Mark O'Connell is adept at doing things differently, at overturning people's preconceived notions of how things should be done.
But even the chief executive officer of Interac Association couldn't hide his surprise when told by a waiter the soup of the day is roasted tomato with banana. "Whoa. That's weird," he says.
His astonishment is short-lived. After a brief plug from the server, a somewhat sheepish Mr. O'Connell orders the soup anyway. "You sold me," he concedes.
For Mr. O'Connell, 41, is also a connoisseur of the power of persuasion. Considered one of the country's top lobbyists, this Bay Street suit is quickly gaining recognition for forcing a radical shakeup of once-sleepy Interac, the backbone of the country's debit payments system.
In the face of a showdown with credit card giants Visa Inc. and MasterCard Inc., and a full-scale evolution in the way that Canadians pay for goods and services, Mr. O'Connell is on a mission to wake up the non-profit association, and those who underappreciate it. In the process, he is making waves among the banks, the country's retailers, at the Competition Bureau, and in Ottawa.
And while the battle that's taking place in the payments industry is still in its early days, he appears to be succeeding. That's thanks in part, strangely, to his early love of computer games.
Mr. O'Connell was recruited in his twenties by a company that made software for bank branches. The firm took him on not so much for his three university degrees, he says, but for his self-taught skills making video games for the Texas Instruments TI-99 computer.
"You had to make your own games or copy them from magazines. You'd buy a magazine and copy it line by line, tens of thousands of lines. But when you're doing that, you're learning programming."
His position at that firm - which was soon bought by IBM - kicked off a rapid rise through the little-known and underappreciated payments industry, which develops and runs the technologies that allow consumers to pay with plastic. By 2005, Mr. O'Connell was executive vice-president, finance market, at Emergis Inc. (now Telus), and he had a seat on Interac's board. He didn't like what he saw at the organization. Interac was slow-moving and bureaucratic, and Mr. O'Connell worried that it didn't see the true threat posed by Visa and MasterCard.
Doug Collins, head of payments and banking services at Royal Bank of Canada says, at the time, the banks and Ottawa were taking Interac for granted. "[Mr. O'Connell]was able to bring to light how important and how entrenched it is in the pockets of all Canadians, and how we do our banking business, and how important it is that we continue to have a strong and viable Interac in Canada."
That message resonated so well in Ottawa that, out of a field of more than 5,000 lobbyists trying to influence the government, The Hill Times ranked Mr. O'Connell in the top 100 for 2011.
But while highlighting the need for a fresh appraisal of the association, Mr. O'Connell, who was appointed president and CEO of Interac Association in 2007, was also shaking up its internal status quo. He took an organization that was operating as if it were a utility and injected it with a business mindset and the desire to compete, Mr. Collins says.
Interac had been created in the mid-1980s when a number of banks and Desjardins Group got together to ensure that their customers would be able to withdraw cash at one another's bank machines. In 1994, it began offering a point-of-sale system so retailers could accept debit cards.
It wasn't long before it raised the ire of the Competition Bureau, which accused it and nine of the financial institutions behind it of abusing their power. In 1996, the Bureau put Interac in shackles: Now, it can only charge fees sufficient to cover its costs.
Mr. O'Connell laments the missed opportunity. "It's a beautiful business," he says. "I mean, we have four billion transactions, 120 people. Think of the economics." Only one problem: No profits allowed.
In 2008, he asked the Competition Bureau for permission to change that, arguing that Interac needed to become a for-profit company to compete with Visa and MasterCard. He gave JPMorgan Chase & Co. a mandate to figure out how many shares each of Interac's members, including the big banks, would receive if the bureau gave the green light to a restructuring.
Private equity funds and pension plans came knocking at Mr. O'Connell's door, and an initial public offering was a distant consideration. Mr. O'Connell even managed to convince the country's retailers, who pay merchant fees to accept credit and debit cards, that this would be a good thing. But the bureau shot down the request in early 2010, because Interac still had a dominant position in the debit market - a big blow for Mr. O'Connell.
