Debitman’s New CEO Stresses More Merchants, Issuers, And Products

Debitman Card Inc.'s new chief executive sees no significant strategic changes ahead for the PIN debit network, though he says some new products are likely within a year, possibly including a stored-value offering. “I think the strategy is spot-on,” says Michael Grossman, a former Intuit Inc. executive and most recently chief executive of software maker LiveCapital who officially takes over today at Debitman as the company, which bills itself as “the retailer's network,” settles into a new headquarters in San Mateo, Calif. “I see my job as execution.” Execution, he says in an interview with Digital Transactions News, means increasing the brand's card issuance and acceptance. Four-year-old Debitman, which processes PIN-secured transactions on merchant-issued cards and settles them through the automated clearing house, claims more than 200,000 acceptance outlets, including stores belonging to Wal-Mart Stores Inc., Sam's Club, Duane Reade Inc., and Walgreen Co. The company refuses to say how many cards are in circulation, but most merchants it has signed up so far have agreed only to accept the card, leaving the issuing ranks thin relative to the acceptance base. Its most prominent selling proposition is that it shares anywhere from 6 to 9 cents of its 15-cent transaction fee with issuing retailers, a pitch that, coupled with its relatively low transaction cost, is calculated to play well with merchants at a time of widespread dissatisfaction with bank card acceptance costs. “Retailers are enormously frustrated,” Grossman says. “It's easy to see what the pain is.” The company has also relied on independent sales organizations to help recruit merchants. Now, says the new boss, new products are on the way. “We'll extend our product line beyond PIN debit,” Grossman says. “We haven't defined exactly what that means, but it's clear that more than PIN debit can run on our rails and we intend to diversify in that way.” When pressed, he gives an indication of what one of the contemplated products might be. “You could imagine stored value as a possibility,” he says. This is not the first time Debitman has talked about launching a stored-value card. Last summer, it indicated plans to begin issuing PIN-secured gift cards by Sept. 30 (Digital Transactions News, July 25, 2005). In any case, Grossman says the new product lines will be commercially available within a year. Grossman replaces founding chief executive John K. Lannan, who remains with the company on its advisory board. Company founder R. Scott Hatfield, who had been president and chief operating officer, assumes the role of vice president of business development. Grossman's arrival and the company's move from its former base in Chico, Calif., follow a $3.6 million funding round it completed last September, led by Cardinal Venture Capital.