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magazine home > archives > winter 2002 > features

U of M alumnus Dan Palmer played his cards right when opportunity knocked. Since the early 1980s, Palmer has been at the top of the cashless commerce market.

The Ace of the Market
by Amy Clarkson

Dan Palmer

Tucked behind a busy shopping center in Cordova, Tenn., Dan Palmer (BBA '66) quietly operates one of the most successful businesses in the country.

Both Palmer and his company, Concord EFS, anchor the Memphis economy with a low-key, down-to-earth approach. And although people around the country use his business daily - when they go shopping, put gas in their car or use their ATM card - most are completely unaware the business even exists.

Concord EFS is responsible for processing ATM, debit-card and point-of-sale transactions. It is one of the most profitable firms in Memphis and the largest PIN-secured network in the United States, says its chief executive officer.

Stockholders and analysts say Concord EFS is one of the best success stories in the business world. It's also been one of Memphis' best-kept secrets. Palmer quietly built Electronic Fleet Systems, and through a merger with Concord Computing, he cornered the cashless commerce market.

"We probably processed nine billion transactions in 2001," he says. "At least nine billion. That's a
conservative estimate. We're the second-largest processor behind VISA, and they only do credit cards."
Palmer rode the wave of ATM technology to the heights of success. Last year, Concord EFS was listed first for stock returns by the Wall Street Journal. During the 1990s, Concord's stock rose steadily, awarding investors a return of more than 60 percent.

The company owes its success to Palmer's foresight and extensive accounting background. He got his start after graduating from then-Memphis State University's Fogelman College of Business and Economics.

"I thought that's what I'd spend the rest of my life doing, the technical side of being an accountant," he recalls. "I worked for Deloitte and Touche in New York in the 1970s and came back to Memphis with them."

Palmer left the firm soon after the move to Memphis to work as chief financial officer for Bayer Corporation's Arkansas chemical firms. He then took a job with a company that dealt with long-haul truckers and discovered a profitable market niche in a burgeoning technology.

In the 1980s, when everyone paid cash or wrote checks to pay for purchases, Palmer saw an opportunity for a successful business, using new technology to make electronic transactions. The company he worked for at the time offered a credit card to truck drivers. A major problem was that it took weeks to shut down a bad card that was past due on payments.

"It looked like an opportunity to me," he says. "There were other things I didn't control that made us successful, but I saw the chance to make a business out of that part of it."

Palmer seized the chance to use the new point-of-sale terminals technology and left the company to make it on his own. But, wary of failure, banks and investors didn't want to sign on to something so new. Only a former Union Planters executive shared Palmer's vision.

"Bill Matthews - he saw the opportunity," Palmer says. "He brought the first ATMs to Memphis and later, he brought us into Union Planters."

During the first few years, the fledging company didn't turn a profit and struggled to find footing in the marketplace. The Union Planters board of directors opted to sell EFS to Concord Computing for a mere $250,000. Today, the company's worth is estimated at $18 billion, making it the most successful capital venture in Memphis.

"They didn't want to have any subsidiaries that weren't making money," he says. "So they agreed to let us merge with Concord for that small amount. At the time, I stayed on as CEO only of the EFS portion, but soon I became CEO of the whole company."

Union Planter's loss was Palmer's gain. Through an aggressive sales approach, he solicited "mom-and-pop" stores around the country to accept credit cards.

He also lobbied the trucking industry to use credit cards. Today, trucking represents $18 billion in annual electronic transactions.

About a year later, Palmer earned the endorsement of the National Grocers Association to allow credit cards in grocery stores, and a business was born.

But Palmer says he doesn't deserve all the credit. Events in business and technology coincided to make it the best possible time to launch a business based on cashless commerce.

"Microsoft just got started," he says. "That made computers quicker. If not for that technology, we'd need a whole warehouse full of computers to operate 24 hours a day, seven days a week."

Palmer's good fortune continued when a federal judge ordered the breakup of AT&T, which held a monopoly on the communications industry. As the business of selling long distance grew increasingly competitive, the cost of placing calls into network servers around the world became cheaper.

The man responsible for the success of Concord EFS says he is a businessman first. He jumped at an opportunity when other business people chose to move cautiously. That confident approach to his success is one of his hallmarks.

Recently, the company purchased the Star Network, one of the largest switching companies for ATM transactions, a move that increased its influence across the nation. It also just purchased the MAC networks in the Northeastern United States, a smaller system of ATMs that gave Concord EFS the lion's share of the market.

Concord EFS offices are catacombs of office space, huge computer processing rooms and control rooms. The company also has offices in Chicago, Atlanta, Florida and Delaware.

Palmer says he owes part of his success to the education he received at The U of M. He started school as a newlywed, despite the objections of family members who said he couldn't hope to graduate while working full time.

The flexibility of The U of M's class schedule was one of the main components toward Palmer finishing his goal of graduating from the University with a degree in business administration.

"I had to work second shift, sometimes third shift, during school," he says. "Memphis State offered classes, especially business classes, at night and during the day. If they hadn't had the number of classes at the times I needed to take them, I probably would have given up. I never would have gotten my degree. As it was, it took me five years."

Palmer's stepson and granddaughter are following in his footsteps: Both are sophomores at The U of M, and both are majoring in business.

What's next for the company? Palmer says Concord EFS is insulated from economic downturns because its business comes primarily from gas stations and supermarkets - places people spend money despite the state of the economy or the stock market.

"We're just going to continue to grow the company," he says. "We're looking for a few smaller network purchases, things like that. We're looking ahead as well."

Palmer plans to expand the company's role on the Internet and believes that in the future, people will use computer software in a different way.

"Instead of paying to have the program on your computer, you'll pay the company for the time you use the program," he says. "And they'll pay us to process those payments. As the Internet connections get faster, then that's the way it's going to go. We're going to be there on the ground floor."

Palmer remains a risk-taker. He branched out in the late 1990s, creating a charter airline in Memphis known as Palm Air. The company is one of the largest charter flight companies in the country, he says, and has flown business people and celebrities to all corners of the country.

Palmer always looks ahead for business opportunities. And as long as he sees those opportunities, Concord EFS will continue its enviable record of success.

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