October 2013 Issue of Transaction Trends by Content Communicators, LLC

Special Insert: Mobile Commerce Providers Guide

Transaction trends The Official Publication of the Electronic Transactions Association

| October 2013

Whoâ&#x20AC;&#x2122;s Who

in mobile commerce

Build strong alliances and powerful relationships with the third annual Mobile Commerce Providers Guide

ALSO INSIDE: Are Merchants Ready for Mobile Payments? How to Attract the Mobile Consumer

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Transaction trends The Official Publication of the Electronic Transactions Association

Vol. 18 | No. 8

cover story SPECIAL INSERT

Who’s Who in Mobile Commerce

Consumers spent more than $20 billion using a mobile browser or app last year. Use Transaction Trends’ third annual Mobile Commerce Providers Guide to identify the key players in the mobile commerce industry and leverage partnerships to grow your business in this space.

FEATURES 15 Are Merchants Finally Ready for Mobile Payments?

By John Manasso Major retailers now generate 10 percent of their sales through mobile payments, which can offer benefits such as increased customer loyalty and reduced interchange costs. Successful implementation among small merchants requires ISOs to educate them on the incentives of paying with a mobile device.

20 S P E C I A L S E R I E S

Startup Stories: The Evolution of eText By John Manasso Mobile phone users make monetary donations via text messages using GTS Group’s eText, a technology enabling charitable organizations to receive donated funds instantly. 20

depar tmentS 4 6 10 6

ETA Gateway

Insights from ETA’s CEO, Jason Oxman

Industry News

Trends, strategies, and news in the payments business and ETA member community

23 Ad Index 24 Industry Insider

Tranzlogic’s online portal puts merchants in touch with valuable customer data

Future of the Business

Large and small businesses alike must act now to better understand and attract the mobile consumer Transaction trends | October 2013 3

ETA Gateway

Welcome to the No. 1 C-Level Event in Payments

t’s that time of year—the ETA Annual Strategic Leadership Forum (SLF) is upon us! For those of you planning to attend the forum, let me say thank you for being a part of the payments industry’s premier annual networking forum. If you haven’t already done so, I suggest you register today at http://electran.org/events/ slf13—the future of your business could depend on the connections you make at SLF. This year’s event brings together hundreds of frontline leaders, business visionaries, and senior-level professionals who are advancing the payments industry to explore the next generation of innovative ideas.With visionary keynote speeches from industry titans Robert Carr, chairman and CEO, Heartland Payment Systems, and Ed Labry, vice chairman, First Data, you will hear firsthand their perspectives and insights on Editorial Policy: The Electronic Transactions Association, founded in 1990, is a not-for-profit organization representing entities who provide transaction services between merchants and settlement banks and others involved in the electronic transactions industry. Our purpose is to provide leadership in the industry through education, advocacy, and the exchange of information. The magazine acts as a moderator without approving, disapproving, or guaranteeing the validity or accuracy of any data, claim, or opinion appearing under a byline or obtained or quoted from an acknowledged source. The opinions expressed do not necessarily reflect the official view of the Electronic Transactions Association. Also, appearance of advertisements and new product or service information does not constitute an endorsement of products or services featured by the Association. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is provided and disseminated with the understanding that the publisher is not engaged in rendering legal or other professional services. If legal advice and other expert assistance are required, the services of a competent professional should be sought. Transaction Trends (ISSN 1939-1595) is the official publication, published 10 times annually, of the Electronic Transactions Association, 1101 16th St. N.W., Suite 402, Washington, DC 20036; 800/695-5509 or 202/828-2635; 202/828-2639 fax. Postage paid at Pittsburgh, Pennsylvania, and additional mailing offices. POSTMASTER: Send address changes to the address noted above. Copyright © 2013 The Electronic Transactions Association. All Rights Reserved, including World Rights and Electronic Rights. No part of this publication may be reproduced without permission from the publisher, nor may any part of this publication be reproduced, stored in a retrieval system, or copied by mechanical photocopying, recording, or other means, now or hereafter invented, without permission of the publisher.

4 October 2013 | Transaction trends

the trends and players to watch. The payments industry is experiencing rapid change, from the overturn of Durbin debit rules to mobile commerce innovators and alternative currencies. Executives like you need to hear from an ever-increasing mix of players to make informed decisions. Federal law enforcement agencies are aggressively pursuing payments companies—and only at SLF can you hear directly from federal officials to explain what that means for your business. From traditional payments leaders and investors to innovators and regulators, SLF delivers a high-level intelligence briefing unlike anything else in the industry. This year we have added an innovative startup competition.This “Shark Tank”-like live competition will showcase innovative new electronic payments technology products that help underserved communities.The showcase will culminate with a judging panel presenting the E-Pay Innovation Award—a check for $10,000—to the product with the most profound impact on the global market.The Payments Next Zone and the E-Pay Innovation Award are the result of a generous grant from the Bill

and Melinda Gates Foundation. Take advantage of this opportunity to survey your own organization and network with other industry executives in a relaxed environment. From evening receptions to our annual golf tournament, ETA offers numerous opportunities to mingle with the industry’s top leaders.This intimate gathering provides a platform where face-to-face conversations and personal connections create a vibrant incubator for ideas, deals, and knowledge. Only at SLF will you hear strategic discussions from the executives and leaders at PayPal, Commerce Ventures, Federal Reserve Bank, Federal Trade Commission, Bitcoin, First Data, Heartland Payments, LevelUp, Intuit, Merchant Customer Exchange, Merchant Advisory Group, Elavon, Merchant Warehouse, Kabbage, FeedZai, and many, many more. I look forward to seeing you in Scottsdale! Kind Regards, Jason Oxman Chief Executive Officer Electronic Transactions Association

Electronic Transactions Association 1101 16th Street NW, Suite 402 Washington, DC 20036 202/828.2635 www.electran.org ETA CEO Jason Oxman COO Pamela Furneaux Director, Education and Professional Development Rori Ferensic Director, Government and Industry Relations Mary Weaver Bennett Director, Membership and Marketing Del Baker Robertson Director, Communications Meghan Cieslak Publishing office: Stratton Publishing & Marketing Inc. 5285 Shawnee Road, Suite 510 Alexandria, VA 22312 703/914.9200; fax 703/914.6777

Publisher Debra Stratton Associate Publisher & Editor Josephine Rossi Contributing Editor Angela Hickman Brady Editorial/Production Associate Christine Umbrell Art Director Janelle Welch Contributing Writers Lia Dangelico, John Manasso, Bryan Ochalla, and Jenn Reichenbacher Advertising Sales Steve Schwanz or Fox Associates (800/440.0232; adinfo.eta@foxrep.com) Fox Associates Offices Chicago 312/644.3888 New York 212/725.2106 Detroit 248/626.0511 Phoenix 480/538.5021 Los Angeles 805/522.0501

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INDuSTRYnews U.K. Predicts Demise of Coins, Rise of Biometric Payments More than three quarters of U.K. consumers believe certain sterling coins will be discontinued within the next 10 years and checks will cease to exist, according to research from WorldPay Zinc. Sixty percent of respondents predict they will regularly make purchases via their mobile devices and other card payment methods. According to the report, predictions

about the future of payments reflect the notion that consumers feel safer when they’re not carrying cash. Almost half of consumers think biometric authentication, such as fingerprint recognition systems, will be used to authorize payments. More than 30 percent believe facial recognition, iris scanning, and voice command payment systems also will be used.

info GRAPH Worldwide Non-Cash Transactions Expected to Top $333 Billion 350

333 307

Non-Cash Transactions (Billion)

300

250

282 247 12 11 19

200

150

266

14 14

24 26

25 27 34

26 30

Emerging Asia 33

CEMEA Latin America Mature Asia-Pacific

Europe (including Eurozone) North America (U.S. and Canada)

100 111

Global*

2008

113

2009

124

117

2010

2011

130

2012E

* Emerging Asia (India, China, Hong Kong, other Asian countries); CEMEA (Central Europe, Middle East, Africa, Russia, Poland); Latin America (Brazil, Mexico, other Latin America); Mature-Asia Pacific (Japan,Australia, South Korea, Singapore) Source: Payments Council, World Payments Report 2013

6 October 2013 | Transaction trends

Mobile to Drive 10% of Total Holiday Revenue U.S. retailers are cautiously optimistic about the 2013 holiday season, and many expect mobile to play an increased role in driving sales, according to a recent survey by Baynote. Sixty percent of retailers are predicting online holiday revenue to grow more than 10 percent yearover-year, with one in three predicting mobile will drive more than 10 percent of total holiday revenue. Nearly 40 percent believe mobile will drive renewed in-store interest and help boost revenues.

fast FACT The total U.S. consumer credit card balance rose to $536.5 billion in July 2013, up from $533.3 billion in 2012—the first yearover-year increase in five years, according to a report from Equifax.

