Dorado Industries TrendWatch 2.0 Payments System Synopsis Q1 2015

TrendWatch 2.0 Q1 2015

Payments System Industry

Synopsis

Notice: Materials contained in this document are drawn from several media sources, and Dorado Industries is not responsible for their accuracy. Opinions expressed

herein are presented without warranty. Brand names are the trademarks of their respective service offerors.

Dorado Industries

655 Deep Valley Drive, Suite 125-P

Rolling Hills Estates, CA 90274

(310) 544-1316

[email protected]

www.doradoindustries.com

Random Thoughts

Frequently Asked Questions

We actually do get mail, it seems. Here are a few beauties.

Q: “Now that Samsung owns Loop Pay and has launched Samsung

Pay and Google owns Softcard and its former owners have agreed to

embed Google Wallet in their handsets, can I buy a new Samsung

phone from AT&T or Verizon and get both apps ready to run?”

A: Depends on which giant blinks first. Loop Pay had already

powered Samsung Pay and the acquisition just makes it permanent.

Do you really think Samsung would allow a third party to clutter up

its pristine handset real estate with a competing wallet? Then again,

the last few phones from Samsung have been clunkers so maybe a

bit more tinsel on the tree couldn’t hurt.

Q: “I love my Loop Pay app and CardCase. Will the company pull

the units from the market now that its part of Samsung?”

A: Not right way, we think. CardCases for iPhone 5/5s, 6, and 6

Plus are still being sold through the Loop Pay website. Now, when

the iPhone 6s launches in September, all bets are off. Too bad; a

Loop Pay device attached to an NFC phone covers all the bases for

virtually all POS terminals in the U.S.

Q: “What’s PayPal doing, buying Paydiant?”

A: Who the hell knows? Great fireworks though.

Q: “We have an ATM located in a church social hall in Turkey

Scratch, [state name redacted] and need to know if we should

upgrade the card reader for EMV.”

A: Maybe it would be cheaper to remove it and put in a poor box?

While the answers may be somewhat tongue-in-cheek (or just

cheeky), the questions are real.

2

Sorry for being tardy again this

quarter; some things are just

more important than payments

(but not many.)

Until next time.

These questions, and literally hundreds more, lead to the

conclusion that we’re a long, long way from a stable, mature

electronic payments industry. The EMV deadline ain’t Y2K so

we’ll be dealing with the after-effects of non-compliant issuers

ATM deployers, and merchants for decades. The Apple Pay,

Samsung Pay, Google/Softcard gambit, MS Tap to Pay, and

PayPal’s Paydiant deal make the competition at the top of the

pyramid more intense, to be sure. But, what about the 200 other

wallets and mPOS schemes that are still at bat at the top of second

inning? Might one of these upstarts be a better solution than the

anointed “Big 5?”

Is tokenization the leavening agent we need to bring things into

alignment? Seems not, if you ask those retailers who are

kvetching over Apple Pay’s asserted condition of non-compliance

with Durbin. Will a Loop Pay CardCase attached to an iPhone let

the device and Apple skate on Regulation II? Probably not.

And, when it’s all said and done, could we be facing a “33 percent

wall” like we did with ATM usage? Recent surveys of new

adopters of mobile banking services reflects a declining growth

rate in new users. It’s still high, at 17 percent, but falling fast.

Which , of course, means that we will continue to support non-

mobile POS services well into the next millennium. So it goes.

Dorado Industries



(310) 544-1316

[email protected]

www.doradoindustries.com 3

Table of Contents

2015 Predictions 4

TrendWatch Scorecard/Summary 6

2015 Payments Industry Yields 7

Interesting Quarterly News That Got No Respect 8

Q1 M&A/Investor Activity 13

Useful Links for More Information 20

Back in the Day! 21

Dorado Industries



(310) 544-1316

[email protected]


2015 Predictions

• While a Herfindahl index analysis of the third party EFT processor segment might suggest no further mergers

would pass the DoJ sniff test, that’s not the case for merchant services players. There should be room for two

more major M&A transactions. One will occur in 2015.

Mar: Nothing so far. No guts, no glory.

• Two digital wallet providers will fold up their tents and return to the desert.

Mar: Softcard is the first to go; Loop Pay became Samsung Pay (doesn’t count). Still waiting for number two.

• At least one mobile network operator (MNO) will leave the playing field for the sidelines.

