Transaction Trends September 2011 by Content Communicators, LLC

Transaction trends The Official Publication of the Electronic Transactions Association

| September 2011

The

other side of Durbin’s Law

Some provisions and legislation more disruptive than new interchange fees

ALSO INSIDE: SPECIAL: 2011 Strategic Leadership Forum Preview October 25-27, Chicago, IL

See Page 18

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Transaction trends The Official Publication of the Electronic Transactions Association

Vol. 16 | No. 9

cov e r s tory

12 The Other Side of Durbin’s Law

By John Manasso Although interchange has dominated conversations on the Durbin Amendment, the law’s other provisions, plus pending legislation, will have a far greater impact on the payments industry, say experts.

FEATURES

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18 S P EC I A L: 2 0 1 1 STR ATE G I C

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A Mobile Payments First in the Second City

Startup Stories: Good Karma

L E A DERS HI P F ORUM PREV I E W

ETA’s first-ever Mobile Commerce Summit headlines this year’s Strategic Leadership Forum, which brings together top executives and industry thoughtleaders for a critical look at the payments landscape. 18 8

d e partm e n tS

President’s Message

Industry News

ISO Corner

Insights from ETA’s elected leader Trends, strategies, and news in the payments business Training merchants and salespeople on PCI compliance can protect small businesses.

Risk in Review

Tips for boarding and monitoring high-risk merchants to generate a successful portfolio

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Transaction trends | September 2011 3

Electronic Transactions Association 1101 16th Street NW, Suite 402 Washington, DC 20036 202/828.2635 www.electran.org

President’s Message

ETA Chief Executive Officer Carla Balakgie

SLF and CPP Give You the Competitive Edge

ETA Director, Communications & PR Thomas Goldsmith Transaction Trends Publishing office: Stratton Publishing & Marketing Inc. 5285 Shawnee Road, Suite 510 Alexandria, VA 22312 703/914.9200 Publisher Debra Stratton Editor Josephine Rossi Contributing Editor Angela Hickman Brady Editorial/Production Assistant Teresa Tobat Art Director Janelle Welch Contributing Writers Douglas R. Kelly, John Manasso, Bryan Ochalla, Julie Ritzer Ross Advertising Sales Steve Schwanz or Fox Associates (800/440.0232; adinfo.eta@foxrep.com) Fox Associates Offices Chicago 312/644.3888 Atlanta 770/977.3225 Los Angeles 805/522.0501

New York 212/725.2106 Detroit 248/626.0511 Phoenix 480/538.5021

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 monthly, 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 © 2011 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. Nonmembers, government agencies, $150 per year; single copy, $20. Subscriptions are available for 12-month periods only, at the quoted rates.

4 September 2011 | Transaction trends

e’re just a few weeks away from ETA’s Strategic Leadership Forum (SLF) in Chicago. The Forum is one of the highpoints of the year for me—and it should be, as well, for anyone in a leadership position in the payments industry. SLF is unique. For a couple of days (more if you attend the Mobile Commerce Summit or Compliance Day), you get the chance to step back and see the industry as a whole.You can see where we are now and get a sense of where we’re heading as an industry. T hen, of course, you can figure out where your organization should be focusing now and in the near future. Even better, you’re surrounded by a few hundred people who are leaders in their organizations in an environment where everyone is thinking and talking about big ideas and how to take advantage of them. The 2011 SLF is shaping up to be exceptional. From critical issues, to industry dynamics, to technology, the Forum will offer not just a look at what’s coming, but how it fits into what you already know. I don’t have to tell you that we work in a very competitive business. More than 125 companies typically are represented at the Forum, and they’re all recognizable names. If you’re at the top of your game, they’re probably the ones you partner with or compete against every day. T hose of us who come to Chicago next month will leave with a sharper strategic vision, and that’s a competitive edge. And speaking of a competitive edge, I’m pleased to note that ETA’s Certified Payments Professional program is officially open and accepting applications for the certification exam that will be conducted in November. More than 30 candidates applied to take the exam in the first couple of weeks, which is a fantastic start (and by the time this goes to press, I’m sure there will be many more). I’ve said it here before, but it bears repeating: ETA took a big step in launching the CPP program because we believe the benefits—to the individual who earns the designation and to the industry—are worth the investment of resources, time, and effort that it has required. As ETA’s staff has begun explaining the CPP program and encouraging the true professionals in our industry to take advantage of the program, one question has surfaced consistently and frequently: How will merchants know what a CPP is and why they need one? The answer is that ETA is committed to making sure that every merchant who accepts credit cards knows what a Certified Payments Professional is, and the advantages of working with a CPP. Merchant education is not something we can do once and check off a list. It will be a permanent part of the program, along with a registry that any merchant can use to quickly find a local CPP or verify that his merchant service provider is a CPP. We’ll have more to say about CPP at the Strategic Leadership Forum, of course, so if you have questions about the program, bring them to Chicago. I look forward to seeing you there. Sincerely, Rick Pylant Rick Pylant is President of ETA and Chairman & CEO of Strategic Processing Systems Inc.

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Tr a n s a c t i o n P r o c e s s i n g

Risk Mitigation

Business Analytics

INDuSTRYnews PCI Council Offers Guidance on Tokenization

While a properly executed tokenization system can increase the security of card information, and merchants and processors who deploy a robust system can reduce the scope of PCI compliance requirements, neither is automatic or fool-proof. That’s the guidance offered by the PCI Security Standards Council, which released a long-awaited set of documents outlining its evaluation of tokenization. The documents, available through the council’s website, provide information on tokenization best practices, advice on ways to use tokenization to reduce the scope of PCI compliance requirements, and recommendations for evaluating and deploying tokenization.

