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Election Impact on the Payments Industry - TSG's Take
It's been a little more than 48 hours since the most surprising and tumultuous presidential election in memory. With a Donald Trump win and the House and Senate staying in Republican hands, there are a lot of potential effects from these results. TSG has reviewed comments from many pundits as well as experts in the industry and compiled our thoughts on the elections impact on the payments industry. Read TSG's potential postivies, negatives and unknowns.
Highlights this week...
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TSG eReport - Political Organization/Campaign ISV Directory
TSG’s latest eReport is a directory of independent software vendors that serve the political organization & campaign space. A main service that these software companies often provide is donation management for political elections. TSG’s directory covers 29 players and includes the following insights (as available):
- Market Share
- Number Of Users
- Payment Processing Partnerships
- Number Of Employees
- Marketed Clients
- Affiliations
The report also provides payments performance metrics for MCC 8651, Political Organizations. These metrics are sourced from TSG’s AIM database of 3.5 million merchants and cover a sample of ~2,000 merchants.
Preview | Purchase - priced at $895
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Vantiv, Inc., a leading provider of payment processing services and related technology solutions, announced today its agreement to acquire Moneris Solutions, Inc. (Moneris USA) from Moneris Solutions Corporation (Moneris) for $425 million USD, subject to certain adjustments. Schaumburg, IL-based Moneris USA is the U.S. subsidiary of Moneris, which is a joint investment between BMO Financial Group and Royal Bank of Canada (RBC). Upon closing of the transaction, Vantiv will begin servicing Moneris USA's merchants and other business relationships, including its relationship with BMO Harris Bank, which operates approximately 600 branches in the United States. Moneris USA processed approximately $12 billion in U.S. transaction volume in 2015.
Related: Vantiv Says It Will Buy Moneris’s U.S. Operation With $425 Million in Cash on Hand
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PayPal users can now send and request payments using simple voice commands via Siri on iOS 10 on iPhone and iPad. The online payments company is making the new feature available to users in 30 countries, and in a number of languages, and it requires only that the iOS app be installed with a logged in user account.
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Tesco Bank has been forced to suspend its online transactions after fraudulent criminal activity was spotted on thousands of its customer accounts over the weekend. A total of 40,000 current accounts were hit by suspicious transactions. Money was pinched from 20,000 of the affected current accounts, Tesco Bank said on Monday morning. "We apologise for the worry and inconvenience that this has caused for customers, and can only stress that we are taking every step to protect our customers’ accounts," said the bank's chief, Benny Higgins.
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The hacking of Tesco Bank may be a negative for the company's reputation and stock price. But the fallout will be felt across the wider fintech industry. You might not think of Tesco, the U.K.'s largest grocer, as a start-up. Its banking arm has more than seven million customer accounts and generates about 17 percent of the company's operating profit. U.K. grocer Tesco shares took a hit after customer fraud forced its bank to suspend online transactions.
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Many people who don’t have bank accounts rely on prepaid debit cards which you buy and add money to so you can make purchases and pay bills. But the FTC says thousands of NetSpend prepaid debit card holders had trouble getting access to cash they loaded onto the cards, or to direct deposits from their paychecks or government benefits. Cardholders who couldn’t access their money often had no other way to pay for necessities, which caused some severe financial hardship, including late bill payments, repossessed cars, and even eviction.
Related: NetSpend Responds to FTC Compliant
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Omni-channel payments seek to address the opportunity for payment technologies to seamlessly integrate in-store payments, mobile transactions, social media purchases, and more. As consumers shop across more and more different channels, it’s not uncommon for someone to check out a Facebook ad, visit a product’s Shopify-hosted website, then buy it on their phone—and small businesses have been racing to keep up.
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Russia is reportedly aiming to create a mutually compatible payments system with China in an effort to reduce the risk of more sanctions from the West, reported Reuters. The report, citing an interview with Prime Minister Dmitry Medvedev, reported Russia created a new national payment to lessen its reliance on systems based in the West, such as Visa and Mastercard. Both have stopped providing services to customers of one Russian bank after the White House imposed sanctions, and Russia wants to prevent that from happening again. The sanctions were due to Russia’s role in the Ukraine.
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Wal-Mart Stores Inc is in talks with several mobile wallet companies to offer more payment options in its Wal-Mart Pay app, an executive at the world's largest retailer said, after signing up JPMorgan Chase & Co last week. Starting next year, Chase Pay will become the first third-party digital wallet on Wal-Mart's website and app, they said on Thursday. Customers can pay within the app with any major credit, debit, pre-paid or Walmart gift card.
