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NF Edition #536 - 12/16/16
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Highlights this week...

Kurt Strawhecker Ponders Next Steps for Payments as 2017 Approaches
Feature from Nov/Dec Transaction Trends

Already a seasoned ad executive, Kurt Strawhecker joined First Data in the 1980s and started a marketing division that reportedly put the first stuffers in credit card statement envelopes. Then, a decade ago, he and Jamie Savant launched The Strawhecker Group (TSG), which the founders say mixes lengthy experience with Big Data to advise clients on all aspects of payments. Here, he leverages both to offer some insights on the industry.

Q: Can you use data to predict merchant attrition?
A: We collect merchant-level data refreshed on a monthly basis by members of the database. The merchants are giving us 60 or more data elements. We determine what is occurring and what has occurred in order to predict the future. Payments companies use the information in all elements of their companies, like financial, sales, and strategy. And the data answers questions. “What should my pricing be for a million-dollar merchant in Savannah, Georgia?” “What verticals are under-served and offer greater opportunity?”

Q: What Other Trends Does Your Data Indicate?
A: A myth you hear is that our industry is in a race to zero, but profitability among merchants has been maintained. Meanwhile, the use of electronic payments is expanding at existing merchants as consumer habits change, and different types of merchants are now able to utilize electronic payments. Now you can pay with plastic for a salad at McDonald’s. Five years ago you couldn’t.

Continue reading.

42% of Global Transactions Now EMV-Compliant
Finextra | 12.14.16

Technical body EMVCo publishes transaction data that reflects year-on-year growth in the number of contact and contactless card-present payments using EMV chip technology. The data reveals that during the period July 2015 to June 2016, 42.4% of transactions globally were EMV-compliant, compared to 33.0% for the previous 12-month period. To qualify as an EMV transaction, both the card and terminal used must be EMV-enabled. The data reflects average transaction volumes over a 12-month period to take into consideration seasonal variations.

Yahoo: One Billion More Accounts Hacked
Krebs on Security | 12.14.16

Just months after disclosing a breach that compromised the passwords for a half billion of its users, Yahoo now says a separate incident has jeopardized data from at least a billion more user accounts. The company also warned attackers have figured out a way to log into targeted Yahoo accounts without even supplying the victim’s password. On September 22, Yahoo warned that a security breach of its networks affected more than 500 million account holders. Today, the company said it uncovered a separate incident in which thieves stole data on more than a billion user accounts, and that the newly disclosed breach is separate from the incident disclosed in September.

Related:

Mastercard And Visa Tag-Team Tokens
PYMNTS | 12.15.16

Tokenization as a global standard for securing transactions in a digital world gets turbocharged today, thanks to Mastercard and Visa. In a mutual commitment to accelerating the adoption of an open digital wallet, the global card networks announced their agreement to allow each network to request tokenized credentials from the other when consumers are transacting across any digital medium — in-app, online and in-store. Put another way, starting next year, Mastercard will be able to request tokenized credentials from Visa for provisioning into Masterpass and Visa from Mastercard to provision into Visa Checkout.

Related: Accelerating the Adoption of Tokens to Benefit Banks, Merchants and Consumers

Cash Still King in U.S. Transactions
The Wall Street Journal | 12.13.16

May require a subscription. Although India may be the latest country trying to take cash out of circulation, it will be a while before cash disappears from the U.S. economy. About one-third of consumer transactions were made in cash last year, according to the Federal Reserve’s Cash Product Office. That’s down from 40% in 2012. Credit cards were used for 21% of payments, debit cards for 27%, and electronic payments made up 11% of transactions. Cash was still the single, most widely used payment method.

PayPal Expands Payment Service with Citigroup, FIS Partnerships
TheStreet | 12.15.16

PayPal agreed to a partnership with Citigroup and Fidelity National Information Services that will expand customers' payment options utilizing its platform. Shares of the San Jose, Calif.-based company were up 0.4% to $39.71 on Thursday as PayPal reported its first deal with a major bank, Citigroup, to tokenize cards for use during point-of-sale, leveraging its earlier deals this year with Visa and MasterCard. PayPal is teaming with companies that "share a common vision to make payments simple, safe and convenient regardless if people are shopping online, in-app or in-store," Gary Marino, PayPal chief commercial officer, said in a statement.  

