Matt Wilcox Pro

The making of a legal holiday

This post originally ran on November 20, 2017

THE FOURTH THURSDAY of November is a legal holiday in the United States. Designated as a national day of thanks, it is named, appropriately enough, Thanksgiving.

Observing Thanksgiving in autumn has been around since the early 17^th century. An act of Congress signed on October 6, 1941 established it as a legal holiday and designated the last Thursday of November as the day.

Which, believe it or not, caused a controversy. Larger merchants argued for establishing the fourth Thursday, fearful that in years in which November had five Thursdays, the last Thursday would leave too little time for Christmas shopping. (This was long before Christmas sales began popping up in September.) Meanwhile, smaller merchants liked the idea of reduced shopping time, hoping to attract shoppers unwilling to put up with too-crowded department stores. Adding to the tumult were not a few citizens who objected to letting commercial concerns move their holiday.

The matter was finally settled two months later, when on December 26, 1941 President Franklin D. Roosevelt signed H. J. Res 41. Henceforth the legal holiday would be on the fourth Thursday.

Thanksgiving is a popular time for authors who like debunking tales of “the first Thanksgiving.” True enough, most of the stories we learned in grade school are exaggerated, whitewashed, or outright fabricated. Dig around and you’ll find that the original meal bore no resemblance to today’s feast, and that, overall, the interaction between European immigrants and Native Americans is more to be regretted than celebrated.

History aside, I like the idea of setting aside one day—at least one—to ponder what has gone right for us. Whether we stumble into opportunities or make them, we must at some level concede that something out of our control put us in the right place at the right time, not to mention gave us the wherewithal and skills needed to seize it. Remembering as much can ground.

I do not embrace the cliché that everyone has something to be thankful for. There are many who mourn, and it is not for me to insult them with a pep talk. Nor do I embrace relative gratitude, the idea of feeling blessed because there exist people not as well off. It is not another’s ill fortune that makes mine good. Recognizing that there are less fortunate people serves best when it motivates empathy and compassion.

Now, please pass the gravy.

Well, that didn’t take long. 

Your Visa credit card is once again welcome at Kroger-owned Food Co and Smith’s Food & Drug stores. Kroger, it seems, was the first to blink. 

It was only in March of this year that Kroger announced that its 142 food stores and 108 fuel centers operating in seven states under the Smith’s Food & Drug brand could do just fine without Visa credit cards, thank you very much. Perhaps Kroger was encouraged by the results of having already banned the cards in its 19, California-based Foods Co stores. At the time, I excerpted the following from a Kroger press release:

“Visa has been misusing its position and charging retailers excessive fees for a long time,” said Mike Schlotman, Kroger’s executive vice president and CFO. “They conceal from customers what Visa and its banks charge retailers to accept Visa credit cards. At Smith’s, Visa’s credit card fees are higher than any other credit card brand that we accept. Visa’s excessive fees and unfairness cannot continue to go unchecked. That’s why, starting April 3, Smith’s will accept all forms of payment except Visa credit cards.”

If the loss of Smith’s inflicted a flesh wound on Visa’s bottom line, a bigger wound could have resulted had the retailer extended the rest of its roughly 3,000 stores. Especially if in doing so it sent a message to other retailers to the effect of Fear not—there is life after Visa.

But on October 30, Kroger relented. 

If you’re curious to know what motivated the change of heart, you’re not alone. According to Business Insider and other media reporting the about-face, Kroger ain’t a-sayin.

With benefit of hindsight, it’s tempting to weave an eloquent “told you so.” But to do so would be to indulge in revisionist history. When Kroger first announced the ban, some experts were outright pessimistic in their predictions, but most were guarded. I admit I more than erred on the side of caution when I offered three possible outcomes:

(1) Kroger capitulates and mends ties with Visa; (2) Visa capitulates and gives Kroger a better rate; or (3) Kroger and the Visa credit card carry on without each other. I know better than to make an attempt at predicting which it will be.

