Barry McCarthy | Executive Profile | ATLANTA TREND
Making Mobile Pay Off
By Karen Rosen
Barry McCarthy is now President of the First Data Corporation Financial Services business. In this role, McCarthy leads the $1.4 Billion P&L with responsibility for more than 4,000 financial institution customers, and those institutions’ 600 million credit/debit card consumers. He also has responsibility for the STAR debit network, print/mail, plastics, remittance, IVR and Government businesses that processes over $2 trillion annually.
In Barry McCarthy’s perfect world, the Vikings in that credit card commercial wouldn’t snarl, “What’s in your wallet?” They’d say, “What’s in your phone?”
McCarthy’s innovations within the field of mobile commerce at First Data made him a natural to move into a new role last summer as General Manager of Asia/Pacific, Alliances and Government Solutions.
“Asia has wild growth,” McCarthy says. It’s also the first part of the world to adopt new mobile applications, which eventually make their way to the United States.
“We are looking at lots of mobile technologies to improve payment acceptance,” McCarthy says. “In some of these developing nations, there just isn’t good landline coverage. So you have to make connections wirelessly, otherwise you can’t accept a card in the first place.”
First Data’s merchant business is among its fastest growing areas, with a myriad mobile implications. In India, for example, First Data is using SMS messaging to text merchants every night the balance they received that day from card payments. Other applications would not only provide balance information and updates, but would allow merchants to make inquiries and manage their business from their handset.
“The U.S. is ahead of Asia on some core mobile technologies, but Asia is ahead of the U.S. on some applications and uses of the phone,” McCarthy says. “I was on a panel recently with the president of AT&T and I said really clearly that Asia was ahead and he disagreed.
“His thinking is that the U.S. technologies -- from the handset perspective and towers and network reliabilities -- are ahead of the rest of the world. That’s true, but that’s not my business. My business is about payments and consumer applications and commerce, and Asia is definitely ahead of the U.S. on that usage of mobile technologies.”
However, McCarthy says it will be years before everybody in the U.S. will have a smartphone to function in their daily lives. “If you think about how the mobile marketplace is segmented, there are smartphone users that really get value out of it, and some that just want to be cool,” he says.
The people who just want a phone on which they can talk and send a few texts may be tempted to switch to smartphones as the price comes down. Or they may be tempted by the things the smartphones can do.
Tracking a Pilot Program
McCarthy saw that firsthand in his previous position at First Data, when he ran the Mobile Commerce Solutions business unit. A 2008 pilot program with the San Francisco Bay Area Rapid Transit Authority (BART) was very successful.
“We went to the consumers and said, ‘We’re going to give you the phone of the future,’” McCarthy says. “It’s got an electronic wallet in it and you’ll be able to tap the phone at terminals and make a payment right out of your phone.”
McCarthy and his colleagues thought the consumer adoption cycle would be long, or that the sample group might not like the phone at all. “What we found is there is no adoption cycle,” he says. “Once a consumer has it in their hand and they see it being used once, they’ve got it.”
In the four-month trial, the 230 riders made nearly 9,000 trips on BART—tapping their phone to open the fare gate. They also could use it at Jack-in-the-Box fast food restaurants.
“The number one thing they said they were dissatisfied about is they didn’t have everything in the leather wallet on the phone,” McCarthy adds. “I don’t need that dumb leather thing anymore, let’s get it all on the mobile device.”
The test group liked the new technology so much, he says with a laugh, “We had a hard time getting the phones back. ‘Oh, no, no, no, this is part of my life I’m not giving that back to you.’”
In November, AT&T, T-Mobile, and Verizon announced the Isis national mobile commerce network. McCarthy says he can’t comment on First Data’s role, if any, but says, “Because of our position in the marketplace, we will always be involved in electronic payments.”
First Data has already launched a reloadable mobile device called a Go-Tag, which uses “contactless” technology. A tiny microprocessor chip can be put on a sticker and attached to a phone. It then talks to the point-of-sale terminal via short distance radio waves.
The second step is putting the contactless chip on a micro SD card that can be inserted into the slot of a phone, and First Data is offering this solution through a partner, Tyfone. The third step will be when it’s fully embedded in the phone like it was in the San Francisco test.
“One of the really brilliant things about mobile technology and one of my favorite data points,” McCarthy says, “is that the mean time to report a lost or stolen card is about 12 hours, but there are people who lose a card and don’t really know about it for weeks.
“If you lose your phone, the mean time to report a lost or stolen phone is under 60 minutes.”
Even More Uses for Your Phone
First Data is also working on a set of technologies revolving around “provisioning,” which take a credit card from approval to your wallet.
At this time, one of the company’s core businesses is making credit cards on behalf of banks, encoding them, attaching them to a card carrier and mailing them to customers. A little known fact: First Data is among the largest customers of the U.S. Postal Service. “In the U.S., we support more than 680 million cards on behalf of our financial institution customers as well as prepaid ‘gift’ cards for merchants across the country,” McCarthy says. “In the future, though, if there’s no leather wallet, how are you going to get the card instead into the phone?”
First Data is partnering with SK C&C, a South Korean company, to build a solution called Trusted Service Management that will provision the information over the air to your mobile device. If the mobile device is lost or stolen, it will securely re-provision it.
