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NF Edition #516 - 7/29/16
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Highlights this week...

Check Out TSG's Hottest New eReport

  • Payments Industry 101: This report can serve as a guide to understanding the landscape of the U.S. payments industry. This material, expertly curated by TSG Associates, provides excellent coverage of the payments ecosystem and the industry’s opportunity, as well as valuable insights into merchant acquiring, credit card issuing, and general industry trends. Seasoned executives, and newcomers alike, will find substantial value in the contents. Preview | Purchase

Mastercard and PayPal Hold Talks About Alliance
Finextra | 7.29.16

MasterCard and PayPal have engaged in a "constructive dialogue" about a possible strategic alliance, according to a report in the Financial Times. MasterCard's chief executive Ajaypal Singh Banga was presenting the company's Q2 results and told Wall Street analysts that the two respective giants of the offline and online payments markets were exploring a possible link-up that would ease some of the competitive tension that has built up between the two as PayPal continues to build its market share.

Apple Pay Now Accounts for Three-Fourths of U.S. Contactless Payments
Fortune | 7.26.16

Apple reported better than expected earnings this afternoon, and one nugget shared on the call by CEO Tim Cook could be a good sign for the company’s mobile payments service. Cook said that according to retailers, Apple Pay now represents 75% of all contactless payments made in the U.S. Apple Pay was launched in 2014 as a way to let shoppers load their credit card and debit card information onto iPhones’ “mobile wallets.” Customers can then use either their iPhone (or linked Apple Watch) to pay at retail stores equipped with point-of-sale registers supporting near-field communication (NFC) technology, which enables frictionless payments between smartphones and registers.

Related

Ex-VeriFone CEO Would Mull Making Buyout Bid at Right Price
Bloomberg | 7.25.16

Doug Bergeron has an alert set on his phone to let him know when the shares of VeriFone Systems Inc. drop. If the price hits $11 or $12, the former chief executive officer of the company says he’s ready to orchestrate a buyout. VeriFone, one of the world’s largest makers of payment-terminal hardware, has slid 32 percent this year to $19.13 as a lengthy certification processes for new chip-card terminals delayed sales in the U.S. and price competition in emerging markets intensified.

Big Banks Turn Silicon Valley Competition Into Profit
Yahoo! Finance | 7.29.16

In an annual letter to shareholders last year, JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon warned in bold print that “Silicon Valley is coming” for the financial industry. This year, his tone was upbeat, describing payment systems and partnerships his bank set up to compete. “We are so excited,” he said. Predictions that banks are about to be disrupted by tech-driven upstarts are starting to look a bit like LendingClub Corp.’s stock. The online loan marketplace’s value soared in late 2014 and has since slid more than 80 percent. Banks including JPMorgan, Goldman Sachs Group Inc. and American Express Co. are finding all sorts of ways to profit from such challengers -- via partnerships, funding arrangements, dealmaking and, sometimes, mimicking their ideas.

TSYS Puts Its TransFirst Assets to Work
ISO & Agent | 7.27.16

TSYS is beginning to integrate its $2.4 billion acquisition of TransFirst, an initiative the Columbus, Ga.-based processor hopes will substantially extend its ability to serve merchants in the high-pressure arena of multichannel commerce. "Our goal is to optimize the capabilities, products and services across our combined entities that will enable our customers to rely on one single provider for all of their processing needs," said M. Troy Woods, TSYS' president and CEO, during Tuesday's earnings conference call. "We believe this is a key market differentiator."

New Federal Trade-Secret Law Could Prove To Be a Double-Edged Sword for ISOs
Digital Transactions | 7.28.16

Every business, including merchant processors and independent sales organizations, wants to protect its trade secrets, and a new federal law gives them stronger tools to do that than available before. But the law also could expose ISOs to damages should they unwittingly hire sales representatives who use somebody else’s stolen trade secrets. That was the word from payments attorney Holli Targan, a Southfield, Mich.-based parter at Jaffe Raitt Heuer & Weiss P.C. Targan reviewed the Defend Trade Secrets Act of 2016 during a Wednesday session about compliance issues at the MidWest Acquirers Association annual conference in Cleveland.

