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PYMNTS.com asked industry expert and author of Paying with Plastic, David S. Evans to profile industry thought leaders and executives to find out what's next in the world of payments.

Gary Flood has been at MasterCard for 24 years and is currently the President of Global Products and Solutions. With new and exciting innovations emerging everyday, Flood sees both technology and consumers driving solutions that will shape the future of the payments industry. In this exclusive NEXTcast interview, Flood shares how MasterCard continues to be a payments pioneer after four decades by delivering innovative services to consumers, small businesses and corporations.

As the United States looks to recover from the economic crisis and as consumers become more budget-conscious, Gary sees the focus of U.S. payments shifting to consumer control to facilitate spending and manage money. On a global scale, Gary addresses how prepaid and mobile will emerge at the forefront on payments. (Click here to listen to the interview.)

Interview with Gary Flood | President of Global Porducts and Solutions, MasterCard

DAVID S. EVANS: Hi, this is David Evans. I have the distinct pleasure of being with Gary Flood, of MasterCard today. Gary is the President of Global Products and Solutions at MasterCard. Gary, thanks a lot for joining us today.

GARY FLOOD: I'm looking forward to it.

Evans: What we want to do is to talk about what's next in payments, but before we get into that, Gary, maybe if you could just give us a little background, tell us how you got into the payments business and just a little bit about your career.

Flood: I guess I got into the payments business out of college. I worked at Citigroup's merchant business for three to four years. There, it was pretty much around hustling around the streets of Manhattan, signing up merchants and then as my experience grew, the ability to go sell to more national merchants and things like that. That opportunity was presented. Spent a lot of time on the merchant side out of college, and then found my way to MasterCard shortly after that.

Evans: And what have your major roles been at MasterCard?

Flood: I've been here about 24 years, I started again on the sales side, working with smaller institutions throughout the Northeast, so I spent a lot of time on sales, business development, relationships. Worked my way up through the organization to running the large customers back probably in the late '80s to early '90s. Wound up running the sales force in the U.S. region for Alan Heuer when he was here. Then I moved over to the product management/product development side, where I managed products in the U.S. for several years. At that point I started the advisors business for us in the late '90s, then worked myself back to the global accounts side, which I did for about ten years.

Evans: That sounds great. So it sounds like you've had a lot of contact on the merchant side of the business over the years.

Flood: Merchants, issuers. The best part about it has been domestic and global. A lot of interaction with the global banks. I did that for about ten years, and then two years ago when we reorganized in planning for Alan Heuer's retirement, I worked my way back to the product solutions, marketing advisors and technology side.

Evans: So let's talk about what's next. Does MasterCard have anything in the works, at least that you can talk about, that you think could really transform the payments business in the next three, five, ten years?

Flood: I'll tell you, the what's next is a lot of fun. It's a big part of what we do every day. The one thing about it is, there's something new every day. You wake up in the morning and you go online, you can see the different types of developments that are occurring around, frankly, the networks and the banks. These are people that are developing technology solutions, consumer driven solutions, many of them B2B solutions. I think if you think about the next three, five, ten years, there's an awful lot that's going to happen. And a lot of it we probably don't have nailed down specifically.

But I think for us, we're very much in touch with what's important to our banks, our customers around the world and merchants. We understand consumers, small businesses and corporations, so we zero in on some things. I guess a couple of examples for us – on the shorter term, people looking for control – it's a tough environment around the world, so our in Control platform which a result of our Orbiscom acquisition last January is one that gives us a lot of flexibility. It's kind of a host-based solution, where we can provide authorization controls, we can provide routing controls for funding, we can integrate alerts.

We've got a lot of progress on this around the world, so this is one innovation that's working its way through with our customers now, our pipeline is very rich, but it's pretty much based around control for consumers, small businesses, or corporations in terms of how their cards are being utilized. The best example for me is giving my son a card, I have three kids, they're pretty much all graduating from college this year, I wish I had in control in their freshman year. But as I worked through, I think it provides a great deal of opportunity to innovate as well. So it's a good platform, but I think we're just scratching the surface on the innovation side. I think the basic functionality is huge.

