Ripple Protocol for Financial Transactions

FOR 44 YEARS, THE LEADING PUBLICATION COVERING PAYMENT SYSTEMS WORLDWIDE
JANUARY 2015 / ISSUE 1055
CIGNIFI ALTERNATIVE CREDIT SCORES
Cignifi has developed an analytics platform using mobile phone
data that underwriters can use to generate credit scores for the
more than 1 billion people worldwide who use a mobile phone on
> see p. 10
DYNAMICS RAISES $70 MILLION IN NEW FUNDING
Purchase Transactions
Worldwide 2013 vs. 2023
Market Shares (%)
in 2013
Interactive payment card and value-added system provider
Dynamics has closed a $70 million Series C financing round
led by new investors MasterCard and CIBC. Existing backers
4.5
22.9
43.7
19.5
> see p. 9
1.7
7.7
CONTACTLESS PAYMENTS AT SMARTPHONES
Software from Montreal-based Mobeewave, when embedded in
a secure element manufactured by Oberthur Technologies, can
turn NFC-enabled smartphones into POS terminals that accept
United Canada Latin Europe Mideast Asia
States
America
Africa Pacific
Transactions (Bil.)
> see p. 6
RIPPLE PROTOCOL FOR FINANCIAL TRANSACTIONS
Like HTTP (Hypertext Transfer Protocol) for building and sharing
websites and SMTP (Simple Mail Transfer Protocol) for sending
messages on the Internet, RTXP (Ripple Transaction Protocol),
> see p. 9
2013 vs. 2023
163
153
102
82
8 13
14
27
43
3
11
37
© 2015 The Nilson Report
CELLPOINT MOBILE’S MERCHANT WALLET
The average number of payments per trip made by airline
passengers is increasing as airlines debundle their product offerings
in addition to steadily reducing the option of flying nonstop to a
> see p. 5
IRIS ANALYTICS AND CARTES BANCAIRES
The 61 million Cartes Bancaires (CB) brand payment cards
issued by banks in France are now being protected by fraud
fighting technology from Iris Analytics. Over 80% of CB cards
> see p. 7
INVESTMENTS & ACQUISITIONS — DECEMBER 2014
Turn to page 11 for a list of 47 mergers, acquisitions, and corporate
financing deals that occurred in December 2014.
TRANSACTIONS WORLDWIDE —
PROJECTED THROUGH 2023
The general purpose payment card industry is projected to
reach 468.61 billion purchase transactions for goods and
services by 2023 including card-present and card-notpresent types. This will be an increase of 281.58 billion from
the 187.03 billion purchase transactions in 2013 generated
by credit, debit, and prepaid cards with Visa, MasterCard,
American Express, Discover, JCB, Diners Club, UnionPay,
Interac (Canada), and PIN-based EFT system (U.S.) brands.
Cards issued in the U.S. generated 43.72% of the global
purchase transaction total in 2013. The United States’
Prior issues: 1,054, 1,053, 1,051, 1,049, 1,047, 1,045, 1,042, 1,041
> see p. 11
INSIDE
2 – 4 Fast Facts
5 Verifone Mobile POS Terminal
6 Worldpay Acquires SecureNet
© HSN Consultants, Inc. 2015 THE NILSON REPORT
8 12
> see p. 10
Yapstone Gateway and Online
Processing
Commerce Bank’s Toggle Features
CHARTS
10 Market Shares of Purchase
Transactions Worldwide
11 Investments & Acquisitions
— December 2014
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FAST FACTS
PAYBYGROUP, which calls itself the world’s leading group payments
platform, integrates with a business’s existing payment processor to
allow consumers to split the cost and pay together online. Between
10% and 20% of guests on vacation rental websites prefer the
PayByGroup checkout option when it is offered. Kevin Shepherd is
Director of Strategic Clients, (512) 633-7817, kshepherd@
paybygroup.com, www.paybygroup.com.
HEARTLAND PAYMENT SYSTEMS, the 5th largest payment processor in the U.S., now offers customers using its Heartland Securecertified terminals, which incorporate EMV, end-to-end encryption, and
tokenization technology, a comprehensive warranty that protects them
from payment card-related losses in the event of a breach. The first
year is free. It costs $8.33 per month per card-entry device after that.
Michael English is Executive Director, Product Dev., (609) 683-3831,
[email protected], www.heartlandpaymentsystems.com.
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EMERGING PAYMENT
SYSTEMS 2015
2
Two-Day Conference
March 26-27, 2015
The Fairmont Chicago Millennium
Park Hotel
Chicago, Illinois
Topics include: Apple Pay case study: mobile payment
service, analysis of the legal and compliance ramifications
of NFC, RFID, and tokenization; new products, services and
technologies focusing on mobile payments, wallets, ecommerce
platforms, and business models, compliance for increasingly
aggressive state regulatory, enforcement framework governing
emerging payment systems, heightened federal regulatory and
enforcement paradigm affecting the evaluation and offering of
emerging payment systems and services, FinCEN’s initiatives
in the emerging payments space, virtual currency supervision,
critical updates for mitigating privacy, data and cybersecurity
risks in the emerging payments market, the CFPB’s continued
interest in mobile services & payments, UDAP/UDAAP, and
third-party risks and managing third-party vendors. Speakers
represent: Paul Hastings, American Express, Citigroup, Office
of the Illinois Attorney General, Davis Wright Tremaine,
Alabama Securities Commission, FDIC, FTC, U.S. Department
of the Treasury, Deloitte Transactions and Business Analytics,
MasterCard, Schulte Roth & Zabel, Western Union, and more.
Cost is $1,995 (first-tier pricing valid until January 30, $2,095
after that). Contact Gregory Shuryn at ACI, (212) 352-3220,
[email protected]. Register at www.
americanconference.com/2015/727/emerging-paymentsystems.
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PASSTHROUGH is a new processing service that lets merchants add
surcharges to credit card payments. Merchants are sent a free POS
terminal that automatically applies surcharges and provides customers with itemized receipts showing the extra charge. PassThrough
also provides merchants with the signage they need to comply with
payment card network regulations. It uses the payment gateway of
Transaction Services, a registered ISO of Chesapeake Bank.
