The document discusses a consultation paper from the Federal Reserve on improving the US payments system. It provides random thoughts in response to the consultation paper. It questions the Fed's motives for wanting to move the US banking system to near-real-time payments and play an operational role, suggesting it may be due to being rebuffed by banks on same-day settlement or being put in a bad light by faster payments programs in other countries. It argues alternative payment systems are designed to avoid legacy systems supported by the Fed and that the cost of international transfers is due to user-imposed rules, not lack of technology. It suggests a new system run by the Fed could ban new forms of currency or transactions.

1. Rats!
TrendWatch 2.0
Q4 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.

2. Random Thoughts
WTF (II)?
WTF (I)? can be found in the Q2 2010 issue of TrendWatch
2.0 when we asked “Why The Fed” regarding Senator
Durbin’s decision to have that agency sort out the shards left
by his amendment to the Dodd-Frank bill. The Fed didn’t
want the job, was unprepared to see it through, and was/is
viewed as being BFFs with big banking. See how well that
worked out?
Today, we pose the same question about the Fed’s poorly
disguised fervor (cloaked in “whaddayathink? prose) for
moving the US banking system to “near-real-time” across the
entire origination-to-reconciliation value chain and its equally
transparent desire for playing an operational role in that future.
In its September 12, 2013 “Payments System Improvement –
Public Consultation Paper,” the Fed puts forth five “Desired
Outcomes” including collaborative problem identification and
resolution, creation of a ubiquitous electronic solution,
reduced transactional costs, greater choice in cross-border
payments, and FRB-promoted payment system security (with
ensuing high consumer confidence) – all desirable end states.
Meanwhile, the CP suggests that, while emerging payment
systems appear to meet some of the desired outcomes, because
they operate outside of the mainstream, these upstart
challengers to the status quo aren’t getting much traction (tell
that to PayPal, Starbucks, and the dozen or so mobile money
transfer guys.)
The CP also harpoons legacy systems for being sedentary,
difficult to modify, slow (particularly in international
payments), and inconsistent with emerging global standards.
Dorado Industries
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All well and good we suppose but could it be that the origin of
the Consultation Paper is a bit less altruistic? Perhaps having
more to do with the rebuffing big Nacha banks gave to the
same-day settlement initiative in 2013 or that the UK Faster
Payments and Zapp programs put the Fed in a bad light?
So far, most of the 130 responses to the CP have been rather
benign so here’s our reply:
1. For the most part, alternative payments system routing
options are designed to avoid legacy systems, the very
ones supported by the Fed for millennia.
2. A goodly share of the cost of participating in Fed-backed
legacy systems comes from the bloated number and nature
of those that support them and the regulations they have
backed.
3. The exorbitant cost of international transfers, a process
that’s been electronified for decades, is a function of big
user-imposed rules, not the absence of technology.
4. Wouldn’t an “improved” payments system, one likely to
be run by the Fed, have the ability to ban or at least curtail
new forms of currency or transactions? Thanks, but no.
5. The CP suggests creation of new systems (“. . wire
transfer-like . . ”) or augmenting existing ones “ . .
modifying the ACH . . ” Aren’t these businesses the Fed is
already in on an almost monopolistic basis? Again, no
thanks.
Courtesy of the CP, the industry has yet another Mason-Dixon
line venue for spitting contests between “them” and “us.” So
much for collaboration. Again, WTF?
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3. Our Thoughts on the Target Breach
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4. Table of Contents
2013 Predictions and Review
2014 Predictions
TrendWatch Scorecard/Summary
2013 Payments Industry Yields
Interesting Quarterly News That Got No Respect
Q4 M&A/Investor Activity
Useful Links for More Information
Back in the Day
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5. 2013 Predictions and Review
•
•
•
•
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.
Jun: Indeed, it looks like the wheels have come off the Google Wallet juggernaut.
Sep: Check out what Loop, Paydiant, clearXchange have been cooking up.
Dec: Hasn’t happened as yet but Google is leaning that way and the fact that O2 shut down its NFC wallet suggests we’re close.
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 it’s off the table. Someone else will cave.
Jun: Perhaps “acquire” is premature. “Strategic partnering” comes closer, i.e., NCR’s new relationships.
Sep: Heartland invests $20 million in Leaf, the tablet-centric startup. Not a dongle, but close enough.
Dec: Missed this one too but the Heartland investment helps; Loop’s new technology may put pressure on the dongle guys.
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.
Jun: Tick, tick, tick.
Sep: Now that the Federal shut-down has ended, we’re likely to see the release of some pent up demand on CFPB’s part.
Dec: Watch what comes out of the woodwork as Chase puts its EBT business on the block; clearly DoJ will have its say.
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.
Jun: New common AID, new Durbin compliance requirements, mounting merchant pressure; someone’s going to throw in the towel.
Sep: Judge Leon’s ruling may help this prediction along; the Fed’s appeal may force a carry-over to 2014.
Dec: PAVD-imposed pain is growing and the EMV stand-off with V/MA is going to force someone to blink.
Dorado Industries
655 Deep Valley Drive, Suite 125-P
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6. 2013 Predictions
•
•
•
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.
Jun: Supreme Court sides with AMEX and against merchants in AMEX v. Italian Colors Restaurant. Not directly
related but tangential at least.
Sep: Nothing new this quarter; hang tight, AMEX.
Dec: Soon, very soon.
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.
Jun: Oops. Back to Saturday delivery, so maybe dumping gift cards is the next money saver?
Sep: Holiday season is upon us – time will tell.
Dec: USPS weathered another winter storm and it will only cost consumers another 3¢. Lovely.
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.
Jun: Could MCX be thinking that a shift to real-time is a good way to avoid V/MC rails and fees?
Sep: Take a gander at what Zipmark is doing for B2B transactions. And clearXchange just got its first non-founder
bank. “There’s something happening here,” to quote Buffalo Springfield.
Dec: Fed’s faster payments solicitation of public comment will likely embolden a number of new players to step up
if only, for no other reason, to keep the Fed from claiming the market by fiat.
Dorado Industries
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www.doradoindustries.com

