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Table of Contents

Lead Story

Ups, downs, ins and outs of vertical market tradeshows

News

Industry Update

Facebook payments on back burner

Faster fleet fueling

Discover streamlines compliance

Mobile payments coming of age

Processors gobble up mobile

Features

AgenTalkSM:
Jerry Sellers

Sunshine state shines on payments

ACH pros recognized nationally

Selling Prepaid

Companies vault into prepaid 2009

Companies vault into prepaid 2009

Prepaid in brief

nFinanSe ups ante with low-cost cards

A revolution in consumer health

Snapshot of the European prepaid market

Views

Change, the economy's enduring fuel

Patti Murphy
The Takoma Group

Education

Street SmartsSM:
Return to the hunt

Jason Felts
Advanced Merchant Services Inc.

Your merchant is calling

Dale S. Laszig
DSL Direct LLC

Wireless, fit for furniture

Tim McWeeney
ExaDigm Inc.

Bankrupt banks and credit card acquiring

Adam Atlas
Attorney at Law

What's in a name?

Nancy Drexler
SignaPay Ltd.

2009: Challenges and opportunities

Lane Gordon
MerchantPortfolios.com

Company Profile

Processing Solutions

Card Group

New Products

Countertop terminals, magnifique

ICT 220 and ICT 250
Ingenico

Future proof that POS

Product: Vx510 Ethernet terminal
Company: VeriFone

Inspiration

Catch and release office tension

Departments

Forum

Resource Guide

Datebook

A Bigger Thing

The Green Sheet Online Edition

January 21, 2009  •  Issue 09:01:02

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Insider's report on payments
Change, the economy's enduring fuel

By Patti Murphy

Am I the only person who's had her fill of doomsayers? I'm doubtful. Evidence suggests Barack Obama won the 2008 U.S. presidential election in part because of his rejection of the politics of fear. But the economy has a lot of folks worried these days, and worry, like its corollary fear, offers fertile ground for doomsayers.

Nonetheless, I was surprised in early January when this headline jumped off the screen while I was checking Google News: "Recession stole Christmas jobs, sales." The story, printed in The Washington Times, reported: "December, already shaping up as one of the worst months in history for retailers, is shaping up to be just as bad for jobs."

Driving home the point, the reporter noted, "Even mighty Wal-Mart was humbled by the most dismal Christmas season in decades."

Curious, I checked how other news outlets were reporting the situation. The New York Times headlined one story, "After weak holiday sales, retailers prepare for even worse," and proclaimed, "Judgment day is at hand for American retailers."

Whoa!

It's time for a reality check

Retailers had been worrying since last summer (when gasoline prices exceeded $4 per gallon in some regions) about consumers being stretched thin, tightening credit markets and what these would mean for December's sales. But had things gotten that bad?

I did reconnaissance, perusing local shopping outlets and chatting up consumers, merchants and ISOs. No one was pleased with 2008 sales figures, but I spoke with several consumers who were ecstatic about post-holiday bargains, and by the second week in January, the shelves at department stores were looking pretty barren.

Meanwhile, the rush to bankruptcy that some analysts predicted would occur after retail merchants closed the books on 2008 hasn't come.

"I had fully expected we'd start off the year with customers calling to say they were closing up shop, but so far, that hasn't happened," an executive at one East Coast ISO told me in mid-January.

I contend that small to mid-sized companies (many of which are privately held and form the heart of most ISO portfolios) tend to be better run than larger companies.

Perhaps their size renders these businesses more nimble. Maybe it's because they don't need to perform to shareholders' short-term expectations.

Or perhaps shopkeepers and other small business folks don't have the time or inclination to cook the books or steal from their companies outright. They're more focused on making sales to stay in business.

I spoke with several small-business owners as December approached. All said they were expecting sales would be down this holiday season. And they were adapting by scaling back on inventory, especially big-ticket items.

Anyone who didn't spend the second half of 2008 in a coma knew the economy was in the tank and should have planned accordingly. It's not like this is the first time the economy has gone into a tailspin.

Booms and busts come and go

I remember the stock market crash of 1987. The Dow Jones Industrial Average lost over 20 percent, or about $500 billion in value, in a single day: October 19, thereafter known as Black Monday. It was relatively early in my career, and I recall older colleagues despairing over the devaluation of their nest eggs.

More than a decade later, I discovered first-hand how those folks must have felt, although by that time the market had rebounded and market capitalization had grown to more than four times its 1987 bottom.

Despite the surge in market capital, though, about 10 years ago, things were starting to get shaky in the energy and telecommunications sectors.

Remember Enron and WorldCom? Both were flying high until they were brought down by shady accounting practices, and with them went employee pension plans heavily (if not entirely) invested in the companies' stock.

My husband once worked for a company that had been gobbled up by WorldCom.

We thought we had it made: a nice pension and 20 or so more years left in our working lives. Upon WorldCom's demise, we felt cheated. All the value his pension had accumulated during the bull market of the 1990s evaporated.

It took a few years, but we managed to pull ourselves back from the brink, and our plans to retire someplace sunny and warm have been delayed by only a few years.

When the meltdown of 2008 came along, we were prepared: We had pared back debt (including taking the fast track to pay down our mortgage), and what little money we had in equity markets was invested through relatively conservative mutual funds. We rarely used credit cards; we preferred debit cards for most POS transactions.

When I hear my friends fretting about today's markets and what it means for their retirement plans, I remind them that things like this have happened to millions of folks in the past, and each time, markets have bounced back.

It may mean you have to defer plans for buying that idyllic retirement place, but it's still possible.

Change leads to renewal

Lately, I've been reading The Ascent of Money, by Niall Ferguson, a renowned British historian.

Published in late 2008, the book recounts with painstaking detail how financial transactions have been the back-story of history since the time of Mesopotamia.

Credit and debt markets have come and gone, and with them entire empires have risen and fallen, Ferguson noted. But markets constantly evolve due to necessity and innovation.

"Sooner or later every bubble bursts," he wrote. "Sooner or later the bearish sellers outnumber the bullish buyers. Sooner or later greed turns to fear. "There have been great reverses, contractions and dyings [sic], to be sure. But not even the worse has set us permanently back. Though the line of financial history has a saw-tooth quality, its trajectory is unquestionably upwards."

The lesson of financial history is the lesson of life itself: Nothing ever stays the same.

Many among us have seen plenty of change, and we're no worse for wear. The key to survival lies in the ability to come up with new ways of doing business and new products and services that make the most of change.

And try not to lose sight of the fact that headlines are written to sell newspapers.

Patti Murphy is Senior Editor of The Green Sheet and President of The Takoma Group. E-mail her at patti@greensheet.com.

Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.

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