Scott Levy is Director at PassThrough, (855) 371-4430 , slevy@
passthrough.net, www.passthrough.net.
MASTERCARD has filed litigation in federal court alleging that
Nike conspired with two former MasterCard employees to
influence seven other MasterCard employees to join the sports
apparel company. All are cybersecurity professionals.
MasterCard, which alleges violation of noncompetition agreements, is seeking $5 million and a ruling barring Nike from
soliciting its employees.
TRANSACTION DATA USA, a payment processing industry consulting firm, will resell Spindle’s mobile payment aggregating services and
its Yowzall Offers mobile marketing service. TD USA recently completed integration with Spindle’s gateway platform. Bill Clark is CEO
at Spindle, (480) 336-2653, [email protected], www.spindle.com.
Jamie Zimmerman is VP of Technology at TD USA, (754) 206-0144
x102, [email protected], www.transactiondatainc.com.
UNIFIED PATENTS helps operating companies deter “patent trolls,”
entities that attempt to extract fees purportedly for violations of
intellectual property rights. It now offers tools to banks, credit card
companies, financial institutions, and other payment technology
providers to protect against frivolous litigation. Gary Bender is
Managing Director of the Electronic Payments Zone, (415) 786-5007,
[email protected], www.unifiedpatents.com.
CORRECTION: In issue #1054 we indicated the value of Cielo’s 70%
joint venture with Banco do Brasil at $4.50 million when it should have
been $4.50 billion.
CACHET FINANCIAL SOLUTIONS will provide its Select Mobile
Money app to members of Navy Federal CU to load money onto their
Visa brand GO Prepaid Card using their Navy Federal debit or credit
card. The app can also manage a companion card, view account
activity and balances, as well as locate the nearest branch, ATM, or
Readylink cash locations from their mobile device. Jeffrey Mack is
CEO at Cachet, (952) 698-6980, [email protected],
www.cachetfinancial.com. Elizabeth Dean is Mgr. of Debit Card
Services at Navy Federal Credit Union, (703) 206-3212, elizabeth_
[email protected], www.navyfederal.org.
INGENICO GROUP’S On-Guard technology has been deployed at
nearly 900 stores in the U.S. owned by Stage Stores whose brands are
Bealls, Goody’s Palais, Royal, Peebles, and Stage. Chase Paymentech
is the acquirer for all Stage Stores brands. The P2PE technology operates on Ingenico Telium POS terminals. Gregory Boardman is SVP of
Product and Dev. at Ingenico Group, North America, (678) 772-0596,
[email protected], www.ingenico.us. Jim Allen is Group
Exec. of Enterprise Product Mgmt. at Chase Paymentech, (813) 3544189, [email protected], www.chasepaymentech.com.
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FAST FACTS
FIRST DATA and UL are offering large and midsized merchants with
integrated POS systems a one-stop EMV migration and certification
program to link to all major payment networks. The program eliminates
the need to certify to multiple end points and authorities.
Steve Mathison is VP at First Data, (402) 222-6833, steve.mathison@
firstdatacorp.com, www.firstdata.com. Sajeev Jesudas is SVP at UL,
(847) 226-2326, [email protected], www.ul-ts.com.
DATACARD EMV Personalization Validation software is now available
to manage chips on EMV cards handled by the company’s MX series
card issuance system. The inline automated process uses Barnes
International’s smart card verification technology. Dan Good is VP
of Central Issuance and Service Product Mgmt. for Entrust Datacard,
(952) 988-1514, [email protected],
www.entrustdatacard.com.
POS ON CLOUD’S point-of-sale service will be integrated with the
Apriva payment gateway, giving ISOs all of the hardware, software,
and gateway services they need to support restaurants and retailers.
Stacey Finley Tappin is SVP North America at Apriva, (480) 421-7088,
[email protected], www.apriva.com. Sunny Dronawat is CEO at
POS on Cloud, (502) 233-8512 x301, [email protected],
www.posoncloud.com.
CAPITAL ONE class action litigation in U.S. District Court for the
Eastern District of Virginia has received preliminary court approval for
a settlement valued at $7.2 million. The litigation concerns 0% annual
percentage rate checks. Customers who accepted more than one offer
will be invited to submit claims, which will collectively amount to at
least $3.1 million.
MONEYPASS NETWORK, which is operated by the Elan Financial
Services division of U.S. Bank, now offers its card-issuing members
mobile money services and card control capabilities from Monitise.
Mike Dreyer is President, Americas at Monitise, (415) 526-7000,
[email protected], www.monitise.com. Troy Cullen is
President at Elan, (630) 443-3238, [email protected],
www.elanfs.com.
TSYS has released a white paper called “T&E Card Programs: A
Revealing, 360-Degree Look at Business Travelers’ and Travel
Managers’ Needs” based on two surveys conducted with the
Global Business Travel Association. Christina Hall is Sr.
Product Development Manager at TSYS Commercial Services,
(706) 644-5103, [email protected], www.tsys.com.
Download at www.tsys.com/businesstravelers/.
COMDATA’S MasterCard brand virtual credit card technology will be
offered by Behalf, a provider of working capital lines of credit to small
businesses (SMBs). Behalf will pay an SMB’s vendor invoice of up to
$10,000. The SMB will repay Behalf back over up to 120 days.
Benjy Feinberg is CEO at Behalf, (347) 692-0911, [email protected],
www.behalf.com. Bob Sneed is SVP Strategist and Corp. Payment
Specialist at Comdata, (615) 370-7000, [email protected],
www.comdata.com.
THE NFC FORUM has made available for public download at its website nine technical specifications after users complete a Specification
License agreement. Go to www.nfc-forum.org.
SKRILL’S Digital Wallet will be a new payment option for users of
Second Life, the Internet’s largest user-created virtual world. Users
can send money within the fully functioning Second Life economy as
well as process credits from Second Life to their real-world accounts.
Christopher Russell is CEO at Skrill USA, (646) 738-6921, christopher.
[email protected], www.skrill.com.