7. 2014 Predictions
•
Beacons of all variety will gain considerable traction and ink. Department, mid-to-high end clothing stores, and the
hardware trade will lead the way.
•
HCE will be anointed as an equal amongst the other mobile payments options – NFC, 2D barcodes, etc.
•
The Target and Neiman Marcus hacks will light a fire under the US EMV rollout (for all the wrong reasons) and
one of the combatants will blink.
•
MCX will announce a roll-out plan and schedule that will leave more than a few pundits confused.
•
Regulation II will remain virtually unchanged.
•
Regulators will take a serious look at Visa Authorized PIN Debit.
•
FRB will announce plans for a pan-industry working group to sort out “US Payments System Improvement.” Won’t
happen until late in the year.
2013 Holdovers:
•
One of the remaining EFT networks will change ownership.
•
One or more of the non-traditional dongle-centric merchant services providers will be acquired by a mainstream
POS terminal industry leader.
Dorado Industries
655 Deep Valley Drive, Suite 125-P
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www.doradoindustries.com

8. TrendWatch Scorecard/Summary – Q4 2013
Industry Players To Watch
Positive
Mixed
Negative
Loop: Having a viable alternative to new terminals can’t be bad for
merchants.
P2P Space: Everyone’s heading that way and there must be a good reason.
After all, how many bar tabs need to be settled every day?
DNA: New letterhead and website; now, how do we fix EMV?
VC and PE: After a lack-luster Q4, and swimming in funds, maybe a bit
more risk-taking?
Core Processors: Time to leverage deposit account access to speed up
payments flow? We think so.
Bitcoin: Yo-Yo like Q4 and Sacramento Kings acceptance; which could be
worse?
Med
1. New Payment Forms
Med
2. ATM Restructuring
Med
3. POS Volume Trend
Med
4. Legal/Regulatory Issues
High
5. New Venture Growth
Med
6. Earnings Announcements
Market & Industry Situation
High
7. Industry Investments
High
8. Payments Industry Security
2 – Bitcoin ATMs? Growing pretty quick for a near-Ponzi scheme.
3 – Good POS volume during the holiday season.
4 – Prepaid just can’t cut a break. Chase EBT deal will bring the regulators,
big time.
5 – Not a great VC quarter but a couple of interesting deals got done.
6 – 2014 was a banner earnings year. Hope it continues (but it won’t).
7 – The equipment guys are still drawing attention; payments not so much.
8 – Target and Neiman Marcus have a lot to explain.
Dorado Industries
655 Deep Valley Drive, Suite 125-P
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1 – Money2020 showed lots of new options, even from the old guys.
8
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www.doradoindustries.com

9. 2013 Payments Industry YTD Yields
Banner year for the investment community in general and our payments equity basket did better
than the Dow and S&P. Clearly, the market doesn’t yet understand Blackhawk. 2014 has started
out in the doldrums and March will likely bring on a rash of tax sales to pay for the 2013 gains. Still,
the new year shouldn’t crater or give back too much of our gains. Holders of this basket of assets
would have seen a 53.5 percent appreciation in 2013. Something to crow about, we think.
Industry Player
Alliance Data Systems
American Express
Blackhawk Network Holdings
Cardtronics
Discover Financial Services
Euronet Worldwide
Fidelity National Information Services
First Data (Future Use)
Fiserv Inc. (stock split adjusted)
Global Cash Access Holdings
Heartland Payment Systems
Jack Henry & Associates
MasterCard Worldwide
MoneyGram International
Total System Services
Western Union
Vantiv
Visa
12/31/2012
Price r
12/31/2013
Cap Value r
YTD 2013 Yield
$
$
$
$
$
$
$
144.76
57.48
25.10
23.74
38.55
23.60
34.81
$
$
$
$
$
$
$
262.93
90.73
25.26
43.45
55.12
47.85
53.68
$
$
$
$
$
$
$
118.17
33.25
0.16
19.71
16.57
24.25
18.87
$
$
$
$
$
$
$
7,031.1
35,910.0
8.4
802.2
7,968.5
1,222.2
3,600.4
81.6%
57.8%
0.6%
83.0%
43.0%
102.8%
54.2%
$
$
$
$
$
$
$
$
$
$
79.03
7.84
30.23
39.26
491.28
13.29
21.42
13.61
20.42
151.58
$
$
$
$
$
$
$
$
$
$
118.10
9.99
49.84
59.21
843.60
20.78
33.28
17.25
27.94
222.68
$
$
$
$
$
$
$
$
$
$
39.07
2.15
19.61
19.95
352.32
7.49
11.86
3.64
7.52
71.10
$
$
$
$
$
$
$
$
$
$
6,091.0
165.8
733.4
1,673.8
45,590.2
433.4
2,341.2
2,070.3
1,864.8
60,143.5
49.4%
27.4%
64.9%
50.8%
71.7%
56.4%
55.4%
26.7%
36.8%
46.9%
Sources: Company releases, Morningstar.com, Bloomberg.com
2013 YTD yield excludes dividends; based on 12/31/12 and 12/31/13 closing prices.
Dorado Industries
655 Deep Valley Drive, Suite 125-P
Rolling Hills Estates, CA 90274
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(310) 544-1316
jmacallister@doradoindustries.com
www.doradoindustries.com