Mar: Could claim victory with the players in Softcard but that’s not fair. Still waiting for a hard fall.

• Trade and popular press scribes will hail the three joint ventures that will occur in 2015 between issuers (or their

processors) and retailers.

Mar: Jungle drums are beating but, as yet, no major announcements.

• A truly viable mobile payments solution for owners of Android phones will arrive late in 2015 to compete with iOS

(and Apple Pay.)

Mar: Acquisition of Loop Pay by Samsung sort of fits the bill but not quite. Google’s acquisition of the Softcard

carcass sort of fits the bill but not quite either. Still waiting.

• Try as it might (e.g., Buy With Twitter) to reverse its waning fortunes, Twitter’s year on year growth will be one-half

its current rate of 30 percent.

Mar: No statistics as yet but anecdotal evidence suggests that Twitter volume is on the wane. Probably a Q4

prediction.

4

Dorado Industries



(310) 544-1316

[email protected]


More 2015 Predictions

• There is a deal to be had between MCX (CurrenC) and a banking consortium and it will be announced late in

2015.

Mar: MCX claims that issuers are lining up. Where, it won’t say.

• Clinkle will disappear; but in a blaze of glory.

Mar: Still taking nourishment but through a straw.

5

Dorado Industries



(310) 544-1316

[email protected]


TrendWatch Scorecard/Summary – Q1 2015

Market & Industry Situation 1 – Loop Pay transformation and Softcard demise may offset one another.

2 – Investment in this old channel is giving it new life and better analytics.

3 – Even in a flat quarter, 8 percent growth is good for everyone.

4 – CFPB is focused on other things for now. Yet, credit unions appear to

be in the bulls-eye.

5 – $875 million came into the industry this quarter.

6 – To early to tell but V and MA announcements should signal what’s up.

7 – M&A money flowing like water. Good for sellers; bad for

competitiveness.

8 – No major breaches this quarter but the pressure remains intense.

Industry Players To Watch Retailers: What are merchants going to do about the PayPal/Paydiant lash-

up?

Cardtronics: Will the new consumer subscriber service for fee-free ATM

access catch on?

Fed Faster Payments: The team of task forces is about ready to take the

field. Coordinated results or goat rodeo?

Facebook: New Messenger-based P2P scheme might be a game changer

or, like Credits, wind up in the Dead Pool.

Amazon: New Echo shopping option and Dash buy buttons suggest

Amazon plans to take full advantage of the Internet of Things.

Visa: MasterCard squeezed $19 million out of Target for issuer

remuneration. How much better will Visa do?

5. New Venture Growth

4. Legal/Regulatory Issues

1. New Payment Forms

2. ATM Restructuring

3. POS Volume Trend

Low

Med

High

Low

High

Med

High

Positive

Mixed

Negative

6. Earnings Announcements

7. Industry Investments

8. Payments Industry Security High

Dorado Industries



(310) 544-1316

[email protected]


2015 Payments Industry YTD Yields

Sources: Company releases, Morningstar.com, Bloomberg.com, Coinbase.

2015 YTD yield excludes dividends; based on 12/31/14 and 3/31/15 closing prices.

One year ago, oil was $90; today it’s hovering around $50. Hard for any sector to thrive when one

of the major market drivers is under so much pressure. Given these conditions, and the fact that

the Dow Jones Industrial Average and S&P 500 posted negative 25 bps and positive 43 bps,

respectively, our basket of equities did fairly well by losing 10 basis points during this traditionally

laggard quarter. Note that the major card brands fared poorly during the quarter, perhaps as a

consequence of the lesson Amex learned about fickle co-branding partners. Thanks, Costco.

Industry Player 12/31/2014 3/13/2015 Price r Cap Value r YTD 2015 Yield

Alliance Data Systems 284.05$ 296.25$ 12.20$ 725.9$ 4.3%

American Express 93.03$ 78.12$ (14.91)$ (16,097.4)$ -16.0%

Blackhawk Network Holdings 38.92$ 35.77$ (3.15)$ (164.7)$ -8.1%

Cardtronics 38.58$ 37.60$ (0.98)$ (39.9)$ -2.5%

Discover Financial Services 65.50$ 56.36$ (9.14)$ (4,395.4)$ -14.0%

Euronet Worldwide 54.90$ 58.75$ 3.85$ 194.0$ 7.0%

Fidelity National Information Services 62.21$ 68.06$ 5.85$ 1,116.2$ 9.4%

First Data (Future Use)