3DELTA SYSTEMS will provide its Level-3 processing clients Bluefin
Payment Systems’ PCI-validated Decryptx point-to-point encryption
service. Julie Counterman is Chief of Integrated Payments at Bluefin,
(678) 894-2643, [email protected], www.bluefin.com.
Allen Cage is CEO at 3Delta Systems, (703) 234-4646, alcage@
aocsolutions.com, www.3dsi.com.
© HSN Consultants, Inc. 2015 THE NILSON REPORT
ALPHA SOFTWARE has integrated its Alpha Anywhere mobile and
Web business application development environment with merchant
acquirer Worldpay. Richard Rabins is CEO at Alpha Software,
(781) 229-4500, [email protected],
www.alphasoftware.com. Hunter Menton is VP at Worldpay,
(720) 344-4888, [email protected], www.worldpay.com.
CU WALLET, a credit union-owned payment technology provider, has
signed 65 credit unions as customers. Collectively they represent more
than 7 million members. Paul Fiore is CEO, (310) 948-1786,
[email protected], www.cuwallet.com.
ELAVON and BANK OF THE WEST have extended their 21-year
merchant referral agreement through 2021. Bank of the West operates
in 22 states. Alan Newstead is SVP of Retail Banking Product Strategy
at Bank of the West, (206) 223-1281, alan.newstead@
bankofthewest.com, www.bankofthewest.com. Guy Harris is
President, North America at Elavon, (678) 731-5070, guy.harris@
elavon.com, www.elavon.com.
MANAGEMENT
CHANGES
Michael Fiore has been appointed Global Prepaid Lead at
MasterCard, (914) 249-2000, [email protected].
Reiner Vanooteghem has been appointed Vice President of Market
Development for Financial Services at Arroweye Solutions,
(615) 585-9432, [email protected]. Iain Johnstone has
been appointed Chief Operating Officer at Semafone,
44 (845) 543-0822, [email protected]. Peter Caparso,
formerly at Adyen, has been appointed Chief Commercial Officer at
BlueSnap, (781) 790-5027, [email protected]. Tom Boyer has been
appointed President at TSYS Merchant Solutions,
(402) 574-7895, [email protected]. Michael Caruana has
been appointed Vice President of Business Development at
Chargebacks911, (716) 741-2463, [email protected].
Paul Stoddart, formerly at Barclaycard, has been appointed
Managing Director of Strategy & Business Development at
Vocalink, 44 (870) 165-0019, [email protected].
JANUARY 2015 / ISSUE 1055 / THE NILSON REPORT
3
FAST FACTS
JETPAY PAYMENT SERVICES now offers a small payment processing service to digital content retailers using technology from Cardis,
whose patented systems lets several small consumer transactions
be handled as one larger value transaction. Spreading the processing
cost of a single, larger value transaction over a number of small payments reduces costs for online retailers. Nebo Djurdjevic is COO
at Cardis, (516) 374-9500, [email protected],
www.cardis-international.com. Trent Voigt is CEO at JetPay Payment
Services, (972) 503-8900, [email protected], www.jetpay.com.
PRESIDENT’S CHOICE FINANCIAL in Canada now offers
the PC Financial prepaid reloadable MasterCard, which lets
users collect points redeemable for free food and merchandise
where they buy groceries. Cards are issued by President’s
Choice Bank. Barry Columb is President at President’s Choice
Bank, (416) 607-4080, [email protected],
www.pcfinancial.ca.
FEDERATION DES CAISSES DESJARDINS, the 6th largest credit
card issuer in Canada, has purchased the private label portfolio of
BestBuy Canada. The portfolio had been owned by Chase Card
Services. The transaction did not include the sale of BestBuy cobranded Visa portfolio, which is also owned by Chase Card Services.
Stephane Halle is Senior Director Acquisitions and Business
Partnerships at Desjardins Card Services, (514) 397-4789 x6502,
[email protected], www.desjardins.com.
FIVE BY FIVE, which is developing a real-time payment card authentication system for banks in 11 European countries, will use a whitelabel mPOS processing service from Wirecard to power AgentCash, a
program for small and midsized merchants that use smartphones as
POS terminals. Sasa Sarunic is CEO at Five by Five, 385 (98) 405-414,
[email protected], www.agentcash.com. Michael Brinkmann is EVP
Partner Management at Wirecard, 49 (89) 4424-1417,
[email protected], www.wirecard.com.
EMVCO, which is collectively owned by American Express, Discover,
JCB, MasterCard, UnionPay, and Visa, will now be responsible for
further developing the EMV 3DS 2.0 Specification and associated
certification program. The new 3DS 2.0 specification is expected to be
published in 2016. Tac Watanabe is Executive Committee Chair at
EMVCo., 81 (3) 5778-8369, [email protected],
www.emvco.com.
CREDITCALL’S EMV-certified payment gateway will be used by
software and payment tablet manufacturer Poynt for its new Smart
Terminal device. Osama Bedier is CEO at Poynt, (650) 666-0240,
[email protected], www.getpoynt.com. Jeremy Gumbley is Chief
Technology Officer at Creditcall, 44 (117) 930-4455, jeremy.gumbley@
creditcall.com, www.creditcall.com.
‘A GUIDE TO EMV CHIP TECHNOLOGY V2.0’ is a free download
from EMVCo. It provides an overview of EMV chip specifications.
The full guide can be downloaded at
www.emvco.com/best_practices.aspx?id=217.
DEUTSCHE KREDITBANK customers can now purchase digital
prepaid cards for Facebook, Nintendo eShop, and Spotify using their
online bank accounts. The cards are available from Retailo, Blackhawk
Network’s German subsidiary. Blackhawk acquired Retailo in 2013.
Retailo also sells prepaid cards through more than 40,000 retail
distribution locations in Germany. Christian Lindner is CEO,
49 (221) 569-5750, [email protected], www.retailo.com.