VeriFone’s Galant Says Networks’ EMV Extension for Fuel Pumps Will Hurt Its Results
Digital Transactions | 12.12.16

It’s a double whammy for VeriFone Systems Inc. On Monday, the San Jose, Calif.-based terminal maker said its sales for next year will be “tempered” by a decision by the major payment networks to postpone their deadline for fuel-pump EMV from Oct. 1, 2017 to Oct. 1, 2020.“We were disappointed and somewhat shocked at the three-year delay,” VeriFone chief executive Paul Galant told analysts during an afternoon conference call to discuss the company’s results for its fiscal fourth quarter, which ended Oct. 31, and for the full fiscal year.

Related: Verifone Reports Results for the Fourth Quarter and Full Year Fiscal 2016

Vantiv Unveils 4 Top Payment Industry Trends for 2017 for Financial Institutions
Vantiv | 12.14.16

Vantiv, Inc., a leading provider of payment processing services and related technology solutions for merchants and financial institutions of all sizes, announced the first installment of its trends to watch in 2017, beginning with financial institutions. “As the year comes to a close, everyone agrees 2016 was a very eventful year in the payments industry. Next year will be the same for financial institutions, as we see evolving technology and innovation across the entire landscape changing the way we think about payments,” said Bill Hampton, senior vice president and general manager of financial institution services at Vantiv.

This Is What Scammers Are Buying With Your Credit Card
CNBC | 12.14.16

Hackers have fashionable tastes, at least when it comes to using your plastic to pay for luxury goods. That's what Forter, a San Francisco-based provider of e-commerce fraud prevention and detection services, found in an analysis of more than 3 million transactions between September and November of this year. Scammers are in the market for diamond necklaces, Fitbits and Apple products, but they aren't necessarily interested in toting the trendiest accessories.

Many Merchant Systems Still Lack Basic Security
PayThink | 12.13.16

What could a Point of Sale (POS) security breach cost your business? Factoring in the cost of an investigation, legal fees, potential fines and lawsuits, damage to a reputation, and a likely decrease in customer loyalty, your business could be out millions of dollars. My advice is to make security a priority, not an afterthought. I have found that many merchants are victims of systems that lack basic security measures. Integrating surveillance cameras is also a good idea. Business owners can avoid theft and loss by monitoring POS transactions in concurrence with live video surveillance.

In Global First, India Offers Discounts for Payments Made Online
Bloomberg | 12.12.16

Exactly 30 days after junking existing high-value 500 and 1,000 rupee notes, Finance Minister Arun Jaitley sought to draw Indians toward digital payments by offering up to 10 percent off on insurance policies, highway usage and concessions on train travel. The government will also waive service tax on online transactions below 2,000 rupees ($29.6), he added. Apart from these, there will be a 0.75 percent discount at petrol stations even though oil companies currently add a surcharge for using debit or credit cards.

Panasonic's New Shopping System Automatically Bags and Tallies Your Bill
TechCrunch | 12.12.16

For some reason I hate everything about grocery shopping, but I must share this hate with others because companies like Amazon, and now Panasonic, are throwing a lot of tech at the problem. WSJ reports that Panasonic is working on a checkout setup for convenience stores that will scan items as you place them into your basket, and then automatically bag it all up for you at checkout so that all you have to do is pay. Last week, Amazon revealed its own more friction-less convenience store pilot, with a location that lets shoppers simply walk out with whatever they want to purchase, for which they’re charged automatically via their Amazon account.

Will Amazon Eat Grocery Stores For Lunch?
PYMNTS | 12.12.16

Retailers, already sweating bullets over the “Amazon Effect” on their business, now have one more reason to keep sweating. Amazon Go, Amazon’s new grocery store format in Seattle, opened last week. Right now, its only customers are Amazon employees, who are putting it through its paces, but that will change in early 2017, a spokesperson said. Few details have emerged as to how Amazon Go powers the experience that shoppers will find once they get inside the store, but the combination of the Amazon Go app, a turnstile at the entrance/exit, deep learning and sensors enables a cashier-less, counter-less checkout experience for the consumer. 