10. Interesting News This Quarter
Subject
Blackhawk/PayPal
College Affinity Cards
Visa, MasterCard, American
Express
JPMorgan Chase
Dorado Industries
655 Deep Valley Drive, Suite 125-P
Rolling Hills Estates, CA 90274
Source/Date
Pressers
October
Consumerist
December
Payments Journal
January
Bank Innovation
December
Substance
Darling of the J-hook and now publicly traded Blackhawk Network has teamed up with PayPal
to insure that, once consumers have a decent choice for mobile wallets, gifts cards will soon
follow. Consumers will be able purchase e-gift cards via their PayPal accounts and use them
across Blackhawk’s sizable network of physical merchants. Trading on the persistent “folks don’t
leave their phones at home” mantra, both parties believe the new relationship will deliver the
highest in consumer convenience and gift card redemption. This, despite the fact that gift card
secondary exchanges are doing a land office business.
Who knew? Better question “who remembered?” College affinity cards have been around for
decades but haven’t received notable ink in a long while. A recent CFPB report now indicates
that in 2012 the dozen or so affinity program issuers wrote $50 million in checks to college and
university sponsors and that BofA’s FIA subsidiary cut 70 percent of the gilt. Top five schools
and their paydays include: Penn State ($2.7 million), University of Michigan ($1.8 million), USC
($1.5 million), Tennessee ($1.4 million) and Cal Berkeley ($1.3 million). The report could have
provided better fodder for analysis and comment by citing the number of cards and transactions
but then again, it’s a CFPB report.
What does one do when caught between Federal and state laws? That’s the conundrum facing the
card issuing organizations in Colorado and Washington state where recreational marijuana is now
legal despite Federal regulations to the contrary. MasterCard and American Express have
sided firmly with Federal law while Visa has tried a double sashay by stating “ . . . given the
federal government’s position and recognizing this is an evolving legal matter with different
standards applicable in different states, our local merchant acquirers are best suited to make any
determination about potential illegality.” In other words, if you’re a local merchant services
processor and you get busted, don’t waste your dime calling us.
Again, “who knew?” JPMorgan Chase has renewed its 1999 patent application for payment
technology named Internet Pay Anyone (IPA) covering a program of anonymous payments
involving funds stored in a virtual lockbox. Sound like a Bitcoin to you as well? Perhaps an
infringement suit against Satoshi Nakamoto will be forthcoming.
10
(310) 544-1316
jmacallister@doradoindustries.com
www.doradoindustries.com

11. Interesting News This Quarter – Continued
Subject
Coin
Qualcomm
Zapp
Dorado Industries
655 Deep Valley Drive, Suite 125-P
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Source/Date
Substance
NY Times
December
Seems like some ideas are just too stubborn to die. Coin is the latest iteration of the “one-card”
approach to payment cards. Dating back to the late 1980s, the one-card approach hopes to reduce
wallet clutter by combining a consumer’s payment vehicles – debit, credit, charge, rewards, etc. – on a
single card. The early efforts were klugy at best and not easy to support given the technology available
at the time. Cards with keyboards and small screens emerged early in this millennium with MasterCard
launching its own late-to-the-party version in 2012. San Francisco startup Coin is offering its card for
sale for $105 ($55 if you pre-order) and promises that it will hold all your payment options and process
via existing swipe terminals but there’s a few gotcha issues. If the transaction fails, don’t bother calling
Coin; the problem’s on you. And the on-board battery? It’s good for only two years and not
rechargeable or replaceable. Perhaps the one-card pipedream will fade away after this round.
PYMNTS.com
December
Communications giant Qualcomm has entered the Beacon device footrace along side PayPal and Apple
with its Gimbal product. Like the others, Gimbal works under Bluetooth Low Energy technology to
create a one-on-one relationship between a sponsoring merchant and a consumer’s Bluetooth-enabled
smartphone. Qualcomm claims locational accuracy down to one foot both inside and outside the store.
Promoted as a “lower-cost” alternative to Apple’s iBeacon, we wonder if a race to the bottom has
already begun.
Finextra
January
The UK banking system got the industry to sit up and take notice several ago when it launched Faster
Payments, a near-real-time solution for money movement. The US took a stab at emulating Faster
Payments when Nacha promoted an opt-in same day settlement feature for its forty-year old ACH
network. Unfortunately, the votes of the Nacha governing body went the wrong way and killed the
deal. UK banking is about to change again after VocaLink invests £33 million in a new mobile
payments technology dubbed Zapp. So far, five UK banks including HSBC, first direct, Nationwide,
Santander, and Metro have signed up. Zapp is the second player attempting to create a third payments
network in the UK. Barclays’ Pingit was launched in 2012 for the same purpose. And, not to be
outdone by US payments system intrigue, Pingit has its own entanglements; first, it uses the Faster
Payments rails for fulfillment and second, it lost it’s chief technology leader to Zapp in 2013. Let the
games begin.
11
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www.doradoindustries.com

