a difference between how our model works and maybe the model of our competitors.
Paybefore: Let’s talk about M&A and equity investments in the mobile and emerging payments arena. There are so many companies entering the market now. How do you make the right bets?
JH: I can’t get into our overall M&A strategy, but at the end of the day it’s a judgment call. I have a pretty talented team that’s examining these companies. If there was a silver bullet, somebody would have found it by now. That said, you do have to place some bets. We try to take a logical approach and consider whether we think the company is solid. We look for a strong management team first and then market relevance. And we consider the partnership perspective: Can we help them and can they help us?
Paybefore: In payments right now there is a lot of emphasis on the “wallet wars.” What should we be asking instead of who will win?
JH: I think the better question is why. Why are they going to win? When you think about the entire value chain, what’s the value created for merchants and for consumers and, therefore, why is this or that going to win?
Paybefore: What are you working on that has you the most excited?
JH: We’re very excited about our relationship with PayPal. Don Kingsborough and I will be talking later today about why it made sense and the power of that partnership [see sidebar]. What excites me is we can take assets we have and leverage them for companies that have created new ways of looking at the overall payments ecosystem beyond just payments.
Paybefore: You’ve worked at Discover for decades now and at a time when the payments landscape has changed tremendously. What stands out?
JH: It’s been a fantastic ride. From a business case perspective, it’s amazing that we were able to launch a business that has grown to the size it is now. I remember when we were knocking on merchants’ doors asking if they’d be willing to accept a card that didn’t have a name yet.
For me, the entrepreneurial spirit of Discover is what helps carry us as a company to continue to be a driver of change. I think a lot of companies mature up after so many years, but we work hard to keep alive the entrepreneurial spirit by continuing to challenge the status quo.
Our partnership approach is part of that. When you’re not the biggest, you look to partner with people who can help you to become more significant, yes, but also partners that you can help grow.
Paybefore: As far as some of your global partnerships, are there particular markets you’re focused on right now?
JH: From a net-to-net perspective, we announced a partnership with EUFISERV in Europe in December, Interswitch in Nigeria in March. We have implementation in India with RuPay, a strong relationship with JCB in Japan, UnionPay in China. We have things going on all around the world. Global business development means we are working all around the clock and have people located all over the world, from China to London. But one of our greatest assets is our partners who have such deep, on-the-ground knowledge of their markets. Unless you hire that entire company to be your company in that country, you couldn’t match it.
We can learn a lot from how some of these domestic schemes are approaching the world. We’re a big supporter of the domestic schemes, and I think it will benefit us. One of our challenges is keeping up with how fast we’re growing.