AROUND THE HORN

Heartland Payment Systems has introduced a mobile acceptance application for devices running on Google Inc.’s Android platform. The company also named David J. Hogan as executive director, major accounts… Street Savings says it is supporting efforts to make sure SMS-based marketing campaigns adhere to best practices developed by the Mobile Marketing Association… China UnionPay Tops Visa as world’s largest credit card brand… AdvanceMe Inc. announced it has passed $2 billion in total cash advanced since its founding in 1998… ROAM Data says it has has sold approximately 300,000 secure readers to leading merchant service providers, making ROAM the largest supplier of encrypted mobile card readers… PowerPay has partnered with Share Our Strength, the leading national nonprofit working to end childhood hunger in America through which it will donate 20 percent of its profit from every supporter’s credit card transaction fee to Share Our Strength’s No Kid Hungry Campaign to end childhood hunger in America by 2015… 6 September 2011 | Transaction trends

info graph Most Trusted Brands in Mobile Payments* 39.6%

Visa Mastercard American Express PayPal USPS

35.9% 35.8% 34.3% 24.6% 22.9%

Apple

22.3%

Microsoft Google

19.5%

Motorola

17%

eBay

15.5%

Facebook

12.1%

*Note: Percentage of respondents expressing trust. Source: OgilvyOne and OgilvyAction Global Mobile Retail Study, March 2011

Visa to Jump-Start EMV in the U.S. With a plan that’s part carrot, part stick, Visa Inc. says it will make an all-out push to bring chip and PIN card technology based on the EMV standard to the United States. EMV is well entrenched across Europe and in Canada, but U.S. merchants have been excruciatingly slow to adopt chip and PIN, which requires replacement or upgrading of card processing terminals and POS equipment. Card issuers, in turn, haven’t been willing to put EMV cards in circulation (except for a few for high-end international travelers) without merchant adoption. Visa says it will overcome that resistance by a combination of incentives and changes to its operating rules, which impose penalties for noncompliance.The steps include: • expanding the Technology Innovation Program to merchants in the United States, which eliminates the requirement for annual PCI validation so long as 75 percent of the merchant’s Visa transactions originate from chipenabled (contact and contactless/ NFC) terminals

• building the processing infrastructure for chip acceptance by requiring U.S. acquirer processors and sub-processors to be able to support merchant acceptance of chip transactions no later than April 1, 2013 • making merchant acquirers responsible for counterfeit fraud losses where transactions take place over nonEMV terminals.The liability shift would take effect in 2015 for most merchants, 2017 for fuel merchants. Visa says the United States is the only country in the world that has not committed to either a domestic or cross-border liability shift associated with chip payments.

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ISO Corner

Continuing Education

Training—for merchants and MSPs—can help small businesses get on board with compliance By Douglas R. Kelly

ain, or the possibility of it, can be a great motivator. But if the pain happens to the other guy—even when the other guy’s business closely resembles your own—it still may not be real enough to spur action. “We had a small restaurant, a chain of a few restaurants, and they got breached,” says Drew Freeman, president of Merchant Data Systems in Miami Beach, Florida. “And their fines—not even the audit, just the fines—put them out of business. That’s a small, mom-and-pop restaurant that had about $55,000 in fines because they had an out-of-date POS system that they didn’t know about [not a terminal, but a software system]. And they’re out of business today.” That’s a steep price to pay for failing to comply with the security standards of the PCI Security Standards Council. It also points to a common myth among many merchants: that it’s only the big fish that get breached and hit with big penalties from card issuers.The reality is that the incidents that make the news, like the Heartland Payment Systems breach of more than 100 million accounts in 2008, are only part of the picture.The bad guys also target small- and medium-size businesses because of the limited resources these merchants often have to devote to data security. “Remember, it’s a lot harder to breach a big company like Sony or Nintendo than it would be to hack into a restaurant down the street, due to the level of security they have,” offers Henry Morales, a manager of credit risk in Merchant Data’s security department.“A lot of times, smaller businesses are easier targets for these hackers.” Not all merchants are ignorant of the benefits of compliance, benefits that include maintaining good relationships with payment brands and acquirers, and building and maintaining trust with customers. Many ISOs and acquirers, and the PCI Council itself, communicate all of this to merchants regularly. Yet more education of merchants and ISO salespeople is 8 September 2011 | Transaction trends

needed to prevent many businesses from falling woefully short of complying with the standards.

Increasing Complexity Without a doubt, part of the problem stems from the complexity of the PCI standards version 2.0, which went into effect on January 1. The Council’s website explains that 2.0 doesn’t add any major new requirements, but that “the majority of changes are modifications to the language, which clarify the meaning of the requirements and make understanding and adoption easier for merchants.” Still, understanding parts of the standards, such as the Self-Assessment Questionnaire (SAQ), can be daunting.“With all the different SAQ types, especially forms C and D, which are very technical, and with the addition of the new version that was released, there are more subquestions that have been added to that,” says Morales. “There also was a new SAQ type that was

released…these SAQs are very technical and complex for smaller merchants to understand, to determine what the correct answers are in filling these forms out. So they need a lot of guidance.” But some say a lot of merchants don’t even get that far. “I don’t really believe there’s anything about the new standards that is that much more difficult than the old standards,” says Mark Fravel, president of National Transaction Corporation in Coral Springs, Florida.“The problem is the old standards are not even adhered to yet. Merchants aren’t using shredders…some still use knuckle-busters and hand receipts to truck drivers [and the receipts] are flying out the window…it’s just loose. “I have merchants, very large, nationwide organizations, that are touching hundreds of thousands of transactions, and they refuse to become PCI compliant,” Fravel continues.“And I have other merchants that don’t put up a firewall, they don’t install any sort of antivirus software, they don’t even do

ISO Corner

background checks on their employees… and they wonder why they’re susceptible to getting hacked, and they complain about a $100 a year fee (we charge $6 to $8 a month for the PCI compliance activity).”

Equip and Advocate For all of the information and compliance assistance tools out there, most merchants will not have a sudden lightbulb moment when it comes to becoming compliant. But ISOs can “educate the educators,” providing training to their salespeople to help get merchants on board. Montana-based NXGEN comes at it from a couple of directions, including making the consequences of a data breach more real to its small- and medium-size merchants. “Along with information available on our website, we provide our reps with ‘leave behinds,’ which can be customized for that merchant,” says Tom Nitopi, CEO. “The customization part focuses on businesses that have been breached, fined, etc., that are similar to that merchant’s business. That’s what that merchant will relate to, a business like theirs that got hacked or compromised.”