12. Interesting News This Quarter – Continued
Subject
Thinaire Spaces
Source/Date
Substance
PaymentEye
January
Speaking of Mason-Dixon lines, not 24 hours after Bluetooth Low Energy beacons from PayPal and Apple
were announced, the new technology was hailed as an NFC-killer and the battle line was drawn. Fortunately,
there’s a middle ground solution named Thinaire Spaces that bundles BLE and NFC technology in the same
package. Adidas, Unilever, Sony and Bon Ton are early adopters of the mixed-channel (we abhor the
“omnichannel” misnomer currently in vogue) messaging and product promotion.
Vantiv
PayBefore
And PR
Newswire
January
Merchant and card processor, Vantiv, is kicking the tires on a number of new opportunities early in 2014. In
the first deal of the year, the company and Microsoft have entered into a joint-solutions agreement to bring
“omnichannel” services to businesses in the areas of mobile POS and cloud-connected payments. This pact
enables Vantiv to move down-market to smaller merchants using hand-held devices for POS transactions and
up-market to merchants seeking tablet-based checkout services. To complement the lash-up with MSFT,
there’s another agreement with AT&T for remote and cloud access under the banners of “Vantiv Mobile
Accept” and “Vantiv Mobile Checkout.” The former offering targets field service providers while the latter
keeps the restaurant industry simmering.
RBC and Bell Canada
PayBefore
January
Americans aren’t the only ones with a thirst for mobile wallets (sadly, only partially quenched so far) and
Canadians now have the opportunity to take up the service from RBC and Canadian Bell. The service was
tested last summer and is up and running on Blackberry (naturally) and Android devices including the
Samsung S3 and S4. The technology is NFC (naturally) and functions at stores with Visa’s payWave and
Interac’s Flash protocols. A companion loyalty scheme is designed to keep consumers committed to both the
wallet and the store brands supporting it. Three other Canadian banks (are there really that many?) either
have wallets in flight or under development while MasterCard launched its MasterPass solution in Canada
before bringing it to the US. Not to be left out, Rogers Communications has announced Canada’s first and
only mobile wallet provided solely by a telecommunications company. “Suretap” comes with a prepaid
MasterCard and a flock of gift cards available for download.
Debit Network Alliance
Presser
December
Ten debit networks continue to press their charge for creation and oversight of an EMV debit standard. To
that end, Debit Network Alliance (DNA) has been created based on the foundations laid in 2012 by the
Secure Remote Payments Council and Chip and PIN Work Group. The group correctly argues that the onesize-fits-all approach to EMV implementation in other parts of the world won’t work in the United States,
particularly in light of Regulation II routing constraints and recent judicial rulings. Reader organizations not
affiliated with these networks may find themselves twisting in the wind: AFFN, ATH, CO-OP, NETS, NYCE,
Presto!, PULSE, SHAZAM, and STAR.
Dorado Industries
655 Deep Valley Drive, Suite 125-P
Rolling Hills Estates, CA 90274
12
(310) 544-1316
jmacallister@doradoindustries.com
www.doradoindustries.com

13. Interesting News This Quarter – Continued
Subject
Source/Date
Substance
Chicago Transit
Authority
PYMNTS.com
January
NFC technology may have found its de facto niche – the Isis Jamba Juice promotion notwithstanding. The
Chicago Transit Authority plans to introduce NFC in its newest update to the Ventra fare-payment network.
Meanwhile, the New York Metropolitan Transit Authority has announced plans to investigate similar
technology as it moves forward with its earlier announced plan to phase out the MetroCard. As usual in the
transportation space, you can find Cubic technology in the background.
Reserve Bank of
Australia
Finextra
October
The Australian banking system (and RBA, its strong-willed and heavily armed regulatory body) has been
cited on numerous occasions for its progressive approach to payments handling and pricing. This Petri dish
site has led us to lower interchange rates, harpooning of “honor all cards” rules, new routing requirements,
and the notion that surcharging consumers isn’t all that bad. US academics and industry practitioners
frequently draw on RBA actions as examples of how things ought to be done in payments. We in the United
States may be in for more trouble as the RBA plans to launch a new regulatory body, the Australian Payments
Council, for the purpose of stimulating innovation in payments. Oz sure swings a lot of power for a country
with less that 25 million people and a handful of banks.
Netclearance Systems
PayBefore
January
Just when you thought the last reference to beacons was behind you . . . cloud tech player Netclearance
makes your day by announcing m2BeaconPay. Despite its clunky name, the next entrant in the beacon wars
brings a lot to the table. It is network and device agnostic while not requiring NFC technology to both
communicate with in-store consumers and handle payment transactions. The added feature with
m2BeaconPay is that it also supports Wi-Fi, opening up the game quite a bit beyond Bluetooth enabled
phones.
Isis
PayBefore
October
We suspect that it’s not too late to get your free Jamba Juice smoothie when you use your Isis wallet app to
make a purchase the first time. After all, the offer extends to the first one million customers and the
promotion was announced in October so what’s the rush? The Jamba Juice/Isis lash-up is part of the mobile
payments network’s national roll-out. Not a Jamba Juice fan? How about the first three drinks from a Coca
Cola vending machine being free? Katie, bar the door. Is that a deal or what?
Dorado Industries
655 Deep Valley Drive, Suite 125-P
Rolling Hills Estates, CA 90274
13
(310) 544-1316
jmacallister@doradoindustries.com
www.doradoindustries.com