Had other retailers jumped on the “we’re not going to take it anymore” bandwagon, Visa might have been forced to deal. As it was, Kroger found itself alone on the credit card battlefield. If this was a game of endurance, Kroger’s pockets, deep as they are, would have been no match for Visa’s much deeper ones. Moreover, the people at Visa surely knew that capitulating to Kroger would have obliged them to capitulate to everyone, and left them wide open to accusations of monopolistic malfeasance.

With the benefit of hindsight, there are some observations we can safely make. Whether or not the following played a part, they are instructive for any marketer:

• It’s never a good idea to confuse a customer. Kroger expected Smith’s customers to remember not to pull out a particular card that all other stores accept. Meanwhile, they had to remember to pull out, as Mobile Payments Today listed at the time, “… debit cards from Visa and Mastercard, and credit cards from Mastercard, Discover American Express, as well as cash, checks, WIC and SNAP government benefit transfer cards and health savings account cards.” That’s asking customers to do a lot of remembering and a lot of thinking for what had always been to them payment by rote.
• It’s never a good idea to take away a privilege or convenience. Pulling out a Visa credit card or using a Visa credit card account via mobile wallet is a convenience. Kroger took that away.
• It’s never a good idea to befuddle or embarrass a customer. On the umpteenth occasion of having to say, “Oops, I forgot” because a Smith’s terminal rejected their payment, it’s difficult to imagine a customer cheerfully adding, “My bad!” What’s easier to imagine is a customer muttering unseemly words while digging for an acceptable card, or simply saying to the poor cashier, “You can put these groceries back” and walking out.
• It’s never a good idea to make casualties of customers. Customers were more likely to be displeased with Kroger than with Visa over the inconvenience. “It’s Visa’s fault” is a tough argument to make when you’re the only major chain that’s not playing ball.

My guess, and that’s all it is, is that not accepting Visa credit cards threatened to cost Kroger more in lost sales and ill will than it was spending on interchange fees.

But all we really know is that Kroger blinked.

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This is from my post on March, 2014. I think it’s still germane.

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Making it digital while keeping it personal

Your clients want digital, but with a personal touch. Remember the rhetoric about banking as a relationship business? It still is. Preserving it while going digital only seems like a paradox. It needn’t be.

There is no reason you cannot infuse your online presence with personality. You did it back in the Dark Ages with print and broadcast media. You used strategy, tone, and design. Those basic tools haven’t gone away. They are as vital online as they ever were elsewhere. That means that besides making apps that are smooth, fast, intuitive, and functional, you must also design and word them so that they come across as uniquely you.

Here’s a good test. Mask the logos and names on your apps and on those of competitors. If the average client paying half attention cannot see any appreciable difference among them, you have work to do.

As for the relationship side, you have plenty of online tools. Though clients are no longer as willing as they once were to hop in the car and run to your office, they still want interaction with real people. It is precisely that problem that the likes of live chat and voice interaction were designed to solve.

Some companies are guilty of a serious error. They make live interaction options hard to find, burying them behind DIY options such as FAQs, help forums, and email options. The overriding message this sends is, “We’ll do anything we can to avoid interacting with you.” It is the antithesis of a relationship business. By all means, make DIY options plainly available, but make on-the-spot, direct contact via live chat and text equally so. Want to get really wild? Make your phone number easy to find.

Of course, this requires that the people at your end be knowledgable, empowered, and pleasant. Never underestimate that last one, namely, pleasant. Physicians have long known that a good beside manner reduces the threat of a malpractice action. Likewise, your clients will overlook “a multitude of sins” if they like the person they’re dealing with.

At least one astrology website says Libras are cooperative, diplomatic, gracious, fair-minded, and social. Like most zodiac descriptions, it’s broad enough so that just about anyone can say, “Yep, that’s me.” 

But the other Libra—Facebook’s recently announced cryptocurrency—seems to be garnering a less positive image.

Not that Facebook has given up hope. As of this writing, the Libra Association’s official Facebook page most recent entry positively states, “Libra is a cryptocurrency that will be available globally.” 