BUSINESS FROM AROUND THE CORNER—

AND AROUND THE GLOBE You already know that Discover® is carried by millions of cardmembers and accepted at millions of places. But did you know that accepting Discover allows merchants to serve millions of international travelers? Your merchants can accept more cards from more places worldwide, and your company can gain a greater share of tourism dollars. Discover has partnerships with global card brands including China’s UnionPay, Japan’s JCB, South Korea’s BCcard and Serbia’s DinaCard. Our network also allows merchants to accept Diners Club International , the card of choice for many affluent business travelers. ®

Help your merchants attract more tourism spending. Order free acceptance signage today! Visit DiscoverSignage.com

News from the association

AROUND THE HORN AnywhereCommerce agreed to provide Spindle with its mPOS platform. Apriva hired Brian Sadowski as senior vice president for information technology. Brand Velocity announced the formation of its financial services practice, created to provide strategic project leadership and change management to organizations in the payments, banking, and financial services industries. Capital Access Network now allows customers to have working capital funds deposited directly into a PayPal account or traditional bank account. ControlScan announced it validated AGR Group as a PCI DSS Level 1 Service Provider. Credorax secured $40 million in funding from FTV Capital. Cynergy Data selected ROAM to power its new Vwalaa! Mobile Pay offering. EVO Payments International acquired a perpetual software license from IP Commerce and much of the company’s payments team. Heartland Payment Systems was named one of the top technology innovators in the U.S. by InformationWeek for the seventh year in a row. Mozido was selected by the Bank of Jamaica to launch a mobile money platform. North American Bancard selected Alaric’s Fractals as its fraud and risk solution. ProPay launched a service to provide rent payments via mobile devices. SecureBuy announced the release of AliveSecure, an online Software-as-a-Service designed to secure credit card payments through a website or mobile chat interface. SecureNet launched Mobile PayOS today, which allows merchants to turn any iOS mobile device into a secure mobile payment solution. Shopify released Shopify POS, its new iPad retail point-of-sale solution. Sysnet Global Solutions appointed Branden Williams as EVP of strategy. Transaction Network Services selected INETCO Insight to monitor its ACI Postilion, and it is partnering with Trustwave to launch a point-to-point encryption service to help safeguard payment card information. TransFirst announced it fully implemented a new proprietary back-end system called TransClear. TSYS announced its long-term agreement to provide full-service payment processing solutions and tools to Anovia Payments, and announced an agreement with Discover to process PayPal transactions in the U.S. Vantiv CFO Mark Heimbouch won the Cincinnati Business Courier’s 2013 CFO of the Year for a public company. VeriFone Systems launched GlobalBay, a new pointof-sale software platform and support infrastructure. Visa presented First Data Corporation with the 2012 Service Quality Performance Award for the Lowest Assured Transaction Rate and Lowest Transaction Response Time in its Issuer Processor category. 8 October 2013 | Transaction trends

ETA Continues to Expand Government Affairs Reach The most recent step in growing its government affairs efforts, ETA announced seasoned Hill veteran Jaime Graham joined the association’s staff as senior government affairs manager. “Jaime brings extensive experience in grassroots work and legislative affairs to our growing ETA team,” said Jason Oxman, ETA CEO.“Her background as a legislative director on Capitol Hill gives her a deep understanding of government affairs, and her campaign work has put her right in the thick of grassroots outreach. Her strong institutional knowledge will be invaluable to us as we ramp up our advocacy on behalf of our members.” ETA also has formed the payments industry’s first political action committee, the ETA PAC; registered its first in-house lobbyist, Hill veteran Mary Bennett, ETA’s director of government and industry relations; and expanded ETA’s Government Relations Committee to include representatives from more than 30 of the nation’s largest financial and technology companies.

CALENDAR: EMV, The Fundamentals (From Acquirers to Issuers) Two-Day EMV, Contact, Contactless, and NFC Mobile Workshop London, UK October 30-31, 2013

ETA Silicon Valley Day The Commonwealth Club of California San Francisco, CA November 7, 2013

New Members ETA is pleased to welcome the following companies to its membership. To inquire about a membership with ETA, please contact Del Baker Robertson, director of membership and marketing, at dbaker@electran.org. Bit by Bit Mobile Brooklyn, NY http://bitbybitmobile.com

E-Complish LLC New Market, MD www.e-complish.com

C&H Financial Services Lodi, CA www.chfs.us

PreCash Inc. Houston, TX www.precash.com

CardFlight New York, NY http://getcardflight.com

PricewaterhouseCoopers Atlanta, GA www.pwc.com

Delego Software London, Ontario, Canada www.delego.ca

Regal Technologies LLC Severna Park, MD www.regaltek.com

ISO Corner Future of the Business

Attracting the Mobile Consumer Develop and deploy mobile strategies now for long-term success By Jenn Reichenbacher

f you haven’t heard, tablets are the and deliver offers, discounts, and loyalty fastest growing technology in history, rewards. Whether you’re a small business with 65 percent year-over-year world- owner or someone who provides solutions wide growth from 2012 to 2013.With more to small businesses, here are three basic than 52 million tablet owners and another tips to attract the mobile consumer. 137.5 million smartphone owners in the U.S. alone, understanding and attracting the Have a Mobile-Optimized Site mobile customer is becoming increasingly If you own a retail business and don’t more important. have a website to leverage e-commerce, While some remain static in fear of the then that is one major opportunity as echanges brought on by technology, suc- commerce retail activity continues to grow. cessful merchants and solution providers A recent Accenture survey found that 43 will be those that understand the opportu- percent of all U.S. consumers plan to shop nity and design and deploy strategies that more online in the future. capitalize on new technology while driving For merchants and business owners incremental revenues. Smartphones and with established sites, mobile optimizatablets enable constant connectivity with tion presents a big opening for growth. prospects and customers, which means It seems like a given, but according to a more opportunities to sell your products recent survey from TheFind, 40 percent 5/7/13 and services,aprivapay_plus_transaction_trends_half_pg_horz_ad_2013_v1.0_printer.pdf add incremental touch points, of consumers who don’t use their1 tablets

for shopping say it’s because the available sites and applications just aren’t up to par. And nearly half note that a lack of optimization was their biggest complaint.The same survey shows that, of those surveyed, 87 percent use tablets to browse and 71 percent make purchases on their tablets from time to time. Consumers want to shop on their mobile devices, but retailers are not making it easy. Investment equals return in the form of increased sales and a better overall shopping experience, so being mobile and having your presence optimized are critical.

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IT’S ALL IN THE PLATFORM

10 October 2013 | Transaction trends

25 YEARS

2010s

OF SUCCESS

2012 - $32 Billion processed annually for nearly 300,000 businesses 2012 - EVO acquires Deutsche Card Services (DeuCS) opening up to 39 countries worldwide, becoming... EVO Payments International 2012 - EVO acquires PowerPay 2012 - EVO chooses Deutsche Bank as its new BIN sponsoring bank 2009 - $20 Billion processed annually for over 235,000 businesses 2008 - EVO’s international expansion begins with the opening of EVO Canada

JOIN US FOR THE NEXT

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BE A PART OF THE EVOLUTION

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Paul Compton - Executive VP of Sales

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• ISO Relationships • Alliance Partnership Programs • Daily Bonus Programs • Profit Sharing • Daily Signing Bonuses • Annual Trips • Investment Opportunities • EVO Sales University • EPIC Portfolio Manager • Accelerated Funding • Security

2000s

2004 - $10 Billion processed annually 2004 - EVO’s first telecenter opens, driving leads to its partners 2004 - MSI is re-branded to EVO Merchant Services, differentiating itself from the competition 2003 - 24 hour technical support and customer service built in-house 2002 - Alliance partnership programs started and sets the standard for all portfolio builders

1990s

2000 - Risk department is brought in-house 1999 - Underwriting department issues its first merchant number 1990 - Terminal and supply deployment department created 1988 - MSI (now EVO) processes first merchant application

EPI613IA

ISO Corner Future of the Business

intention of testing or trying on products before they purchase them online.There’s really no fighting it, even though some retailers have tried. Showrooming allows you to embrace in-store mobile use. Placing QR codes next to products is one great way to do this. Customers can scan QR codes to get additional information, visit your e-commerce site, make a purchase online, and have the item shipped directly to their homes. The options are endless, but showrooming cannot be ignored.