14. Interesting News This Quarter – Continued
Subject
Isis
Federal Reserve Bank
Source/Date
Substance
PaymentsNews
November
Wells Fargo becomes the third major credit card issuer to certify its cards for inclusion in the Isis mobile
wallet app, joining early supporters American Express and JPMorgan Chase. NFC technology being what it
is, First Data has been selected to provide Trusted Service Manager duties. WFC plans to phase in the new
accessibility via an early stage pilot across the fifty or so Isis-ready smartphones and consumers will be in
business once they receive an NFC SIM card from their wireless carrier. Sprint customers need not apply.
Various Blogs
December
“Random Thoughts” poses the “WTF?” question and points to an imagined Mason-Dixon line regarding the
Federal Reserve Bank’s Consultation Paper on accelerated near-real-time payments in the US. A brief
review of the 130 responses has determined that they break down into four generic buckets and can be
paraphrased as: Financial Institutions: “This is going to cost us a fortune, the business case had better be
good.” Retailers: “The payments system has been controlled by financial institutions since the days of
money changers in the temple; this time, merchants should have a say.” Payments System Processors:
“Hey, we’re already doing what you want.” Trade Associations: “Whatever.”
Ripple
Credit Union
Times
October
Been following what’s going on with Ripple? Ripple is an in-flight distributed payments protocol that
recently held its first developers’ conference in Las Vegas. Ripple is currency agnostic, designed to move
money instantly, reportedly prohibits chargebacks, and plans to be “virtually” free to use. Ripple uses its own
virtual currency (“XRP”) that operates similar to Bitcoin yet enables currency exchange on the fly. The
system works on the basis of a series of “market makers” that are sort of like Bitcoin miners but not quite.
Ripple market makers match up two or more parties to a foreign currency exchange and carve out the deal.
Stay tuned; venture capital guys are all over Ripple and will likely keep it healthy of at least a couple of years.
Bitcoin
Various Blogs
December
Speaking of virtual currencies, December was not particularly kind to Bitcoin: China’s largest search
company stopped taking the currency and Bitcoin value dropped 13 percent. The following day, Bitcoin value
dropped by another 50 percent. Apple removed the Coinbase app from its store. South Korea said thanks, but
no thanks, and banned it. Research indicated that half of all Bitcoins are held by less than 1,000 people,
throwing everyone into a concentration risk tailspin. In the meantime, Bitcoin value has recovered to about
$850 after hitting over $1,000 near the end of the year. Quite a horse race, right?
Dorado Industries
655 Deep Valley Drive, Suite 125-P
Rolling Hills Estates, CA 90274
14
(310) 544-1316
jmacallister@doradoindustries.com
www.doradoindustries.com

15. M&A/Alliance Activity
Buyer/Investor
Target
Payments Emphasis
Possible Strategy
Blackhawk Network
InteliSpend
Corporate Incentive Cards
Now public (HAWK) Blackhawk Networks peels off $70 to
$100 million of cash to acquire InteliSpend from Maritz. The
rapidly transforming incentive industry is rushing head-long into
open loop prepaid solutions to keep corporate employees’ noses
to the grindstone, making the fit with Blackhawk, itself, quite
different than its original J-hook deployer persona, a natural.
Origin Ventures,
Illinois Ventures,
Hyde Park Venture
Partners, OCA Ventures
Iris Mobile
Mobile Text Marketing
Iris Mobile (not to be confused with Isis) receives Series A
funding of $3.0 million to expand its Rich Media Messaging
services for clients including IKEA, Cartier, Pink, and others.
Iris supports interactive messaging for consumer promotions
including pictures, videos, coupons, and links coupled with
back-end analytics for campaign success measurement. Like
they say, mobile isn’t about payments, its about marketing.
Digicel,
SVG ventures,
True Ventures,
Storm Ventures
Flint Mobile
Mobile Payments/Marketing
Right on the heels of launching its Android payments app, Flint
lands $6.0 million in Series B funding. The Flint app uses the
mobile phone camera to record card numbers, removing the
need for add-on dongles and other equipment. Focused on the
“non-countertop” merchant segment, Flint has been posting 10X
growth since launching in 2011. Like others focused on the
segment, pricing is relatively non-toxic at 1.95 percent for debit
and 2.95 for credit. Another Kodak moment for your 16-digit
PAN.
Verizon Investments
Flint Mobile
Mobile Payments/Marketing
Not to be left out, Verizon Investments added $2.0 million to
Flint’s Series B round, raising the ante to $8.0 million. Nice
work if you can get it.
Dorado Industries
655 Deep Valley Drive, Suite 125-P
Rolling Hills Estates, CA 90274
15
(310) 544-1316
jmacallister@doradoindustries.com
www.doradoindustries.com

