Dorado trend watch q1 2013

TrendWatch 2.0
Q1 2013
Payments System Industry
Synopsis

Notice: Materials contained in this document are drawn from several media sources and Dorado Industries is not responsible for their accuracy. Opinions expressed
herein are presented without warranty. Brand names are the trademarks of their respective service offerors.

Random Thoughts
2013: A Return to On-Us Transactions? Hope Not.
Some industry observers consider the recently announced Then again, what are the odds that this is a “one and done”
relationship between Visa and Chase as either benign or deal? If it works for Chase and Visa, what about Bank of
innovative. A few might consider what amounts to white- America and Visa? Or Citibank and MasterCard? Sure,
labeling VisaNet to Chase a serious step backwards. Still special pricing arrangements between retailers and acquirers
others might recall that First Data proposed a similar “on-us” have been permitted and in place for decades but when large
arrangement dubbed “FirstDataNet.” Because FDN was chunks of transactions become virtually “interchange-free”
missing approval from a moving part – VisaNet – litigation through this form of on-us relationship, aren’t we creating
was threatened by our friends in Foster City and FirstDataNet what economists call market inefficiencies? And what the hell
entered the deadpool – good idea, bad timing. happens to CFPB’s favorite term of art, “transparency?”

By most accounts, Chase represents 16 percent of Visa traffic As consumers, can we expect to be barraged with merchant
at all merchants. That figure is likely to increase if Chase signage and slogans promoting Chase cards over others?
migrates a significant portion of its 30 million MasterCard What would Senator Durbin say if so? Lord knows we like
payment cards to Visa as has been announced. Meanwhile, innovative efforts to get ahead of the game but returning to the
the bank’s Chase Paymentech acquirer business is ranked dim dark days of “my bank’s bigger than yours” and other on-
fourth in size in the U.S., posting 9.1 billion in POS us promotional follies seems out of place today.
transactions in 2012 valued at one-half trillion dollars.
On a more forward-looking note, congratulations to the Secure
A supercomputer isn’t required to figure out that linking Remote Payments Council and EMV Migration Forum
Chase cards and its newly empowered acquiring business members for having the guts to buck stiff headwinds while
through a licensed version of VisaNet (operated by Visa for unanimously selecting Discover’s D-PAS as their EMV
Chase, no less) will create considerable pricing advantages for common AID. Now that that logjam has been broken, let’s
the bank and cause a substantial bump in Visa transactions. see if we can get issuers and merchants to come along for the
One wonders what unaffiliated merchant acquirers like Vantiv, ride. EMV may not be the panacea it claims, but all the
Heartland, and Global Payments, those absent the ability to spitting from the sidelines doesn’t cure anything either.
create closed-loop networks out of open-loops, think about
this change in market power? Until next time.
Dorado Industries (310) 544-1316
655 Deep Valley Drive, Suite 125-P jmacallister@doradoindustries.com
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Table of Contents

2013 Predictions 4
TrendWatch Scorecard/Summary 5
2013 Payments Industry Yields 6
Interesting Quarterly News That Got No Respect 7
Q1 M&A/Investor Activity 12
Useful Links for More Information 20
Back in the Day 21

3

2013 Predictions

• One cloud-centric mobile payments player other than PayPal will have a break-out year; the payments industry will
declare NFC DOA and move on.
Mar: Since Google is re-gearing mobile yet again, it’s not likely to be the one.
• One or more of the non-traditional dongle-centric merchant services providers will be acquired by a mainstream
POS terminal industry leader.
Mar: Verifone’s Sail is gone so its off the table. Someone else will cave.
• Despite the fact that there are already laws preventing abusive use of electronic benefits transfer cards, the CFPB
or Congress will intervene to provide more protection.
Mar: Still waiting to see if CFPB wants to double down on casinos, strip clubs, and liquor stores.
• One of the remaining EFT networks will change ownership.
Mar: The search for a common AID for mobile (more accurately, reaction by V/MA) will likely propel things.
• American Express will prevail in its Department of Justice litigation.
Mar: Time remains an ally for American Express. DOJ litigation didn’t impair its efforts to gain FDIC access for its
prepaid product – Bluebird.
• The US Postal Service will declare its pilot in gift card sales a failure and shut the program down.
Mar: After all, who buys gift cards on Saturday when USPS is delivering mail. Oh, right.
• Emboldened by the success of PayNet (FIS) and clearXchange (BofA, Chase, Wells), two new real-time payments
networks will emerge.
Mar: Nothing yet but the Italian banks are pushing their own version in-country and pan-Europe. Time will tell.