Accept Mobile Payments While mobile payment adoption is still on the upswing—and in the early stages—businesses that get a jump-start with mobile payment acceptance will not only benefit by being able to take payments via QR, NFC, or contactless EMV, they also will be positioned to leverage the incremental value of mobile payments— gift, loyalty, and rewards. Consumers always love an early adopter, even if you’re

Consumers want to shop on their mobile devices, but retailers are not making it easy. Investment equals return in the form of increased sales and a better overall shopping experience, so being mobile and having your presence optimized are critical. ahead of them, so merchants that can add mobile acceptance and begin to integrate commerce functionality are sure to reap benefits as mobile payments continue to gain momentum in the marketplace. Whether it be showrooming, mobile shopping (browsing or buying from a smartphone or tablet), or mobile payments, those business owners that take the necessary steps to develop and deploy mobile strategies will be those that win in the long term. Don’t wait, act now. TT

Jenn Reichenbacher is director of communications for Merchant Warehouse and a member of the ETA ISO Practices Committee.

Editor’s Note: This column also was featured on the new ETA trendsetter blog, the hub for insights and thought-provoking content on payments and technology trends. Visit the blog at www.electran.org/eta-trendsetter.

Processing Network

123

The

everywhereProcessingNetworkSM

eProcessing Network –

Enabling Merchant Processing Through Payment Gateway Innovation and Support POS 123

Accounting

Recurring Tablets

Customer Data Manager

Websites

Bill Pay

Inventory

Smart Phones

In-Store Computers

No matter what type of payment you want to accept or how you choose to transact, eProcessing Network is the payment gateway for you. Our PCI-compliant solutions & services enable your merchants to process payments anywhere, anytime, helping them to meet the daily demands required to manage their business effectively. ePN is here to partner with you and help you establish strategies for the success of you and your merchants.

eProcessing Network – Cloud-Enabling Payments Everywhere

12 October 2013 | Transaction trends

(800) 296-4810 eProcessingNetwork.com

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Transaction trends

Mobile Commerce Providers Guide Mobile Acceptance Mobile Banking & Payments Mobile Data & Analytics Mobile Engagement Mobile Hardware/Handsets Mobile Loyalty & Rewards Mobile Marketing Mobile P2P Payments Mobile Promotions & Offers Mobile Security & Risk Management Mobile Software Mobile Wallets

A1 A4 A5 A5 A5 A6 A6 A6 A6 A6 A7 A8

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Who’s Who inMobileCommerce The third annual Mobile Commerce Providers Guide shows a bright future for this growing industry

obile payments present a window of opportunity for growth for merchants across the globe.With 6 billion mobile phone subscriptions worldwide, smartphones are now the dominant phone type. Merchants and mobile commerce providers that harness the power of this technology will succeed in the long term. Transaction Trends’ third annual Mobile Commerce Providers Guide is designed to help you identify and build strong partnerships to thrive in the mobile payments industry.

Opportunities Abound According to a recent FDIC report, more than 87 percent of the U.S. population has a mobile phone, half of which are smartphones. And nearly one third of those mobile phone users reported using their devices to make a purchase in 2012. Consumers spent over $20 billion using a mobile browser or application during the year. Globally speaking,the number of mobile payment users reached 200.8 million in 2012—and that number is expected to reach 245.2 million this year, according to Gartner Inc. In terms of dollars spent, worldwide mobile payment transaction values are expected to hit $235.4 billion in 2013. U.S. consumer interest in mobile wallets is high, according to research by Vantiv/Mercator, with 62 percent expecting to see mobile

wallets in wide use in two to five years. Adoption is expected to be particularly high among“high-value customers”(with annual incomes of $100,000 or more) as well as among younger consumers (ages 18 to 34). Given these trends, the future is bright for companies that offer mobile products and services. Transaction Trends compiled the third annual Mobile Commerce Providers Guide to offer readers a better understanding of the players in this space who provide opportunities for business partnerships. This directory is produced as part of the magazine’s commitment to serve you with the resources and information critical to advancing your business. This year’s expanded Mobile Commerce Providers Guide features a growing number of companies with mobile offerings in a number of categories, from mobile acceptance and banking to mobile rewards, software, and wallets. Companies are arranged by category to help you search and find the right company to meet your needs.We hope this guide will serve you year-round and that you’ll refer to it often. Please note, despite our best efforts, some companies offering mobile commerce products or services may not have made it into this guide.To be included in next year’s edition, email transactiontrends@strattonpublishing.com with the subject line “Contact me for the 2014 Transaction Trends Mobile Commerce Providers Guide.” TT

[ Mobile Commerce Providers Guide ] Mobile Acceptance  Phone Swipe

 Cynergy Data 4800 North Point Pkwy., Suite 100 Alpharetta, GA 30022 800/933-0064 www.cynergydata.com Tom Della Badia Cynergy Data offers Vwalaa! Mobile Pay, a secure payments and mobile aggregation offering that enables merchant-branded receipts, inventory management, previous purchase recognition, and reporting. ISOs can uniquely brand. Merchants get a seamless brand experience across the mobile app, management portal, and customer service. Call 800/933-0064, ext. 5140, today.

250 Stephenson Hwy. Troy, MI 48083 877/387-9615 www.gonab.com/trend Rita Feldman Introducing the industry’s first and only Free Tablet Placement Program, only from Phone Swipe! In just three minutes sign up your merchants for a free tablet, software, card reader, and all cards at one low rate with next day funding. You’ll earn up to $1,000 per merchant with $200 upfront! Visit www.gonab.com/trend.

 ROAM 280 Summer Street, Lobby Level Boston, MA 02210 888/589-5885 www.roamdata.com Scott Holt ROAM, an Ingenico company, helps merchants get to market quickly with secure, cost-effective, and powerful mobile point-of-sale solutions, regardless of the technology environment. ROAM’s “powered by” mCommerce platform provides the hardware peripherals, applications, tools, and services enabling companies worldwide to realize the benefits of using mobile to reinvent their interactions with their customers and to create new business efficiencies. www.roamdata.com. MOBILE COMMERCE PROVIDERS GUIDE A1

[ Mobile Commerce Providers Guide ] Mobile Acceptance (Continued)

AnywhereCommerce 376 Victoria Ave., Suite 418 Montreal, Quebec, Canada H3Z 1C3 514/940-0155 www.anywherecommerce.com Mitchell Cobrin

1 certified payment gateway links to all major processors in the U.S., Canada, and the UK and is supported by a multichannel transaction reporting tool. CreditCall, founded in 1997, is headquartered in Bristol, UK.

Apriva

CREDORAX

8501 N. Scottsdale Road, Suite 110 Scottsdale, AZ 85253 877/277-0728 www.apriva.com Stacey Tappin

106 Southville Road Southborough, MA 01772 617/715-1977 www.credorax.com

Automated Merchant Systems, Inc. 600 Northlake Blvd., Suite 230 Altamonte Springs, FL 32701 407/331-5465 www.automatedmerchant.com Daniel Sloan

CardFlight 142 E. 71st Street, Suite 10A New York, NY 10021 646/389-4450 http://getcardflight.com Derek Webster

Cardware International 432 S. 22nd Street Heath, OH 43056 740/522-2150 www.cardwareinternational.com Sandy Jackson

1133 Broadway, Suite 706 New York, NY 10010 800/868-1832 www.creditcall.com Ingrid Anusic CreditCall is an award-winning payment services provider and EMV migration expert, enabling card acceptance in diverse and complex payment environments including mPOS, in-app, e-commerce, over-the-phone, and unattended (parking, ticketing, and vending). Its PCI DSS Level

A2 MOBILE COMMERCE PROVIDERS GUIDE

National Merchants Association 43620 Ridge Park Drive, Suite 310 Tennecula, CA 92590 866/509-7199 www.nationalmerchants.org Heather Petersen

Payment Alliance International 6060 Dutchmans Lane, Suite 320 Louisville, KY 40205 866/371-2273 www.gopai.com Terri Newton

eProcessing Network, LLC

Payment World LLC

1415 North Loop West, Suite 1185 Houston, TX 77008 800/296-4810 www.eprocessingnetwork.com Steve Sotis

18226 Ventura Blvd., Suite 103 Tarzana, CA 91356 855/282-6510 www.paymentworld.com

eProcessing Network (ePN) offers ePNMobile, a complete suite of mobile products and services for on-the-go merchants, enabling them to succeed in today’s competitive market. With a quick download of the ePNMobile app on their own smartphone or tablet, merchants can securely process any form of accepted electronic payment from virtually anywhere.