16. M&A/Alliance Activity - Continued
Buyer/Investor
Target
Payments Emphasis
Possible Strategy
New Player or Dead
Pool
JPMorgan
Chase
EBT and Prepaid
Compared to the hacking Target suffered over two weeks in 2013, the hit
taken by Chase in December is peanuts. The bank has admitted to the
exposure of around 465,000 cardholders via a server intrusion and has
announced plans to exit the EBT, HSA, and public sector cards businesses,
pronto. Street talk indicates that Chase has been having severe service
problems with its EBT offering for awhile (“first to worst” is the common
catchphrase), so the hack is probably the final straw. Problem is that DOJ
won’t likely allow Chase to sell its business to one of the other two players
in EBT so it’s likely that we’ll see another entrant by and by.
Dead Pool
O2 Mobile
Wallet
Mobile Wallet
O2, a prominent Euro and LATAM mobile payments player, has
announced plans to ditch its mobile wallet and has given wallet owners
until March 31st to find the door. “Things change” is the reason given. O2
has been an early and loquacious supporter of NFC technology causing its
fraternity brothers more than a bit of grief.
Valar Ventures,
Klass Capital,
Others
Granify
E-commerce Analytics
Granify provides SaaS processing for e-tailers in a manner designed to
reduce shopping cart abandonment through manipulation of its 5.3 billion
items database. The Granify system predicts when a shopper is about to
abort and intercedes to offer a transaction kicker (e.g., free shipping) to
encourage transaction completion. Investors provided $1.5 million in seed
funding to keep things moving along.
Brentwood
Investments,
TomorrowVentures,
Atlanticus Corp.,
Bob Turner
Mozido
White Label Mobile Wallet
Mozido funding grows to over $100 million with commits from investors
and receipt of the first $30 million tranche of a $70 million round. Mozido
is on tear now with service delivery in the US, Mexico, Central America,
the Middle East and Southeast Asia. Near term plans call for expansion
into India and Africa. Ric Duques, former CEO of First Data, has become
the Mozido Board Chair. Duques plans to continue the company’s run of
delivering “ . . . disruptively priced . . . .services. . .” Interesting.
Dorado Industries
655 Deep Valley Drive, Suite 125-P
Rolling Hills Estates, CA 90274
16
(310) 544-1316
jmacallister@doradoindustries.com
www.doradoindustries.com

17. M&A/Alliance Activity - Continued
Buyer/Investor
Target
Payments Emphasis
Possible Strategy
Private Placement
Zwipe
Biometrics
Nice to know that someone is looking out for us when hackers abound.
The Zwipe Access card relies on biometrics (i.e., fingerprints and other
data) maintained on the card itself instead of on servers. $2.5 million in
new funds were raised by the private offering and another $1.0 million
came from a grant by the government of Norway. Clever name; a
company to keep an eye on. Didn’t someone else launch on-board
biometrics gizmo recently? Oh, right, Apple.
Unnamed Investors
Loop
Wireless Payments
90 days after moving into boot-strap mode with Kickstarter for its unique
approach to avoiding having to reterminalize the entire merchant market,
Loop receives $10 million in Series A funding and begins shipping its fobs
to earlier investors. The Loop app mimics a card present transaction using
sonics, thereby avoiding the need for retailers to gear up for on-coming
rush (dribble?) of NFC-equipped smartphones.
QED,
Trilogy Equity
Partners,
Founders Co-Op,
TomorrowVentures,
Bezos Expeditions
Remitly
Money Transfer Service
Watch out, Western Union and Xoom, Jeff Bezos-backed Remitly has you
in its sights. VC funding grows to $10 million with a $5.5 million Series A
round at the start of the new year. Once known as BeamIt Mobile, Remitly
claims to have created a cheaper and faster way to handle trans-border
payments. The Philippines is the first target for outbound remittances.
Three day transactions (account based) are free while express transfers
(Visa/MC) take minutes and are priced between $4 and $5. Not yet
WU/Xoom-like in scale but, with Bezos in the background, who knows?
Square
Evenly
P2P Payments
Everyone needs plumbing and a plumber so that’s why Square and
company has acquired a P2P outfit, Evenly. The start-up runs an anyone,
anywhere app that fits nicely with Square’s Wallet and Stand services.
Originally designed to enable parties to settle up bills and other expenses,
experience has shown that P2P apps can easily be morphed into full blown
remittance engines. As they say, it’s easier to buy one than make one.
Dorado Industries
655 Deep Valley Drive, Suite 125-P
Rolling Hills Estates, CA 90274
17
(310) 544-1316
jmacallister@doradoindustries.com
www.doradoindustries.com