But that was posted on October 10, which, astute readers will no doubt observe, was nearly six weeks ago. A lot has changed since then. It began the very next day with the news that major Libra partners had bailed. This, from CNN, was typical: 

Facebook (FB) is now facing an exodus of companies from its Libra cryptocurrency effort. Mastercard (MA), eBay (EBAY), Visa (V) and Stripe … all confirmed on Friday that they would not be members of the governance organization for the Libra cryptocurrency developed by Facebook. PayPal said last week it would pull out of the organization. The firms were part of a group of more than two dozen nonprofits and companies originally listed as “founding members” of the Libra Association, which is intended to be an independent overseer of the cryptocurrency.

In an indisputable show of class, Libra co-creator David Marcus responded on the same day with this tweet:

Special thanks to @Visa and @Mastercard for sticking it out until the 11th hour. The pressure has been intense (understatement), and I respect their decision to wait until there’s regulatory clarity for @Libra_ to proceed, vs. the invoked threats (by many) on their biz.

Marcus followed up:

I would caution against reading the fate of Libra into this update. Of course, it’s not great news in the short term, but in a way it’s liberating. Stay tuned for more very soon. Change of this magnitude is hard. You know you’re on to something when so much pressure builds up.

On October 16, PYMTS.com reported on details Mastercard shared regarding its decision:

Mastercard said that cryptocurrencies need to give consumers protections that include privacy and security of both information and transactions. They also must provide a level playing field for everyone, Mastercard said. That would include merchants, mobile network operators and financial institutions. They must comply with all laws and regulations, and that includes money-laundering protections and operating within the economic structures of whatever country in which it trades. 

Mastercard’s statement is a master’s class in leaving unsaid, “We’re not so sure Libra meets those criteria.” It went on to express confidence in blockchain technology overall:

“We believe in the transformative power of blockchain. We hold the third-largest number of blockchain patents and patent applications, and from our provenance solution to commercial payments, our exploration of blockchain applications span our entire business ecosystem,” Mastercard said.

The following day—October 17—Finextra ran a story headlined “Fed governor warns of ‘core’ regulatory challenges facing Libra.”

Facebook’s Libra project will need to address core legal and regulatory challenges before it can facilitate a single payment, US Federal Reserve governor Lael Brainard has warned … Among the issues Libra needs to address, says the governor, are compliance with KYC rules; demonstration of consumer protections; and efforts to define the financial activities that the various players in the Libra ecosystem are conducting in order for jurisdictions to assess whether existing regulatory and enforcement mechanisms are adequate. More broadly, Brainard told her audience that global stablecoin projects such as Libra could challenge bank business models. “If consumers and businesses reduce their deposits at commercial banks in favor of stablecoins held in digital wallets, this could shrink banks’ sources of stable funding, as well as their visibility into transactions data, and thereby hinder banks’ ability to provide credit to businesses and households,” she suggested.

A week later, Facebook CEO Mark Zuckerberg endured one of many grillings before a Congressional subcommittee. Finextra reported:

Democratic Representative Nydia Velázquez stated that Facebook has a “credibility issue” which poses a problem to its attempt to enter financial services. “Mr Zuckerberg, we do not want to ‘break’ the international monetary system,” Velázquez said, referencing the Facebook founder’s motto, “Move fast and break things.”

On another matter, Zuckerberg’s later testimony defending the banning of “offensive” content while not fact-checking—indeed, while permitting—provably false political advertising hasn’t exactly moved Americans to come to his defense. 

So in many ways it hasn’t been a great month for Zuckerberg. On the other hand, he may find some consolation in being the fifth-richest person in the world.

There’s a reason we call it cuckoo.

Daylight Savings Time wreaks havoc on everyone, but it brings particular challenges to the banking industry.

If you happen to live in a place where it is now one hour earlier than it was at this time a little over a week ago, I hope you have recovered from this year’s wrapping up of the shock to your system known as Daylight Savings Time.