4

TrendWatch Scorecard/Summary – Q1 2013

Industry Players To Watch
Positive V/MA: EFT networks snub both and select Discover common AID.
Next move?
Mixed
MasterCard and its SDWOANAF pricing: Google and PayPal must be
Negative thrilled. Courthouse steps or circumvention? Either way, great payments
industry theater.
Low 1. New Payment Forms Target: Sold its consumer credit card portfolio – now what?
Green Dot: With NetSpend in the TSYS camp, does GDOT need to serve
Med 2. ATM Restructuring up something new?
Isis: There must be something there if Coca Cola is willing to play.
Med 3. POS Volume Trend Facebook: Planning to launch a FB phone device this Thursday? Maybe.

Low 4. Legal/Regulatory Issues
Market & Industry Situation
High 5. New Venture Growth 1 – Pretty slow in Q1; lots of me-too plays.
2 – New fangled devices and All Point gains another 5,000 units in its
Med 6. Earnings Announcements network.
3 – Still looking to see where the volume is; Chase/Visa lash-up may change
High 7. Industry Investments things.
4 – A quiet Congress is a good thing but the Fed and CFPB are sniffing
around.
5 – There’s still a trillion or so on the sidelines; it’s likely to start moving
again.
6 – Banks are making money ($32 billion in OD fees helps), so are
payments networks. Others, not so much.
7 – See #5.
5

2013 Payments Industry YTD Yields
We lost TNS and ORCC to M&A activity during the quarter and NetSpend will soon become part of
Total Systems. Western Union and MoneyGram International have been added to round out the
basket of equities and to add more of a money transfer segment weighting. Q1 indices did well; the
Dow was up 11.3 percent and the S&P 500 came in at 10 percent to the good. Our basket beat
them both by delivering 15.8 percent in average yield. A lot better than last quarter.

Industry Player 12/31/2012 3/28/2013 Price  Cap Value  YTD 2012 Yield

Alliance Data Systems $ 144.76 $ 161.89 $ 17.13 $ 1,019.2 11.8%
Cardtronics $ 23.74 $ 27.46 $ 3.72 $ 151.4 15.7%
Discover Financial Services $ 38.55 $ 44.84 $ 6.29 $ 3,024.9 16.3%
Euronet Worldwide $ 23.60 $ 26.34 $ 2.74 $ 138.1 11.6%
Fidelity National Information Services $ 34.81 $ 39.62 $ 4.81 $ 917.7 13.8%
First Data (Future Use)
Fiserv Inc. $ 79.03 $ 87.66 $ 8.63 $ 1,345.4 10.9%
Global Cash Access Holdings $ 7.84 $ 7.05 $ (0.79) $ (60.9) -10.1%
Green Dot $ 12.20 $ 16.71 $ 4.51 $ 183.8 37.0%
Heartland Payment Systems $ 30.23 $ 32.97 $ 2.74 $ 102.5 9.1%
Jack Henry & Associates $ 39.26 $ 46.21 $ 6.95 $ 583.1 17.7%
MasterCard Worldwide $ 491.28 $ 541.13 $ 49.85 $ 6,450.6 10.1%
MoneyGram International $ 13.29 $ 18.10 $ 4.81 $ 278.3 36.2%
NetSpend (M&A Pending) $ 11.82 $ 15.89 $ 4.07 $ 357.3 34.4%
Total System Services $ 21.42 $ 24.78 $ 3.36 $ 663.3 15.7%
Western Union $ 13.61 $ 15.04 $ 1.43 $ 813.3 10.5%
Visa $ 151.58 $ 169.84 $ 18.26 $ 15,446.1 12.0%