Android Pay Launches in Japan With Prepaid Card Provider
NFC World | 12.13.16

Google has launched its Android Pay mobile payments platform in Japan in collaboration with prepaid card provider Rakuten Edy, allowing consumers to make payments with their compatible devices at more than 470,000 locations accepting Rakuten Edy eMoney. Users can top up their prepaid account within the Android Pay app with a credit card, or at stores that support Rakuten Edy, including Bic Camera, Family Mart, Lawson, McDonald’s and Yodobashi Camera. Supported loyalty programmes will also be compatible with Android Pay.

I Have Seen The Future Of Wearable Payments, And It Is Magical
AndroidCentral | 12.12.16

I went to Walt Disney World at the beginning of December. It was absolutely glorious. And each day, while in the parks, I did not take a wallet with me. I stuck my driver's license in the back of my phone's clear case, and that was all I brought. And while I bought tons of keepsakes and food, my credit cards stayed safely in my hotel room. Did I use Android Pay? Samsung Pay? Apple Pay? No; I used something even better.

Introducing the New Google Wallet Experience on the Web
Google | 12.15.16

We're excited to introduce the new Google Wallet web experience just in time for the holidays. Available across all browsers, the updated Wallet website has a brand new look and added features, which will make planning that New Year's trip with friends a breeze.You can send what you owe to your friend’s email address or phone number, and they can quickly transfer the money to their bank account – all without installing an app.

Bitcoin Wallet Blockchain Adds Ex-Barclays Chief to Board
CoinDesk | 12.13.16

Bitcoin wallet startup Blockchain has added former Barclays Bank group chief executive Antony Jenkins to its board of directors. The appointment is notable as Jenkins served as Barclay’s chief executive from 2012 until mid-2015. There, he was promoted to the top spot in the wake of the Libor scandal, a plot involving numerous banks aimed at manipulating interbank interest rates.

State Ballot Wins Only Amplify Questions About Pot Banking
BankThink | 12.12.16

The 2016 election will be remembered not only for the memorable presidential race but also for what was effectively a national referendum on cannabis. Eight states passed laws allowing its use. Medical marijuana is now permitted in 29 states, and eight permit its recreational use. The legal sale of marijuana has grown from a $1 million industry in 1996 to an almost $8 billion industry today, with predictions it will reach $23 billion by 2020. But the state victories only amplify the disconnect between federal and state law when it comes to marijuana use, which preserves the uncertainty for banks about whether to get involved in the legal pot industry. That industry is booming, but for the most part can't bank its profits.

CFPB Finds Bank Marketing Deals With Colleges Can Mean Costly Fees and Risks for Students
CFPB | 12.14.16

The Consumer Financial Protection Bureau (CFPB) released a report raising new concerns about costly fees and risky features that can be attached to certain college-sponsored accounts. The Bureau’s analysis of roughly 500 marketing deals between these schools and large banks found that many deals allow for risky features that can lead students to rack up hundreds of dollars in fees per year. The report also examines trends in the school-sponsored credit card market.  The CFPB also issued a bulletin today reminding colleges and universities they are required to publicly disclose marketing agreements with credit card companies.

RBI Eases Some Card-Not-Present Authentication Requirements
Bank Info Security | 12.12.16

Following the government's recent demonetisation initiative to help fight tax fraud and counterfeiting, the Reserve Bank of India had removed its two-factor authentication requirement for small-value card-not-present transactions. But some critics fear the move, designed as a catalyst for cashless transactions, could lead to an increase in fraud.

Third Alleged Hacker Arrested in Chase Breach
Bank Info Security | 12.15.16

A third suspect alleged to be responsible for the 2014 JPMorgan Chase data breach, which resulted in the compromise of data linked to more than 83 million customers, was arrested Dec. 14 after voluntarily returning to the U.S. from Russia, according to The Associated Press and other news media reports. Joshua Samuel Aaron, 32, who also goes by the alias "Mike Shields," was arrested at JFK International Airport after waiving extradition and asylum in Russia "to responsibly address the charges," Aaron's attorney, Benjamin Brafman, told AP.