Fiserv Inc. 70.97$ 79.40$ 8.43$ 2,145.4$ 11.9%

Global Cash Access Holdings 7.17$ 7.63$ 0.46$ 35.4$ 6.4%

Heartland Payment Systems 53.94$ 46.86$ (7.08)$ (264.8)$ -13.1%

Jack Henry & Associates 62.14$ 69.89$ 7.75$ 650.2$ 12.5%

MasterCard Worldwide 86.18$ 86.44$ 0.26$ 418.6$ 0.3%

MoneyGram International 9.09$ 8.64$ (0.45)$ (26.0)$ -5.0%

Total System Services 33.95$ 38.16$ 4.21$ 831.1$ 12.4%

Western Union 17.91$ 20.79$ 2.88$ 1,638.1$ 16.1%

Vantiv 33.95$ 37.71$ 3.76$ 932.4$ 11.1%

Visa 65.55$ 65.48$ (0.07)$ (59.2)$ -0.1%

.

Bitcoin Closing Price 315.95$ 243.39$ (72.56)$ -23.0%

Dorado Industries



(310) 544-1316

[email protected]


Interesting News This Quarter

Subject Source/Date Substance

Microsoft Presser

April

Microsoft announces that it’s serious about getting into the payments game and has been granted a

money transmitter license in the state of Idaho. The one-time PC software giant has also registered

with FinCEN as a money transfer agent and seller of prepaid access. Microsoft has been making

off-shore waves at conferences in Asia chatting up its Tap to Pay application embedded in Windows

10 (Windows 9 was skipped to denote the dawning a new day). Details on MS tokenization and

how the networks and banks are going to play in the Tap to Pay scheme are skimpy. Those who

remember MSFDC, the merchant services joint venture, probably won’t sweat Microsoft’s market

entry.

Apple Pay PYMNTS.com

April

Despite swearing off commenting on Apple Pay last quarter, this one is too good to pass up.

Merchants and others are lining up to accuse Apple Pay of violating Durbin by not extending

routing choice to those retailers opting to accept the new mobile payments scheme. Tokenization is

at the root of the complaints. To us, it seems like a short-range problem looking for a long-term

round of litigation. More likely, the EFT networks will learn to work with the tokenizing networks

(V and MA) and the dust-up will die down. Still makes for good theater, though.

Dwolla Finextra

April

Dwolla, the little engine that could, continues to build up steam with its FiSync protocol. BBVA

Compass has hitched itself to Dwolla to provide real-time payments for its depositors. FiSync uses

unique authentication and tokenization tools to avoid having to use traditional payments rails or the

ghastly-slow ACH. Pricing remains pretty close to that offered on launch day three+ years ago -

25¢ for transactions over $10.00 and free for smaller values. Dwolla continues to have its API labs

idling at the station for those innovators who want to use the core system to bring new consumer

and business applications to the market.

Google Wallet Finextra

January

One month before Google swooped in to snatch up the Softcard remnants, the Google Wallet got a

boost by inking a deal with WePay. WePay is the payments platform behind ConstantContact,

Care.com, and a host of others. The Google Wallet lash-up was spurred by its inclusion in just

about every Android handset made (more brand conflict coming, we note). InvoiceASAP, a small

business portal with 200,000 participants, is the first to sign up for the newly enriched WePay

platform. Wonder what Samsung thinks about this?

Dorado Industries



(310) 544-1316

[email protected]


Interesting News This Quarter – Continued


Costco Presser

March

Mega big box store, Costco, spits the hook and leaves American Express for Citibank and Visa. Current

holders of co-branded Costco/Amex cards have less than a year to figure out where the nearest Sam’s

Club is before they’re told “cash, debit, or Citibank” by checkout clerks. Investors pummeled AXP

stock once they figured out that Costco was 8.0 percent of its co-branded volume. Meanwhile V and C

shareholders benefited from 2.0 percent bumps in their holdings. MasterCard lost out on what appeared

to be a grand opportunity (90 percent of Citibank issued cards are MasterCard). Details about whether

or not all Visa branded cards will be accepted at Costco are somewhat iffy. Gonna miss that store.