Sources: Company releases, Morningstar.com, Bloomberg.com
2013 YTD yield excludes dividends; based on 12/30/12 and 3/28/13 closing prices

6

Interesting News This Quarter

Subject Source/Date Substance
Intuit Finextra Dongle wars take on an international flavor as Intuit launches a chip and PIN version of its
March “Intuit Here” merchant services scheme in the already crowded UK market. Other market
interlopers including Sweden’s iZettle, Germany’s Payleven, mPowa out of London all are
shooting for the small and micro business sector in the UK where less than 20 percent of these
under-10 employee firms presently accept card payments.
TD Bank ATM Marketplace The venerable ATM has been undergoing considerable changes lately – devices that dispense gift
March cards, units without keypads that are accessed through cell phone applications, and scrip
dispensers. Now we hear that TD Bank plans to roll out a “Green Machine” ATM solution
powered 100 percent by wind. TD intends to update its fleet of 1,900 ATMs using renewable
energy. Strangely, TD’s footprint runs from Maine to Florida, excluding the nation’s capital
where there’s an overabundance of wind to harness.
China UnionPay China Daily China UnionPay and Visa have been at odds since 2010 when the card company advised its
March banks that adopting CUP routing for international transactions would not be a good idea. Half of
the credit cards issued by CUP are co-branded and the company plans a global push to issue
double the number of single branded cards within the next three years, diluting Visa’s impact on
its issuing and branding strategies. This bit of trans-border spitting is far from over, we fear.
Xoom PaymentsSource Global money transfer player, Xoom, takes a novel approach to money movement while
March launching its Pay Only When Received (POWR) service. Unlike other transmittal services that
withdraw sender funds immediately upon initiating a domestic or international transfer, POWR
debits the originating account when the funds notification is received by the recipient. Xoom
moved over $3.0 billion last year on behalf of 750,000 customers. High street banks like Citi,
HSBC and CIBC participate in the Xoom MTS programs.

7

Interesting News This Quarter – Continued
Amazon Payments Source Amazon plans to launch its own brand of virtual currency – Amazon Coins – in May. The company
February rationalizes the endeavor as a means to monetize in-app purchases on its Kindle Fire tablet using an
exchange rate of 1:100 so a $3.00 Kindle app will cost 300 Amazon Coins. Developers receive the
same “generous” payout of 70 percent offered by Facebook and other online purchasing service
providers. The May launch of Amazon Coins will include a give-away of “tens of millions of dollars
worth” of the coins. Speaking of Facebook, didn’t Mark & Co. announce plans to sunset Credits
sometime in 2013? This may prove to be interesting theater.
EMV Migration Forum Paybeforenews Is your hometown available for a pilot? EMV Migration Forum and Smart Card Alliance is looking
February for a test bed site to experiment with EMV deployment. 100-300 thousand brave and hardy souls would
be exposed to the miracles of chip and PIN payments in a quasi-laboratory setting. If successful, we
might see full roll-out of EMV by, say, 2025 since its not likely that issuers, merchants, and networks
will agree on a common AID by then. We’re guessing that prime fishing locations like La Paz and
Puerto Vallarta, Mexico aren’t in contention; a pity. How about Santa Monica? Lots of experimental
folks live there.
Muscat Bank Paybeforenews Makes you wonder how something like this can happen. Oman’s largest bank sprung a leak earlier this
February year when it discovered that twelve of its prepaid travel cards had been compromised and used outside
of the country. As a result, Muscat Bank will take a $39 million impairment charge equal to ten percent
of its annual earnings. True, the bank had yet to implement chip and PIN but, really? A dozen cards
run up nearly $40 million in losses before they’re shut off? Makes most other data breaches pale by
comparison.
Facebook TechCrunch Facebook meanders into the grim world of plastics by offering a multi-merchant prepaid card ordered
January online and fulfilled by mail. The product is closed loop but reusable with multiple participating
retailers. So, it’s something like a wallet but resident on a card. Merchants participating in this
gradually rolling out program include Target (naturally), Jamba Juice, Olive Garden and so on. We
can’t tell for sure where this scheme is going but it’s worth keeping an eye on.