KFC Loyalty Program Hack Proves It's Better at Protecting Recipes Than Passwords
TNW | 12.13.16

KFC sent an email to all 1.2 million members of its Colonel’s Club loyalty program in the UK on Monday, instructing them to change their passwords after it discovered its website had been targeted and several user accounts potentially compromised. It’s unclear what information the hackers managed to get their hands on, but seeing as KFC is encouraging users to change their passwords to other services too, we’re guessing that it was probably a list of email addresses and passwords.

Class-Action Filed To Block the IRS From Tracking Bitcoin Users On Coinbase
The Cointelegraph | 12.15.16

A motion has been filed to block the Internal Revenue Service’s move to access the personal and Bitcoin transactional information of over a mln U.S. based Coinbase customers between 2013 and 2015. Filed on behalf of Los Angeles attorney Jeffrey K. Berns, the Managing Partner of Berns Weiss LLP, who used Coinbase to buy and sell Bitcoins estimates that over a mln Americans are subject to the John Doe summons issued on Nov. 30, the case was assigned to Judge Jacqueline Scott Corley who granted the IRS summons.

In Case You Missed It: U.S. Holiday Spending Report Card
ETA/TSG

Household Appliance Stores, Lumber & Building Stores, and Automotive Tire Stores will be among the “winners” in December consumer spending, according to ETA's U.S. Retail Holiday Spending Report Card, powered by TSG. TSG used predictive modeling to relatively “grade” estimated credit/debit same store sales for the month of December, which established the winners.  The data leveraged is sourced from TSG’s data warehouse of over 3.5 million card-accepting merchants in the U.S. and the modeling utilized 57 consecutive months of spending by merchant type (MCC code). 

Fed Raises Rates, Boosts Outlook for Borrowing Costs in 2017
Bloomberg | 12.14.16

Federal Reserve officials raised interest rates for the first time this year and forecast a steeper path for borrowing costs in 2017, saying inflation expectations have increased “considerably” and suggesting the labor market is tightening. The Federal Open Market Committee cited “realized and expected labor market conditions and inflation” in increasing its benchmark rate a quarter percentage point, according to a statement Wednesday following a two-day meeting in Washington. New projections show central bankers expect three quarter-point rate increases in 2017, up from the two seen in the previous forecasts in September, based on median estimates.

Related: Traders Doubt the Fed Will Hike Rates 3 Times Next Year

White House Economists Spell Out the Four Most Stubborn Economic Challenges
The Wall Street Journal | 12.15.16

May require subscription. The White House released Thursday its annual Economic Report of the President, the last such volume produced by the Obama administration. While the nearly 600-page report catalogs what the administration views as its greatest successes, it also neatly frames what White House economists see as the most stubborn challenges facing economic policy. In some instances, those hurdles mark a clear contrast with the economic worldview of President-elect Donald Trump and his advisers, who have chosen to focus on other gauges, including the U.S. trade deficit and the level of domestic manufacturing employment, as signs of economic vigor.

A Holiday Sales Update From NPD: 2016 May Fall Flat
Benzinga | 12.13.16

Thanksgiving week is usually one of the strongest for retail sales in the United States, kicking off the holiday shopping season. This year was no different. According to the NPD Group’s data, weekly point-of-sale figures for the main general merchandise categories show sales in the Thanksgiving Day and Black Friday week were more than double those of the preceding week. However, the numbers also exhibited a 1 percent tumble in Thanksgiving week sales, in relation to the same period last year. Moreover, dollar sales in the first four weeks of this year’s holiday shopping season slipped 3 percent in relation to those same four weeks in 2015.

TSYS Announces Executive Transition
TSYS | 12.15.16

TSYS announced the retirement of William A. Pruett as Senior Executive Vice President and President of TSYS’ North America Services segment, effective April 1, 2017. A 40-year veteran of TSYS, Pruett started his career in the merchant area at Columbus Bank and Trust in 1976, and in 2011 assumed leadership of TSYS’ largest reporting segment. Under his guidance, TSYS has become the number one provider of issuer services in North America.