EVO Payments International—Canada

CreditCall

800/846-4472 www.mercurypay.com Mark Blanchard

105-505 Blvd. de Maisonneuve W. Montreal, Quebec, Canada H3A 3C2 877/355-2082 www.evocanada.com Antonio Romano

Loop, Inc. 400 TradeCenter, Suite 5900 Woburn, MA 01801 617/279-0520 www.act-pay.com Greg Ewald

Mercury Payment Systems 10 Burnett Court, Suite 300 Durango, CO 81301

PayPal 2211 N. First Street San Jose, CA 95131 855/456-1327 www.paypal.com/partnerprogram Greg Campagnolo Open your merchants to 55+ million active U.S. buyers with billions in their PayPal accounts. Our innovative payment solutions Express Checkout and Bill Me Later® help merchants improve conversion and increase average order values. Deliver impactful innovation to your merchant base while boosting your bottom line today.

SecureNet Payment Systems 12357 B. Riata Trace Pkwy., Bldg. 6, Suite 150 Austin, TX 78727 888/231-0060 www.securenet.com Brad Olivier

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Express Checkout and Bill Me Later® payment options help merchants increase sales and average order size.

•

Give merchants access to 117 million active PayPal buyers.

•

Capitalize on competitive buy rates and revenue share models.

All payment gateways aren’t created equal. Payflow offers more innovative ways to help merchants get paid – and for you to make money.

We want to partner with you. Call 1-855-456-1327. www.paypal.com/payflowpartner

[ Mobile Commerce Providers Guide ] Mobile Acceptance (Continued)

The Strawhecker Group 10730 Pacific Street, Suite 234 Omaha, NE 68114 402/964-2617 www.thestrawgroup.com Mike Strawhecker

TouchSuite 1081 Holland Drive Boca Raton, FL 33487 800/793-3250 www.touchsuite.com Afshin Yazdian

Transaction Network Services 10740 Parkridge Blvd. Reston, VA 20191 703/453-8300 www.tnsi.com Travis Lee

VeriFone’s PAYware Mobile Portfolio accepts mag-stripe, EMV, and NFC payments, helping to reduce walk-outs and complete transactions on the spot. An integrated barcode reader scans items at checkout, and assists with inventory management, improving store operations. Devices are PCIcompliant and EMV Level 1 and 2 certified. www.verifone.com/paywaremobileportfolio

Mobile Banking & Payments AppNinjas 5555 Wall Street Dublin, OH 43017 888/364-6527 www.appninjas.com Sarah Schiffer

BridgePay Network Solutions TrustCommerce 9850 Irvine Center Drive Irvine, CA 92618 800/915-1680 www.trustcommerce.com Melody Hendricks TrustCommerce’s secure mobile payment application, PayWithIt®, is the ideal way to accept credit cards, debit cards, and ACH payments on the go. Available through popular digital devices, merchants can securely accept payments via the app using an encrypting card swipe. Features P2PE, signature capture, and user administration, and is fully customizable. PayWithIt is a free application available for download from major app stores.

VeriFone 2099 Gateway Place, Suite 600 San Jose, CA 95110 800/837-4366 www.verifone.com

A4 MOBILE COMMERCE PROVIDERS GUIDE

600 Northlake Blvd., Suite 260 Altamonte Springs, FL 32701 866/531-1460 www.bridgepaynetwork.com Carlee Hudachko

C-Sam 1 Tower Lane, Suite 2325 Oakbrook Terrace, IL 60181 630/928-0890 www.c-sam.com Holger Kunkat

ePaisa Services (P) Limited Level 1, Trade Centre, Bandra Kurla Complex Mumbai, Maharashtra, India 400 051 91 22 2642 6911 www.epaisa.com Aaryan Behl

First Data Corp. 5565 Glenridge Connector NE Atlanta, GA 30342 800/735-8000 www.firstdata.com Elizabeth Grice

Moneris Solutions 3300 Bloor Street W. Toronto, Ontario, Canada M8X 2X2 416/734-1747 www.moneris.com Isabelle Jones

Moven 25 W. 31st Street, 11th Floor New York, NY 10001 212/947-6915 www.moven.com Julianna Young

CreditCall

Mozido

1133 Broadway, Suite 706 New York, NY 10010 800/868-1832 www.creditcall.com Ingrid Anusic

1601 S. Mopac Expressway, Suite 200 Austin, TX 78746 512/524-7550; 888/428-3411 www.mozido.com David Luther

CreditCall is an award-winning payment services provider and EMV migration expert, enabling card acceptance in diverse and complex payment environments including mPOS, in-app, e-commerce, over-thephone, and unattended (parking, ticketing, and vending). Its PCI DSS Level 1 certified payment gateway links to all major processors in the U.S., Canada, and the UK and is supported by a multichannel transaction reporting tool. CreditCall, founded in 1997, is headquartered in Bristol, UK.

Rafter J. Merchant Services 3157 Executive Drive San Angelo, TX 76904 325/227-8414 www.rafterjmerchantservices.com Stephen F. Williams

SecureBuy 605 Crescent Blvd., Suite 200 Ridgeland, MS 39157 800/511-2050 www.securebuycommerce.com Christopher Wooten

Mobile Engagement BetterBuyDesign 1214 Querida Drive Colorado Springs, CO 80909 203/968-1967 www.betterbuydesign.com Steve Mott

SHAZAM 6700 Pioneer Pkwy. Johnston, IA 50131 800/537-5427 www.shazam.net Cindy Smith SHAZAM has been helping merchants and financial institutions compete in the EFT industry since 1976. SHAZAM’s mobile payments app, Pentagon, is the first and only mobile app that allows merchants to accept PIN-debit, signature-debit, and credit card transactions using iPhone and Android mobile phone and tablet devices.

TrustCommerce 9850 Irvine Center Drive Irvine, CA 92618 800/915-1680 www.trustcommerce.com Melody Hendricks

ExaDigm, Inc. 2871 Pullman Street Santa Ana, CA 92705 510/209-0563 www.exadigm.com Hervé Auch-Roy

Merchant Warehouse 1 Federal Street, 2nd Floor Boston, MA 02110 800/941-6557 www.merchantwarehouse.com Henry Helgeson

Mozido 1601 S. Mopac Expressway, Suite 200 Austin, TX 78746 512/524-7550; 888/428-3411 www.mozido.com David Luther

Mobile Hardware/ Handsets

Infinite Peripherals 1641 McGaw Avenue Irvine, CA 92614 801/341-8436 www.ipcprint.com Bill Elrick Anticipating trends and pre-empting solutions for a constantly evolving business landscape, Infinite Peripherals was the first company to enable Apple® products with mobile POS functionality with the Linea Pro in 2009, and today has deployed more than 250,000 mobile POS devices in 30 percent of the top 20 U.S. retailers.

Vesta Corporation 4400 Alexander Drive Atlanta, GA 30022 503/790-2500 www.trustvesta.com Joshua Rush

Mobile Data & Analytics Nomis Payments 1111 Bayhill Drive San Bruno, CA 94066 650/588-9800 www.nomispayments.com Marina Terblanche

Simply Charged Inc. Epson America, Inc. 3940 Kilroy Airport Way Long Beach, CA 90806 504/684-4495 https://pos.epson.com Michelle Jordan Epson offers a range of printers for your merchants’ mobile printing needs. The Mobilink P60II provides 2-inch receipt and label printing, and the ultra-compact Mobilink P80 provides 3-inch receipt printing with WiFi, Bluetooth, or Bluetooth for iOS options. All Epson POS printers are available with wireless interfaces and support leading mobile technology platforms.

8417 Washington Blvd., Suite 100 Roseville, CA 95678 916/789-1333 www.simplycharged.net Mark Mullan Simply Charged Inc. is your source for wireless tablet and Bluetooth mobile hardware solutions.

TASQ Technology 1169 Canton Road Marietta, GA 30066 800/827-8297 www.tasq.com Julie Lyons

MOBILE COMMERCE PROVIDERS GUIDE A5

[â&#x20AC;&#x2030;Mobile Commerce Providers Guide ] Mobile Hardware/Handsets (Continued)

XAC Automation Corporation 26470 E. Arbor Drive Aurora, CO 80016 720/202-3310 www.xac.com.tw Chuck Chagas

Mobile Marketing Mozido 1601 S. Mopac Expressway, Suite 200 Austin, TX 78746 512/524-7550; 888/428-3411 www.mozido.com David Luther

Mobile Loyalty & Rewards

Roam Cellular

Loop, Inc.