8


Akimbo Presser The new Akimbo Visa Prepaid Debit Card program looks pretty cool on its surface – P2P transfers, photo
March storage and distribution, social media interaction – rife with stuff that might attract the younger set. Until you
read the fee schedule. PIN POS transactions are 99¢, ATM balance inquiries cost 33¢, and ATM withdrawals
are $1.98. Want your funds back by check? $5.00! Signature POS transactions are free. Well, of course, it’s
a Visa branded product.
Venmo Mobile Payments What do you do when consumers are reluctant to use their mobile phones for purchases and you’re a provider
Today of merchant acceptance terminals for mobile payments? The folks at Braintree have chosen to convert the
March Venmo app into a B2B system enabling SMBs to pay their contractors and vendors through email addresses
or mobile phone numbers. Vendors pay a modest 25¢ to cash out their receipts unless they are with Venmo
clients who pay no fees. Braintree has 4,000 eligible SMBs in tow and is offering the first 1,000 transactions
for free. Sort of a lemonade-for-lemons exchange.
Subway Finextra Two former Subway franchisees, tired of the meager returns generated by $5 foot-long sandwiches have
March taken a different tact. They formed POS Doctor, a California-based (naturally) company which sold POS
systems to other Subway franchisees. They neglected to mention the system backdoor which enabled the two
entrepreneurs to hack the POS Doctor systems and add as much as $40,000 to Subway gift cards. The pair
then either used the fraudulent cards at Subway or sold them on Craigslist and eBay (after all, how many foot-
long sandwiches can a couple of guys eat?) Our hacking gourmands have been indicted and are awaiting
trial.
ShopSavvy NetBanker ShopSavvy was founded in 2008 as a comparison shopping and deals app for mobile phones. Like most in
March the genre, the company can boast of 25 million downloads and 10 million active users (which means that 60
percent that downloaded the app said no thanks.) Over time, the app has morphed into a wallet application
including payments and just recently Capital One has launched a top-of-wallet campaign that pays CapOne
cardholders $20 for linking ShopSavvy to its card and using the app for making purchases. ShopSavvy has
already wooed lots of the big box stores – WalMart, Best Buy, Target, etc. – and is now creeping up on the
issuer side in an approach not dissimilar to the recent Chase/Visa lash-up (see Random Thoughts).

9


PayPal Payments Source PayPal is attempting to break the gas station logjam that has stymied mobile wallet developers thus far. Gas
February stations have been cut some slack in hardware upgrades for decades (e.g., EMV compliance deadlines)
because of the knotty problems associated with weatherizing and fuel pump technology. PayPal has cut a
deal with Gilbarco Veeder-Root, one of the pump guys, to launch a QR-based wallet solution, one which
avoids the high cost of retrofitting island pumps. Another arrow in the PayPal digital wallet quiver.
Discover American Banker Faced with a need to lower its funding costs and the challenge of being a regulated FI under Durbin, Discover
March has launched its new checking account scheme which comes with the same benefit offered on its iconic credit
card – cash rewards. “Cashback Checking,” pays depositors 10¢ for each debit card purchase, bill payment
and check written. No fees or required minimum balance, free checks and free withdrawals through 425,000
ATMs. What’s not to like? Sorry, but Cashback Checking is only available by limited invitation for now.
LevelUp Payments Source Twenty small merchants in Boston and Washington D.C. held a small protest and refused to accept credit
February cards for one day. Each of the merchants participates in the LevelUp zero interchange payments scheme.
Instead of interchange, retailers pay based on the number of new enrolled customers. Obviously, adoption has
been gradual and modest but LevelUp now claims to have 500,000 users; still small but weren’t the seeds of
Durbin sown in a small photography shop in Orange County, California? Tea (party) anyone?
American Express The Guardian Payments disrupter American Express (never thought we’d say that) has been signing deals with Twitter,
February Facebook, Xbox Live, and others including FourSquare to enable purchases using linked American Express
cards. In the Twitter case, a tweet in response special offers made through the 140 character communications
portal will secure the deal and schedule shipment or download of real or virtual goods. The arrangement
generates clicks for Twitter and the others plus a piece of each deal. AMEX gets a “way cool” nod from old
line members and that new demographic it’s winning over with the Bluebird prepaid card. 2+2=5.
FIDO PC Magazine FIDO stands for Fast Identity Online and is an association of seven companies including Lenovo, PayPal and
February five others. The FIDO objective is to create a new standard for online authentication. Options range from
biometrics, tokens, and existing approaches which would be unified in their use across the membership. If
successful, FIDO believes it can greatly reduce consumer exposure to reuse, phishing scams, and malware.
FIDO is casting a wide net to encourage all organizations that need to verify user identity to join the effort.