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Despite double-digit growth this year and next, Americans’ use of mobile wallets like Apple Pay, Android Pay and Samsung Pay, as well as branded apps that include mobile wallets like the Starbucks app, Walmart Pay and CVS Pay, will not reach mass adoption in the foreseeable future. This year, 38.4 million Americans 14 and over will have used their mobile phones to pay at the point of sale at least once in the preceding six months. That’s just 19.4% of US smartphone users. By 2020, that figure will grow to 33.1% of smartphone users.
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It is not a question of whether digital payments will alter the fortunes of payment providers in the future, but how soon. New research published today shows that this shift is happening now as advances in digital payments and changes in consumer behavior shake up their traditional paths to success. In particular, there’s a new consumer behavior dynamic that bears particular watching, one that the Deloitte Center for Financial Services calls “default payments.” These are payments made with credit card, debit card and bank account details that have been stored for ongoing and future transactions – and they now make up 82% of digital transactions.
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Up to 4 million Australians can soon start using Apple Pay following a deal between Apple and a body representing smaller banks and credit unions. Customers with debit and credit accounts held with 31 financial bodies will be able to use Apple Pay to make retail payments from their iPhone following a deal with payments provider Cuscal. A Cuscal spokesman said a starting date for the service was yet to be announced.
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Walmart's addition of Chase Pay to its mobile wallet sounds like a big step forward for the payments industry, but the companies have a foot firmly planted in the past through their ongoing use of QR codes. It's worth asking why, after years of working out the kinks of contactless payments, we are still relying on a technology from the early '90s. Quick-response codes — the two-dimensional bar codes originally designed for Japan's automotive industry in 1994 — present information in a way that computers can read and humans can't, which makes them useful for displaying sensitive information. Starbucks, Paytm and Paydiant, which is a now part of PayPal, also use QR codes for mobile payments.
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McDonald’s is hoping to take a page out of the Apple playbook when it begins offering consumers the option to order and pay via a mobile app sometime during 2017. Apple is a market leader that rarely is the first to introduce a new technology—but tends to get it right when it does. Starbucks, Dominos, Taco Bell and Chick-fil-A all beat McDonald’s to market with mobile order-and-pay options in their apps, but the world’s largest fast-food chain waited, and diners worldwide will be able to decide next year if the restaurant got it right.
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Denmark is about to open its very own Fintech hub, Copenhagen Fintech, a joint initiative by Financial Services Union Denmark, the City of Copenhagen and the Danish Bankers Association to spur innovation in the Nordic capital. Billing itself as Scandinavia's first co-working space dedicated to fintech entrepeneurs, the new lab is opening its doors to all-comers at a reception today.
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Yahoo's postmortem into one of the largest data breaches of all time continues to reveal damning information. In a Nov. 9 filing to the Securities and Exchange Commission, Yahoo says it believes that a state-sponsored attacker - which it has blamed for the compromise of at least 500 million accounts - was in its network in 2014, and reports that it detected the related intrusion at the time. The disclosure complicates Yahoo's recovery from the breach, which according to the SEC filing has cost the company $1 million so far. It also casts doubts about whether Verizon will stick with its $4.8 billion bid to buy Yahoo, which it made prior to the breach details becoming public.
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The U.S. government on Thursday asked a federal appeals court to reconsider a recent antitrust decision allowing American Express Co to stop merchants from encouraging customers to use rival cards that charge lower fees. In its Sept. 26 decision, the 2nd U.S. Circuit Court of Appeals in New York reversed a lower court ruling that had struck down AmEx's "anti-steering" rules. At issue are the more than $50 billion of fees that merchants pay annually to process transactions.
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The PCI Security Standards Council is devising recommendations for protecting payment transactions on devices connected to the Internet of Things, a network with endpoints researchers say already number in the billions. The Wakefield, Mass.-based PCI Council, which oversees a number of security standards for the protection of credit and debit card data, is developing what chief technology officer Troy Leach calls a “framework” for ensuring payment security when IoT devices are involved. The framework will pay especially close attention to software controlling payments on the devices.
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Computop, a leading payment service provider (PSP), released the findings from a recent study of consumers and their expected shopping behaviors this holiday season as well as their online security concerns. In a survey of over 1,900 consumers crossing the U.S. and UK, Computop found an overwhelming majority, 76 percent, planned to shop online this holiday season; however, 62 percent of those respondents overall don’t plan to shop on Cyber Monday, noting it doesn’t offer the deals it used to previously.