Costco Visa Card Hits 1 Million-Member Milestone
CSA | 12.12.16

Costco Wholesale’s new co-branded Visa payment card is definitely resonating with shoppers. Since launching its co-branded Citi Visa Anywhere credit card in June, the club retailer reports that 1 million members signed up for the payment card. “Most of them have it in hand,” Costco’s CFO Richard Galanti said during the company’s earnings call on Dec. 7. “In terms of conversion, usage and new sign up for the card, all [is] good so far.”

Fiserv to Acquire Online Banking Solutions, Inc.
Fiserv | 12.12.16

Fiserv, Inc., a leading global provider of financial services technology solutions, announced today that it has entered into a definitive agreement to acquire Atlanta-based Online Banking Solutions, Inc. (OBS). Through this acquisition, Fiserv will gain additional cash management and digital business banking capabilities, which complement and enrich its existing solutions. "Financial institutions are increasingly focused on deepening relationships with commercial customers," said Jeffery Yabuki, President and Chief Executive Officer, Fiserv.

American Express Launches New "Add a Card" Feature for the Amex Bot for Messenger
American Express | 12.12.16

American Express announced a new Add a Card feature for the Amex bot for Messenger. This feature helps enable eligible U.S. Consumer and OPEN Card Members to add their Card and billing information to Facebook for purchases on Facebook. After adding a Card to their Facebook accounts, Card Members can easily make in-game purchases, purchases on the Shop sections of business’ Facebook pages and participate in Messenger commerce experiences.

Shift4 and Club Automation Announce Joint EMV Solution for the Health and Athletic Club Industry
PRWeb | 12.15.16

Payment gateway provider Shift4 Corporation and Club Automation, a cloud-based club management software provider, today announced the general availability of their joint EMV-certified solution for health and athletic clubs. “Shift4 solves payments problems that others in the industry haven’t even thought of yet. While the EMV liability shift has left many merchants clamoring to adjust their infrastructure and business practices, our integration with Club Automation solves these problems for health and athletic clubs by providing a comprehensive, flexible, and completely bank- and processor-neutral solution.”

Scalefast Selects Ingenico Group to Boost Global, Multi-channel Payment Processing Capabilities
Ingenico | 12.13.16

This comprehensive partnership will enable Scalefast to provide its customers with an integrated, multi-channel payment solution that allows them to accept payments both in-store and online. Ingenico ePayments, the online and mobile commerce division of Ingenico Group, will provide Scalefast with support for all major credit cards, alternative payment methods and value added services in a full-service, multi-acquirer model. Additionally, Ingenico Mobile Solutions, Ingenico Group’s mPOS division, will provide the company with next generation RP750x mobile card readers to allow its customers to accept card-present payments on mobile devices, regardless of location, including trade shows and events.

China UnionPay Qualifies FIME Test Platform
PaymentWeek | 12.15.16

FIME’s chip payment test platform Savvi, used by acquirers, processors and merchants globally for terminal integration testing, now supports China UnionPay (UnionPay) certification. The new certification process requires merchants and acquirers to confirm that a terminal meets UnionPay’s credit and debit card standards and will successfully integrate with the payment infrastructure.

ACI Worldwide Named Official Service Provider for Pan-European Instant Credit Transfer Scheme by EBA Clearing
ACI | 12.14.16

ACI Worldwide, a leading global provider of real-time electronic payment and banking solutions, has been named by EBA Clearing as one of the ‘frontrunner service providers' for the pan-European EBA SEPA Instant Credit Transfer Scheme, due to go live in November 2017. The scheme will enable consumers and businesses to make euro credit transfers in real-time between accounts across an international area that will eventually span over 34 European countries. The first pilot banks are expected to start testing as early as Q1 2017.

Citi Backs Foreign Exchange Blockchain Startup Cobalt DL
Business Insider | 12.15.16

Citi has made an undisclosed investment in Cobalt DL, a London startup aiming to use the technology behind bitcoin to simplify foreign exchange trading. Cobalt DL, founded by two veteran bankers, aims to apply distributed ledger technology, also known as blockchain, to the foreign exchange trading market. Currently, when banks trade currencies with each other there are multiple different records of the transaction held by the buyer, seller, broker, clearer, and other third parties, all of which have to be reconciled. This slows the process down and adds to costs.