10


UK Payments Industry Payments Journal In a classic example of winning the battle while losing the war, the UK Payments Industry which includes
March the LINK ATM network and other three- and four-party systems has come under new regulatory control in
that government’s efforts to “liberalise” the British payments system (sounds a bit like the Australian Reserve
Bank rhetoric from 2007, right?) Seems the UK higher-ups got miffed when their mandate to eliminate
checks by 2018 wound up in a ditch so a special commission was impaneled to correct things. Rather than
use the existing Payments Council Board because it was viewed as being too closely tied to industry players,
there will be a new, as yet unnamed, powerhouse capable of controlling, fining, and ultimately forcing FI
divestiture of payments systems in which they hold ownership. Yikes, who leaked the CFPB blueprint?
Early Warning Services Payments Journal Early Warning Services takes action to plug a potentially expensive hole in the remote deposit capture
Presser phenomenon supported by roughly 65 percent of the nation’s banks and credit unions. Using its existing
March Deposit Chek infrastructure and ability to match transactions across multiple EWS participants, the company
can identify and notify when potentially high-risk (i.e., duplicate) deposits are made via branch locations,
ATMs, RDC and the like. In the game of “whack-a-mole,” EWS provides us a bigger mallet.
Acculynk Payments Source Acculynk scores big in the game of large numbers by enrolling UnionPay (CUP) in its PIN-over-the-Internet
March processing system. The smaller number is that of the number of online merchants participating already –
6,000 today and 8,000 by the end of the year. The big number stands for how many UnionPay cards in
circulation may take advantage of online transactions – 3.5 billion. Now, that’s a whole lot of potential for
new transaction traffic at online retailers that might consider giving Acculynk a second look.

11

M&A/Alliance Activity
Buyer/Investor Target Payments Emphasis Possible Strategy
Cardtronics i-design group ATM on-screen ads Cardtronics, arguably the largest non-FI deployer of ATMs in
the world, sets itself up to open a new business line by
acquiring Scotland-based i-design group plc through its UK
subsidiary. In business since 1991, i-design creates ad copy
for use on ATMs pre- and post “please wait” screens.
Notable clients include, McDonalds, Coke, Burger King, and
Samsung. Let the wait wars begin!
WorldPay YESpay Payments services The big get bigger. WorldPay, the behemoth (#6)
international payments processor owned by Bain and Advent
(and once, Royal Bank of Scotland) acquires UK, Canada,
and India-based YESpay to bring multi-channel integration to
its existing offering. WorldPay gets 150 employees and 3,000
customer relationships. Probably would not have happened
under RBS’ watch.

PayPal Duff Research Mobile app development Most pundits agree that consumer adoption is critical if
mobile and digital wallets are ever going to achieve critical
mass. PayPal takes a step in the right direction by acquiring
Duff Research, a respected mobile application developer with
four “Best of CES” awards and two Emmys for technology to
its credit. Apparently PayPal believes that surgical precision
will win over blunt force in the wallet wars competition. It’s
been a while since PayPal missed a bet so we’re doubling
down on this transaction.