SANTANDER, the 5th largest payment card issuer in Mexico, will
migrate to Multos chip card technology. Multos is an open, high-security, multiapplication platform. Richard Cusson is Managing Director at
Multos International, (514) 631-4901, rcusson@multosinternational.
com, www.multosinternational.com. Borja Serrats Recarte is Strategy
and Planning Director at Santander Mexico, 52 (55) 5257-8421,
[email protected], www.santander.com.mx.
See links at www.nilsonreport.com
CONFERENCES & SEMINARS
4
SCA 2015 PAYMENTS SUMMIT: February 3-5, 2015. The
Grand America Hotel, Salt Lake City, Utah. Estimated attendance:
700. Cost for the three-day conference is $820. Subscribers to
The Nilson Report will receive a 20% discount. (Use code P7T4.)
Contact Bill Rutledge at Cnxtd, (212) 866-2169, [email protected].
Register at www.scapayments.com.
GLOBAL ACQUIRING CONFERENCE 2015: May 5-7, 2015.
The Millennium Gloucester Hotel and Convention Centre, London,
U.K. Estimated attendance: 185. Cost for the three-day conference
is $1,695 until February 15, and $1,995 until April 15. Contact
Kevin Atwood at Global Vision Group, (650) 349-1536, atwood@
globalacquiringconference.com. Register at
http://globalacquiringconference.com.
CARDS & PAYMENTS ASIA 2015: April 22-23, 2015. The
Suntec Convention and Exhibition Centre, Singapore. Estimated
attendance: 8,000. Cost for the two-day standard conference
package is $2,239 (SGD 2,995) before March 13 and $2,513 (SGD
3,295) after that; the price for banks, telcos, retailers, gov’t, and
academic is $1,121 (SGD 1,500) before March 13. Subscribers to
on the conference or a free expo hall pass. (Use code NILREP15.)
The Nilson Report will receive 15% off existing conference rate.
(Use code NAWH.) Contact Jancis Yap at Terrapinn,
Contact Brianna Morris, (404) 647-0804, brianna.morris@expodevco.
com. Register at www.cartes-america.com.
CARTES SECURE CONNEXIONS AMERICA 2015: May 5-7,
2015. The Walter E. Washington Convention Center, Washington, D.C.
Estimated attendance: 2,000. Cost for the three-day conference is
$790. Subscribers to The Nilson Report will receive a 20% discount
(65) 6322-2708, [email protected]. Register at
www.cardsasia.com.sg.
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VERIFONE MOBILE POS TERMINAL
The new Payware Mobile e355 POS terminal from
Verifone can be used on a countertop, as a handheld
device linked to a smartphone or tablet, or attached
to a tablet. The
flexibility of
design also
includes
the ability
to work
with
they, for example, switch from an Apple to a Dell
tablet at some point during the life cycle of the
Verifone device. Merchants tend to keep POS devices
for about five years.
The e355 uses a 400 Mltr, ARM 11 32-bit RISC
processor and comes with 128 MB Flash and 64
MB SDRAM memory. The color display measures
2.4 inches and uses highly durable Corning Gorilla
Glass. Wireless connectivity includes Bluetooth BLE
and WiFi.
The e355 is PCI PTS 4.0 approved, and supports
all major global contactless technologies. The module
(without the frame shown here) measures 130 mm
x 71 mm x 14.5 mm and weighs 188 grams. Options
include a 1D or 2D barcode scanner.
Dennis Mos is General Manager, OEM Business
Development-Mobility at Verifone in San Diego,
tablets or smartphones using
iOS, Windows, or Android
operating systems. This lets
merchants buy e355s when they are using one tablet
or smartphone operating system and keep them if
California, (858) 436-2288, [email protected],
www.verifone.com.
Prior issues: 1,045, 1,043, 1,042, 1,041, 1,039, 1,038,
1,037
CELLPOINT MOBILE’S MERCHANT WALLET
from page 1...
final destination.
Some customers
might buy a ticket
with a corporate
credit card, use a
personal debit card
to pay for excess
luggage charges,
and pay with a
personal credit
card for a seat upgrade.
Handheld point-of-sale devices
are used to accept card payments
inflight from passengers who buy
duty-free products and foodstuffs.
Passengers pay over the counter
for luggage service. Frequent
flyers might use a combination
of points and an additional
card payment to purchase an
upgraded seat.
As passengers make multiple
payments in different channels
within a single trip, airlines
are becoming aware that
© HSN Consultants, Inc. 2015 THE NILSON REPORT
pages for airline clients, charge a
fee for every transaction.
CellPoint Mobile offers
airlines an alternative — a
merchant wallet that can handle
transactions from any device, in
any currency, using any payment
method, which connects to their
own payment infrastructure.
Emirates Airlines uses technology
from CellPoint to store passenger
payment data in-house, reducing
its need for per-transaction
services from a PSP. CellPoint’s
merchant-centric
wallet also
... benefits to controlling card paytokenizes card
ment processing from end to end.
details. Emirates
uses it to connect
the stored data to all channels and
Companies like Worldpay,
link all transactions to its backAdyen, CyberSource, and
end operating system.
GlobalCollect, traditional
CellPoint’s technology, which
payment service providers (PSPs)
sits on the airline’s security
that manage gateways and Web
there are benefits
to controlling
card payment
processing from
end to end. They
can better manage
their customer
relationships by
getting a complete
picture of their
activities. Airlines can also
improve their profit margins, add
layers of security, and expand
audit trail features.
> see p. 6
JANUARY 2015 / ISSUE 1055 / THE NILSON REPORT
5
CELLPOINT MOBILE’S MERCHANT WALLET
from page 5...
firewall, integrates with loyalty, payment, and
reservation platforms and handles all communication
with a PSP. Particular applications or the entire wallet
can be licensed by PSPs on a white-label basis.
Other users of CellPoint’s wallet include Pizza Hut
in the U.S. and railroad operators in Norway and
Sweden. Its first bank client will go live this year.
Kristian Gjerding is CEO at CellPoint Mobile in
Coral Gables, Florida, (305) 206-2336, kristian@
cellpointmobile.com, www.cellpointmobile.com.
CONTACTLESS PAYMENTS AT SMARTPHONES
from page 1...
contactless card payments. They
can also handle
contactless
payments initiated
by another
smartphone
deploying a
digital wallet.