Evans: Having three kids graduate from college in the same year sounds pretty rough.

Flood: It actually – I can't wait. May will be a beautiful month, whether it's sunny or rainy.

Evans: That sounds great. Let me ask you – I know that you've had experience in many dimensions at MasterCard, but let's talk about the merchants just a little bit. From the merchant side, what kind of benefits do you think the merchants are going to see from MasterCard or in the payments industry generally in the next several years?

Flood: I think you're going to see a lot of things. If I think about the world in general, in many economies, the leapfrog capability on technology to generate an ease, a convenience of use of cards and payment devices, whether it's prepaid debit or credit, different types of credit, products I think is something that is going to be there. Merchants around the world are in very different stages of developments and needs. If you think about different parts where, from a financial inclusion perspective, merchants are being encouraged to participate much more directly. We work with them like they are – like I guess I'd try and say like a U.S. issuer. Where the governments are encouraging them, so you need to participate with them in a certain way.

Paypass has provided a great deal of capability for us, particularly in France with some of the Carrefour, the ability to speed transactions through on a checkout, as well as providing some ingenuity and innovation. The chip functionality has provided some good opportunities for us to do some things with airlines around the world, whether it's check-in, secure your boarding pass, things like that. So I think for us, merchants are big, they're important, we're spending a lot more time with them, I think, than we historically did. I think one good example is the advisors work we've done, where I think earlier this year you may have seen where we announced an information based business supporting merchants and the development of their business through the provision of data, analytics, and modeling capabilities.

Evans: Gary, as a publicly traded company, MasterCard is still a kid. How do you see the company evolving over the next decade?

Flood: For me, it's been a lot of fun. I've been here from a not-for-profit association, transition to a private share corporation, and then the IPO. So I've seen the transition firsthand. The most motivating thing is the opportunities that are out there around the world. When you think about the number of cash and check transactions, it's huge. Many economies, it dominates. Even when we think about developed economies, the cash penetration or the number of transactions say under $10 or $8 or whatever the local currency might be is just amazing.

So I think for us, the opportunities are huge. For us, you've got to really zero in and prioritize. There is big space in the emerging market opportunities, that represents great growth potential for us. Many of the economies throughout Asia, Latin America, parts of Europe. So I think of us, we've grown up tremendously. There's a lot of competitive pressure, no doubt about it, but there's also tremendous opportunity that comes with that pressure. So I think you're going to see us continue to work as hard as we have for shareholders, and continue to work as hard as we can in terms of growing the pie and the opportunity within the transaction set that's out there.

Evans: The card industry has taken a lot of flak in the last year. The final provisions of the CARD Act went into place yesterday, Monday the 22nd of February. So there's been lots of bad publicity and some stiff regulation. Does the card industry need to work on rebuilding its reputation with consumers and with their governmental representatives, and if you think the answer is yes, what do you think needs to be done?

Flood: I think all those issues from a card issuing perspective – the banks have taken them on firsthand, everything's out, you know a lot of discussions. For me, it's about providing consumers, small businesses and corporations with the solutions they need. That's what we're zeroing in on, whether it's in Control and making sure that we have products and services that can help issuers provide consumers with the types of things they're looking for, whether it's leveraging mobile technology to enhance convenience, to enable phones to be used with near-field communication devices resident in them, so from a simplicity perspective. I think our job is around making sure that we're innovating and working with our customers, but understanding what consumers need and want, small businesses, what they need and want, and corporations in terms of what they need and what from payments, and enabling our customers to deliver on those things.

Evans: Do you think the CARD Act or other government regulations has affected the pace of innovation in the card business in the U.S., either positively or negatively or both?