12

M&A/Alliance Activity - Continued
Intel Capital, 500friends Customer loyalty 500friends captures another $5.0 million in growth capital, raising its
Fung Capital funding ante to $12.0 million. The company is a customer loyalty-
building venture that relies on rewards, widget applications and user
generated content to build retailer support. Hotels.com, L’Oreal, and
American Greetings are mainstay retailers using the system.
Visa Europe Monitise UK mobile payments Visa Europe already owned 7.5 percent of Monitise while Visa Inc. had
cut a deal with Monitise to use its technology for mobile payments in the
U.S. The Euros negotiate a warrant to purchase several million Monitise
shares for chump change over the next three years. As a result, Monitise
will pocket €45 million through 2016. Not bad for a company that
warned in December that its path to break-even had hit a gulley. Some
will recall that Monitise acquired Clairmail in February.
Atlas Ventures, Plastiq Online payments Plastiq’s approach to online payments involves consumer paid fees in
Flybridge Capital lieu of the traditional merchant discounts. Specifically, Plastiq works for
Partners, other tuition, tax, and apartment rental payments firms and others where the
returning PEs. service offeror is unwilling to receive discounted remittances. Several
key payments players are operating behind the scenes: First Data,
American Express, Monitise, Global Payments, MasterCard and BAMS.
New and returning investors raised another $6.0 million in funds. Trial
balloon for consumer acceptance of surcharging? Perhaps.
Falcon Investment ecoATM Terminal manufacturer One man’s tech-trash is another’s treasure. ecoATM deploys kiosks
Advisors used by consumers to recycle unwanted mobile phones, tablets, or MP3
players. Consumers can claim up $250 for their e-stuff on the spot
from 300 kiosks in 20 states or 700 due by 2013. Falcon Investment has
arranged $40 million in debt financing to keep the recycling value chain
in motion.

13

Investor Growth BillFloat Micro lending and payments BillFloat makes payments up to $200 on your behalf and collects
Capital, what’s owed in 30 days plus 10 percent (California) in interest.
Venrock, FirstRound
Capital, Baseline Positioned as a lower cost alternative to paydays and pawn, the
Ventures company uses the services of Online Resources to handle expedited
payments. Investor Growth Capital is a new investor that anted up $21
million alongside returning players for technology expansion and
growth opportunities. BillFloat is old by most tech standards, founded
in 2009.
TransCard HQ Gift Cards Gift card program operator TransCard is a transaction processor and program operator for prepaid
payroll, gift, and GPR cards. HQ operates mall and casino gift
programs in over 300 locations. The acquisition gives TransCard
greater market share and reach within new verticals, another chapter in
the maturation of the prepaid market. Terms were not disclosed.
Meanwhile, TransCard has announced an agreement with Watch2Pay
which would enable issuing banks to offer their customers the option of
using a wristwatch device as a contactless form factor for making
payments, conducting P2P transactions and accessing mobile apps.
Tech industry pundits have been panning watches as tokens and for
communicating with a device kept in our pockets or purses since they
arrived a few years ago. It might take Apple to get it right and move
the dial before we’re all playing the Dick Tracy role.
Private Investors Salt Mobile wallet Here’s another wallet wars entrant. Salt Technologies started in
Technologies Toronto three years ago and migrated south. Private investors have
placed $2.0 million on the table for Salt to merchandise its cloud based
solutions for NFC, QR and P2P wallets. Salt’s market emphasis is on
the retailer side rather than issuers in hopes that white labeling will
carry the day. Mobile payments are slated to roll out in Q3 2013.