Face-to-face interaction with industry groups also can get results.“I just spoke to the board of directors of the Montana Automobile Dealers Association,” says Nitopi. “All very successful automobile dealers in Montana, and not one of them knew what PCI is.We talked about how this could put them out of business, and about a third of these people (or their accounting departments) circled back with us on it the second day after the event.” “It’s continuing education,” says Fravel. “We just have to keep beating it into the heads of the merchants. Five years ago, they had no clue what a computer was; today we’re telling them they have to protect it. And merchants sometimes just don’t want to be trained. They think they’re impenetrable.” But equipping an ISO’s salespeople to bring value to the merchant is half the battle, says Freeman. “I would train the salespeople to be advocates for the merchants. You have to train people so they can be a consultant and bring a valueadded type of presentation to the merchant. So I would equip salespeople, as we have at Merchant Data, with a web

portal, where they can go online and find articles about PCI, information on how to prevent breaches, and so on, so we provide all this as a part of our training. And we provide training for our merchants—in our welcome kit, they get a notice about PCI. So we educate them from day one.” PCI’s standards have been in place now for five years, and most sales reps on the acquirer and ISO side get it. Surprisingly, though, there are pockets of resistance. “There are still salespeople out there that don’t talk to merchants about PCI,” says Freeman. “If an ISO or processor is charging fees for PCI, there are salespeople that will say it’s bogus.” Fravel agrees that resistance to compliance will fade as merchant and industry education takes hold but warns that this kind of change takes time.“Our whole society is starting to tune in more to data breach, but it’s like a big ship that we’re turning at sea. It doesn’t turn on a dime.” TT Douglas R. Kelly is a contributing writer to Transaction Trends. Reach him at streamlux@yahoo.com.

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[ COVER STORY]

The Other Side of Durbin’s Law

Ancillary provisions in the ruling, plus pending legislation, may prove more worrisome than interchange By John Manasso

Visa has an overwhelming majority of debit transactions run on its network. But with [network exclusivity] changes, it will likely see a significant decrease in the number of debit transactions running on Interlink.

ith the Federal Reserve System’s ruling on the Durbin Amendment, much initial attention focused on changes to interchange fees, but the reality is other provisions of the ruling could have a far greater impact on the electronic payments industry. One of them is the Fed’s decision on network exclusivity, which says that each debit card must be able to be carried on two unaffiliated networks, as opposed to the former standard of one. A nother provision has to do with the portion of the ruling on network routing, which will allow merchants to negotiate their own deals directly with acquiring banks—a change that Walmart and Target lobbied heavily on behalf of, according to numerous reports. As the industry digests the nearly 400 pages of the Durbin Amendment, it also needs to keep an eye on legislation gaining steam in the U.S. Congress, including a bill in the U.S. Senate that could make any “financial transaction provider” liable for processing transactions for unlicensed merchandise. Together, these new federal rules and proposed legislation make up some of the most significant changes facing the payments business to date.

Durbin Details Among the most meaningful new rules coming out of the Durbin decision is one mandating debit cards be able to process transactions on more than a single network. While many urban-area cardholders already have such cards, a number of the smaller regional debit networks focus on 12 September 2011 | Transaction trends

customers who live in more rural areas that do not have the same competition from banks and card issuers. The Visa network Interlink was the dominant player in this market, which will now open to greater competition. As a result, networks other than Interlink—Accel, AFFN, Alaska Option, Credit Union 24, Jeanie, Maestro, NYCE, Pulse, Shazam, and Star—could be some of the winners out of this part of the Durbin ruling. Right now, Visa has an overwhelming majority of debit transactions run on its network. But with these changes, it will likely see a significant decrease in the number of debit transactions running on Interlink. “That’s huge for our business,” says Mary Weaver Bennett, director of government and industry relations for the Electronic Transactions Association. “…It’s going to be a huge economic dynamic in the market to have Visa’s presence shrinking, to have these 10 networks growing. “Then you enter into competitive pricing—what all these networks are going to charge to process debit transactions and who they are going to negotiate with—and there’s going to be a price war, probably, to find the lowest debit processing cost,” she says.“It’s going to be exciting and fascinating to watch, but that’s a huge market change in our world.” Credit Union 24 CEO Jim Park was not pleased with some of the new rules and said he vowed to fight them through friends in Congress. However, just as he disagreed with some changes, he also realizes that other rules changes in Durbin can represent opportunities. For example, his company

“There’s going to be a price war, probably, to find the lowest debit processing cost. It’s going to be exciting and fascinating to watch, but that’s a huge market change in our world.” —Mary Weaver Bennett, ETA

KEY NOTES 8

While the most headline-grabbing news out of Durbin has been interchange fees, complying with the nuts and bolts of the regulatory changes ought to be of primary interest to ETA members.

ISOs should make sure their acquirer has the technical wherewithal to meet complicated new routing requirements.

Proposed legislation could make payments processors liable for facilitating transactions for unlicensed merchandise.

The Kerry Bill, as it is known, seeks to pre-empt or supersede state laws or rules governing consumer notification of data and security breaches.

[ COVER STORY] already has been approached by other companies to take advantage of the new rules on network exclusivity. “We are strictly a PIN debit network,” he says,“so (companies) that have come to us are ones that perhaps have a smaller PIN debit base that they would like to expand” and would like to have Credit Union 24 be their PIN debit network. But the competition encouraged by Durbin will not be solely between networks, says Atlanta-based attorney Chris Baugher, a partner in the financial services and products group of Alston & Bird LLP. “It wouldn’t surprise me to see a lot of ISOs competing on price after Durbin comes out and they can go after accounts that their competitors have,” says Baugher. “They can price them more aggressively, given the lower cost that they should receive from their acquirers.” The new rules also do not allow networks to enter into exclusivity agreements and restrict the ability of issuers or networks to mandate routing requirements. The Fed does not allow any exceptions to any of the new rules regarding exclusivity. Debit card issuers will not have to reissue existing cards bearing the logo of a second network to comply with the rule change. However, existing cards must be enabled on a second network by April 1, 2012. Network exclusivity agreements must end before that, on Oct. 1, 2011. Before Durbin, ISOs also had the power to make deals with acquiring banks and get creative with discounts to merchants. Now, the shoe will be on the other foot: Merchants will be able to cut their own deals, and the changes in routing could add an extra layer of confusion. Prior to Durbin, about several thousand ISOs in the United States negotiated these contracts. Now, it’s possible that many millions of merchants could attempt to negotiate their own respective routing deals. “Merchants can now tell ISOs where to route transactions,” Bennett says. Amid these new rules, one unforeseen consequence for ISOs is the changes that they must make to their software and processing systems to be compliant. “That is a huge expense and one that some people might not have planned for,” Bennett says. “From the ISO perspective, I think what I 14 September 2011 | Transaction trends

“It wouldn’t surprise me to see a lot of ISOs competing on price after Durbin comes out and they can go after accounts that their competitors have. They can price them more aggressively, given the lower cost that they should receive from their acquirers.” —Chris Baugher, Alston & Bird

would be concerned about is making sure that my acquirer has got the technical wherewithal to meet those routing requirements,” adds Baugher.“What Durbin requires is not exactly simple from the routing perspective.”