Mobeewave
and Oberthur
see initial
opportunities for
their joint offering
in Australia,
Canada, and the
United Kingdom.
Issuers in these
countries are
committed to
EMV-compliant,
dual-function
contact and
contactless type Visa, MasterCard,
and American Express branded
payment cards.
Pilot tests will soon begin in
these countries with acquirers who
point-of-sale technology. Its
will give the NFC-enabled devices
technology is approved by Visa
to participating merchants.
and MasterCard.
Mobeewave’s contactless software
Oberthur Technologies has a
and the acquirer’s mobile payment
global agreement with Samsung
application will be preinstalled.
to supply NFC-enabled secure
When the service is launched
elements as well as the TSM
commercially, merchants will
support needed to handle and
purchase their own handsets and
transmit sensitive data.
download the mobile payment
application from the Google Play
Maxime de Nanclas is Chief
Store. Mobeewave will provision
Operating Officer at Mobeewave in
these devices over the air using
Montreal, Canada, (514) 573-3287,
Oberthur Technologies as the
maxime.denanclas@mobeewave.
trusted service manager (TSM).
com, www.mobeewave.com.
Mobeewave’s
software also
Software also tokenizes the cardtokenizes the
holder’s personal account number.
cardholder’s
personal
account number (PAN) when the
Manuel Inconnu is Product
transaction is initiated. Its data
Marketing Manager at Oberthur
center routes the original PAN to
Technologies in Paris, France,
the acquirer for authorization.
33 (1) 7814-7608,
Mobeewave has filed for
[email protected],
patents in all of the countries
www.oberthur.com.
it sees opportunities for its
integrated contactless mobile
WORLDPAY ACQUIRES SECURENET
Private equity firm Sterling Partners has sold
SecureNet Payment Systems to Worldpay. Terms were
not disclosed. Sterling purchased SecureNet in 2012.
Worldpay has been owned by private equity firms
Bain Capital and Advent International since 2010.
Worldpay and SecureNet are payment processors
of merchant card transactions. Headquartered in
London, Worldpay operates in 31 countries. It ranks
3rd among all merchant acquirers worldwide and
is Europe’s largest. Worldpay processes 26 million
6
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transactions a day in 120 currencies from more
than 600,000 merchants. Last year it handled more
than $475 billion in payments from more than 250
different card and noncard types.
U.S.-based SecureNet handled more than
$21 billion in card payments last year from
merchants who gain access to its Web-based API
from independent software vendors (ISVs) and
independent sales organizations (ISOs). SecureNet
settles payments into Visa and MasterCard through
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Wells Fargo and Eagle Bank. New customers
using SecureNet products will have transactions
settled through Citizens Bank, the same bank used
by Worldpay.
Top competitors of SecureNet include Braintree
and Stripe. These firms also offer cloud-based services
that integrate point-of-sale, mobile, and e-commerce
payment processing, inventory management, and
data analytics for merchants. SecureNet goes further
by adding end-to-end encryption and tokenization.
Worldpay US, like its parent company in the
U.K., has been a traditional payment processor.
That business, which is identified with dedicated
POS terminals, is losing ground to multichannel
payment integration that enables businesses to accept
payments in every way their customers want to pay.
Worldpay US will offer SecureNet products to its
existing customers. The SecureNet brand will be
phased out over time.
Brent Warrington is Head of Strategic Channels at
Worldpay in Austin, Texas, (512) 693-4800,
[email protected],
www.securenet.com.
... 26 mil. transactions a day from
more than 600,000 merchants.
Chester Ritchie is Head of Market Development &
Strategy at Worldpay US in Atlanta, Georgia, (949) 3063234, [email protected], www.worldpay.us.
IRIS ANALYTICS AND CARTES BANCAIRES
from page 1...
are co-branded with Visa and
MasterCard brands. However,
when transactions occur in
France, which is about 42% of
all POS and ATM transactions
on CB cards, authorization
messages route through a node
operated by a CB technology
company subsidiary called Société
d’Exploitation de Réseaux et de
Services Sécurisés (SER2S).
Iris Analytics technology
installed at the SER2S data
centers examine all domestic
cardholder and merchant activity
passing through that node in
real time. This year more than
5.00 billion transactions will
receive Iris fraud scores, which
are delivered in less than 5
© HSN Consultants, Inc. 2015 THE NILSON REPORT
milliseconds per transaction
even at peak times when SER2S
is handling 4,000 transactions
per second.
French card issuers have been
using chip & PIN security since
the 1990s and adopted EMV
technology in 2003. EMVcompliant cards are effective
protection against counterfeit
transactions at the point of
sale, however, they do not guard
against the steadily increasing
number of card-not-present
(CNP) transactions on CB cards.
In addition, they can’t protect
against purchases made with lost
or stolen cards in France if the
thief has somehow also obtained
the cardholder’s PIN.
France, which has the second
highest card fraud problem in the
European Union behind the U.K.,
has seen steady increases in lost/
stolen cards in recent years. CNP
transactions on CB cards have
been growing and are expected to
account for 7% of all transactions
this year.
The Iris platform lets Cartes
Bancaires’ staff completely
manage all fraud fighting decision
models through a browser-based
user interface that manipulates
built-in machine intelligence.
SER2S was formed in 2010. It
connects to 1.8 million merchants
and 58,500 ATMs.
Nikolaus Bayer is Managing
Director at Iris Analytics GmbH in
Neu-Isenburg, Germany,
49 (6102) 560-5802, [email protected],
www.iris-analytics.com.
Pierre Juhen is CEO at SER2S in
Paris, France, 33 (1) 5523-3102,
[email protected],
www.e-rsb.com.
JANUARY 2015 / ISSUE 1055 / THE NILSON REPORT
7
DYNAMICS RAISES $70 MILLION IN NEW FUNDING
from page 1...
Bain Capital Ventures and
Adams Capital Management
also participated. Total funding
received by Dynamics since 2011 is
$110 million.