Stratos PYMNTS.com

March

Here we go again (the first one of these we saw was in 1988.) Stratos is close to offering a plastic

payments card with (wait for it) buttons. Like others of the same ilk – Coin and Plastic – Stratos claims

to have worked out all the KYC and encryption challenges so that consumers can load multiple cards on

a single plastic and change payment preferences on the fly. All this for a mere $99 annual subscription

price ($149 if you’re keen to own two of these little gems.) If the majority of industry observers are

correct and we’re all moving to mobile for payments, why would we pay $100 for a piece of plastic,

buttons or no?

Cardtronics PayBefore News

March

Was there a conference on subscription pricing techniques that we passed up? Cardtronics, the largest

deployer of co-branded ATMs in the U.S., has launched its ATMpass program for surcharge-free ATM

access. Cardholders may purchase monthly, quarterly, or annual memberships that allow cash

withdrawals from select ATMs around the country. CVS and Walgreen stores in 38 states are included

in the first tranche of cash dispensers with more being added throughout the year. Call us slow (or

feeble), but we don’t get it.

Jamba Juice Business Wire

March

How quickly they turn. Jamba Juice announces that it now accepts Apple Pay through its 650 national

stores. Wasn’t Jamba Juice the first merchant to offer free goodies every time a customer used their

ISIS (oops, Softcard) app to purchase smoothies or juice? Why, yes it was. There’s a message here

about high stakes poker, we think.

Dorado Industries



(310) 544-1316

[email protected]




USAA Mobile Payments

Today

January

USAA steps up and delivers an expanded set of biometric options for mobile authentication of its depositors. In

addition to standard PINs, USAA members can use voice and facial recognition tools for account access. Users

either blink their eyes when cued by the app or read a phrase delivered on the handset screen. This added bit of

security is on top of USAA’s recent addition of VOIP to its mobile application for discussions with member

service representatives. Banking with USAA just keeps getting better.

GlobalOne Mobile Payments

Today

March

We’ve all seen, or might even bank with, one of the Internet-only banks – Bank of Internet USA, Ally Bank,

and others. GlobalOne is set of launch a mobile-only bank in the U.S. and Mexico through partnerships with

Investabank and Bankaool. Services to be delivered through GlobalOne and targeted at the under-served

markets in both countries include a paperless checking account, savings accounts, transfers, and lines of credit.

Less than half of Mexico’s citizens have banking relationships making that country fertile ground for the

GlobalOne offering. Not a bad choice for America’s 45 million underserved as well.

Microsoft Finextra

January

Not an auspicious start for Microsoft’s new Tap to Pay mobile payments offering discussed earlier, but Chase

has ditched its Windows mobile app. Either Chase customers are not buying the Microsoft phone (highly likely)

or the Chase app wasn’t up to scratch (equally likely.) Either way, the app, which was launched in 2012, is now

part of the Dead Pool.

Customers Bank ATM

Marketplace

January

Was there a mobile-only banking conference we passed up? Customers Bank, the $6.5 billion Phoenixville,

PA-based institution, has launched BankMobile, a no-fee service offering aimed at Gen X and the few of us

baby boomers left who are tech savvy. On top of all the goodies offered by GlobalOne, BankMobile customers

receive access to 55,000 fee-free ATMs. Jay Sidhu is the CEO at Customers Bank. Readers may recall that Jay

was bounced out of Sovereign Bank in 2006 over a disagreement with a dissident shareholder group. Sovereign

was acquired by Santander after deficiencies in auto lending practices came to light and a Moody’s downgrade.

What goes around, comes around.

Dorado Industries



(310) 544-1316

[email protected]



11


Security PaymentEye

January

Worried about transaction or identification security linked to you becoming part of the Internet of Things gambit?

Forget about it; it’s too late. A report by MIT filed in the Science periodical analyzed 1.1 million anonymous people

and three months of their transactions in an unspecified country for an unnamed bank. The research indicates that,

with just four bits of secondary data (stuff that comes from electronic transactions), it is possible to identify unique

purchasing patterns for 90 percent of the individuals involved in the study. Once the patterns for an individual was

identified, the researchers could find the name of the credit card user by matching their movements through LinkedIn

or Facebook (gotta watch those “Check-Ins” on FB.) These folks were also able to determine gender and relative

income levels through more linking of the social media data to the transaction data profile. Horse/barn door reference

goes here.