Knock-Off Liability In addition to the new rules issued by the Fed in late June, industry players need to be aware of Senate bill 968, which already has made it out of the Judiciary Committee by a unanimous vote. Preventing Real Online Threats to Economic Creativity and Theft of Intellectual Property Act of 2011, or the “PROTECT IP Act of 2011,” was introduced by Committee Chairman Patrick Leahy (D-Vermont) and co-sponsored by nine other senators. The bill targets “rogue websites operated and registered overseas” that sell unlicensed merchandise, such as pirated CDs and DVDs, knock-off handbags, and designer items. Under the bill, plaintiffs may apply to the attorney general’s office for a temporary restraining order, a preliminary injunction, or an injunction. The bill requires companies processing such transactions to take action:“A financial transaction provider shall take reasonable measures, as expeditiously as reasonable, designed to prevent, prohibit, or suspend its service from completing payment transactions involving customers located within the United States and the Internet site associated with the domain name set forth in the order.” The bill goes on to say,“In order to com-

pel compliance with this section, the Attorney General may bring an action for injuctive relief against any party receiving a court order issued pursuant to this section that knowingly and willfully fails to comply with such order.” If the Justice Department grants injunctions, plaintiffs can seek legal redress against a processor through a “private right of action,” which essentially is the right to sue. On June 26, American Express, Consumer Electronics Association, Discover, Visa, PayPal, NetCoalition, Yahoo!, eBay, Google, Yes, and Technet sent a letter signed jointly to congressional leaders of both parties expressing concerns about the bill.While saying that the companies shared the goals of the bill to crack down on intellectual property infringement, the letter also stated its disagreement with this provision.The signers say their intent was to “express in clear terms our serious concerns with the private right of action.” The companies feared the bill could create a “one-sided litigation machine with rights owners mass-producing virtually identical cases against foreign domain names for the purpose of obtaining orders to serve on U.S. payment and advertising companies,” which also are held liable under the bill. The bill has been introduced in the past, but this is the first time it includes a provision allowing plaintiffs to sue processors. Previously, such bills were designed to hold global payments technology companies like Visa responsible for enforcement. “It’s very troubling to ETA members be-

cause it seeks to involve us where we were not involved before,” says Bennett.“Especially if (the business) is certified with a business certificate by the other country,” there’s no way to know if they are not legitimate.

Notification Worries Other bills on the industry’s watch list are those regarding data and security, although the timetables on those look as if they will take a bit longer than the PROTECT IP Act. Among them is a bill introduced by Sen. John Kerry (D-Massachusetts) and Sen. John McCain (R-Arizona) called the “Commercial Privacy Bill of Rights Act of 2011,” which would govern consumer notifications on data and security breaches. While 46 states now have their own laws or rules governing data and security breaches, the Kerry Bill, as it is known, would seek to pre-empt or supersede them. It also calls for the creation of a “safe harbor” program administered by the Federal Trade Commission to help protect consumer privacy. One potential concern is that the FTC wants to change the definition standard in federal legislation of what might trigger consumer notifications following security

breaches, according to Washington, DCbased attorney Paul Martino, a partner in the Legislative and Public Policy Group of Alston & Bird and a co-leader in its Privacy & Security Task Force. Prior to President Obama taking office, FTC officials had testified in Congress that consumers should be notified if they faced a “significant risk of harm,”such as data breaches that could lead to identity theft following a breach, including such personally identifiable data as a name, address, or phone number in combination with a bank, debit, or credit account number or a Social Security number. Martino says the FTC now wants that standard watered down in current legislation to require notification about anything that could potentially be embarrassing to a consumer, such as the release of an email address. Apart from those concerns, Martino, who formerly served as majority counsel to the Senate Commerce Committee, has an overarching trepidation about the creation of the Kerry privacy bill. It is being considered in the Senate Commerce Committee, not the Banking Committee. It’s not clear whether the financial industry’s or payments provider’s concerns would be addressed, he says.

“I think that’s an area that needs further examination because, to be specific or clear, the Kerry privacy bill would impact the financial services industry and the industry needs to take a closer look at its provisions.” In the House, Rep. Mary Bono Mack (RCalifornia) chairs the Energy and Commerce Committee’s Subcommittee on Commerce, Manufacturing, and Trade, which includes consumer protection matters. That subcommittee introduced a security bill called The Safe Data Act in July. The subcommittee marked up the newly introduced bill on July 20. From there, it was headed for full committee markup in the Energy and Commerce Committee. As far as timetables for these bills go, a data security law could pass as early as late 2011. One mitigating factor is that President Obama’s proposal on cyber-security could include provisions on consumer data breaches. Broader privacy legislation, like the Kerry Bill, is not expected to pass this year. TT John Manasso is a contributing writer to Transaction Trends. Reach him at john_manasso@yahoo.com.

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www.electran.org Transaction trends | September 2011 15

Startup Stories:

Dharma Merchant Services

Good Karma

Young ISO puts as much effort into employee health and satisfaction as its business development By John Manasso

Dharma Merchant Services San Francisco, CA Founded: 2007 Portfolio size: Active base of 1,800 merchants Transaction volume: $200 million annually

o say that Dharma Merchant Services is not your average ISO would be a great understatement. But the fact that the fourand-a-half-year-old company is one of the Electronic Transactions Association’s newest members itself is proof ETA is a big-tent organization with room enough for all kinds. San Francisco-based Dharma—named for the teachings of Buddha—has five full-time staff members and is actively searching for a sixth. Co-founder and President Jeff Marcous, a 20-year veteran of the payments industry, is a practicing Buddhist who helped craft a mission statement for the company that has more to do with being a good corporate citizen and upstanding member of the community than it does with maximizing profits. On a whiteboard in the company’s offices, Marcous has written,“My abundance is not measured by money or possessions.”

