Executive profile: One on One with Mark Schatz, Stored Value Solutions

When he can’t sleep at 2 a.m., Mark Schatz, managing director of Stored Value Solutions, will get up and run eight miles. “It’s therapeutic and a source of solitude,” he explains. Akin to a phoenix, running invokes renewed clarity that supports his mission in managing one of the companies that gave birth to the closed-loop gift card industry.

The Early Days

Based in Louisville, Ky., Stored Value Solutions traces its origins to National Processing Company, the merchant acquiring business. In 1992, company executives anticipated the shift that was about to occur with paper vouchers and started a division to process closed-loop plastic cards for retailers. Four years later, it launched its first program for Mobil Oil. Gap, Kmart and others followed. That division became Stored Value Solutions (SVS), which has grown to a global company that manages more than 650 million card products and processes more than 1 billion transactions annually.

“In the early days, cards were largely used as a loss-prevention tool for merchandise returns. Eventually, the business evolved into a broader function, including gift cards for consumers and businesses,” says Schatz.

SVS’s Business Influence

In the quest to drive increased revenue, customer engagement and brand reinforcement goals for retailers, SVS acts more as multichannel marketer than a monolithic payments provider. The platform that once delivered basic prepaid functionality has been more fully expanded into sophisticated promotion and loyalty tools.

“By managing various channels for clients, a new revenue-producing mechanism can be deployed very quickly,” says Schatz, citing SVS’s Dynamic Promotions product as an example. “It can be rolled out practically overnight to help a retailer create incremental sales using promotional codes, even down to the SKU,” says Schatz.

Clients are the epicenter of SVS’s mission. The company created an Advisory Board of clients that helps guide its road map for innovation. In addition, Schatz spends one-on-one time with the Advisory Board members for a deeper dive into individual goals. “Working with clients is critical, so we can tailor our broad-ranging products and services, like plastic manufacturing, personalization, fulfillment and mobile and digital features, to their particular objectives,” says Schatz.

With 650 global retail clients, what is the foundation of SVS’s success? Schatz says: “It’s a combination of flexible technology, dedicated people and a consultative approach to solving clients’ problems. But, most particularly, it’s our super-talented team because we couldn’t deliver anything without them. A number of the staff have been with the company since its inception.” With 25 years of payments, stored value and financial services experience, Schatz joined the company in June of 2011 as managing director.

Global Reach

Looking to the international front, SVS supports gift cards originating from 45+ countries in 26 currencies. As SVS helps clients develop their global strategies, it has learned that each marketplace is in a different phase. Schatz explains: “In Germany, for example, SVS fostered the creation of a trade organization to evangelize gift card benefits in the retail industry. In China, where prepaid cards have traditionally been used for employee benefits, it’s a different adoption curve. SVS just launched a new data center there to be in compliance with regulations that require new cards to be issued within the country.”

“What’s impacting China is the expansion of U.S.-based merchants into Shanghai and other areas. Because of the initial strength of retail sales, they are eager to introduce gift cards as a differentiator. What’s especially exciting for us is the opportunity to help them grow that business where gift card sales surge to be 5 percent or more of their overall revenue,” Schatz says.

With the advent of worldwide expansion and an increase in technical applications, the data obviously multiplies so how does SVS deal with it? “SVS’s job is to package the data in such a way to be relevant and valuable to all of the stakeholders at a client company, from IT to marketing to finance to senior leadership,” says Schatz.

Another thing Schatz is often asked about is the holy grail of the digital revolution. “E-gift card consumer sales will grow, but we’re seeing interest for mobile and digital capabilities that can be integrated into promotional and loyalty applications to facilitate offers and purchases. We’re third-party partner agnostic. Rather, we ensure the volume is incremental and that the overall pie continues to grow,” he says.

Comdata’s Acquisition

In 2001, Comdata Corporation and Stored Value Solutions separated from Ceridian HCM, Inc. and now operate as a Comdata Inc. (with SVS as a subsidiary business). Both organizations are overseen by Stuart Harvey, Comdata Chairman and CEO, and both are investments of private equity firm, Thomas H. Lee Partners.

With Comdata’s focus on corporate payments, there’s synergy where each business leverages the other’s core competencies to benefit clients. “We provide Comdata’s payroll cards to our retailers, which appeal to their seasonal and geographically diverse workforce,” says Schatz.

“Another area where we’re making a big impact is through virtual accounts payable. It doesn’t cost clients anything to automate their vendor payments, which streamlines their process and cuts cost over check issuance,” adds Schatz.

The Future

What’s ahead for SVS? “Every retailer defines its business goals differently and each one has its own proprietary CRM system,” Schatz notes. “What we’re preparing for is more complexity and ubiquitous acceptance. We’re focused on how consumers buy and intelligently driving a more profitable sale with multifaceted tools and resources.”