There's no doubt the lost opportunity was huge. Canadians love their debit cards: Almost 60 per cent of all card payments in Canada are made with debit. When Tim Hortons Inc. announced in November that it would start accepting Interac cards across the country, its stock shot to what was then an all-time high. "It was the only major merchant in Canada we didn't have," Mr. O'Connell says. "We took them out to a Leafs game, and they said 'Boy, that really had a bang.'"
Mr. O'Connell is tucking into his halibut as he says this. But he's got bigger fish to fry.
He and his board are putting the finishing touches on a new proposal for the bureau, a watered-down request that would tackle Interac's governance and funding challenges, but leave it as a non-profit. That would be done through a demutualization that would create a new corporation and a new, independent board. Those stepping stones would give Mr. O'Connell more freedom to make swift strategic decisions for an organization that operates in a constantly changing and highly lucrative global industry.
When customers pay for their purchases with credit cards, the retailer, restaurant or hotel pays a fee of 1.5 to 3 per cent, or more, of the total transaction. To accept an Interac payment, merchants pay roughly 12 cents on average.
Globally, Visa Inc. - which has debit networks in addition to credit networks in most other countries in which it operates - made more than $2.9-billion (U.S.) last year, largely by charging stores and restaurants fees for each of the tens of billions of transactions that route trillions of dollars over its network. In its annual report, the credit behemoth boasted about the October, 2010, launch of its first Visa debit product in Canada, in partnership with Canadian Imperial Bank of Commerce.
But the rollout of Visa debit has not gone as smoothly as planned. Mr. O'Connell played a role in that, helping to convince Finance Minister Jim Flaherty to impose a code of conduct on the payments industry that made it much harder for Visa and MasterCard, which have a reputation as fierce competitors, to muscle their way into the debit business by piggybacking off Interac's network.
"If Starbucks came to Canada, they wouldn't be allowed to sell coffee through all the Tim Hortons," Mr. O'Connell says.
The battle is far from over. In fact, it's just heating up. New technologies - such as contactless debit systems that work simply by waving a card in front of a reader - are about to revolutionize the industry.
Mr. O'Connell is betting that two years from now, Canada will lead the world in so-called tap-and-go cash. His enthusiasm is palpable. Visa and MasterCard's contactless credit products are already big, with retailers such as gas stations already signed on.
"But not a lot of people love putting 30 coffees on their credit card statements; it's a natural debit category," Mr. O'Connell says. And it's the reason Tim Hortons finally came on board.
Interac's contactless product, called Flash, uses the same chip that could be used to turn mobile phones into e-wallets. "If Interac Flash is successful, it migrates to the ultimate platform," he says.
As the bill comes, I insist on paying and plunk my Visa card down on the bill with aplomb. Whoops. Who's sheepish now?
IN HIS OWN WORDS:
On his one-time ambition to be a professional student
"I got three university degrees. I refused to work, I just loved academia."
On the influence of his father-in-law and mentor, Matthew Barrett, former head of Bank of Montreal and Barclays
"He believes that banks have forgotten that payments is one of the three legs of the original banking stool, and they are not realizing that if you don't have a place in the payments franchise, it affects everything. Particularly now, when you have Googles and Apples and new ways to pay that disintermediate banks."
On the trick of being a good lobbyist
"It's easy when you genuinely, passionately believe that you are doing the right thing, and that this is important for both Canadians and also Canadian businesses, and not just merchants. I believe that banks are going to thank their lucky stars that there's a strong domestic debit network. I think I'm doing a service to the [debit card]issuers as much as I am to Canadians. And when you believe all that, you're so much more credible when you are trying to educate."
Mark O'Connell's CV:
- He has an honours undergraduate degree from McGill University, a BComm and MBA from Odette School of Business at the University of Windsor, and a Harvard Finance diploma.
- Lives with his wife Tara, a clinical psychologist, and their two sons Matthew and Ryan in Oakville, Ont.
- Hockey, skiing, golf, computer games
- Executive vice-president, finance market, Emergis Inc.
- President and CEO, Interac Association
In his late 20s, Mr. O'Connell rose through the ranks of NCR Corp. (formerly known as the National Cash Register Company) whose products include ABMs.
"The word 'fired' started at NCR because you'd know you were no longer with the company if you drove up to the headquarters and the first chairman, [John]Patterson, had put your desk on the lawn and set it on fire."