STRATEGIC PARTNERS
Bipin Shah, one of the original architects of the MAC network, is crafting a strategy for his new company, Genpass Inc., that relies on some of the same key components he used to build MAC: acquisitions and new product development.
February 11, 2002
What does Bipin Shah have up his sleeve?
That's a question on the minds of many in the EFT industry since Shah emerged as president and CEO of Genpass Inc., a newly-formed company owned by the private equity firm of GTCR Golder Rauner LLC, last spring.
Shah, who is known as an industry visionary, isn't sharing his business strategy. "But I'm going to have a lot of fun, that's for sure," he said.
As the former chief operating officer and vice chairman of CoreStates Financial Corp., Shah was one of the creators of the MAC ATM network. During his tenure at MAC, he helped create and develop the market for POS debit transactions at gas stations and supermarkets in the late 1980s.
The inspiration for bringing debit to the supermarket hit Shah in 1986 while he was standing behind another customer writing a check for her groceries. He said he realized "that check can bounce, but MAC doesn't bounce."
The key to any new product, Shah said, is simplicity. "Give (consumers) something that doesn't change their lifestyle, but improves it. When you ask for a change of habits, that takes a long time. Don't ask the consumer to carry another card or do anything differently than what he's used to doing."
Identifying new distribution channels such as the supermarket is a Shah trademark. "Access to money - that's what it's all about," he said. "There are a lot of other channels out there, and we want to open up those channels over time."
Shah believes that smaller companies like Fort Washington, Pa.-based Genpass are better equipped for innovation, because they don't always adhere to traditional business models.
"You need total freedom with no strings attached," he said. "If you don't do that, you're not going to get any new products out there; you'll just have staff meeting after staff meeting."
Shah also helped lead the drive toward EFT network consolidation, buying several small networks for MAC - including the CashStream and Treasurer ATM networks and BuyPass and AGI POS businesses. As early as 1985, Shah predicted that the number of networks would dwindle until only two or three large ones were left.
Since then, the number of networks in the U.S. has shrunk steadily. In the past year alone, MAC owner Concord EFS purchased the Cash Station and Star networks. The PULSE and NYCE networks also acquired smaller networks through acquisitions or mergers.
In the EFT industry, as in any other industry, "leaders consolidate," Shah said. "You can only grow 10 percent to 20 percent through market power and sales, whereas you can double in size through acquisition."
Indeed, one of Shah's first moves with Genpass was the acquisition of the Dallas-based MoneyMaker networkfrom Affiliated Computer Services in July. According to ATM&Debit News, MoneyMaker in March ranked ninth in switch volume with 19.2 million transactions and fifth in ATM driving with 15,796 machines. It now operates as Genpass Technologies Inc., a Genpass subsidiary.
The deal also included ACS' ATM service business, now known as Genpass Service Solutions Inc., and a number of ACS-owned machines, some in high-profile locations like 7-Eleven stores.
MoneyMaker just announced a five-year contract extension with E*TRADE Access, Inc., the former Card Capture Services and now a wholly-owned subsidiary of E*TRADE Group Inc. Under the agreement, MoneyMaker will drive up to 5,000 new ATMs for E*TRADE Access over the next five years.
MoneyMaker is also expanding into international markets with the signing of Bermuda Commercial Bank, Ltd., headquartered in Bermuda, and of First Curacao International Bank with headquarters in Netherland Antilles.
The international contracts include EFT processing and transaction authorization services for Visa Electron and MasterCard debit card products.
Last month, Shah announced Genpass would buy the Money Belt network, which ATM&Debit News ranked 15th in switch volume, from First Tennessee Bank. And another acquisition is reportedly in the works.
As the number of networks dwindles, "we keep moving up by default," Shah said.
In contrast to most other EFT companies, "we can do everything," Shah said. "We can switch transactions, we can drive machines, we can service machines, and we can deploy machines."
All of those businesses are "important parts of the equation," he added. "The larger the number of ATMs you drive, the larger the number of locations you own, the larger the number of debit cards you have, the greater the volume you shall receive."
