Former First Data head Charles Fote to set up new payments venture

Charles Fote is planning a return to the electronic payments business with a brand new holding company, three years after stepping down as chairman and CEO of First Data.

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Former First Data head Charles Fote to set up new payments venture

Editorial

This content has been selected, created and edited by the Finextra editorial team based upon its relevance and interest to our community.

In an interview with the Denver Post, Fote says he will use his own money and funds from two or three private equity firms, to acquire companies in the electronic-payments and money-transfer business.

 

"It will look like Western Union and First Data put together," Fote told the paper.

 

Fote says the new company will emphasise what consumers want, for instance by offering electronic currency conversion at the point-of-sale, rather than focussing on the back-end commodity processing. He says the success of the venture will depend on the willingness of merchants to purchase an integrated package rather than pick from a menu of services provided by a host of third parties.

 

Fote told the Post he has been working on the business plan for the past eight months and will make his first acquisition in September.

 

Ex-CEO of First Data Corp., makes a power play in Denver

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Comments: (2)

A Finextra member 

This will be interesting. The idea of starting a payments company based on "what consumers want" is the right idea, if not an altogether new idea. The question is: how to decide what consumers want, and how to they align that with the motivations of everyone else that decides if a payment method succeeds, such as merchants and banks? Our Javelin data shows unmet consumer needs aplenty, but the trick is to align those needs with business models of the other market participants. Quite frequently I see business models which just don't hold up to such a factual review, while in many other cases I see the unmet needs (consumers, especially) waiting for the right model. It's all a process of factual discovery.

A Finextra member 

No surprise what I think.

Charles has it all going for him - knowledge, experience, contacts, insight and a start-up plan which can benefit from what is now possible and not have to carry the legacy infrastructure of established competitors. Talent is more available and infrastructure costs are less.

Merchants are price sensitive and have issues with security and fraud.

Consumers are convenience sensitive and have issues with security, fraud and privacy.

Both want the process easier and safer and at lower cost. Is it possible? Of course. Blend the communications channels consumers use to make it easy for them to buy and make payments, and take a little weight off the merchant's shoulders...

Give 'em what they want Charles. A sure recipe for success.

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