Mobile P2P Payments

400 TradeCenter, Suite 5900 Woburn, MA 01801 617/279-0520 www.act-pay.com Greg Ewald

Element Payment Services 500 N. Juniper Drive, Suite 100 Chandler, AZ 85226 866/435-3636 www.elementps.com

ID TECH

Mocapay

512/524-7550; 888/428-3411 www.mozido.com David Luther

10721 Walker Street Cypress, CA 90630 714/761-6368 www.idtechproducts.com Mocapay blue Process: c 68 m 3 y 0 k 0

Mocapay green Process: c 63 m 0 y 97 k 0

Mocapay blue Spot: PMS 298c

Mocapay green Spot: PMS 368c

1660 17th Street, Suite 310 Denver, CO 80202 303/381-3909 www.mocapay.com Karen Moritzky

Mocapay is an end-to-end, merchant-centric, mobile commerce platform offering an integrated marketing and sales solution to enhance the lifetime value of a customer. Mocapay offers white label reseller and referral products. Mocapayâ&#x20AC;&#x2122;s token-based architecture ensures every mobile payment transaction is simple and secure with a onetime-use, perishable code.

Mozido 1601 S. Mopac Expressway, Suite 200 Austin, TX 78746 512/524-7550; 888/428-3411 www.mozido.com David Luther

Opticard, A Planet Group Inc. Company 407 N. 117th Street Omaha, NE 68154 480/538-5511 www.planetgroupinc.com

A6 MOBILE COMMERCE PROVIDERS GUIDE

905 W. 7th Street, Suite 319 Frederick, MD 21701 877/753-3039 www.roamcellular.com Desmond Nicholson Roam Cellular provides innovative, ROI-focused, cost-effective mobile communication, promotions, and targeted campaigns for merchants and payment providers. Leveraging our product suite, enable businesses to attract, engage, and convert prospects into loyal customers. Our offer includes: text message/sms marketing, mobile websites, mobile coupons, loyalty programs, and QR code campaigns.

Mozido 1601 S. Mopac Expressway, Suite 200 Austin, TX 78746 512/524-7550; 888/428-3411 www.mozido.com David Luther

Mobile Security & Risk Management Coalfire

Mobile Promotions & Offers Loop, Inc. 400 TradeCenter, Suite 5900 Woburn, MA 01801 617/279-0520 www.act-pay.com Greg Ewald

Mocapay 1660 17th Street, Suite 310 Denver, CO 80202 303/381-3909 www.mocapay.com Karen Moritzky

Mozido 1601 S. Mopac Expressway, Suite 200 Austin, TX 78746

361 Centennial Pkwy., Suite 150 Louisville, CO 80027 303/554-6333 www.coalfire.com Matt Getzelman

CSR 830 NE Pop Tilton Place Jensen Beach, FL 34957 866/462-7774 www.csrcorporate.com Jan Carroza

ID Analytics 15253 Avenue of Science San Diego, CA 92128 858/312-6200 www.idanalytics.com Jim Degracia

Merchant Link

in the U.S., Canada, and the UK and is supported by a multichannel transaction reporting tool. CreditCall, founded in 1997, is headquartered in Bristol, UK.

8401 Colesville Road, Suite 750 Silver Spring, MD 20910 303/694-6778 www.merchantlink.com Mary Anderson

Rich Consulting Los Angeles, CA 818/787-5837 www.deanarich.com Deana Rich

SecureBuy 605 Crescent Blvd., Suite 200 Ridgeland, MS 39157 800/511-2050 www.securebuycommerce.com Christopher Wooten

Voltage Security 20400 Stevens Creek Blvd., Suite 500 Cupertino, CA 95014 408/856-3200 www.voltage.com Lisa Anderson

Mobile Software

GoPago Inc.

Apriva 8501 N. Scottsdale Road, Suite 110 Scottsdale, AZ 85253 877/277-0728 www.apriva.com Stacey Tappin

44 Montgomery Street, Suite 250 San Francisco, CA 94104 972/310-2001 www.gopago.com Stuart Walker

Mocapay 1660 17th Street, Suite 310 Denver, CO 80202 303/381-3909 www.mocapay.com Karen Moritzky

Nomis Payments 1111 Bayhill Drive San Bruno, CA 94066 650/588-9800 www.nomispayments.com Marina Terblanche

RDM Corp. 4-608 Weber Street N. Waterloo, Ontario, Canada N2V 1K4 800/567-6227 www.rdmcorp.com

 Retailcloud

SecurityMetrics

2702 Clayton Road, Suite 200 Concord, CA 94519 925/288-4300 www.retailcloud.com Sheena Shastri

1275 W. 1600 N. Orem, UT 84057 801/995-6860 www.securitymetrics.com David Meyers

Retailcloud Mobile Suite includes mPOS, mINV, mCRM. Retailers will be able to do much more than just ring up sales and track inventory. A powerful CRM allows merchants to match sales and inventory with customers, accept various payments, send digital receipts. mINV allows retailers to scan inventory right from their device. White label available.

CreditCall 1133 Broadway, Suite 706 New York, NY 10010 800/868-1832 www.creditcall.com Ingrid Anusic CreditCall is an award-winning payment services provider and EMV migration expert, enabling card acceptance in diverse and complex payment environments including mPOS, in-app, e-commerce, over-thephone, and unattended (parking, ticketing, and vending). Its PCI DSS Level 1 certified payment gateway links to all major processors

SecurityMetrics MobileScan app verifies mobile device security in seconds by scanning smartphone and tablet components (operating system integrity, application installation settings, disk encryption, etc.) for vulnerabilities and assisting in remediation by providing setting and device recommendations. MobileScan helps merchant processors know which merchants comply with PCI mobile processing best practices.

MOBILE COMMERCE PROVIDERS GUIDE A7

[ Mobile Commerce Providers Guide ] Mobile Software (Continued)

TransFirst

Google Inc.

12202 Airport Way, Suite 100 Broomfield, CO 80021 855/533-6402 www.transfirst.com Gavin Cicchinelli

1600 Amphitheatre Pkwy. Mountain View, CA 94043 www.google.com/wallet/business/payments Steven Klebe

PreCash Inc.

Loop, Inc.

5120 Woodway Drive Houston, TX 77056 713/600-2200 www.precash.com Alex Vertiz

400 TradeCenter, Suite 5900 Woburn, MA 01801 617/279-0520 www.act-pay.com Greg Ewald

PreCash is a leader in payments services and transaction processing. We offer mobile, online, and walk-in bill payment solutions, Visa®, MasterCard®, and Discover® prepaid solutions, and other payments services. PreCash serves more than 3 million consumers and touches nearly $3 billion in payments annually. For more information visit www.precash.com.

VeriFone 2099 Gateway Place, Suite 600 San Jose, CA 95110 800/837-4366 www.verifone.com GlobalBay Merchant from VeriFone is a simple, intuitive POS (point-of-sale) app for merchants, including: retail shops, delis, kiosks, salons, mechanics, mobile salespeople, and others. A complete small business POS solution with a comprehensive merchant portal and 24x7 support. Designed for merchants. Built for partners. Secured by VeriFone. www.verifone.com

Mobile Wallets Apriva 8501 N. Scottsdale Road, Suite 110 Scottsdale, AZ 85253 877/277-0728 www.apriva.com Stacey Tappin

Cimbal Inc. 84 Clay Drive Atherton, CA 94027 650/743-2732 www.cimbal.com Chris Boone

Double Diamond Group, LLC 7741 S. Glencoe Court Centennial, CO 80122 303/916-9997 www.doublediamondgroup.com Todd Ablowitz

A8 MOBILE COMMERCE PROVIDERS GUIDE

Mocapay

Mocapay blue Process: c 68 m 3 y 0 k 0

1660 17th Street, Suite 310 Denver, CO 80202 303/381-3909 www.mocapay.com Karen Moritzky

Mocapay blue Spot: PMS 298c

Mocapay green Process: c 63 m 0 y 97 k 0 Mocapay green Spot: PMS 368c

Mocapay is an end-to-end, merchant-centric, mobile commerce platform offering an integrated marketing and sales solution to enhance the lifetime value of a customer. Mocapay offers white label reseller and referral products. Mocapay’s token-based architecture ensures every mobile payment transaction is simple and secure with a onetime-use, perishable code.