Passion and Compassion Visit the company’s webpage and you’ll see a prominent link labeled, “How we’re different.” T he company donates 10 percent of its profits to charities of its merchants’ choice (see the list on the website). Its mission is “to provide excellent service while showing compassion for our environment, communities, our customers, and ourselves”—meaning employees.Dharma Merchant Services pays for such perks as health club memberships and for classes at a yoga 16 September 2011 | Transaction trends

studio. Not only does Dharma pay 100 percent of employees’ health insurance, but it also fully funds health spending accounts up to $3,000 each year—the federally mandated maximum. The ISO also encourages employees to get involved in volunteering and social enterprises and has plans for employees to participate in an AIDS walk. Marcous was not one of those people who had always dreamed of running his own company.The idea came to him as he was reading an article on “life’s purpose.” He says it dawned on him that he could bring many of the values he espouses to his own company.“I just thought,‘Let’s see if we approach the industry, the marketplace, from a little bit different position, what kind of response will we get?’” Marcous says. “It’s been really heartening.” Dharma’s strategy is to find like-minded companies and to build loyalty. Marcous says that growth has been slow but steady even without any marketing or, in his words,“salespeople beating the street.” Nonetheless, he said,“people are finding us.” The company adds about 60 accounts per month and has an active base of about 1,800 merchants with “very little attrition.” The fact that Dharma is a certified Green LEED company gives it instant credibility with the kinds of merchants it targets, adds Marcous. For example, the company that Dharma uses to host its website gets 100 percent of its energy from solar sources. “If you don’t have the credentials to show that you’re a green-certified company and

you’re talking to a green company that makes fair trade organic chocolate or something, you can’t fake it.”

Integrity and Authenticity Some might perceive Marcous’ decision to found a company like Dharma with intrinsically high costs as risky. Yet Marcous was able to do it because of his long experience in the industry.He was employee No. 3 at Authorize.net, which was eventually bought by Visa International in a $2 billion deal. That experience allowed him to “get to know the major ISOs all over the country” and the people who run them, calling his tenure there an “incredible, exciting ride.”As rewarding as he said the experience was, he also worked at Authorize.net when it went public, a process that he did not enjoy as much. (Earlier in his career, Marcous also had worked at First Data, another publicly traded company.) In founding Dharma Merchant Services, Marcous did not want to have to worry about what Wall Street might think about how his company was run. Going along with the concept of molding an ISO around his values, he co-founded the company with his daughter Alexia Marcous, an MBA holder with 15 years’ experience as a computer programmer. When her father asked her if she wanted to go into business with him, Alexia responded, “Absolutely. And what are merchant services?” Dharma Merchant Services is the third company she helped found. Prior to cofounding Dharma, Alexia Marcous worked as a consultant, where it was her job to learn about new industries. That allowed her to pick up the mechanics of selling merchant accounts quickly, she says. “Lo and behold, we found that there is so much potential to serve merchants in an ethical, straightforward way and also provide a values-aligned partner for companies that seek to operate with care and concern for the environment and to give back to the community,” says Alexia Marcous.“Just like we choose mission-aligned partners for our banking and our office supplies and our website hosting and our telecommunications, we’re a mission-aligned choice for merchant services. “And that was really compelling to me that, not only are we doing a business service that helps companies thrive, but we’re

WORDSTOTHEWISE Do a lot of research.“First of all, most banks will give you a number of contacts to call, but just ask the tough questions,” says Jeff Marcous.“When you call the references a bank or an ISO might give you, make sure that you’re asking questions of integrity, responsiveness, responsibility, and openness. And make sure the ISO has your best interests in mind.” Don’t always take what looks like the best deal out there. “There are a tremendous amount of up-front bonus offers,” Marcous says.“If the deal looks too good to be true…” his voice trails off. You know the rest of the saying. Get legal advice. This is one that can come up from time to time with those who have learned things the hard way in the payments industry.“Find a good attorney to review your agreements,” says Marcous.

doing it in such a way that we connect with conscious companies trying to make a difference.” Alexia Marcous has a lengthy dialogue with potential new customers before signing them up “to make sure they’re completely clear on all of the pricing and they understand how the accounts work. They understand how to work with us and how to get support, how to protect themselves against fraud,” she says.“So what I’ve really enjoyed is the connection with the people and learning about their great businesses and being able to sell just by being honest.” In the event that a merchant is not doing enough volume, Dharma will refer that merchant to PayPal because the company believes that ethically it is the right thing to do. Dharma has seen some of those same merchants return when their volume increases. As part of her role at Dharma, Alexia Marcous also writes a blog on the company’s website that keeps merchants up to date about what else the company does outside of selling merchant services.For example, in her capacity on the San Francisco Bay Areas Green Chamber of Commerce, she recently traveled to Sacramento, California, to push for legislation to create a new type of corporation—a “B”-Corp (Benefit Corporation). Marcous compares it to an S-Corp or a C-Corp, which provides certain tax advantages for those who incorporate under those legal guidelines. A B-Corp is seeking to “have the commitments to sustainability and social responsibility written into the bylaws

of the companies” so that even if a company is sold or acquired, the new owner or entity would have to maintain those commitments.

Business Evangelism Idealism would seem to be at the heart of Dharma Merchant Services. But if the company weren’t profitable, it would not be able to survive and—at the risk of anachronism—spread its gospel. That’s why Jeff Marcous elected recently to join ETA. He hadn’t attended an ETA conference since his Authorize.net days, but with the most recent conference being held in San Diego, it offered him the chance to visit some partners and vendors in the area. Owing to his long involvement in the industry, Jeff Marcous said the conference was “like a family reunion.” “So many people,” he says.“It’s a great forum to keep in touch. Talk about community; there’s no greater community in our industry than what you get at the ETA conference.” TT John Manasso is a contributing writer to Transaction Trends. Reach him at john_manasso@yahoo.com.

LET US PROFILE YOUR ISO Is your company a successful ISO? Let us tell your story. Email jrossi@strattonpublishing.com for more information.