McCarthy predicts that in two years there will be a significant number of phones with contactless embedded in them “and the ability to manage your life from the phone.”
First Data also has a new solution called eGift social which ties gift-giving to social networks like Facebook. For instance, someone with a friend who likes Cold Stone Creamery can send the friend a hot fudge sundae through Facebook or e-mail. Recipients can use the redemption code in-store or online, and users with a Web-enabled mobile phone can just bring in their phone to show the clerk the code. If the message is sent through Facebook, the solution also posts a message to your Facebook wall, so others can learn about the application and send gifts too.
From Deodorant to Development
All of this technology is a far cry from McCarthy’s first job out of college as a Procter & Gamble sales rep calling on grocery stores and drug stores, “building displays and fighting for shelf space,” he says.
McCarthy, who graduated from the University of Illinois-Urbana, and got his MBA from the Kellogg School of Management at Northwestern University, was promoted through a series of sales management and product/brand roles in Ohio and California from 1986-98.
“I know more about deodorant, skin care, cosmetics and hair care than any man should know,” he says with a laugh. “It used to frighten my wife at cocktail parties when I would talk about what I did.”
After a headhunter call, McCarthy joined Wells Fargo bank as a vice president Marketing/Business Development and later as general manager in the ATM and debit business. At the time it was the biggest ATM network with about 6500 machines and about 14 million debit cards. McCarthy converted the ATMS from greenscreen technology and dialup protocol to Internet protocol and full-motion video.
At the peak of the internet craze, he started a micropayments company called MagnaCash. A digital content company bought MagnaCash in 2000 and through subsequent transactions the technology is now owned by Digital River (NASDAQ: DRV).
He then went to VeriSign, the internet security company, as vice president and general manager of its payments business, helping it become the largest gateway for Internet payments. After a brief stint in private equity in Milwaukee to support his wife, who was there as CFO of GE HealthCare-Americas, McCarthy moved to Denver to join First Data.
His first job at First Data was US merchant product management leader, and on a bookcase in his Atlanta office, McCarthy keeps the family of First Data countertop terminals that he helped create. The terminals are among the best-selling in America and process everything from cards to checks through TeleCheck, McCarthy’s work including these terminals and other large innovations, collectively deliver more than $500 million in revenue for the company annually.
The lessons McCarthy learned at Procter & Gamble still resonate with him, of “understanding what the customer wants, then designing a product for that customer, validating that that was what the customer wanted, and then promoting it like crazy.”
With more than 1,000 people on his First Data team, McCarthy tries to create a vision of what the end needs to look like, and then outlines a basic pathway.
“The Chairman of Procter & Gamble was not trying to decide the color of the label or the fragrance on the new deodorant product,” McCarthy said. “He wanted the people closest to the customer, people who were talking to consumers regularly, to make those decisions with data -- but always have the data to support their decision. I try very hard to do the same thing.”
Atlanta Telecom Professional of the Year Award
McCarthy was honored in November as the recipient of the prestigious Atlanta Telecom Professional of the Year award. “It was a true honor to be recognized with such a distinguished award and to share it with the exceptional Mobile Commerce team at First Data,” according to McCarthy. “We have made great strides this year toward our vision of migrating everything consumers do with a leather wallet to an electronic wallet stored on a mobile phone. We are especially proud to be recognized for our work on eGift Social, an application that allows consumers to deliver gift cards from Facebook to an individual’s phone, and our partnership development of an NFC-enabled microSD card. This award is both affirmation of First Data’s work in the mobile commerce space as well as our decision to make Atlanta our new home.”
5 Secrets to Success
1. There’s no substitute for hard work. Killing yourself with hard work, and wanting it more than anybody else will help you get ahead. It is a competition. You can be the smartest person, but if you’re lazy you’re not going to win. If I’m not as smart as you, but I work harder than you, I’m going to beat you every time. So it’s all about hard work, hard work, hard work.
2. You have to care passionately about what you’re doing, so it’s not just a job. You’re thinking about your work on the weekend. Maybe you’re not in the office working, but it’s on your mind.
3. Close your mouth … and open your ears. You never learn anything by talking. You only can learn by listening. I personally find the more my mouth is closed, the more I listen, the more I learn and the better job I can do.
4. Empowerment and respect. Some of the best ideas come from the most junior people. If we’re not open and empowering of everybody, you never hear about some really great ideas. I think a lot of people rise through the ranks thinking after every successive step, they’re successively more important and they know better than anybody else. My experience tells me that the higher you go, the harder you have to work to make sure you really hear everything. Open your door and listen; otherwise you could become really isolated in some ivory tower, making really bad decisions.
5. Genuinely care about your people and your team. This is not about compensation, having a nice holiday party or giving team members a nice Christmas present. It’s about caring about them as individuals, about their career, about their family and really trying to help them reach their own personal goals. I think people not only respect leaders that try to sponsor and help them; they’ll work harder, be more loyal and get better results.
Barry McCarthy is General Manager of Asia/Pacific Alliances and Government Solutions at First Data. Atlanta Trend expresses its thanks and deep appreciation to Barry McCarthy for sharing his thoughts with us.