Mozido 1601 S. Mopac Expressway, Suite 200 Austin, TX 78746 512/524-7550; 888/428-3411 www.mozido.com David Luther

PayPal 2211 N. First Street San Jose, CA 95131 855/456-1327 www.paypal.com/partnerprogram Greg Campagnolo

Tabbedout 1135 W. 6th Street, Suite 130 Austin, TX 78703 866/626-8045 http://tabbedout.com Nick Myers

1101 6th Street NW, Suite 402 Washington, DC 20036 202/828.2635 www.electran.org ETA CEO Jason Oxman Transaction Trends Publishing office: Stratton Publishing & Marketing Inc. 5285 Shawnee Road, Suite 510 Alexandria, VA 22312 703/914.9200 Publisher Debra Stratton Associate Publisher & Editor Josephine Rossi

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LINEA PRO™ 5 for Apple® iPhone® 5 and iPod touch®

INFINEA TAB™ M for Apple iPad® mini

SRED-certified for the ultimate transaction protection. The first devices to bring Apple iOS to mobile POS are also the safest. View coordinating mobile printers and a full suite of accessories at ipcprint.com. For more information about these SRED-certified devices please contact us at ISO@ipcprint.com. iPhone® iPod touch® and iPad® are registered trademarks of Apple Inc. Linea Pro™ and Infinea Tab™ are trademarks of Infinite Peripherals.

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INFINITE SECURITY INFINEA TAB™ 4 for Apple iPad® (4th Generation)

LINEA PRO™ 5 for Apple® iPhone® 5 and iPod touch®

INFINEA TAB™ M for Apple iPad® mini

[ FEATURE ]

Are Merchants Finally Ready for Mobile Payments? Overcoming the hurdles of mobile payment adoption with education By John Manasso

en years ago, before the dawn of smartphones—think Stanley Kubrick’s film 2001: A Space Odyssey, with early man learning to use a bone as a weapon—Ben Goretsky and his company, USA ePay, began writing programs in Java to work on Motorola and Nokia phones so they could be used to make mobile payments. During the years that followed, USA ePay continued to innovate with new technologies to enable mobile payments.With all of the challenges and the battles, was it worth it?

“As of now, the way [business] is going, yes,” says CEO Goretsky. The knowledge gained through that experience has proven to be important; clients are coming to USA ePay because of it.“Nowadays,”says Goretsky, “people are more accepting of the fact that you can process your transactions with your smartphone. “Maybe we got onto the train a little bit early…but we really didn’t give up on the thing. We were able to take our knowledge of what we experienced early and use it on smartphones,” explains Goretsky, who founded the company along with his brother Alex. They saw that people were enticed by the idea of making purchases

using their smartphones—it really got their interest—so they introduced them to their gateway. Goretsky does admit, however, that in terms of research and development,“we definitely did not make our money back.” But times change—and technologies advance. Sticking with the 2001 metaphor, the computer HAL 9000 is about to start thinking for himself.

A Star App vs NFC

KEY NOTES 8 Major retailers currently generate 10 percent of their sales through mobile payments.

8 Industry experts believe they have found a path to wider acceptance of mobile payments following Starbucks’ model.

8 Once merchants become convinced that Big Data can help them increase their business—or that they must use it for survival in the future— then mobile payments could take off.

Major retailers, such as Starbucks, currently generate 10 percent of their sales through mobile payments, according to a company spokesperson, who added that the coffee shop giant sees mobile payments as a growth Transaction trends | October 2013 15

[ FEATURE ] area. From Starbucks’ perspective, what makes mobile payments even more attractive is that it can cut down on the amount its stores pay in interchange. Starbucks uses an app that generates a bar code, which can be scanned from a store’s POS terminal. Customers purchase a prepaid card that the app uses for transactions. If a customer chooses to load $50 on to that card, Starbucks only has to pay interchange once on what could potentially be almost 25 transactions on a $2 cup of coffee. “Which is a huge savings for them,” says Chris Gardner, the co-founder of Paydiant, which white-labels mobile solutions for major retailers.“For consumers, it’s really about loyalty. [Starbucks has] this little game where every time you scan your phone, you put a gold star in a cup and, if you fill up your cup, you get a free cup of coffee.” While mobile payments have been available for years, merchants and consumers have yet to accept them widely. Some thought that near-field communication (NFC) would pave the way. Via NFC, a chip in a cell phone stores a card’s information and enables a payment when the user taps a terminal to transmit the information at the point of sale. However, too many powerful entities with conflicting interests—namely wireless cell phone providers, banks, and the card brands—have yet to find common ground on issues that would make NFC more popular. Behemoths have invested heavily in NFC technologies—for example, Google has invested nearly a half billion dollars in its mobile wallet, which relies on the NFC model— but they’ve made little headway. Gardner presents another obstacle to NFC’s adoption: “ Everyone launching mobile payments is trying to be the new man in the middle.There’s a reason for that: T hey want to sniff the data. If they can sniff the data, they can run an advertising business on the back of it… Of course, the retailers are wise to that.” Nonetheless, Gardner and other industry experts believe they have found a path to wider acceptance of mobile payments, and it goes along with Starbucks’ model. As Gardner puts it, it’s not about the payment. “Successful [models] will be a combination of a convenience of payments, the loyalty and brand-building, special offers and discounts, some gamification,” says Gardner. 16 October 2013 | Transaction trends

Through its loyalty program, [Yumilicious] can create all kinds of “push” marketing programs, especially by tracking customers’ spending habits. App Acting Locally With 24 years in the business, including 13 at First Data, Doug Dwyre has served as CEO of Mocapay for the last two-and-a-half years. He has tried to make it Mocapay’s mission to serve“the merchant community”and, specifically, to“mobile-enable”merchants. As part of that, Mocapay builds apps for merchants. “We typically start out around marketing,” Dwyre says of his company’s approach. “That’s really our audience, the marketing professionals within the organization. We’ll work with them on some simple and straightforward marketing programs to harvest customers and build their lists. From there, many times we’ll migrate into offers and loyalty [programs].” One of Mocapay’s clients is Yumilicious, a small, Dallas-based “self-serve frozen yogurt lounge” with 14 stores.With Mocapay’s help, Yumilicious has moved from a card-based loyalty program to a mobile one. Customers download the Mocapay wallet, an app, to get to the Yumilicious loyalty program. (The company is in the process of white-labeling the app, which it expects to go public in November.) Mocapay has integrated Yumilicious’ gift card program (whose provider is Chase Paymentech) and is in the process of integrating its credit card provider, so consumers can use the mobile phone app to make payments.Yumilicious can track redemption of loyalty offers through the POS terminal. For customers who do not own smartphones, the program works via codes that are generated using text messages. Beatrix Hofker, a managing partner of Yumilicious, says the company first started offering its online loyalty program and mobile payments in a trendy neighborhood in Dallas called West Village. Single young professionals in that neighborhood love their gadgets and keep current on the latest technology— and use it. The loyalty program tracks points that customers spend in Yumilicious stores.W hen customers reach 100 points (each dollar spent equates to a loyalty point), they receive

a $10 card in their Mocapay wallet. In July, Yumilicious offered double points. It now has 14,000 customers in its loyalty program. Customers can also sign up for the loyalty program via Yumilicious’ Facebook page. Based on data Yumilicious receives through its loyalty program, it can create all kinds of “push” marketing programs, especially by tracking customers’ spending habits. Depending on how frequently customers visit the store,Yumilicious can send out offers to specific phone numbers via text in an attempt to lure them more often.The offer could be for double loyalty points or anything else Yumilicious is willing to offer. “This way we can reward the customers for their loyalty… but also track customer habits, which is key for business,” says Hofker.

Making It a Habit Using promotional offers to train consumers to use mobile payments is a tactic also used by Barclaycard US.Through a pilot program it began about two years ago in Northern Delaware, Barclaycard US, a strategic partner of Paydiant, is attempting to expand the use of mobile payments. First, Barclaycard started in the cafeteria of its corporate headquarters in Wilmington to train its employees to use mobile payments.Then, it expanded to the cities of Wilmington and Newark, an ideal location as it is the home of the University of Delaware with its tens of thousands of smartphone-addicted students. Angel Carra, head of market solutions/ mobile commerce for Barclaycard US, explains that the company has created a network of about 50 merchants. In her opinion, merchants know that mobile payments are coming—and they want to be a part of it. Barclaycard already has a few thousand users and is performing consumer marketing to promote new users. Carra says that Barclaycard continues to evolve the application based on user and merchant feedback. “We truly look at this as a two-sided market,” she says.“You can’t have 100 merchants and a handful of users, and you can’t have thousands of users and a handful of mer-