Cards developed and
manufactured by Dynamics
contain 10 chips, a battery,
and more than 100 electrical
components that manage more
than 40,000 lines of code. No
other battery-operated interactive
payment card on the market
matches the technological
sophistication. Dynamics has
been developing these cards for
five years. Last year they were
made EMV-compliant and
contactless-compatible.
The first contactless EMV
product was for Canada’s CIBC
— a co-branded Visa card for
quick service restaurant Tim
Hortons. The Tim Hortons card
also uses Dynamics’ loyalty/
rewards service, which takes data
from authorization messages to
mag-stripe, which will protect
offer real-time account updates.
cards from skimming.
Data is sent by the issuer’s
Financial backing from
account processor such as TSYS
MasterCard is part of a larger
or First Data to one of the centers
alliance between the two
operated by Dynamics in Nevada
companies. MasterCard believes
or Pennsylvania. The Dynamics
Dynamics (and other providers
loyalty/rewards service, which also
of battery-operated interactive
handles chargeback adjustments,
cards) are offering innovative
is available to issuers who don’t
product and security features
deploy the company’s card.
for select customer segments
Dynamics manufactures cards
and countries where the legacy
in a MasterCard and Visa certified
card infrastructure is expected
plant in Pittsburgh using a fully
to function for a fairly long time.
automated process that includes
Battery-operated MasterCard
robotic technology. The Series
cards are issued in Belgium,
C funds will be used to increase
Singapore, and Poland.
the company’s
manufacturing
Financial backing from Mastercapacity as
Card is part of a larger alliance.
well as extend
its technical
capabilities and
product lines.
Carlos Menendez is Group
New security features for
Executive, Global Credit and Debit
Dynamics cards will be launched
Products at MasterCard in London,
this year. Cardholders will be able
U.K., 44 (207) 557-5090, carlos_
to use a code to lock and unlock
[email protected],
the card’s keypad, allowing them
www.mastercard.com.
to turn on or off the magnetic
Jeff Mullen is CEO at Dynamics
stripe and/or EMV chip. In the
in Cheswick, Pennsylvania, (724)
off position there is no data on
274-6484, [email protected],
the stripe or chip. There will be
www.dynamicsinc.com.
a dynamic CVV II code, which
can be used for online purchases,
Prior issues: 1,022, 963, 603, 566
and a dynamic CVV I code for the
YAPSTONE GATEWAY AND ONLINE PROCESSING
Privately held Yapstone processed more than
$9.00 billion in card (60%) and automated
clearinghouse (ACH) payments (40%) last year.
All transactions are high margin,
and most are also recurring.
Nearly all were initiated online. Over 95% occurred
within the U.S. The others originated in the U.K.,
8
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Ireland, France, Germany, and Spain. Merchant
acquiring partners of Yapstone are Vantiv and Chase
Paymentech in the U.S. and Global Payments in
Europe. ACH settlement in the U.S. is handled by
Profit Stars.
Yapstone, which is both a gateway and a processor,
is minority owned by private equity firms Accel
Partners and Meritech Capital. Those companies
invested $50 million in 2011. By that time, Yapstone,
which had more than $120 million in revenues (up
40%) last year, was already profitable. Another equity
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financing round is expected later this year, with
profits expected to grow by 40%.
Yapstone focuses on recurring payments markets,
which have been check-based and where
consumers are willing to pay a fee to make
an electronic payment, including apartment
rentals, vacation rentals, homeowner
associations, marketplaces, self storage,
and nonprofit (faith-based and secular)
organizations. The average transaction amount is
$850. All transactions are high margin, and most are
also recurring.
In addition to a payments app clients can install
at their websites, Yapstone offers a fully encrypted
virtual terminal Web link as well as mobile and social
network channel links. Consumers can pay online,
from a mobile app (including scanned check), via
email, using an IVR, via text message, or in person.
Yapstone is a Level 1, PCI-compliant processor. All
technology is built in-house and includes reporting
systems aimed at providing customers with more
detail than they would receive from a company
offering only payment processing. Customers can
configure descriptions of payments at the line-item
level. The platform also integrates with clients’
reconciliation and billing processes. For most clients
Yapstone also handles all payment-related customer
service calls using a staff of 100 people, aimed at
creating differentiation versus potential competitors.
Yapstone can handle payments in U.S. dollars,
British pounds, euros, and Canadian dollars. Clients
can determine settlement currency. Yapstone also
employs 20 people in Ireland. They are helping to
push the company’s growth in Europe into many of
the same markets penetrated in the U.S.
Thomas Villante is Chairman at Yapstone in Walnut
Creek, California, (310) 351-6932,
[email protected], www.yapstone.com.
Prior issues: 975, 918, 899, 897
RIPPLE PROTOCOL FOR FINANCIAL TRANSACTIONS
from page 1...
which was created by Ripple Labs,
is free, open source software that
standardizes rules and messages.
RTXP is designed for trading and
settlement of interbank payments
over distributed networks. Ripple
Labs calls RTXP email for money.
Existing interbank payment
systems, money transfer
companies, card networks,
Earthport, clearinghouses,
and exchanges are centrally
designed, and provide messaging
logic, business rules, dispute
resolution, and risk management
for participants. Ripple is not a
payment system. Instead, it can be
used to upgrade the movement of
funds within any existing payment
© HSN Consultants, Inc. 2015 THE NILSON REPORT
public database of account
balances and offers to trade
currencies.
All network participants
can view the ledger. Changes to
the ledger are agreed to by the
network participants. Ripple Labs
calls this process consensus. The
global account balancing within
the ledger is reconciled within
seconds through decentralized
transaction settlement created by
Ripple Labs’ engineers.
Ripple users
can hold balances
Transactions are processed
in any currency or
simultaneously, not sequentially.
commodity, while
sending payment
instructions in another currency
RTXP-based accounting can be
or commodity. The currency
fully settled in seconds, allowing
exchange is handled by entities
recipients instant access to funds.
Ripple Labs calls market makers,
Currency exchange, if included,
who advertise their bids and offers
occurs at no extra charge. Banks
in order books and broadcast to
operate Ripple software on their
local servers to create a shared
> see p. 10
system’s settlement function or
can be used in the creation of new
competitors to legacy systems.