Seriously. David Gorsky, MD, an oncologist and contributor to the Science Based Medicine blog, did a deep dive into the health effects of DST, resurfacing with a well-documented, not-pretty picture. Here’s what science has been able to document during the few weeks it takes our bodies to adjust to getting up an hour earlier: a measurable increase in traffic-related deaths and pedestrian fatalities (the incidence declines with the return to Standard Time); increased risk of heart attack and stroke; an increase in suicide among men (this also occurs with the switch back to Standard Time); increased human error; and an increase in wasted time on the job.

(And pity the poor clock shop proprietor. Bob Capone, owner of Hands of Time in Savage Hills, Maryland, has the privilege of manually resetting an inventory of some 400 clocks twice per year.)

To be fair, Gorsky points out, DST is also associated with increased physical activity among children and lower robbery rates, both easily attributable to increased daylight hours. But he may be mistaken in allowing that DST may increase retail sales, a belief that helped drive the United States Department of Energy’s 2007 decision to push the cutoff date from October to November. If credit card purchases are an indicator, a JPMorgan Chase study suggests that the increase is illusory. The study tracked credit card purchases in Los Angeles, where DST is observed, and, as control, in Phoenix, where it is not. The study found: 

… a 0.9 percent increase in daily card spending per capita in Los Angeles at the beginning of DST and a reduction in daily card spending per capita of 3.5 percent at the end of DST … The magnitude of the spending reductions outweighs increased spending at the beginning of DST.

Ironically enough, the one thing DST doesn’t do is what it was meant to do, that is, cut energy consumption. Depending on whose measure you accept, DST cuts energy use somewhere between 0.03 percent and not at all, or actually increases it.

In financial markets, it appears that moving in and out of DST correlates with riskier investment activity. The University of Glasgow’s Antonios Siganos found that:

… when a merger is announced over a weekend or on a Monday following daylight saving time, the average stock return went up by around 2.50% more in relation to announcements that took place on other days—a statistically significant increase in profits for the target firms. 

By way of explanation, Siganos proffers:

With plenty of evidence that investors experience relatively stronger mood swings and higher risk-taking behaviour when their circadian rhythm is disturbed, it seems as though daylight saving time causes investors to push the stock prices of target firms to more extreme values. 

It goes without saying that people working in financial services industries are as subject as anyone else to mood, safety, and judgment swings due to time shifts. This can certainly increase human error during acclimatization. Over and above, the banking industry has its technical DST challenges, as this 2007 warning from the FDIC makes clear: 

The impact of the DST change may not cause system failures; however, without remediation and preparation, financial institutions could experience automated logging errors, system monitoring difficulties, degraded system performance, or disruption of some services. In addition, malfunctioning systems could result in compliance errors (e.g., incorrect ATM disclosures) and malfunctioning security systems. Examples of other systems that may be affected include those controlling heating, air conditioning, lights, alarms, telephone systems, PDAs (personal digital assistants) and cash vault doors.

An industry with (arguably obsolescent) standards like “close of business” and “working days” already has its hands full with time zones. Regional, national, and international banks need to be mindful that a closed business day in New York will remain in full swing for another five hours in Hawaii. Switching between Standard and Daylight Savings complicates matters further, and locales within the U.S. that opt out of DST, such as Indiana, Hawaii, and certain U.S. territories, complicate them even more. And then there are states like Arizona, where most of the state has opted out of DST, but 27,000 square miles of it—namely, the Navajo Nation—have opted in.

In 1784, Benjamin Franklin wrote that Parisians could conserve candle wax by getting up an hour earlier. But Franklin was joking. He would have been surprised when, a century and a half later, New Zealand entomologist George Vernon Hudson proposed DST in earnest. Germany implemented DST in 1916. The United States followed in 1918 with the passage of the Standard Time Act, better known as the Calder Act. 

Not exactly pulling punches, the Financial Post called Daylight Saving Time “dumb, dangerous and costly to companies.” They may have been on to something.