Transaction trends | September 2011 17

[ feature ]

A Mobile Payments First in the Second City Top minds and influential leaders convene for high-level industry talks and inaugural Mobile Commerce Summit

Make Plans to Attend Now Registration: Register online at www.electran.org/slf11. Member fees are $745 for full conference if booked by September 30 and $795 after. (Nonmember rates are $1,145 by September 30 and $1,195 after.) One-day conference and Mobile Commerce Summit registrations also are available. Hotel Reservations: The Palmer House Hilton, Chicago. Call 312/726-7500 or use the special link provided at www. electran.org/slf11 under the Hotel tab. Book your stay early to receive the special ETA rate ($229/night).

18 September 2011 | Transaction trends

he premier event for executive-level payments professionals is back, this time featuring a full day devoted to mobile commerce. ETA’s Strategic Leadership Forum (SLF) offers three consecutive days of high-level discussion with the best and the brightest in the electronic payments business, plus vital networking events for maximizing your organization’s relationships. This year’s event—taking place at The Palmer House Hilton in Chicago—kicks off a day earlier with the first-ever Mobile Commerce Summit.This deep dive into the red-hot mobile payments landscape will unite key players from inside and outside the industry and examine new entrants to mobile payments arena, changes to the existing value chain, and ways to adapt and capitalize on these new opportunities. Following the Summit, keynote speaker Roger C. Hochschild, president and chief operating officer of Discover Financial Services, will participate in a Q&A hosted by National Processing Company’s Jim Oberman, chair of the SLF planning committee. Hochschild is responsible for all of Discover’s operating functions, including marketing, risk management, cardmember services, consumer banking, payment services, and technology. The 2011 SLF will be split into three events: the first-ever Mobile Commerce Summit, the core Strategic Leadership Forum, and Compliance Day. Each day’s themes will be organized into multiple sessions, followed by a wrap-up analysis of key information. Here’s a closer look at the sessions planned for ETA’s inaugural Mobile Commerce Summit on Tuesday, October 25: So What’s This Mobile Thing All About, Anyway? What do

Don’t Miss Compliance Day

players like Square, PayPal, Google, and Isis mean to the industry? Experts offer an unbiased view of the current and prospective mobile commerce environment including opportunities, threats, key assumptions, and possible impacts/outcomes. Separating Signal from Static. This session will go deeper into the competitive landscape, indentifying real-time threats, opportunities, and potential partners to the current payments value chain within the mobile commerce space. Representatives from companies operating in various areas of mobile will discuss innovations/ solutions they’ve implemented. The Mobile Wallet—Converging Commerce Across Sectors.

Large amounts of capital are being expended on the development of essential building blocks to enable commerce via a ubiquitous mobile wallet. What does this mean for acquirers and merchants? This session will explore the forces, technologies, and approaches involved in the race for dominance. Possibility Thinking—Shaping the Collective Future of Mobile Commerce. Representatives of the existing payments value chain,

emerging players, and merchants will postulate feasible paths toward mobile adoption, and they’ll discuss how to create a mutually beneficial future for all. On Wednesday and Thursday, sessions will be divided into three key topic areas, as leaders talk technology and products, electronic payment dynamics, and critical business issues:

SESSION 1: TECHNOLOGIES AND PRODUCTS Tech Race. 2011 features an unprecedented level of potential game-changing technologies.Titans like Google, Apple, and Verizon will alter the landscape radically. How will the new Google Wallet change the game? Who will be the winners in the battle to deliver mobile payments to consumers and retailers? Mobile and Social Commerce. Mobile technology and social networking are more pervasive in our lives than ever before, changing the way we work, play, interact, and live, leading a new era and demand for mobile and social commerce. Merchants are embracing these new platforms and if current payments providers do not respond, others will.This session will address the questions everyone is asking and will also share findings from the ETA Mobile Commerce Summit. The Question Everyone is Asking—What is a Merchant? New technologies, products, and services are making it easier for almost anyone to present or accept a payment. Learn how current

Join us Thursday, October 27, for Compliance Day. This special forum discusses the obligations and liabilities of banks, processors, ISOs, and agents to key compliance issues such as sponsor and ISO registration, the due diligence process, merchant agreement requirements, risk monitoring, and PCI compliance. Hear from all four card brand representatives, plus leaders in data security and technology, the Federal Trade Commission, and the PCI Security Standards Council.

card brand rules and government regulations apply to these new technology-driven choices and how they may have to adapt to protect the integrity of payments.

SESSION 2: ELECTRONIC PAYMENT DYNAMICS Regulation and Compliance—A Dramatic Driving Force for the Payments Industry. Get the latest on the ongoing debate and

implementation of the Durbin Amendment and its impact on debit interchange, routing rules, operational and technical compliance, and competition. Get the lowdown on the IRS’ 1099K reporting requirements and various topics surrounding data security, too. What About the Issuers? Hear first-hand what industry leaders are doing in response to changing economics, new products, competitors, rising fraud, and what they think the impact will be for acquirers. Leverage what you learn in this session to refine your roadmap and ensure your solutions can handle tomorrow’s payments products. The New Economic Normal. The road to continued and enhanced profitability is fraught with new challenges and opportunities for both new and legacy payment providers and processing entities. Gain insights for success from a unique group discussion with a panel of strategic thinkers from several key players in the payments space.

SESSION 3: CRITICAL BUSINESS ISSUES The Payments Industry as an Investment. Experts will discuss how outside investors view the payments space; what attracts investors; what assets affect the value of payment companies, and their views of the future. Is This a Revolution or an Evolution? Hear from new market entrants who will discuss how their companies are influencing the future of payments, while veteran industry CEOs discuss the impact of these new technologies and products on the business today. TT Transaction trends | September 2011 19

ISO Corner RISK IN REVIEW

Minding the Gaps in High-Risk Processing Smart underwriting and monitoring are critical to a successful portfolio By Jekabs Sliede

hile many ISOs shudder at the thought of boarding highrisk merchants such as adult websites, nutraceuticals, or work-at-home business opportunities, we all know that’s where the big bucks are. Of course, the negative connotation is there for a reason—the niche is flooded with crooks looking to make a quick profit. Nevertheless, there are dozens of candid businesses that run their online stores to the best of their ability and knowledge. We need to remember that it’s not the product itself that causes problems; instead it’s the poor marketing and billing practices that lead to excessive chargebacks, account terminations, and card scheme fines.That said, having a successful and sustainable high-risk portfolio is not rocket science, as long as the ISO boards the right merchants, which requires a dedicated high-risk underwriting and management team that knows the ins and outs of the industry and follows the latest trends and changes.