Visa/PayPal And The Future Of Payments
PYMNTS | 7.25.16

There’s no doubt that the announcement of the Visa/PayPal partnership shook the payments world more than a little bit last Thursday. Over the last year, PayPal CEO Dan Schulman made a point, every chance he could, to let everyone know that he was the chief of a decidedly different PayPal, post its eBay independence. That PayPal, he said, was one that embraced partnerships and consumer choice. The network that started life steering consumers to ACH, he emphasized, was now indifferent to tender type. The consumer ruled.

Miami Judge Rules That Bitcoin Is Not Money
Forbes | 7.27.16

Bitcoin has been described as “a new kind of money.” That’s because the digital currency doesn’t rely on an exchange of paper and there is no centralized bank that records your transaction. This week, a Miami-Dade judge disagreed, issuing a ruling that Bitcoin is not, in fact, money. The ruling came in response to what is likely the first of its kind: a criminal case involving Bitcoin and money laundering.

The Battle Heats Up in Person-to-Person Payments
The Wall Street Journal | 7.25.16

Banks have an unexpected weapon in their latest battle with Silicon Valley: speed. The biggest U.S. lenders, sometimes criticized for moving slowly, are revving up efforts to persuade Americans to zap money to each other’s bank accounts instead of digging for dollars to pay the baby sitter or split a dinner bill. But the banks face steep competition from digital rivals like PayPal Holdings Inc.’s Venmo, the popular money-transfer service that has gotten a head start with millennials who also use it as a social-media tool.

You Can Now Use Venmo to Pay for Things Inside Other Apps
TechCrunch | 7.27.16

In January Venmo announced that users will soon be able to use Venmo to pay inside other apps, similar to how most e-commerce apps already offer PayPal or Apple Pay as payment options. And now (well, technically tomorrow) the feature is leaving beta and will be available to all Venmo users. The feature will make it easy for anyone with Venmo to quickly pay in other apps. Users will first have to do a one-time authentication between the app and Venmo, but subsequently won’t have to leave the e-commerce app to pay from their Venmo account.

New ACI Worldwide Study: 40 Percent of Thai Technologists Prefer Alternative Payments for Online Shopping
BusinessWire | 7.27.16

ACI Worldwide, a leading global provider of real-time electronic payment and banking solutions, announced the results of its new Thai Commerce & Payment Study. The survey asked approximately 300 technologists about their shopping habits and payment preferences for in-store, online and mobile transactions in Thailand, where eCommerce sales are expected to be valued at 800 billion Baht in 2021.

Banks Look Up to the Cloud as Computer Security Concerns Recede
Bloomberg | 7.28.16

Imagine reclining in your La-Z-Boy, closing your eyes and asking the voice-activated Amazon Echo on a nearby shelf when your next car payment is due. Just a few years ago, banks would have needed a houseful of their own computers to provide such service. Instead, new capabilities announced Wednesday by Capital One Financial Corp. run on Amazon.com Inc.’s cloud. It’s the latest sign banks are growing more comfortable using other companies’ servers instead of their own closely guarded data centers -- and that longstanding security concerns are fading.

Kimpton Hotels Probes Card Breach Claims
KrebsonSecurity | 7.26.16

Kimpton Hotels, a boutique hotel brand that includes 62 properties across the United States, said today it is investigating reports of a credit card breach at multiple locations. On July 22, KrebsOnSecurity reached out to San Francisco-based Kimpton after hearing from three different sources in the financial industry about a pattern of card fraud that suggested a card breach at close to two-dozen Kimpton hotels across the country.

ThreatMetrix Cybercrime Report Reveals a 50% Increase in Global Attacks, With 1 in 10 New Account Applications Now Rejected
MarketWired | 7.27.16

As part of its ongoing effort to thwart cybercrime, ThreatMetrix®, The Digital Identity Company™, released its Q2 2016 Cybercrime Report. The ThreatMetrix Digital Identity Network (The Network) detected and stopped a record 112 million cyber attacks this quarter, a 50 percent increase from last year. The report revealed that the rise in stolen identity credentials available in the market led to an increased level of attacks on new accounts, a 250 percent increase year-over-year. Fraudsters are using identity credentials obtained from the dark web to run substantial automated bot attacks that have increased 50 percent since last quarter.

