Article

Q&A: ISO of the Year CEO discusses growth strategy and future considerations

PAI's John Leehy, III talks about why ISOs should be excited.

July 13, 2011 by Kim Williams — Reporter, NetWorld Alliance

Payment Alliance International (PAI) was awarded the 2011 ISO of the Year by the Electronic Transactions Association (ETA). The award annually recognizes a member company whose actions move the payments industry forward, while also exhibiting high ethical standards and successfully addressing industry challenges with demonstrated business results.

ATMmarketplace.com today talked with CEO John Leehy, III about the award, PAI's growth strategy and what he thinks is important for ISOs to consider now and for the future.

Founded in 2005, PAI has more than 80,000 customers and is the largest ATM deployer in North America, with more than 50,000 locations in the PAI Alliance Network.

The following responses have been edited for brevity and clarity.

Why do you think PAI was chosen as ISO of the year?

I think the strong growth we've had in the past five years was probably a factor, as well as our approach to the business and how we serve our customer. We've also had a lot of success in a fairly tough market.

I should point out too that we have a lot of folks on the payments team working with other people throughout the industry. They are heavily involved, passionate and excited about the industry, which I'm sure reflected to our benefit. 

Our business is more than just merchant-acquiring, we truly are a payment solutions provider for small- to mid-sized enterprises. We have a great merchant-acquiring business, but we also process debit and credit, we have remote deposit capture and we are the largest deployer of ATMs in the country. We have 200 community banks and credit unions that we serve and we do bank branding.

So, when we look at the marketplace and the opportunities in front of us, we believe that a large portion of the marketplace isn't looking to have five different vendor relationships, but in fact, is really looking for one trusted partner that can provide those services.

How did PAI grow during the tough economic climate of the past few years?

We have a really strong sales effort and an unstoppable group of market partners and distributors, and that really makes a difference. I think acquisitions have been a big part of our growth. We've done 10 acquisitions in the past five years, and that really comes down to the teams out there that get the vision and want to be a part of it. Every time we do an acquisition, we end up with not just great customers, but pick up additional distribution.  

We've also got great organizational talent. We've got so many folks driving our business today that have come to us through acquisitions. These are the people making the difference in our business every day.

This economic downturn has been ugly, and I wouldn't wish it on anyone. When you had a near total collapse of the revolving credit market, the merchant acquiring business suffered because all of our customers were suffering. And most players in that space were particularly focused on a specific product and serving that market.

Our business is more balanced, so at the same time that credit was collapsing, and same-store sales were declining, the ATM business was absolutely thriving, so it was counter-cyclical. That kept us healthy when I think some other folks were a little more single-line or product-focused in the credit card space.

How will the future of the ATM industry be similar to or different from today's environment?

When you talk about changes, and how things will be similar or different, the first thing, and the most obvious, is you have to talk about the application of technology, both externally and internally.

Externally, the reality is that our customers can perform a secure transaction from anywhere at just about any time. They can move money, or more specifically, value from a mobile device instantaneously. Consumers are no longer tethered to a piece of plastic anymore. We've got cardless ATM transactions and money transfers that are occurring.

Internally, the speed and information that I get access to now in order to operate the business is just so different and will continue to be. I wake up in the morning, and I can check my iPhone and get call center performance stats from the day before, a list of the customers we've boarded and the products they've selected. I even get an assessment that tells me if we've got any credit merchants that are experiencing a bunch of chargebacks that might indicate some risk. Those are significant changes.

On a macro level, the role that consumers are playing in determining a payment solution is that of a vocal participant. They know how they want to pay and when they want to pay, and as a retailer and a provider, if you can't accommodate, they'll go someplace else.

In the old days, or 10 years ago, we could work with our retailers and pretty much dictate how the consumer was going to pay, but it doesn't work that way anymore. And in the future, it will be even more pronounced. 

What would you say to ISOs (IADs) about the future?

Get excited. It's a great time to be in the business. When you have these kinds of changes in technologies and consumer preferences, they cause disruption. And unless you're the largest player in the business, with the lowest cost, and the most customers, then you want an element of chaos. 

The role that most of us play in the marketplace is that of a market intermediary. We take new technologies, package and translate them, and match them with smart and cost effective distribution, and get them out to the end-user. When a product is commoditized, there's not much of a need for that role.

But when a marketplace is full of confusion, options and technology, then that's exactly when a marketplace needs what all of us do. I would encourage everyone to look at that and recognize that.