[ FEATURE ] chants.You need to make sure there’s the right mix and balance of numbers.” Barclaycard’s merchants are the type of establishments that college students are likely to frequent: retailers and quick-service and full-service restaurants, including Subway and Little Caesars Pizza. Carra explains that Barclaycard pitches mobile payments to merchants as a marketing platform. Barclaycard is promoting its merchants’ names, logos, and offers. By conducting its experiment in a geographically fixed area, Carra says Barclaycard is trying to create “contain ubiquity,” meaning consumers can be confident that they can use the transaction form in multiple places. To encourage consumers to participate, Barclaycard is giving away incentive cards that contain either $10 or $20.“Users have to feel comfortable,” Carra explains.“If they can test the program with someone else’s money, the process is quick. It can create that habit.” Although still in “silent mode,” Barclaycard is looking to expand its pilot to other geographic areas. College towns like Newark are ideal locations because they can train the next generation of consumers. “You’re building out the merchant side, user side, and capability side,” Carra says.“We want to make sure we’re making it work and creating that best customer experience before going nationally.” Barclaycard US has spent time training workers at its merchant partners to encourage consumers to sign up for its mobile payments program. In stores with high turnover, Barclaycard will return and train the new hires. It is also conducting student focus groups to see

what works and what doesn’t; in addition, the company is providing financial literacy programs for those students. “Students care about their money,” Carra notes.“They don’t want [mobile payments] necessarily to be about gamification or about trying to spend more money. What we want to focus more on is financial literacy. How can we help students save money with offers, stay on budget, track receipts? “We want to help them see it as part of their daily lives. It’s not about making the payment. It’s about everything.” Carra says Barclaycard US is getting to the point where merchants are contacting them to ask about mobile payments. She is encouraged by the program that began only two years ago but does not want to speculate on the role mobile payments will play in Barclaycard US’s business in the coming years.

“We want to help them see it as part of their daily lives. It’s not about making the payment. It’s about everything.”

—Angel Carra, Barclaycard US

“We are still figuring that out,”Carra says.“It’s not about being first to market. It’s about getting it right.That’s why we’re taking this pilot approach. Again, being in market, we are learning and adjusting in real time. We know it’s going to be core to our global business for Barclays, and that’s what we’re trying to figure out right now, how that integrates into our business.”

Gaining Acceptance The slow acceptance of mobile payments is perplexing, especially considering they do not require any special hardware. In most cases, companies like Mocapay and Paydiant are building apps for payment transactions. If a merchant or an acquirer strikes up a partnership with such a company, they’re essentially licensing software or purchasing their technology. “I don’t foresee any hardware necessary at all to do many types of mobile payments,” says Todd Ablowitz, president of the Double Diamond Group, a consulting company.“ However, when you start to get into a busy store, there will be cases where you need something to connect that phone with the point of sale.The reason is you might have a multi-lane environment like a grocery store. It’s very difficult to know whose basket you’re buying if you don’t identify it.That is where hardware comes into play.” Ablowitz describes how a larger grocer like Kroger can shift consumers’ habits on a massive scale through loyalty programs. He explains that a lot of the data the company compiles is through the use of mobile phones and mobile technology—data that wasn’t previously available until the advent of mobile phones. In Colorado, where he lives, the chain’s stores go by the King Soopers’ brand. He says he has personally changed where he fills his prescriptions because King Soopers offered 10 times the loyalty points, which can be converted into discounts and used at its stores that sell gasoline. “Pharmacy is a commodity,” he says.“You’re going to get it for about the same price anywhere… It’s not a discretionary purchase. By linking two nondiscretionary purchases together—pharmaceu18 October 2013 | Transaction trends

One Card Quarter Page Ad Trans Trends.indd 1

7/1/13 7:44 PM

ticals and gas—the company realizes they get more share of my wallet. I’m sure they know they’ll also get an increased spend for other things when I’m there.That’s a very, very large merchant with a whole department of people to figure out that program.” So, how does the small merchant—or grocer—compete with such a large corporation that has access to such resources and manpower?“The only way,”according to Ablowitz,“is to use these Big-Data-type services across many, many small merchants where a provider then shows a small merchant what to do with that [consumer] information.” It’s not a leap to say that merchants, with help from their acquirers or ISOs, could offer incentives for consumers to pay with their mobile phones, so they can extract this useful data (as illustrated in the Yumilicious example). Once those merchants become convinced that such data can help them increase their business—or that they must use it in what could be an existential struggle for survival in the future—then mobile payments could take off. As Ablowitz notes, this could change both the way that stores and restaurants do business and how they look. For example, says Paydiant’s Gardner, look at a fast food restaurant. “At a place like McDonald’s, it’s not going to be so much about the payment,” he says.“You get in line, place your order over the phone, and walk up and pick up your bag.Yes, the payment is the most important, but the least interesting, to customers.You eliminate these lines. Let them order, and go in and pay.” It also could revolutionize sit-down restaurants.The website OpenTable.com is testing a way to send a bill to a diner’s phone at the conclusion of the meal, but it is not publicly available yet. “Using the app, you can see the check, add the tip,”Ablowitz says.“That beats the heck out of the old way of waiters running back and forth a dozen times, multiple wasteful paper receipts that have no value.” He adds that business travelers could easily store the receipts on their mobile phones and print them out later for an expense report. Uses like that could lead to wider adoption of mobile payments because it provides a helpful solution for both parties. A merchant gets rid of several wasteful steps; the consumer realizes the utility of a process that is more simple and efficient than the already simple and efficient card swipe. To convince merchants on a wide scale to push their consumers toward mobile payments, Nick Nayfack, director of product at Mercury, which is helping to find mobile solutions for its new partner, PayPal, says the industry must answer a simple but vital question: What problem are we solving from a merchant’s perspective with mobile payments? “The problem...is a very, very important one that’s very loud and resonant in our segment: how to bring commerce back to local merchants,” Nayfack says.“That is the real problem that buying off-line is solving; it’s stimulating local economies again.That’s huge… If we can solve that problem, it will make all our lives immediately better in a local way.” TT John Manasso is a contributing writer to Transaction Trends. Reach him at john_manasso@yahoo.com. Transaction trends | October 2013 19

Startup Stories: GTS Group

The Evolution of eText

How one winner of the ETA Payments Next Zone scholarship is revolutionizing mobile payments technology By John Manasso

our years ago Mike Wofford, a longtime veteran of the payments industry, formed Omaha-based Global Transaction Services Group (GTS Group), and, within a few years, the company had created eText, an important technology for charitable nonprofit groups. eText allows mobile phone users to make monetary donations via text messages. Through this mobile payments technology, a charity can receive donated funds instantly. People are probably most familiar with text donations contributed during the telethons that often follow large national disasters,

for example for the victims of Hurricanes Katrina or Sandy. T hose telethons have a beneficiary (such as the International Committee of the Red Cross or a fund organized for that specific event) and will show viewers a number to which they can text a donation during their broadcast.This, however, is not eText. As Wofford points out, those donations merely represent pledges; they are a signal to the user’s telecom provider of a willingness to donate a specified amount of money. The funds are not collected until the user pays his or her monthly phone bill, and then the telecommunications company has to transfer the money,

GTS Group | Omaha, Nebraska

www.gtsgglobal.com

Founders: Mike Wofford, Jamie Savant Wofford

Savant

20 October 2013 | Transaction trends

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marking what can be a substantial delay for the charity earmarked to receive the funds. “Money doesn’t exchange hands,” Wofford explains of earlier text-pledge technologies.With eText, it does.“When you do the text… we run a credit card authorization on the spot,” says Wofford. For its innovation, GTS Group was one of four winners of the ETA’s Payments Next Zone scholarship, which is funded by the Bill and Melinda Gates Foundation. The scholarship paid for free exhibit space for the four companies at the 2013 ETA Annual Meeting & Expo in New Orleans earlier this year. Jamie Savant, a co-founder and partner in the Strawhecker Group, a management consulting group focused solely on the payments industry, worked with GTS Group as it developed eText. Savant tells a story that explains how simple and intuitive eText is for potential donors. His wife Peggy is a clinical dietician who works with several nonprofits in Sacramento, California. At a dinner with Savant and his wife, Wofford explained eText. “[My wife] was able to take it back to her nonprofit,” Savant says.“It’s a very simple, easy solution for a very nontechnical

The Federal Election Commission granted GTS Group approval for individuals to use eText to donate to political campaigns— making it the first technology of its kind to receive such approval. person to understand. That’s what I like about this product offering.” Savant states that eText is “pretty straightforward to get set up.” One of GTS Group’s first clients for eText was the American Diabetes Association, which is based in Omaha.The plan is to continue to build locally and then expand nationally.