14

Buyer/Investor Target Payments Possible Strategy
Emphasis
ACI Worldwide Online Resources Online banking and End of an era. Online Resources, one of the first serious processors in
payments platform the online banking realm, has been acquired by ACI for $263 million
($3.85/share). ORCC started out with a telephone banking system
using a screen-enhanced “smartphone” (white, if memory serves) and
moved from there to online banking. A stream of acquisitions led to
expedited payments processing, customer care, and disbursement
services. ORCC went public in 1999 at $13.375; the stock’s high
water mark hit $22.00 one year later. No one said the payments
business was easy; a sub-$4.00 endgame seems extreme.
FIS mFoundry Mobile banking and Back in the “little bets” days of mobile commerce, Fidelity acquired
payments platform 22 percent of mFoundry to expand its nascent mobile banking and
payments platform. FIS paid an additional $120 million to acquire the
remaining interest in mFoundry, closing the deal in early March. The
acquisition brings with it a tangled web of FI and processor
relationships which could begin the logical next step in mobile
payments – interoperability. Time will tell.
Investors like us Blackhawk Network Prepaid card As reported in 2012, Safeway is going forward with plans to spin out a
programs/distribution minority interest in Blackhawk while raising $200 million through an
IPO. Despite the rather poor public market performance of others in
the prepaid industry, this may be yet another sign of maturity as the
segment comes to grips with being over a decade old. Put less
generously, Safeway may be seeking others willing to solve the end
game challenge for Blackhawk that it cannot.

15

Ingenico Ogone eCommerce payments Ingenico is a global terminal manufacturer with 20 million devices deployed
platform around the world. 42 percent of its revenues come from Europe and a mere
7.5 percent from the U.S. To strengthen its hold on multi-channel acquiring,
Ingenico pays €360 million for Ogone, a Brussels-based ecommerce
payments enabler that posted €42 million in 2012 revenues and EBITDA of
€12.5 million (you do the math). Ingenico appears to be on an M&A roll,
having acquired a controlling stake in Roam Data, the smartphone dongle
folks. The transaction brings along Barclaycard by way of a large white
label agreement with Ogone.
Ecwid and Intuit Payvment eCommerce payments We don’t see deals like this very often and when they occur, they’re
platform and talent interesting to watch and ponder. Facebook’s premier ecommerce platform
provider, Payvment, has been split in half. The ongoing ecommerce
business (aka “F-commerce”) involving nearly 200,000 Facebook merchants
is being sold to Ecwid, the Russian startup and provider of the same sort of
services while the Payvment team, technology, and patents are heading to
Intuit. An interesting twist in this case is that TechCrunch sniffed this out
when a few Payvment executives changed their LinkedIn profiles to add
Intuit as their workplaces. Don’t post anything on the Internet that you don’t
intend to be read is the message here.
Atos Business line Transaction processing Atos, the European IT firm with €8.5 billion in revenues and a 48 country
spin-off footprint, wouldn’t be the first company to spin out an under-valued asset –
Deluxe’s eFunds and Safeway’s Blackhawk transactions come to mind. Yet,
when Atos spins off its transactional services business later this year it will
create a formidable competitor with €1.1 billion in revenues and €165
million in earnings. Given the competitive congestion the entity will face in
Europe, isn’t it likely that the new venture will look westward for new
growth opportunities? We think so.
16


Investors like us Xoom Internet money transfer Q4 2012 follow-up: Xoom priced at $16 dollars per share in mid-
service February in hopes of raising $100 million through its IPO. The
shares closed over $25 on its opening day and have been hovering
around $22 since then. Guess there’s more money to be had in
money transfer services for the underbanked than in social
networking.
BCD Holdings, Parkmobile Mobile payments solutions Parkmobile, one of the key players in mobile applications for
Parkmobile Group, parking meter payments, raises $6.3 million for market expansion.
Fontinalis Partners,
Bluefield Investors Started in 2009, Parkmobile has expanded its footprint to include
Washington DC, Los Angeles, Houston, and Indianapolis; active
subscribers exceed 700,000. The parking meter payments app has
evolved into Parkmobile Wallet, a prepaid solution created in
partnership with Citibank. The ultimate challenge here is that of
finding a path to interoperability to serve the needs of travelers to
cities where Parkmobile is not the parking payment provider. After
all, how many parking apps do we really want?
BlueKite RedCycle Networks Bill payment technology BlueKite recently raised $1.5 million for market expansion.
BlueKite acquires competitor RedCycle to enhances its technology,
add bill payment to its suite of services, and expand money
remittance to international markets. What’s next, Green Lantern?

