1. “Our
culture
encodes
a
strong
bias
either
to
neglect
or
ignore
VARIATION.
We
tend
to
focus
instead
on
measures
of
central
tendency,
and
as
a
result
we
make
some
terrible
mistakes,
o:en
with
considerable
prac<cal
import[ance].”
-‐Stephen
Jay
Gould,
naturalist,
1941-‐2002
8. Built Business Intelligence system that simulated customer
behavior and automated inventory management.
Changed company pricing methodologies. Improved
NOP Rates by 600bps in less than 8 weeks!
9. Designecd Crop Insurance Models to estimate crop yields
and pricing by county; reducing risk of insurance
selections based on ‘averages’
10. Rebuilt Best Buy’s credit card portfolio through Analytics by
focusing on consumer purchasing patters (and
influencers).
21. Back in the
Day
To access your funds for
(when
Pea
Green
was
cool…)
payment, your Cards/Checks
were processed manually
22. Back in the
Day
To access your funds for
(when
Pea
Green
was
cool…)
payment, your Cards/Checks
were processed manually
This led to an inordinate amount of waste as manual
handling was involved which led to DAYS for funds to
be processed and also led to fraudulent transactions
23. Back in the
Day (when
Pea
Green
was
cool…)
Interchange was introduced to protect banks from fraud risk
associated with a paper-based credit card system. 80% of
the cost covered Fraud.
Interchange was a ‘per-
transaction’ fee the merchant paid
based on the method of consumer
payment
25. Today…
Manual processing is replaced with
electronic funds transfers via Point-
of-Sale terminals.
Funds no longer take DAYS to clear,
but SECONDS
Fraud is nearly eliminated
26. So… what about the cost
VISA and MasterCard OWN the
Networks that process over 85% of all
Credit Card Transactions
When you
swipe your
card…
The Transaction is
processed over a
‘Network’
27. To capture market share, Card Brands funnel
Interchange fees back to issuing banks.
1971 2011
*Propor<on
of
Interchange
Fee
going
to….
28. Unless
you
ascribe
to
Soviet
Economics,
CAPITALISM
thrives
on
COMPETITION
2
of
the
largest
Card
Visa/MasterCard’s
major
clients
are
big
banks.
Brands
VISA MasterCard 5
of
the
largest
banks
control…
Bank of America Capital One
Control
80%
CHASE Citi HSBC
90%
Revenue
of
Revenue
of
29. Economics of the
Transactions
The Merchant establishes the
business relationship with
YOU.
You CHOOSE to buy from
the Merchant based on factors
such as service and price.
What value do you place on the
Banker being involved with the
transaction…
31. ISSUE ONLY “And
I’ll
give
x%
of
the
MY CARD Transac<on
Fee”
The CARD BRAND
The BANKER
$10
The MERCHANT The CUSTOMER
32. ISSUE ONLY “And
I’ll
give
x%
of
the
MY CARD Transac<on
Fee”
The CARD BRAND
The BANKER
You can only
have this
Brand Card $10
The MERCHANT The CUSTOMER
33. ISSUE ONLY “And
I’ll
give
x%
of
the
MY CARD Transac<on
Fee”
The CARD BRAND
The BANKER
You can only
have this
Brand Card $10
$1000
“OMG! I love this!”
The MERCHANT The CUSTOMER
34. ISSUE ONLY
MY CARD
$38
The CARD BRAND
$2
The BANKER
$40
You can only
have this
Brand Card $10
$960 $1000
“OMG! I love this!”
The MERCHANT The CUSTOMER
35. ISSUE ONLY
MY CARD
$38
The CARD BRAND
$2
The BANKER
Would you pay $40 to have the
$40 ability to use a major card brand?
You can only
have this
Brand Card $10
$960 $1000
“OMG! I love this!”
The MERCHANT The CUSTOMER
36. ISSUE ONLY
MY CARD
$38
The CARD BRAND
$2
The BANKER
Would you pay $40 to have the
$40 ability to use a major card brand?
(why
should
a
merchant?)
You can only
have this
Brand Card $10
$960 $1000
“OMG! I love this!”
The MERCHANT The CUSTOMER
![“Our
culture
encodes
a
strong
bias
either
to
neglect
or
ignore
VARIATION.
We
tend
to
focus
instead
on
measures
of
central
tendency,
and
as
a
result
we
make
some
terrible
mistakes,
o:en
with
considerable
prac<cal
import[ance].”
-‐Stephen
Jay
Gould,
naturalist,
1941-‐2002](https://image.slidesharecdn.com/palisadeconference-13267477263339-phpapp02-120116150409-phpapp02/85/Palisade-Conference-1-320.jpg)