President's Cyber Response Directive Gets Mixed Reviews
Bank Info Security | 7.27.16

Security experts disagree about whether a new presidential policy directive on how to coordinate response to a large-scale cyber incident is well-designed. While some say its far too complex to work, others say it reflects current practices. Richard Stiennon, chief strategy officer at Blancco Technology Group, a provider of mobile device diagnostics, sees the directive as being "overly complicated" with "too many moving parts. It calls on many new and relatively unvetted components of the federal government to work together in a quick and efficient manner."

Banks' Privacy Concerns Shaping Blockchain Vendors' Strategies
American Banker | 7.26.16

One of the ostensible selling points of blockchain technology is its potential to bring greater transparency to financial markets. But this feature has turned out to be a bug for the institutions that would use the technology. In the original bitcoin blockchain, transactions are recorded on a public ledger for the whole world to see but users are pseudonymous, identified only by alphanumeric addresses that look like a cat walked on the keyboard. In the private, or "permissioned," blockchains being developed for the industry, only known, trusted entities can participate. This may alleviate concerns about bad actors using the system, but it doesn't address worries about tipping one's hand to the competition if everyone involved can see who did what.

UK Payments Regulator Calls for Structural Reform
Finextra | 7.28.16

The PSR has just completed a market review which concluded that there is no effective competition for any of the UK's three payments systems - Bacs, Faster Payments and LINK. One of the biggest problems identified by the PSR is the common ownership and control of payment systems and infrastructure providers - a small number of large banks control the majority of payment system operators.

U.S. Economy Grew at a Slow Pace in Spring, Expanding at Just 1.2% Pace in Q2
The Washington Post | 7.29.16

The U.S. economy grew 1.2 percent on an annualized basis between the months of April and June, according to government data released Friday morning, dashing hopes for what economists had expected to be a major bounce-back. The tepid expansion raises new concerns about the health of the U.S. economy, particularly with signs that businesses are holding off on spending and investment.

Fed Leaves Rates Unchanged in July Meeting
CNBC | 7.27.16

The Federal Reserve opted Wednesday not to raise interest rates, despite painting a rosier economic picture than it did just a month ago. As expected, the Federal Open Market Committee kept its overnight interest rate target in the 0.25 percent to 0.5 percent range. However, it noted a labor market that has "strengthened" and said other indicators were pointing to growth. "Job gains were strong in June following weak growth in May," the FOMC said in its post-meeting statement, referring to nonfarm payrolls that rose from 11,000 to 287,000 over the one-month period. "On balance, payrolls and other labor market indicators point to some increase in labor utilization in recent months."

Amazon Shatters Earnings Expectations
TechCrunch | 7.28.16

Amazon shattered expectations when it reported second quarter earnings after the bell on Thursday. Adjusted earnings per share came in at $1.78, when Wall Street was forecasting $1.11. Amazon also beat revenue predictions, posting $30.4 billion for the quarter when analysts were expecting $29.55 billion. Shares ticked up 2 percent in after-hours trading. The company saw a significant increase in sales and profit from the same period last year. Net sales were up 31 percent and net income was $857 million, a large jump from last year’s $92 million. Amazon also spent many years unprofitable, while it invested in growth.

Global Payments Reports Fiscal 2016 Earnings, Establishes Fiscal 2017 Growth Targets and Announces Fiscal Year Change to Calendar Year End
Global Payments | 7.28.16

"Fiscal 2016 was a transformative year for Global Payments. We are delighted with our performance as results exceeded our expectations, reflecting continued strong execution throughout the year," said Jeff Sloan, Chief Executive Officer. "Our partnership with Heartland Payments is off to a strong start. Our combined senior management team is in place, we are executing initiatives to drive incremental revenue enhancements and we are realizing the integration synergies we previously outlined. We expect continued positive momentum in 2017."

Mastercard Incorporated Reports Second-Quarter 2016 Financial Results
Mastercard | 7.28.16

MasterCard Incorporated announced financial results for the second quarter of 2016. The company reported net income of $983 million, an increase of 7% or 8% on a currency-neutral basis, and earnings per diluted share of $0.89, up 10% or 11% on a currency-neutral basis versus the year-ago period. Excluding special items related to separate U.K. merchant litigations taken in both this quarter and the previous year’s quarter, the company reported net income of $1.1 billion, an increase of 10% or 11% on a currency-neutral basis, and earnings per diluted share of $0.96, up 13% or 14% on a currency-neutral basis versus the year-ago period.

