Digital Man

High-tech exec Dan Schulman is driving American Express’s bid to become a big player in mobile payments.


Schulman runs Serve from new offices in New York’s trendy Tribeca neighborhood.


DAN SCHULMAN LEANS BACK IN A leather chair in a conference room that overlooks the Hudson River on the 39th floor of American Express Co.’s Wall Street headquarters. His ostrich-skin cowboy boots, faded jeans and short-sleeved polo shirt stand in sharp contrast to the suits and ties donned by most of his fellow executives at Manhattan’s Two World Financial Center. Schulman, 54, hikes up his pant leg to show off the boots, which he bought on a trip to Wyoming and wears almost every day.

Schulman is AmEx’s group president for enterprise growth, and his job is to capture for the company the young, hip consumers who also prefer jeans to Armani. Chief Executive Officer Kenneth I. Chenault hired Schulman, the former head of Virgin Mobile USA Inc., in 2010 to help lead what Chenault calls the “digital transformation” of AmEx. “We’ll always be doing financial payments and services, but the face of that is changing,” says the 5-foot-11-inch (180-centimeter), athletic-looking Schulman, who played football and lacrosse while earning an economics degree at Vermont’s Middlebury College. “AmEx is moving rapidly to becoming a technology software type of company.”

Schulman’s principal project is a system called Serve, an AmEx offshoot that allows the user to buy goods and services out of a prepaid account. Schulman’s goal is to turn Serve, now a plastic card, into a full-fledged mobile wallet — an application on a smartphone that allows the user to make payments by simply waving the phone over a scanner. The application would also store special deals and discounts. Visa Inc. and MasterCard International Inc. are in the process of launching their own mobile-payment services. The credit card companies face entrenched competition from EBay Inc.’s PayPal and Google Inc.’s Google Wallet.

Purchases and payments to individuals made with mobile phones will reach $670 billion globally by 2015, up from $244 billion in 2011, according to consulting firm Juniper Research Ltd. That’s still just 6 percent of the $11.2 trillion spent via credit and debit cards in 2011. Yet Juniper research director Windsor Holden says that within the next 20 years the mobile wallet may replace both cash and credit cards as the dominant payment form. Mobile payments rose 10 percent in 2011 despite slow growth in the economies of both the U.S. and Europe. “It’s an absolutely astonishing rate of growth,” Holden says.

William Ryan, a financial company analyst at Portales Partners LLC, doubts that AmEx, MasterCard or Visa can make themselves major players. “Obviously, they have to try and put their name out there in the market; everybody’s got to do it,” says Ryan, who had an underperform rating on AmEx as of early June. “They’re going against some very entrenched players.”

Schulman has been priming AmEx for the fight, wielding the $148.7 billion balance sheet and $18 billion in shareholder equity the company boasted at the end of the first quarter. In January 2010, the firm paid $305 million for Revolution Money Inc., an online-payments company created by AOL Inc. founder Steve Case. That was the initial building block for Serve. In addition, Schulman has been on a hiring binge. “We’ve hired 200-plus people in the last year from everywhere: Google, Microsoft, Amazon, wireless companies,” he says.

Serve has its own loftlike space in New York’s trendy Tribeca neighborhood, where staffers dress as casually as their boss. Schulman has also opened new offices in Palo Alto, California, which will be a base for spending the $100 million AmEx has set aside to buy additional startups. Chenault took his entire board to California in September to meet with executives from Facebook, Twitter and other Internet companies. “I wanted them to see what we had done to advance the company’s digital strategy,” he says. “There’s been this fundamental change in the convergence of online and offline, which to me represented a tremendous set of opportunities.”

Because Serve accounts are prepaid, they allow American Express to go after customers who don’t qualify for its credit cards. “It really changes our hand from being an exclusive brand to being an inclusive brand,” Schulman says. “That’s a fundamental change for us as a company.”

AmEx’s strategy is to make Serve part of its already-prodigious set of advertising alliances with retailers, whose offers are stuffed into every American Express bill. “The distinction between online shopping and physical retail shopping is blurring,” Schulman says. Imagine swiping your phone over a scanner when you walk into a store and getting customized offers based on what you’re shopping for, what you’ve looked at online and what competitors are charging, he says. “My vision of the future is that exactly. It’s like walking into Best Buy and asking, What deal do you want to give me today?”

Schulman began his career at AT&T Inc., rising to president of consumer markets before leaving in 1999 to take over as president, then CEO, of Inc. He made his reputation as a digital guru at Virgin Mobile. Virgin Group Ltd. Chairman Richard Branson hired Schulman in 2001 and credits him with developing what Branson says was the first prepaid mobile-phone service in the U.S. Schulman ran the company from 2001 until after it was acquired in 2009 by Sprint Nextel Corp. for $483 million.

Branson says Schulman would have been a candidate for the top spot at Virgin Group if AmEx hadn’t hired him. “He’s that capable, that personable and that bright,” Branson says in a phone interview from his home on Necker Island in the Caribbean.

Branson and Schulman used to play tennis together. “He normally beat me on the tennis court and still somehow managed to keep his job,” Branson quips. On a visit to Necker Island, Schulman learned kite surfing — a sport Branson was once photographed doing with a nude model. “I never spotted him with any naked models, but he was game for pretty well anything,” Branson says. “He knows how to play hard and work hard, and that is what I think a good leader should do.”

Schulman rises early, is peppering his staff with e-mails by 6:15 a.m. and is in the office by 6:30. He’s not an easy boss. “Don’t be deceived by his laid-back demeanor,” says David Messenger, AmEx’s head of online and mobile payments. “He’s intensely competitive and very, very focused.”

Schulman’s aversion to business dress first caused a buzz after Sprint bought Virgin Mobile. “Dan calls an all-employee meeting and shows up in his trademark outfit: cowboy boots and jeans,” recalls Peter Lurie, Schulman’s general counsel at Virgin Mobile and now head of strategic partnerships at AmEx. “The next day, a memo went around with a new dress code.”

Chenault and Schulman have global ambitions for their Serve program, especially in China and India. “Unlike here in the U.S., where we went from cash to checks to plastic to digital payments, they’re going to leapfrog from cash to digital payments because everybody carries a mobile phone,” Schulman says. “There are 2.4 billion unbanked customers in the world. Of those, about 1.7 billion have mobile phones. Think about the power of being able to tap into the trillions of dollars of spend they have.”

Chenault acknowledges that Serve is losing money right now. “Name me a startup, which is what Serve is, that’s generating a profit in the first year,” he says. He’s counting on Dan Schulman to help guarantee that AmEx has a digital future.

DAWN KOPECKI COVERS BANKING AND THE CREDIT CARD INDUSTRY AT BLOOMBERG NEWS IN NEW YORK. This email address is being protected from spambots. You need JavaScript enabled to view it.


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