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Late last month, popular websites like Twitter, Pinterest, Reddit and PayPal went down for most of a day. The distributed denial-of-service attack that caused the outages, and the vulnerabilities that made the attack possible, was as much a failure of market and policy as it was of technology. If we want to secure our increasingly computerized and connected world, we need more government involvement in the security of the "Internet of Things" and increased regulation of what are now critical and life-threatening technologies. It's no longer a question of if, it's a question of when.
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People released from Arizona prisons say in a federal class action that they are "forced" to become Bank of America customers by being given a BofA debit card, then charged "exorbitant and unusual fees" to withdraw their own money — $15 for each transaction with a teller. Lead plaintiff Daria Brill says Bank of America preys upon "one of the most vulnerable groups imaginable — releasees from Arizona corrections facilities."
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World Bank’s 2016 ID for Development (ID4D) report revealed that approximately 1.5 billion people around the world (over 21% of the world’s population!) cannot prove their identity. The majority of these people live in Asia and Africa and are cut off from accessing basic services and rights. The presented data suggests that less than half of all adults in the poorest 40% of households have a bank account and ~375 million unbanked adults in developing countries (18%) are constrained by not having the necessary ID documentation.
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Sentinel Hotel announced today that it has taken action to investigate and address an incident affecting payment card data at the hotel's front desk. After receiving reports of unauthorized charges occurring on the payment cards of some of its guests after they had used their card at the Sentinel Hotel, Sentinel immediately launched an investigation and hired a leading computer security firm to assist. On October 5, 2016, the investigation identified signs that an unauthorized program was installed on one of the payment terminals at the hotel's front-desk designed to copy data as it was input into the terminal.
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As businesses gear up for the holiday season, they are optimistic about sales and predict growth for the next quarter and into 2017, according to the American Express Holiday Growth Pulse, a survey of 1,502 small and middle market businesses across a variety of industries. Specifically in the retail industry, nearly six in ten (59%) small business retailers think holiday sales will be stronger compared to last year, and 34% think they will be roughly the same as last year.
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Jack Ma's e-commerce giant Alibaba has smashed its Singles' Day sales record with another huge number.According to its Singles' Day live updates site, Alibaba blew past its major milestone at 3:20 p.m. CST, 15 hours and 19 minutes into the sale, total gross merchandise volume (GMV) hit RMB 91.2 billion ($14.3 billion), surpassing the GMV total for the 24-hour sale last year. The Chinese e-commerce conglomerate brought in RMB 10 billion ($1.4 billion) in less than seven minutes, and broke $5 billion before the first hour was up, according to Asia-focused technology news website TechinAsia.
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As anyone who has visited Japan knows, cash is still king. Even though many places now take credit cards, Apple Pay and other forms of cashless technology, the actual amount of notes and coins circulating in the country has doubled in 20 years. And that’s while the economy and population has shrunk. More than 101 trillion yen ($966 billion) of cash was circulating at the end of October. It was used for more than 80 percent of transactions by value in 2014.
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First Data Corporation, a global leader in commerce-enabling technology and solutions, reported financial results for the third quarter ended September 30, 2016. Consolidated revenue for the third quarter was $2.9 billion, up 1% versus the prior year period, or up 2% excluding currency impacts. Total segment revenue was $1.8 billion for the quarter, up 1% versus the prior year period, or up 3% excluding currency impacts.
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Coupons, rewards and loyalty programs are making a comeback. While the coupon-cutting generations are still searching print ads, younger generations, led by mobile payments technology, are infusing new life into traditional marketing campaigns. According to the Vantiv ShopTalk survey, conducted by Socratic Technologies, offers received through the mail garner the most interest across all generations (71 percent). However, Millennials and Gen Xers express a high degree of interest in newer methods, such as QR Codes™ and mobile wallets.
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GTCR, a leading private equity firm, announced that it has acquired RevSpring, Inc., a leading provider of multi-channel billing and communications solutions to the healthcare and financial services industries. GTCR is partnering with RevSpring's existing management team to pursue growth initiatives at RevSpring as well as complementary acquisitions in the multi-vertical billing and payments industries. To support this strategy, GTCR has committed up to $400 million of equity capital to the platform.
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Payment gateway provider Shift4 Corporation and Total e Integrated, a club management software provider, today announced the general availability of their joint EMV-certified solution for golf courses and resorts, retail, private clubs, homeowners and property owners associations, and the food and beverage industry. "The U.S. migration to EMV has been a slow and painful process, and merchants continue to bear the brunt of it. Shift4 created a solution that enables merchants to adopt EMV with unparalleled flexibility and increased data security. We are pleased to work together with Total e Integrated to provide EMV payment processing to its many customers.”