18. M&A/Alliance Activity - Continued
Buyer/Investor
Target
Payments Emphasis
Possible Strategy
Innovation
Endeavors,
Bessamer Venture
Partners,
Betawords
Estimote
Beacon Player
There’s yet another Beacon player in town. US and Poland based
Estimote gets $3.1 million in VC funding from industry stalwarts as it
tries to crack a new field of customer communications and merchant
promotions. Estimote enters the market along with Qualcomm (clearly,
a formidable communications player) to compete with PayPal and
Apple. Pretty soon we’ll need a scorecard to keep up with the players.
A great opportunity for retailers, we continue to believe.
Andreesssen
Horowitz,
Union Square
Ventures, Ribbit
Capital
Coinbase
Bitcoin Wallet
Coinbase raises $25 million in additional VC funding on top of its
earlier round of $7 million. Now we’re talking serious money –
remember last year when Starbucks invested the same amount in
Square? According to the Coinbase presser, it has enticed 600,000 to
register for its wallet and expects more as Bitcoin hovers around the
$850-$1,000 range. More importantly, Coinbase claims 16,000
merchants including Khan Academy and Reddit. Bitcoin as an
investment is one thing (and maybe not all that bright) but serious
payments? That’s another deal altogether.
LifeLock
Lemon Wallet
Mobile Payments
Identify protection disrupter, LifeLock, pays $42.6 million for Lemon
Wallet and immediately rebrands it as LifeLock Wallet. Lemon had
been gaining traction on the other wallet slingers lately, posting 3.6
million in downloads (remember the download/usage rule of 80/20).
LifeLock now couples some of its protection tools – lost wallet
service, enhanced alerts, and account monitoring with the wallet. An
interesting twist on a segment that heretofore looked to be heading
down the commodity route.
Dorado Industries
655 Deep Valley Drive, Suite 125-P
Rolling Hills Estates, CA 90274
18
(310) 544-1316
jmacallister@doradoindustries.com
www.doradoindustries.com

19. M&A/Alliance Activity - Continued
Buyer/Investor
Target
Payments Emphasis
Possible Strategy
Fontinalis Partners,
Ecomobilite
Ventures, Total,
Orange, IncWell
QuickPay
Parking and Payment
Application
Founded in 2010, QuickPay focuses on providing automobile drivers with
access to, and paying for, parking locations. Deals with major parking lot
operators such as ABM Parking Services and others has moved QuickPay to
near the top of the heap. The investors, consisting of current and former
automobile industry executives, pooled $5.5 million in new funding to
expand product development and to build scale. Just wondering, if
QuickPay can be used to park a car, why couldn’t it be used to get it serviced
and buy new tires? Just a thought about where QuickPay might be heading.
Amazon
DoubleBeam
GoPago
Mobile Payments
“A company’s two biggest assets are its treasure and talent,” they say. In
this case, Amazon and DoubleBeam paired up to snap up GoPago with
Amazon taking the talent (technology, too) and DoubleBeam purchasing the
POS business. Clearly, Amazon wants to get into the mobile payments
business in a big way; perhaps to support its drone delivery service?
DoubleBeam is a heads-down outfit led by former PayPal, Green Dot, and
Digital Insight executives that competes with Mozido in white label mobile
payments technology and related services.
MasterCard
eServGlobal,
BICS
International Mobile
Money Transfer
MasterCard seeks to leverage its worldwide base of 24,000 FIs through a
joint venture with eServGlobal and BICS. Named HomeSend JV, the cartel
hopes to deliver low-cost money transfer services to consumers anywhere on
the globe and independent of the type of phone equipment used.
eServGlobal builds mobile wallet applications for 65 countries while BICS
is an international communication services provider. Looks like all the right
pieces are in place for a serious swat at some of the smaller international
remittance upstarts.
Dorado Industries
655 Deep Valley Drive, Suite 125-P
Rolling Hills Estates, CA 90274
19
(310) 544-1316
jmacallister@doradoindustries.com
www.doradoindustries.com