Mastercard and PayPal Renew Consumer Credit Card Program
Business Wire | 7.27.16

Mastercard and PayPal announced a multi-year extension of the PayPal Extras Mastercard co-branded consumer credit card program in the United States and Puerto Rico. “We are proud to continue our long-standing relationship with PayPal through this program,” said Craig Vosburg, president, North America, Mastercard. “In this increasingly digital world, we are providing PayPal cardholders with the most advanced and secure technologies, giving them the core guarantees and benefits they’ve come to expect from Mastercard, regardless of how and where they pay.”

Visa to Open New Silicon Valley Office
Visa | 7.25.16

Visa Inc. announced plans to open a new office in Silicon Valley as part of its continued efforts to accelerate digital commerce globally. The new 62,000 square foot facility, located in Palo Alto, will be a combination of office and collaboration spaces for approximately 300 Visa employees focused on technology research, business intelligence, data security and merchant solutions.

Kenya's PesaPal is Moving Into the Physical World With its First POS System
Quartz | 7.27.16

PesaPal, a Nairobi-based aggregator for online and mobile payments, is set to launch its own point-of-sale system (POS) to rival similar products from PayPal, Shopify and Square. Expected to be in place in a month, the point-of-sale system will enable business owners to accept payments more conveniently and help the firm tap into the growing usage of payment cards to ramp up its income.

Visa Europe Partners for Bitcoin Micropayments Trial
CoinDesk | 7.26.16

Bitcoin micropayments startup SatoshiPay is developing a new proof-of-concept with Visa Europe's innovation unit. Work on the project was first disclosed earlier this year, when Visa Europe Collab said that it was exploring bitcoin micropayments for connected devices. At the time, the company indicated it was looking at use cases like smart light bulbs that could pay for their own electricity.

Vantiv Launches All-in-One Developer Network for Smarter, Faster and Easier Payments Integration
Vantiv | 7.25.16

Vantiv, Inc., a leading provider of payment processing services and related technology solutions for merchants and financial institutions of all sizes, launched Vantiv O.N.E., One Network Experience, today to provide software developers a best-in-class destination for integrating payments into their applications for mobile, in-store and online processing. Vantiv O.N.E. is combining Vantiv’s leadership in integrated payments and industry leading scale of its processing platform, to enable software developers to get their applications to market faster, make compliance and security easier, and help fuel innovation in the increasingly complex market for omni-channel commerce solutions.

Apriva Announces Another EMV Certification of Ingenico Group Terminals
Apriva | 7.27.16

Apriva, the leading provider of secure end-to-end wireless transaction processing solutions, today announced it has completed EMV certification for Ingenico Group smart terminals to First Data’s Omaha platform. This additional certification expands on Apriva’s existing EMV solutions to offer more choices to reseller partners, the merchants they serve and end-users. This full-featured certification includes the wireless iWL220 and iWL250, as well as the iCT220 and iCT250 countertop models.

Lloyds cuts a Further 3,000 Jobs and Doubles Branch Closure Plan
BBC | 7.28.16

Lloyds has accelerated its job-cutting scheme, axing a further 3,000 roles, even as it reported a 101% increase in pre-tax profits. It has also doubled its planned branch closures, with 200 more set to vanish from High Streets by the end of 2017. The bank attributed the cuts to changes in people's banking habits, and the effects of interest rates remaining low for the foreseeable future.

Set It and Forget It: Square Eliminates Settlement Wait Time by Offering Scheduled, Same-Day Deposits
Square | 7.28.16

Cash flow and access to capital are some of the biggest challenges faced by local sellers when growing a business, often due to lengthy settlement times as long as five days. Today, with the introduction of Scheduled Deposit, Square gives sellers the option to deposit their daily sales in their bank account the very same day, seven days a week. For just 1% of the total deposit amount, sellers get their money when they need it, without extended wait times — including holidays and weekends.