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Visa, Micromax and TranServ have launched mVisa for all Udio mobile app users across the country, which include Micromax smartphone users. Udio is a digital wallet enabled by TranServ to create payment experiences for customers. It enables customers to digitise their physical cash at nearly 100,000 offline centres across the country in addition to standard online wallet-loading options, reducing their dependance on cash and cash-based payments.
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Citibank said it will soon launch its own competitor to JPMorgan’s Chase Pay which will allow consumers to pay retailers using their smartphones in stores. The new smartphone-based payment system, dubbed Citi Pay, was built to rival the mobile wallet apps already offered by Apple, Google, Samsung and others. Citibank is the latest banking giant that try to benefit from the prevalence of smartphones, which many now believe it will one day be consumers’ preferred way to pay for everything.
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Global Payments Inc., a leading worldwide provider of payment technology services, now supports PARKnSHOP - the ability to accept credit and debit card payments with Apple Pay - which is transforming mobile payments with an easy, secure and private way to pay that is fast and convenient in Hong Kong. Apple Pay is now live in the PARKnSHOP mobile app so customers can enjoy the convenience of paying quickly and easily with Apple Pay while grocery shopping on an iPhone or iPad. Global Payments is pleased to enable PARKnSHOP to offer this checkout option.
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Verifone, a world leader in payment and commerce solutions, and ATIO Group, a leading provider of retail fuel technology in Mexico and other Latin American markets, have announced a partnership to provide integrated payments technology to Mexico’s petroleum retailers. Mexico is the sixth largest consumer of motor gasoline and diesel with more than 11,000 filling stations across the country, and its energy market deregulation allows foreign companies to import, own assets, and sell other fuel brands.
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MagTek, a global leader in mobile payment security, and Payment Alliance International (PAI), the nation’s largest, privately-held provider of ATM processing and maintenance services, ATM equipment sales and support, jointly announce the support for MagTek’s QwickCodes® for cardless transactions. QwickCodes will be deployed across PAI’s nationwide network of over 74,000 ATMs. QwickCodes provides a proven way to pay for goods and services at stores and online, or to access cash from ATMs, without compromising sensitive payment information or consumer identity.
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Ingenico ePayments, the online and mobile commerce division of Ingenico Group, today announced that it has entered into an exclusive partnership with the hotel chain, Casa Andina. By partnering with Ingenico ePayments, Casa Andina aims to continue its tradition of offering guests the best stay possible by offering payment options that match regional preferences.
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Paymetric, Inc., a global leader of integrated, secure electronic payment acceptance solutions for the enterprise announced that Paymetric's XiPay On-Demand solution achieved SAP-certification with the SAP S/4 HANA platform. This solution will provide an integrated, efficient and secure way for businesses to accept credit cards and other electronic payment methods within their existing enterprise systems.
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CardFlight, a mobile point of sale (POS) technology provider, is proud to announce that Traveling Vineyard, a direct marketer of wines through in-home wine tasting events, will be using CardFlight to enable their distributors to accept payments, including EMV chip card payments, from mobile devices. Traveling Vineyard has developed a proprietary iOS application to help Wine Guides plan and organize tastings.
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Yahoo! | 11.09.16
Green Dot Corp. (GDOT) on Wednesday reported third-quarter net income of $2 million. The Pasadena, California-based company said it had profit of 4 cents per share. Earnings, adjusted for one-time gains and costs, were 21 cents per share. The results surpassed Wall Street expectations. The average estimate of nine analysts surveyed by Zacks Investment Research was for earnings of 17 cents per share.
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BusinessWire | 11.09.16
USA Technologies, Inc., a premier payment technology service provider of integrated cashless and mobile transactions in the self-service retail market, reported results for its first quarter ended September 30, 2016. “USA Technologies continued its strong connection and revenue growth and is executing in the market to drive cashless and mobile payments to self-service retail locations,” said Stephen P. Herbert, USA Technologies’ chairman and chief executive officer.
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WRCB | 11.10.16
Cardtek, a leading payment technologies provider, will launch Mobile Services Manager (MSM), a secure mobile payments platform, in partnership with DC Payments, a full-service provider of payment processing and ATM managed solutions. This contactless payments solution, integrated with leading open wallets, enables Canadian residents to make debit expenditures from a mobile phone without presenting a bank payment card and will be available by the end of the year.
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PR Web | 11.10.16
Integrity has announced the launch of its new payment gateway and developer partner program, IBX: Integrity Business Exchange. IBX features a robust payment gateway at the core of its offering, allowing software developers to build in secure payment acceptance technology to their products. The Developer Partnership Program included in IBX provides partners with white-glove support in the form of sales and marketing integrations, relationship management, and unique payment processing tools unavailable anywhere else.
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