The aim is to reduce the
marginal processing costs
of financial transactions at
the settlement level between
businesses and consumers and
between businesses and other
businesses, particularly crossborder payments. Ripple can also
facilitate currency exchange if
transactions require that function.
JANUARY 2015 / ISSUE 1055 / THE NILSON REPORT
9
RIPPLE PROTOCOL FOR FINANCIAL TRANSACTIONS
from page 9...
the protocol the rates at which they will do business.
Payment requests are routed to the best available
rates using algorithms created by Ripple. Neither the
sender nor recipient in a Ripple transaction needs to
have a relationship with the market maker handling
the currency conversion portion of the accounting.
Ripple Network transactions have counterparty
risk in the same way legacy system transactions do.
All instruments are claims against the issuer. What is
novel about Ripple is that transactions are processed
simultaneously, not sequentially. Ripple changes all
accounts in a transaction at the same moment. There
is no possibility that party A pays party B, but party B
fails to pay party A.
Fiat money, the legal tender of any nation, enters
the Ripple Network at a gateway, which is either a
financial institution or a business such as a money
transfer firm. Gateway firms redeem balances on the
Ripple Network, converting Ripple currency back to
fiat currency.
Ripple Labs, which is venture funded by Google
Ventures, Andreessen Horowitz, IDG Capital
Partners, and other investors, does not act as the
central operator. Ripple Labs earns revenue from
professional services delivered to network operators
such as Earthport. And Ripple Labs also earns
revenue from building software that connects RTXP
to legacy systems. Clients integrate Ripple accounting
into their payment systems.
Patrick Griffin is Head of Business Development at
Ripple Labs, Inc. in San Francisco, California,
(718) 696-7954, [email protected], www.ripple.com.
TRANSACTIONS WORLDWIDE — PROJECTED THROUGH 2023
from page 1...
market share is projected to fall to
34.69% by 2023, even though the
Market Shares of Purchase
Transactions Worldwide
with Change in Basis Points
Asia
Pacific
+1,302
U.S.
-902
2023
32%
19%
35%
2%
2013
MEA
+64
23%
2%
44%
Canada
-167
8% 4%
Europe
-110
©2015
The Nilson Report
22%
6%
3%
Latin
America
-187
region is projected to gain 80.81
billion transactions to reach
162.57 billion.
Cards issued in Europe
generated 22.94% of the global
total in 2013. Europe’s share is
projected to fall to 21.84% of the
world total by 2023, even though
the region is projected to gain
59.44 billion transactions to reach
102.34 billion.
Asia–Pacific’s 19.52% share in
2013 is projected to reach 32.55%
of the global total by 2023.
Purchase transactions totaled
36.52 billion in 2013, behind both
Europe and the United States,
but are projected to reach 152.52
billion in 2023, an increase of
116.00 billion. This is projected to
be the largest increase among the
regions, and the total is expected
to surpass Europe to become the
second largest region behind the
United States.
Latin America’s 7.68% share
in 2013 is projected to drop to
5.81% in 2023 when purchase
transactions are projected to
reach 27.25 billion, an increase of
12.88 billion.
Canada’s 4.49% share in 2013
is expected to fall to 2.82% of
the world total by 2023 when
transactions are projected to
reach 13.20 billion, an increase of
4.80 billion.
Middle East/Africa’s share of
1.66% at the end of 2013 will grow
to 2.29% of the global total by the
end of 2023 as transactions are
projected to reach 10.74 billion, an
increase of 7.64 billion.
CIGNIFI ALTERNATIVE CREDIT SCORES
from page 1...
a prepaid basis but have no history with a financial
services product such as insurance, credit card, savings
account, or installment loan to help predict risk.
The Cignifi platform was developed by a team
of behavioral mathematicians and data scientists
who state they can perform analysis on as little as
10
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four weeks of calling history to determine credit
risk. The technology examines voice, text, and data
messages, which Cignifi says effectively approximates
a consumer’s lifestyle. It takes huge data sets and
adds data mining algorithms to identify prospects for
financial products as well as marketing messages.
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All data is anonymized to
protect the identity of the telecom
customers. The algorithms
create clusters of behavior, which
illuminate prospects. The clusters
are determined by processing
more than 500 attributes derived
from calling and texting patterns
... determined by processing 500+
calling and texting patterns.
such as time of day, number
of calls and unique recipients,
location, and more.
In Brazil, Cignifi is working
for a credit card issuer and
mobile network operator
(MNO) to generate leads for
new card accounts. In Ghana
it is working with an MNO to
identify prospects for personal
savings and insurance products.
Cignifi, which also has customers
in Mexico and the Philippines,
could be used by underwriters
in developed markets to
identify prospects beyond those
available after a review of files at
credit bureaus.
Venture funding investors for
Cignifi, which has received Series
A and Series B rounds, includes
Omidyar Network and American
Express Ventures, which is also
a commercial partner. Venture
funds are being used to create
capacity for the cloud-based
platform and to expand to
new markets.
Cignifi is headquartered in
Cambridge, Massachusetts, and
has offices in São Paulo, Mexico
City, Manila, and Accra.
Jonathan Hakim is CEO at
Cignifi Inc. in Cambridge,
Massachusetts, (617) 859-6989,
[email protected],
www.cignifi.com.
Investments & Acquisitions December 2014
Company
Buyer/Investor
Amount
(mil.)
Country
3V Transaction Services
99Bill
Adyen
Akimbo Financial
Altpay
Amara Tech. Africa
Avra
BitGold
Biz2Credit
Bluefin Payment Sys.