High-Risk Underwriting When evaluating high-risk applications, using only the general underwriting and “know your customer” procedures is not sufficient. To cover potential gaps, additional key underwriting elements cannot be overlooked: • Websites. Underwriters must be aware of what’s commonly referred to as “banksite” or “dummy sites.” These are fully compliant sites built exclusively for obtaining a merchant account. Afterward, the transactions actually come from undisclosed and noncompliant websites. In general, if a site looks unusually clean with no signs of real marketing language, it’s a good idea to review the application package one more time. Age of the domain always should be verified on Whois, and search engines should be utilized to look up any customer complaints, which 20 September 2011 | Transaction trends

often also disclose the “real” sites. While dishonest merchants have become more sophisticated, these simple checks can be sufficient to catch them. • Statements. The requirement to provide previous processing history is one of the most troublesome hurdles for merchants with less-than-perfect histories. Knowing the nature of these merchants, checking the authenticity of the processing statements is a must. Do the numbers add up? Do the processing trends make sense? Is the text and reporting format consistent throughout the statements? Six months of history should be the minimum requirement; anything less than that is unlikely to show the full picture. In addition, it’s a good idea to contact the ISO or acquirer listed on the statements.This can be done either directly or through risk organizations such as the Merchant Acquirers Committee. • Principals/Owners. Many high-risk business owners are reluctant to fill out applications in their personal name due to an existing negative reputation within the industry. Instead, they hide behind shell companies and nominee signatory services. Some may even commit identity theft. While it is impossible to catch all of the cases, contacting the principal listed on the application is a simple and effective way to find out if the person is the actual business owner or just a name on the application. In addition, a quick address search on Google Maps will confirm if the business is located in an appropriate building.

Merchant Monitoring The real test for risk analysts begins after a high-risk online merchant is approved and has started processing. First and foremost, ISOs should be familiar with online affiliate marketing space so that they become aware of the different types of web traffic available. In addition to holding a reserve

as a loss-prevention tool, experienced analysts should perform different types of account monitoring on a daily, weekly, and monthly basis. The following are the monitoring areas requiring extra attention: • Website compliance. All merchant sites should be continuously monitored throughout the lifetime of the account. While there are several website monitoring services available, ISOs themselves should take screenshots of the key areas of the site, including the terms and conditions, privacy policy, payment page, billing disclosures, product description, and company details. Not only do such screenshots make it very easy to catch any future adjustments, they also are a Visa requirement. Merchants should know to inform the ISO before any major website adjustments. • Transaction amounts. Merchants should be asked to provide all applicable product price points that they are planning to put through their account (not just the minimum, maximum, and average ticket amounts). They also should be required to inform the ISO of any changes in pricing after approval, even if it is a shortterm promotional campaign. Nonmatching transaction amounts and billing trends is one of the most common indicators of “banksite” presence. An often-used method to unnaturally lower chargeback ratios is to increase the number of transactions by charging the merchant’s own cards. When looking at transaction listings, it is easy to notice a large number of small ticket charges over a short period of time. Prepaid cards are often used for this purpose.While there can be legitimate promotional offers, in most cases such a billing trend is a clear sign of watering down the chargeback ratio. Unless the ISO is fully aware of the promotional campaign, the merchant should be suspended immediately and its settlements held until an investigation is conducted.

• Test purchases. One of the simplest and most effective ways to monitor a merchant is mystery shopping. It is as easy as getting a prepaid gift card at your local grocery store, creating a test email account, and making a purchase on the website. This way you will be able to see the entire picture—from the product description and billing disclosure to the confirmation emails and customer support, which is a common weak spot for high-risk accounts. In addition to mystery shopping, ISOs should look for online customer reviews. The collected information will answer many questions right away, allowing ISOs to have a concrete conversation with a problematic merchant. Keep in mind that high-risk merchants often seek a new home for their recurring billing portfolios after being terminated by their previous acquirer.While there is nothing wrong with moving legitimate rebills from one account to another, the ISO should be made aware of that beforehand, and the expected chargeback ratio should be higher than that of the transactions originating with them. • Chargeback analysis. Each person in charge of high-risk accounts should know the chargeback ratios of their largest merchants and the overall portfolio at all times. The analysis also should include monitoring the growth of chargebacks and sales separately as well as keeping an eye on chargeback reason codes.The risk department should promptly have open communication with any merchants whose numbers are approaching the thresholds. (Unfortunately, waiting with hope that the ratios will decrease naturally is likely to result in an unavoidable termination.) Problematic merchants who cannot provide a rock-solid explanation and solution to their rising chargebacks should be shut down right away because a single excessive chargeback merchant can seriously harm the entire portfolio. ISOs have every right to avoid boarding high-risk merchants, and most of them should. However, those that are looking to increase their profit margins by accepting such merchants need to be extremely careful to board the right businesses and proactively monitor their high-risk portfolio. In addition, ISOs should take the initiative to educate their merchants on card scheme rules, industry best practices, and the key components of business that require extra attention. Merchants need to understand that their main goal should be sustaining the account and securing longevity of the business instead of the short-term revenue stream from potentially fraudulent transactions. In the end, a chargeback entails not only returning the funds to the card holder, but also paying a hefty chargeback fee—which means the merchant is giving money away instead of making it. Moreover, the merchant may also be jeopardizing its ability to accept credit cards. Once the flow of funds is fully understood, many merchants will adjust their business practices accordingly. TT Jekabs Sliede is COO and director of risk and underwriting for Maxpayments and is a member of ETA’s Risk & Fraud Committee. Transaction trends | September 2011 21

ETA 2011 BOARD OF DIRECTORS OFFICERS PRESIDENT Rick Pylant Chairman & CEO Strategic Processing Systems Inc. PRESIDENT-ELECT Eddie Myers President & COO Payment Processing Inc. TREASURER Roy Banks CEO ACCELERATED Payment Technologies Inc.