20. M&A/Alliance Activity - Continued
Buyer/Investor
Target
Payments Emphasis
Possible Strategy
Unemployment
Line
Clinkle
Merchant Processing
Six months after banking $25 million in VC money, stealth mode
Clinkle sacks 25 percent of its staff (16) on the heels of another 30
part-timers and contractors let go earlier. Meanwhile, the highfrequency based merchant services processor has loaded up on
former Netflix executives to handle finances, operations and
“talent.” Sounds strange; wonder what key investor Richard
Branson might be thinking?
TransCard
PayPartners
Payroll Card Processor
TransCard went on a shopping spree in 2013 and purchased
PayPartners, a payroll and corporate card processor; HQ, a provider
of shopping mall prepaid cards, and Reloadable.com, a digital
prepaid provider. Having plans to continue the streak, TransCard
also created TransCard Ventures, a unit focused on acquiring other
prepaid managers, portfolios, talent and technology. Now, if the
regulators cooperate, there could be a nice payoff down the road; or
an implosion.
Alliance Data
Systems
BrandLoyalty
Customer Loyalty Systems
Major transaction processor and loyalty scheme operator (e.g., Air
Canada and Virgin America), ADS, continues its global conquest in
loyalty by acquiring a majority interest in BrandLoyalty resulting in
an 8 and 10 percent uplift in revenue and EBITDA, respectively.
BrandLoyalty operates in Europe and Asia and fits well with ADS
interests in the US and LATAM.
NCR
Digital Insight
Home Banking Platform
NCR stuns the market but acquiring Digital Insight from PE firm
Thoma Brava for $1.65 billion four short months after DI was
acquired from Intuit for about $1.0 billion. Observers on both sides
of the good deal/bad deal debate will have to wait until they see
what NCR plans to do with the asset. History might suggest that,
well, never mind.
Dorado Industries
655 Deep Valley Drive, Suite 125-P
Rolling Hills Estates, CA 90274
20
(310) 544-1316
jmacallister@doradoindustries.com
www.doradoindustries.com

21. M&A/Alliance Activity - Continued
Buyer/Investor
Target
Payments Emphasis
Possible Strategy
ff Venture Capital
CardFlight
Card Acceptance SDK
CardFlight raises $1.6 million in VC funds to expand its developers
kit for brick-and-mortar retailers desiring a fully customized card
acceptance app for in-person payments. POS-in-a-box, perhaps.
Flexpoint Ford
JetPay
B2B Payments
Relatively quiet for a decade, payments industry guru Bipin Shah
arranges for up to $40 million in funding from Flexpoint to expand
his JetPay organization. JetPay provides card acceptance
processing, payroll services and tax filing tools along with the usual
debit and credit, ACH ODFI systems, and other B2B processing.
Hard to keep a good man down, they say.
KCPB
Level
Mobile Payments
KCPB (Kleiner Perkins) invests $5.0 million in Level on the heels of
its new Level Money offering. Level Money, an Apple App Store
app, targets millennials in search of mobile-based budgeting for both
income and expense using embedded analysis tools instead of
traditional spreadsheets.
Guggenheim
Partners
CardCash
Gift Card Secondary
Exchange
Did you get a few gift cards over the holidays that you’re not likely
to use? CardCash operates a secondary exchange for buyers and
sellers of unwanted gift cards much like that operated by Plastic
Jungle. Guggenheim invests $6.0 million to expand the number of
accommodated cards beyond today’s 300 retailer base. Buyers can
acquire their preferred gift cards through CardCash at discounts
ranging from 10-15 percent. Sellers take a similar haircut. Try
doing that with the ugly sweater you got this year from aunt
Mildred.
Dorado Industries
655 Deep Valley Drive, Suite 125-P
Rolling Hills Estates, CA 90274
21
(310) 544-1316
jmacallister@doradoindustries.com
www.doradoindustries.com

22. M&A/Alliance Activity - Continued
Buyer/Investor
Lightspeed Venture
Partners
Target
SimplyTapp
Dorado Industries
655 Deep Valley Drive, Suite 125-P
Rolling Hills Estates, CA 90274
Payments Emphasis
HCE Innovator
Possible Strategy
SimplyTapp claims to have created Host Card Emulation (HCE), a
platform designed to bypass the SIM-based secure element in NFC
transactions. Lightspeed invested in the company through an
undisclosed amount of Series A money. Those following the
NFC/2D barcode/BLE battles will hear more about HCE as the
skirmishes unfold. SimplyTapp may come out a winner in the end.
Just ask merchants being asked to foot the bill for new NFC-ready
terminals.
22
(310) 544-1316
jmacallister@doradoindustries.com
www.doradoindustries.com

23. 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
Zapp
UK mobile payments
www.zapp.co.uk
Ripple
Virtual currency protocol
www.ripple.com
Thinaire
Beacon technology
www.thinaire.com
Netclearance
Beacon technology
www.netclearancesystems.com
DoubleBeam
Mobile payments
www.doublebeam.com
Alliance Data Systems
Merchant and loyalty services
www.alliancedata.com
Estimote
Beacon technology
www.estimote.com
Blackhawk Network
Prepaid card distribution
www.blackhawknetwork.com
Clinkle
Sound based authorization systems
www.clinkle.com
Dorado Industries
655 Deep Valley Drive, Suite 125-P
Rolling Hills Estates, CA 90274
23
(310) 544-1316
jmacallister@doradoindustries.com
www.doradoindustries.com

24. Back in the day!
This quarter’s contest ought to tax a few brain
cells and should really test the younger crowd.
This image is the subject in question.
1. What is it?
2. Who manufactured it?
3. When was the product launched?
4. What is the model number?
5. What was its original cost?
6. What can you buy it for today?
7. If you were a merchant would you use it in your
store today? Why or why not?
Registered ISOs need not respond.
Same rules as before. First email with the correct
answers gets wearing apparel from Dorado
Industries.
Dorado Industries
655 Deep Valley Drive, Suite 125-P
Rolling Hills Estates, CA 90274
24
(310) 544-1316
jmacallister@doradoindustries.com
www.doradoindustries.com