Bongo Solutions
Bonusley
ChangeTip
CorFire
CreditGuard
Datalogix
Dynacart Solutions
Dynamics
EchoSat Communications
GFG
GiftCardsIndia
Giftery
GlobalPay
Global Payments/BPI
GoCoin
LaunchKey
MBNA
Mobitize
Nok Nok Labs
OpenJaw Technologies
SafeCharge1
Dalian Wanda2
Series B3
Payment Data Solutions1
undisclosed equity round4
Wirecard1
seed funding5
Series A6
capital agreement7
debt/equity8
Fedex1
seed funding9
seed funding10
Mozido2
SafeCharge1
Oracle1
Kohli Ventures1
Series C11
Wimsett & Co.1
Wirecard1
undisclosed round12
GiftCardsIndia1
Keyware Tech.1
joint venture13
undisclosed round14
seed funding15
Virgin Money16
private equity17
Series C18
GuestLogix1
$16.8
*
$250.0
$3.0
$1.0
$44.8
$0.2
$3.5
$250.0
*
*
$1.0
$3.5
*
$8.0
*
*
$70.0
*
$39.9
*
*
*
*
*
$3.0
$570.0
$0.5
$8.3
$41.2
U.K.
China
Netherlands
U.S.
U.S.
So. Africa
U.S.
Canada
U.S.
U.S.
U.S.
U.S.
U.S.
U.S.
Israel
U.S.
Ireland
U.S.
U.S.
New Zealand
India
India
Belgium
Philippines
Canada
U.S.
U.K.
U.S.
U.S.
Ireland
© HSN Consultants, Inc. 2015 THE NILSON REPORT
Company
Buyer/Investor
Amount
(mil.)
Country
P97 Networks
PayClip
PayHub
PayOne
Paytrail
PeerNova
Prairie Cloudware
Prairie Cloudware
Prismah Loyalty
Quoine
QwikCilver Solutions
Simply Tapp
Stripe
Tappr
Triotech Solutions
Valitor
Wallaby Financial
Series A19
undisclosed round20
SignaPay1
DSV Group21
Nets22
Series A23
debt venture equity24
capital raise4
Multiplus25
angel funding4
undisclosed round26
Series B27
undisclosed round28
Series A4
undisclosed round29
Arion Bank30
Bankrate1
$8.0
$5.2
*
*
*
$8.6
$6.0
$3.2
*
$2.0
$10.0
$5.9
$70.0
*
$3.0
$27.7
*
U.S.
Mexico
U.S.
Germany
Finland
U.S.
U.S.
U.S.
Brazil
Singapore
India
U.S.
U.S.
U.S.
India
Iceland
U.S.
*Terms not disclosed. (1) Acquisition. (2) Purchased controlling interest. (3) Led by General
Atlantic. (4) Family office investors. (5) Unnamed investor(s). (6) Led by PortVesta Holdings.
(7) From Direct Lending Investments. (8) Led by Goldman Sachs. (9) From Bloomberg Beta
and First Mark Capital. (10) Led by Partera Capital. (11) Led by MasterCard and CIBC.
(12) From Blume & Rajan. (13) Merchant services joint venture. (14) From GAW Miners.
(15) Led by Metamorphic Ventures. (16) Purchased credit card portfolio. (17) Unnamed
buyer(s). (18) Led by DCM Ventures. (19) Including Emerald Technology Ventures. (20) Led
by Alta Ventures. (21) Purchased 80% stake. (22) Purchased 80% ownership. (23) Led
by Mosaik Partners. (24) Led by Invest Nebraska. (25) Acquired the remaining 50% from
Aimia. (26) Led by Amazon. (27) Including Blue Sky Capital. (28) Led by Thrive Capital.
(29) From BlueHill Asset Mgmt. (30) Purchased Landsbankinn’s 38% stake.
Note: An error left one transaction off the November chart — Xpient Solutions was
acquired by Heartland Payment Systems in the U.S. The amount was not disclosed.
© 2015 The Nilson Report
JANUARY 2015 / ISSUE 1055 / THE NILSON REPORT
11
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prohibited and may violate the intellectual property rights of HSN Consultants, Inc. dba The Nilson Report.
COMMERCE BANK’S TOGGLE FEATURES
Commerce Bank is the 26th
largest U.S. Visa/MasterCard
credit card issuer. Its portfolio is
heavily weighted with revolving
credit users, and cardholders
in the revolving cycle don’t
want to add new everydaytype purchases to their existing
balances because they would have
to pay finance charges on them.
Research revealed that Commerce
cardholders use credit cards
from other issuers for spending
they intend to pay off every
month. This limits growth in new
purchase volume for Commerce,
denying the bank interchange
fee revenue.
To address that problem
Commerce has introduced a suite
of features it calls toggle, which
consumer cardholders can use to
consolidate all of their spending
on their Commerce credit card
without incurring any unwanted
finance charges or other costs on
select new purchases.
Toggle is an online card
spending management
tool available to all existing
at any time and the new
consumer credit card accounts
preferences will be applied nightly.
for cardholders who use online
A toggle feature Commerce
banking. They can use toggle’s
Bank calls Unwind permits
Pay Now feature to designate
cardholders to change their
purchases in a particular
preferred settings retroactively
merchant category above or
for any individual purchase,
below a certain amount to be paid
allowing a Pay Now ACH payment
from their Commerce checking
to be reversed, and adding
account or a checking account
that purchase amount to any
from another bank. At the time
outstanding credit balance.
of purchase, those transactions
Commerce Bank, which
are authorized against their
developed the business rules
Commerce credit card, and earn
supporting toggle’s core functions
credit card reward points.
in-house, plans on adding new
At night, when transactions
features every year.
post to their credit card account,
their Pay Now
preferences are
Pay Now preferences are applied
applied using
using technology from TSYS.
technology from
TSYS, Commerce
Bank’s card account processor.
Chad Doza is Senior VP, Consumer
Selected transactions are cleared
Credit Card at Commerce Bank in
and settled from the consumer’s
Kansas City, Missouri,
selected checking account through
(816) 234-2161,
the automated clearinghouse
[email protected],
every night at no charge.
www.commercebank.com.
They are not included in
the average daily balance
calculation, so they do not incur
finance charges.
They are not counted as Visa
or MasterCard debit transactions
because they were authorized
against the credit line.
Two checking accounts from
any financial institution can be
linked to a customer’s Commerce
credit card.
Cardholders can use toggle to
change their payment preferences
David Robertson, Publisher
Jan 19, 2015
12
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