Datacap Releases Certified BluePay US EMV Solution for Point of Sale
PRWeb | 12.15.16

Datacap Systems, leading integrated payments middleware provider, has completed US EMV level 3 certification with BluePay and released an EMV-capable version of NETePay™ available for download immediately. NETePay for BluePay’s host-based processing platform provides Datacap and BluePay point of sale partners with the ability to deliver US EMV functionality via an evolving list of PIN Pads through a simple out-of-scope interface.

Blackhawk Network Offers Merchants Centralized B2B and B2C Physical and Digital Gift Card Solutions with Launch of Hawk Commerce
PR Newswire | 12.12.16

Blackhawk Network, a leading prepaid and payments global company, today announced the launch of Hawk Commerce, a comprehensive, single source B2B and B2C solution for expanding, distributing and managing gift cards and egifts. At HawkCommerce.com, merchants now have one location where they can easily learn about many of Blackhawk's solutions and request a demonstration.

United Pacific Selects Cardtronics for ATM Services
Nasdaq | 12.12.16

Cardtronics announced a long-term agreement with United Pacific, which has named Cardtronics its exclusive provider of ATM services covering more than 300 gas station and convenience store locations. United Pacific is a leading convenience store, gas station operator and fuel wholesaler in the western United States. Cardtronics is the world's largest ATM owner / operator.

Stanz Foodservice Selects FTNI's ETran Integrated Receivables Solution
FTNI | 12.14.16

Financial Transmission Network, Inc. (FTNI) announced that Stanz Foodservice has selected FTNI’s ETran Integrated Receivables platform, including its Fully-Hosted Online Payment Portal, advanced Remote Deposit Capture (RDC), and EPay ACH initiation modules. Stanz and FTNI are on schedule to roll out these seamlessly integrated solutions early in Q1 2017.

USA Technologies Adds to Growing List of Customers Committing to 100% Cashless Payment Technology With Ten M Corporation
BusinessWire | 12.12.16

USA Technologies, Inc., a payment technology provider of cashless and mobile transactions in self-serve retail, announced a strategic agreement with Ten M Corporation (“Ten M”), a family owned Canteen franchise, adding to its expanding list of customers committing to a fully connected operation. USAT is working with Ten M to upgrade 1,000 of the company's machines to its state-of-the-art ePort Connect cashless payment system, enabling the company to track the acceptance of cash, credit/debit cards, and contactless payments, including mobile wallet payments such as Android Pay and Apple Pay.

NAB Velocity Partners with Avalon Solutions Group
CBS58 | 12.13.16

Avalon Solutions Group, LLC, a technology innovator headquartered in Portland, ME, is expanding distribution of its myOmny POS software solution though its inclusion in North American Bancard’s Velocity Marketplace. North American Bancard (NAB) is the nation’s leading merchant services company. This joint effort provides businesses with a novel approach to streamlining their point-of-sale and accounting activities in a competitively-priced offering made available nationwide through NAB’s extensive Agent and ISO reseller base.

Renowned Security Expert Introduces Game-changing Endpoint Security Detection Device for POS, ATMs, and Gas Pumps
PR Newswire | 12.15.16

Night Lion Security, a boutique information security risk management and digital forensics firm, today announced the release of its first product. CardShield is an endpoint security detection device designed to provide payment acquirers and merchant providers with real-time visibility into malicious activity. Available in February, 2017, it is slated to be the industry's first endpoint security device capable of both rapidly identifying malware on point-of-sale (POS) systems and detecting modern credit card skimming devices commonly embedded within gas pumps and ATMs.

Privacy Launches To Make Your Payments Safer & Easier
PR Newswire | 12.13.16

Privacy, a provider of easy to-use software that protects your digital rights, announces the official launch of its first payments product designed to keep your personal information secure without sacrificing convenience. The company also announces today that it has secured a seed round of $2.2 million in funding led by Index Ventures, with additional investment from Rocketship.vc and angel investors. The new capital will be used for product development, engineering resources and growth efforts.

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