Strategic Agreement between Bancolombia and First Data: the Arrival of New Commerce Solutions for Colombian Business Owners
First Data | 7.25.16

Bancolombia and First Data, a global leader in commerce-enabling technology, announced a strategic agreement to integrate and strengthen their technology platforms in order to improve and diversify services for business owners in Colombia. The companies will focus on building commerce technology solutions for merchants and facilitating access to the banking system, offering advanced technology and secure, efficient transactions. First Data and Bancolombia will bring the latest payments innovations from Europe and the United States to the Colombian market, including best-in-class eCommerce and business management solutions. 

Elo and Discover Mark First Transaction, Opening Discover Global Network to Brazilian Travelers
Discover | 7.26.16

Elo, the first 100% Brazilian card brand, conducted its first international transaction today in the U.S. on the Discover Global Network. This transaction marks the official acceptance of the Elo Global Card in the U.S. Elo Global Cards are issued by Banco do Brasil, Bradesco and Caixa Econômica Federal, and will be used for international purchases and cash access outside of Brazil on the Discover Global Network, which includes Discover Network, Diners Club International, PULSE and affiliated networks.

 

Fifth Third Masterpass Now Available to Fifth Third Bank Customers
Nasdaq | 7.27.16

Fifth Third Bank announced that its customers will have access to fast, simple and secure digital payments across devices. Fifth Third Masterpass, developed with Mastercard, enables customers to shop online, in app and now, in-store with Android devices."Fifth Third Bank is excited to offer Fifth Third Masterpass - one of the first bank digital wallets in the marketplace that allow in-store mobile payments and online check-out capabilities," said Randy Koporc, head of Payments and Commerce Solutions for Fifth Third Bank.

FIS Reports Second Quarter 2016 Results
FIS | 7.26.16

FIS, a global leader in financial services technology, reported that second quarter revenue increased 45.3 percent on a reported basis to $2.3 billion from $1.6 billion in the prior year quarter. Operating income decreased 1.4 percent to $283 million in the second quarter of 2016, from $287 million in the prior year quarter, with operating income margin of 12.3 percent for the quarter. Net earnings from continuing operations attributable to common stockholders was $120 million, or $0.36 per diluted share, compared to $242 million, or $0.85 per diluted share in the prior year quarter, a decrease of 57.6 percent.

Verifone Helps Pennies Raise £1M for Charities
Verifone | 7.27.16

Verifone, a world leader in payments and commerce solutions, and Pennies, the digital charity box, today announced that their partnership has reached a significant milestone by helping to unlock £1million for charities in the United Kingdom. The Pennies application works by allowing consumers to donate small sums to charity - always under £1 - by ‘rounding up’ or ‘topping up’ when paying by card in-store and online.

Ingenico - Continued Double Digit-Growth in the First Half of 2016
Ingenico | 7.26.16

Ingenico Group has once again achieved solid growth in the first half of this year. Our multi-local strategy has continued to prove its effectiveness, with our excellent results in mature markets and Asia offsetting the slowdown in Brazil. At the same time, our ePayments division has extended its business reach substantially, finalizing a new major agreement with Alipay. And although we have maintained our investment drive to keep bringing out new products and developing our online transaction platforms, Ingenico Group still has a 21.5% EBITDA margin. 

WePay Crosses Atlantic with Integrated Payments for the U.K.
PR Newswire | 7.26.16

WePay, the leading provider of payments-as-a-service for online platforms including crowdfunding and business software platforms like GoFundMe, FreshBooks, and Constant Contact,  announced its expansion into the United Kingdom. This means platforms can now serve U.K. users with the same fully-integrated, white label payments services they enjoy from WePay in the U.S. and Canada. WePay has also extended its best-in-class fraud risk protections, compliance and support offerings to new U.K. business.

Frozen Yogurt Chain Adopts NCR Cloud-based POS System
The Green Sheet | 7.28.16

Looking to gain a competitive edge in the crowded frozen yogurt market, the Zoyo Neighborhood Yogurt team adopted NCR Silver Pro Restaurant Edition as its cloud-based point-of-sale (POS) system. Before switching to the system, Zoyo’s corporate stores used a cumbersome POS system that required extensive training and expensive software updates. Now, they have a scalable solution that all employees can quickly learn and use.

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