17

Funding Farm BillAway Loyalty program This is a head-scratcher to us. Funding Farm invests $1.1 million in
BillAway to help build out the venture’s online presence and to add
services. BillAway operates a loyalty program for utility providers –
rubbish haulers and heating oil companies for the most part today. Debit
and credit purchases at participating retailers and online sites generate
credits that consumers can use to reduce their utility service costs.
Perhaps it’s too late in the day, how does the quid pro quo work? That
is, how do the utilities get compensated for their discounts and what sort
of behavior are they trying to avoid – non-payment? Seems like there’s a
cheaper way to curtail bad behavior. Write us if you see the path to
prosperity for BillAway and it utilities more clearly than we do.
Intel Capital, Fortumo Mobile carrier billing Looks like the mobile carrier billing segment isn’t going away soon.
Greycroft Partners Fortumo, with offices in Estonia, San Francisco, and Beijing raises
another $10 million while inking deals with China Mobile and Vodafone,
key players in global emerging economies. Owners of the B&N NOOK
reader will soon see Fortumo in action; Fortumo is now the in-app
payments solution used by the book retailer for its tablet reader. Prior to
Fortumo’s latest raise it was majority owned by Mobi Solutions, the 800
pound gorilla in SMS-based services. Meanwhile, a direct competitor,
Bango, raises $10.2 million to enter carrier billing markets in Brazil,
India and other Asian countries. Clearly, no NFC chips or user payment
card information required with either Fortumo or Bango.
U.S. Bank Collective POS Canadian payment U.S. Bank expands in Canadian payments acceptance through its Elavon
processing subsidiary by acquiring Collective POS, a processor for 12,000
businesses doing $1.0 billion in annual credit and debit card sales.
Terms were not disclosed.

18

Total Systems NetSpend Prepaid debit card program TSYS pays NetSpend shareholders $16 per share to acquire the
prepaid card program manager, adding to its existing backend
prepaid assets. With a market cap of $4.25 billion and the deal
being financed with $1.3 billion in debt, the $1.4 billion price tag
looks steep but time will tell. One thing is sure, TSYS’ direct-to-
market prepaid business now dwarfs its third party processing
business line suggesting that Total Systems will be a more
consumer-focused company from now on.
Deadpool Adaptu Mobile wallet PFM Another bit of payments industry road kill: Adaptu was positioned
by its owner StanCorp Financial as a free and flexible alternative to
Mint, the PFM solution owned by Intuit. Apparently the
combination of its parent company’s own financial troubles and
Adaptu’s inability to monetize the mobile PFM application led to
the February 20, 2013 demise.

19

Useful Links for More Information
We threw a lot of new names out again this quarter. Here’s a list of links for you to
learn more.

Company Role Link
EMV Migration Forum Consortium for EMV sanity www.smartcardalliance.org

Akimbo Prepaid card program www.akimbo.com

FIDO Consortium for ID sanity www.fidoalliance.org

500Friends Customer loyalty programs www.500friends.com

ecoATM Tech product recycling kiosks www.ecoATM.com

BillFloat Transactional micro-lending www.billfloat.com

BlueKite International remittances www.bluekite.com

Parkmobile Parking meter payments for cities www.parkmobile.com

BillAway Utility rewards/loyalty program www.billaway.com

20

Back in the day!
Congratulations to our Q4 2012
contest winners Rick Comandich
for naming the five Interlink
founders – BofA, Wells Fargo,
and three deadpool players, First
Interstate, Crocker, and Security
Pacific – and Rick Lyons for
being old enough to remember
that gasoline retailer ARCO
started its PayPoint network in
1983 and put the fear of God into
California bankers.

Speaking of senior citizens,
there’s no contest this quarter,
just a reminder that there are
things that two old duffers can do
during four days on a boat in
Baja other than talk about
electronic payments. Both
anglers are available for
autograph signings, pricey
advice, and such.
21

Dorado trend watch q1 2013

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