Gary Goodrich CEO ProPay Inc.

Mike Passilla President & CEO Elavon

Robert McCullen CEO Trustwave

Jeffrey Sloan President Global Payments Inc.

Diana Mehochko President TSYS Merchant Solutions

EX-OFFICIO Carla Balakgie CEO Electronic Transactions Association

Jeff Rosenblatt President EVO Merchant Services

SECRETARY Tom A. Wimsett Chairman & CEO J&T Ventures

Debra Rossi Executive Vice President Merchant Payment Solutions Wells Fargo Bank

IMMEDIATE PAST-PRESIDENT Holli Targan Partner Jaffe, Raitt, Heuer & Weiss P.C.

Kurt Strawhecker Managing Director The Strawhecker Group ADVISORY COUNCIL Tom Bell CEO Bank of America Merchant Services

DIRECTORS Todd Ablowitz President Double Diamond Group

Jan Estep President & CEO NACHA Sameer Govil Head of Acceptance Solutions Global Aceptance Visa Inc. Steve Carnevale Senior Vice President/Group Head Commerce Development MasterCard Worldwide Ron Shultz Vice President American Express Gerry Wagner Vice President Discover Financial Services

Donald Boeding President—Merchant Services Vantiv LLC

Robert Baldwin President & CFO Heartland Payment Systems Inc.

Chuck Harris President NetSpend

Gregory Cohen President Moneris Solutions Kim Fitzsimmons Senior Vice President—First Data Services First Data Corporation

LEGAL COUNSEL Dave Goch Attorney at Law Webster, Chamberlain & Bean

Chris Hylen General Manager & Vice President Intuit

Advertisers index Company Authorize.Net

Page Phone C2 866-437-0491

Web www.authorize.net

Elavon

9 678-731-5236

www.elavon.com

Elavon

C3 678-731-5236

www.elavon.com

Electronic Merchant Systems eProcessing Network, LLC First Data/CARP NPC SparkBase

800-726-2117

www.emscorporate.com

800-296-4810

www.eprocessingnetwork.com

800-298-3025

www.firstdatapartners.com

23 877-453-5933 1 216-867-0877

www.npc.net http://sparkbase.com/

Total Merchant Services, Inc

888-84-TOTAL x9411

www.upfrontandresiduals.com

TransFirst LLC

214-453-7711

www.transfirst.com

USA ePay

866-872-3729

www.usaepay.com

Visa U.S.A Inc.

22 September 2011 | Transaction trends

www.visadps.com/allsystemsgo

Industry Insider

Out With the Old, In With the New MocaPay’s mobile platform is changing the rules of merchantconsumer engagement By Bryan Ochalla

hen MocaPay first opened its doors in Boulder, Colorado, in 2006, its founders hoped the company’s product suite would help mobile phones replace credit and debit cards as American consumers’ primary form of payment. “Our initial market play centered around a consumer wallet with MocaPay as the tender,” says President Doug Dwyre.“Consumers could load funds via ACH or credit card into a prepaid account, and then could use [that account] at specific merchant locations that accept the MocaPay tender using their mobile phones.” Although MocaPay tested that PayPal-like platform in 200 Boulder-based merchants, “We quickly determined that creating our own brand, our own payment scheme, would require a significant amount of capital—more than what we had, or more than what we would have wanted to invest in,” says Dwyre. Rather than go back to the drawing board completely, the founders decided to change their focus while retaining the technol—Doug Dwyre ogy they had created for the previous consumer wallet. “We came back to market about a year-and-a-half ago and focused, initially, on gift cards,” Dwyre says.Today, loyalty and mobile marketing are part of the MocaPay mix, too.

“Payment transactions, which historically have been anonymous, are no longer anonymous.”

Loyalty and Engagement The company’s revamped product suite includes mGift, mLoyalty, mMarketing, and mPayments (a recent addition that allows consumers to load their association-branded payment card into their wallets and connect them to their existing mobile gift and mobile loyalty accounts). According to Dwyre, they “provide merchants with a solution ... that allows them to engage their consumers and provide them with offers and other information via their mobile handsets.” That process starts when a merchant signs up—either directly or through the company’s channel partners, such as ISOs and acquirers—with MocaPay.The merchant then puts together various campaigns that will help it “harvest” its consumers. As an example, Dwyre points to MocaPay’s relationship 24 September 2011 | Transaction trends

with Denver-based Dazbog Coffee. Recently, Dazbog told its customers something along the lines of,“If you text DAZ to a short code, we will give you a free cup of tea.” Customers who followed those instructions were then prompted to download the MocaPay wallet, if they had an Android or an iPhone, or access MocaPay’s mobile website, if they had a smartphone, to redeem the coffee shop’s offer. Customers with less-advanced mobile phones were instructed how to use MocaPay via text. “At that point, they could load a gift card in there, they could load a loyalty card in there, they could load whatever they wanted—including their association-branded payment card—into their wallet and then use it to interact with the merchant,” Dwyre explains.

Consumer Lure Thanks to the technology behind the product suite,“payment transactions, which historically have been anonymous, are no longer anonymous.”T hat means merchants can interact with consumers before, during, and after the transaction, providing them with offers, incentives, or information about events. For instance, the folks at Dazbog may use MocaPay to attract certain customers to one of their locations.“We try to help our clients answer questions like,‘How do we get consumers in the store more often, how do we decrease the time between visits, or how do we get them to spend more when they’re here?’” In addition, MocaPay clients have seen redemption rates as high as 35 percent, according to Dwyre. At the very least, he adds, “they almost always see double-digit percent responses on these promotions.” Consumers, on the other hand, are likely to be interested in MocaPay’s ease of use as well as its emphasis on security. “The consumer’s information is all stored on our host, not on the handset,” Dwyre explains.The MocaPay platform uses a single-use, perishable token that is “rendered to the phone from the host when the consumer requests it.” T hat code is then input into the POS, which interfaces with MocaPay to complete the transaction. “Once the code is used, it can never be used again,” he adds,“so no sensitive information is ever exposed over the air or at the POS.” TT Bryan Ochalla is a contributing writer to Transaction Trends. Reach him at bochalla@yahoo.com.

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