Making a Political Statement As much as the recognition from ETA and the Gates Foundation might be gratifying for GTS Group, the company received another form of approval that is likely to prove far more remunerative. On Dec. 20, 2012, the Federal Election Commission (FEC) granted GTS Group unanimous approval for individuals to use eText to do-

WORDSTOTHEWISE � Partner with other companies. “You don’t have to develop everything yourself,” says Mike Wofford, founder of GTS Group. “So much technology is being developed that you don’t have to invent everything. Partner with both technology and sales sides of your business. A lot of companies fail because they don’t acknowledge how to build a sales channel. You need to partner with distribution partners.” � It’s okay to be a follower. Although GTS Group was the first company to receive approval from the Federal Election Commission to make mobile payments to political campaigns, Wofford doesn’t see himself as a leader. “I don’t need to be the leading edge,” he says. “I just want to follow what the customers need and utilize the technology they need; right now, mobile is becoming more mainstream.” � Buyers are in the market for good companies. Jamie Savant, co-founder and partner in the Strawhecker Group, believes the market continues to be one for sellers. “There are a lot of buyers—existing buyers or new entrants—coming into the market,” he says. “For those that are thinking of an exit strategy in 2013, the market is very strong. In the acquiring space, there are a lot of buyers and a lot of pent-up demand… We’re seeing smaller players wanting to get bigger, and they need cash to do that. The market is definitely growing, so we’re out of the recession.”

22 October 2013 | Transaction trends

nate to political campaigns—making it the first technology of its kind to receive such approval.The idea to adopt eText for political campaigns was the brainchild of Rick Reed of Rick Reed Media, a political consulting and media relations firm located in Arlington, Virginia, just over the line from the nation’s capital. “The Commission concluded that the process proposed by [GTS Group] for receiving and forwarding small-dollar contributions to political committees is permissible under the Federal Election Campaign Act of 1971, as amended,” according to the FEC press release. There was a certain irony in the approval process. Unlike Payment Card Industry Data Security Standards, which seek to keep consumers’ personally identifiable information (PII) secret, the FEC was looking for transparency in the political donation process. “The key issue is in the political market today you have to report donor information very stringently,” Wofford explains.“That’s a little bit at odds with the financial transactions world where the less information the better. I think the most important thing is we were the first credit-card-approved solution by the FEC, and we have a certain way we have to report the data to the political campaigns.” Donations of $50 or less can be anonymous. However, for those more than $50, GTS Group must collect information and ask certain questions in order to allow a transaction to proceed. Federal and state regulations concerning political contributions can vary. Nonetheless, Wofford says that eText is “highly configurable” and GTS Group is able to modify the system for each state and each campaign. Wofford thinks that configurability is what is most attractive about the product GTS Group has built. With that, GTS Group has been off and

running—and it happens to have impeccable timing.This is an off year in the national election cycle. However, 2014 represents the mid-term congressional elections, and many candidates are declaring their intentions now, which means they need to raise money.With roughly a year to go before the elections, what better way to ask for contributions than through a new technology such as eText? In their advertising—whether television and radio commercials or billboards and printed materials—candidates can educate supporters on how to use eText to make campaign contributions. Thus, candidates can use those ads to quickly create a potentially significant campaign war chest.

eText in Action Among GTS Group’s first clients was the campaign of Jean Stothert, a Democrat who won Omaha’s mayoral election. Another is the campaign of Doug Truax, who is running for the Republican nomination for U.S. Senate in Illinois to vie for the seat held by Democrat Dick Durbin, who is seeking a fourth term. (The FEC ensured the tech-

nology was made available to candidates regardless of political affiliation before granting its approval.) By texting the message “DOUG” to “313131,” the user receives a text message in return with a hyperlinked URL. (For Stothert’s campaign, users were asked to text “JEAN.”) The link opens in a smartphone’s browser with several options, including a pull-down menu that includes various dollar amounts the user might want to donate. It also includes an option to volunteer. While GTS Group is first in this space, competitors no doubt will arise. Savant thinks that eText is well positioned: “It’s easy to get set up, which I think is a tribute to the product. Is there going to be competition? Definitely so. But [eText] seems to be out there holding its own and kind of growing.” In that respect,Wofford says GTS Group remains relatively small in terms of head count at 10 employees. Eventually,Wofford would like to expand to have an office in Washington, D.C., to take advantage of all of the congressional candidates seeking to raise funds. To date, GTS Group has been

self-funded and used private angel funding; however, it is about to embark on a larger capital raise with a private equity group. “That’ll be our big round,”Wofford says. One source that is unlikely to provide that private equity funding is one of the biggest names in investing: legendary Omaha native Warren Buffett and his Berkshire Hathaway Inc.Wofford says Buffett shies away from technology companies and startups, preferring to focus on mature companies. However, Wofford does share one thing in common with Buffett: They belong to the same country club, which can turn into a nice perk when he is trying to court new business. “We say ‘hello’ in the halls,”Wofford says of Buffett.“We don’t know each other. He wouldn’t know who I was. But when I have clients in town, they get a kick if they see Warren in town.” The way GTS Group is going, the Oracle of Omaha might want to reconsider. TT John Manasso is a contributing writer to Transaction Trends. Reach him at john_manasso@yahoo.com.

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Industry Insider

Getting To Know You—and Your Customers

Tranzlogic’s online portal uses transaction data to help merchants cultivate their most valuable clients By Bryan Ochalla

“C

an you tell me more about my customers?” It’s a question that has always been on the minds of merchants, but it was especially so a few years ago when Anthony Aker, Charles Hogan, and Dave Watkins joined forces to open the doors of Westlake Village, California-based Tranzlogic. At that time, says Hogan, who serves as the company’s CEO, he and his cohorts “started to see an increased demand from merchants for information—information about their customers, specifically.” Prompted by those requests, the trio, who’ve been in and around the payments space for 15 years or more,“set out on a course to figure out what information we could share and how we could share it,” Hogan adds. “We spent the better part of a year working with Morrison & Foerster—Visa’s and MasterCard’s attorneys—as well as some of the credit bureaus and other data repositories “We want to provide figure out how we could share merchants who can’t af- to [with merchants] transaction inforford to spend hundreds mation and information about cusof thousands of dollars tomers in connection with those with the same capabili- transactions,” Hogan shares. Once all of those important deties that Walmart, Tartails were worked out,Aker, Hogan, get, and Amazon use to and Watkins launched Tranzlogic. better understand their The company’s claim-to-fame product is a customizable online portal customers.”—Charles Hogan that “enables merchants to identify and cultivate their most valuable customers by mining their credit card transaction data” for invaluable demographic, geographic, psychographic, and economic information. “We take credit card transaction data, and we use it to return back to the merchant information about the cardholders connected to those transactions—so they can better understand who their customers are, what characteristics and attributes they have, and where they’re coming from,” says Hogan. The idea, he adds, “is to take the same or similar capabilities that Walmart and Target and Amazon use to better understand their customers, distill it down, and make it accessible to merchants who can’t afford to spend hundreds of thousands, if not millions, of dollars on such things.” 24 October 2013 | Transaction trends

Two Flavors The aforementioned portal that allows clients to accomplish all of those things—which primarily is private-labeled and made available to merchants via ISOs—comes in two forms: basic and professional. The basic offering is “really intended for the small, momand-pop merchant,” Hogan explains. It offers those retailers “some high-level information, insights, and reporting features, but turnkey marketing is its focus. Basically, it helps them answer the question, ‘How do I better understand who my best customer is and then use that information to get more customers?’” Geared toward the more sophisticated merchant, the professional offering provides access to “raw data features and more robust business intelligence tools and capabilities.” ISOs tend to provide the basic offering to merchant customers for an average of $10 per month, Hogan shares, although some provide it free of charge. T he professional offering, on the other hand, usually is sold to clients for about $20 per month. “The way we’ve structured this product is pretty dynamic for the ISO,” states Hogan. “If they want to use it on a freemium basis and basically give it away to some or all of their portfolio, they can do that. Or, if they want to sell it into subsets of their portfolio and generate incremental revenue as a result, they can do that.”

Value Proposition It’s easy enough to envision why merchants would desire such a solution, but how about the ISOs that Tranzlogic relies on to deliver it to them? According to Hogan, the main value proposition for the latter group is that “they’re operating as an undifferentiated player in a highly commoditized market with shrinking margins, and this allows them to license some technology, private-label it, add incremental value to their merchants, and generate incremental revenues for themselves as well without having any upfront capital expenditures.” Making matters more appealing is that Tranzlogic provides ISOs with all of the training and collateral materials they could want or need. It also offers support “so the ISO doesn’t have to engage in supporting the technology unless they want to.” TT Bryan Ochalla is a contributing writer to Transaction Trends. Reach him at bochalla@yahoo.com.

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