Flood: I think the U.S. has been kind of interesting. I think the economy's had a big impact on what banks have and haven't been able to do. I think the other thing around innovation is when you look at how innovation is occurring, it's occurring all over. You're thinking about different types of developments, whether it's phone companies, technology based companies, it's not just banks. The magic is in how those things come together. So I think the banks have been working on how they comply with the CARD Act, they've been assessing what they need to do strategically given the P&L impacts of those kinds of things, but when you think about innovation there's so much occurring. There's a bunch in banks in terms of how they operate, and then there's an awful lot around the outside of banks. Whether it's – as I said – technology providers, network providers, things like that that just I think are going to enable more and more the development of neat ideas that solve things that are important to customers at the end of the day.

Evans: If we look beyond MasterCard, what do you think the most significant innovations that we're going to see coming in the next few years, and you might want to divide that between the U.S. and maybe other parts of the world, but what do you think is going to be really big, just generally for the payments business?

Flood: I think what's interesting outside the U.S., like I said before, in many economies, there's a lot of core runway. And what I mean by core runway, whether it's acceptance, network processing, fundamentals guys, that will provide great growth opportunities. So I'd say outside the U.S., there's a lot of that still left to be had. I think prepaid represents a big opportunity globally. So I won't do the U.S. split on that one, but I think prepaid represents a huge space that there's just going to be tremendous opportunity. If you think about benefit cards, merchant participation, you think about economies wanting more around financial inclusion, prepaid is a great space for us. We see that as a lot of runway.

I think at any point in time, we're probably working on 30 to 35 mobile pilots around the world, so I think mobile, but not mobile on its own. I think you're going get down to how does mobile work with near field communication, controls, rewards, and information. How does that composite picture come together?

And then you also have to think through how the ecosystem works. How people make money. There's been a lot of things going on in the mobile space, but how you make money or how all the participants make money is something I still think there's a lot of work that needs to be done. I kind of say, outside the U.S. mobile, I'd say prepay globally, so outside the U.S., and inside the U.S. I'd say in the U.S., there's a lot around in control type behavior, the ability to facilitate the management of my money and my spending, and I'd say that that probably represents a pretty good space for the next two years.

Evans: Gary, most of our listeners obviously know a lot about MasterCard. We have an audience that are truly specialists in the payments business. Is there anything about MasterCard that they probably don't know, and that you'd care to share with them?

Flood: I think for us, it's kind of interesting. We operate in about 210 countries through about 40, 50 offices around the world. I think our local understanding is very acute, and our ability to leverage that local understanding and development activity to benefit the world is something from our standpoint that is unique and important. So I don't know whether you want to call it reverse innovation or whatever the correct terminology or buzzwords are today, but the development activity that's occurring in many of the emerging economies and small economies and how that can benefit other economies and other opportunities is something that we feel we have a pretty good grip on, and that is basically resident in the fact that we are one global entity, with a very distributed organization that's synced up pretty tightly. So I think I'd probably say that would be the on important thing that I think really resonates with me, when I think about our company.

Evans: So you have a lot of innovation that's just bubbling up in the organization from all these points around the world.

Flood: Yeah. The challenge is harnessing and making money out of it, which everybody's got. But I think – I'd suggest that that's probably one of the big opportunities for us.

Evans: Gary, we really appreciate the time you've spent with me this morning, and we wish you and MasterCard the best for 2010, and might as well give you our best for the next decade as well.

Flood: All right. Thank you very much.

Evans: Thanks a lot Gary.

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Executive Bio: Gary J. Flood is President, Global Products and Solutions for MasterCard Incorporated and MasterCard International. In this capacity, he has responsibility for the products and services that the Company delivers to its customer financial institutions. Prior to being appointed to his current position in November 2007, Mr. Flood was Executive Vice President of Global Account Management for the Company. In this capacity, Mr. Flood oversaw the Company's efforts to support its largest global customers. Previously, Mr. Flood was Senior Vice President of Consumer Card Product Management and Development, where he spent four years directing all MasterCard consumer credit programs in the United States. Mr. Flood joined the Company in 1986 as Regional Marketing Director. Before joining the Company, he was National Sales Manager for Citicorp's Merchant Business.

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