Facebook New York Times

March

In case you missed it, your Facebook BFFs can now send you a few bucks through the company’s Messenger app.

All that’s needed is a preregistered debit card on file with Facebook. This triggers the presence of a “$” sign next to

the thumb’s up symbol. Click on it and you’re good to go. App updates are still being rolled out to both desktop and

mobile systems. For now, the money transfer service only works among FB friends but ultimately will be extended to

all 500 million monthly users. Limits and costs are still in the formative stages, says Mr. Zuckerberg.

Glassjar PYMNTS.com Yet another klugy application designed to make it “easier” to pay shared rent, bar tabs, and the cost of a meal has

popped up in the Silicon Valley. Glassjar came to life in New Zealand but quickly came to the U.S. in search of a

larger (and more chaotic, perhaps) market. Here’s how it works: only one of the parties sharing a tab needs the

Glassjar app. A “Glassjar” is created and the poor guy holding the phone has to scan the payment cards of all the

other players. The app then emails an invoice to all the players. After that, well, we quit reading . . . . . surely, there’s

an easier way.

UK Payments

Council

Telegraph

March

Although it’s a bit hypothetical since the underlying research is sort of vague, the U.K. Payments Council has

determined that, on March 8, 2015, the number of credit, debit, and other non-cash transactions exceeded the number

of cash transactions throughout jolly old England. True or not, there are some serious implications of the occurrence.

The role of ATMs in the ecosystem would likely fall in importance. A whole lot of vending machines would have

been retrofitted. The corner news stand and street vendor realm will have had to adopt mobile POS technology in

spades. Frankly, this date is not too dissimilar to the dates identified by Star, NYCE, PULSE and others when POS

transaction exceeded those for ATM cash withdrawals. In general, that happened in late 1990s and we’ve seen what’s

happened to these venerable institutions since their respective cross-over dates. More to come from the U.K. and the

U.S. on the demise of currency and coin, we’re sure.

Dorado Industries



(310) 544-1316

[email protected]



12


IRS PayBefore

April

Once again, the IRS is being used as a club to beat down the prepaid card segment. A group of up-tight

Senators has launched a new bill dubbed the Identity Theft and Tax Fraud Prevention Act of 2015. Taxpayers

wishing to have their refunds deposited on a prepaid card may have to jump over a number of hurdles to either

identify themselves or verify that a new deposit to an existing card does not fall into the “at-risk account”

category as imprecisely defined by the bill. Sometimes, some people just can’t get a break. Most of the time for

prepaid.

American Express and

Jawbone

PYMNTS.com

April

PYMNTS.com parrots a WSJ article (which, itself, draws from another source) about a product partnership in

the offing between American Express and Jawbone. Seems that an upcoming Jawbone exercise band labeled

UP4 will include the ability to pay for things but only so long as the user has a valid APX card. NFC only, as

the story goes. So, let’s get this straight. The companies plan to launch a payments product that’s accepted in

only 26.4 percent America’s retailers and which only works with NFC-enabled terminals. Extra security

precautions – PINs, biometrics, etc. – aren’t necessary the product’s sponsors claim because the exercise band

rarely comes off the user making it a 24/7 wearable. Really? Those forecasting inevitable world collapse

thanks to the Internet of Things will have a field day with this one.

Digital Currency Finextra

February

It’s now confirmed in writing by the Bank of England that its governors are considering issuance of a BoE-

backed digital currency. This comes on the heels of the Federal Reserve Bank of St. Louis musing out loud

about “Fedcoin,” a US dollar denominated cybercurrency. In theory, the new issuances could make interbank

settlement far easier and its use could be extended to non-bank financial institutions as well. The obvious draw-

back is value conversion since it’s likely the BoE issue would be Pound Sterling denominated. Lots more work

ahead of the BoE and the Fed, but at least the tides are moving in the right direction.

Dorado Industries



(310) 544-1316

[email protected]


M&A/Alliance Activity

Buyer/Investor Target Payments Emphasis Possible Strategy

Human Ventures

Capital, First Round,

Lowercase Capital,

others

Reserve Dining reservations and

payments

Startup venture, Reserve, launches in Los Angeles, San Francisco,

Boston, and New York in hopes of giving OpenTable and Cover a

run for their money. Reserve charges users $5 per reservation while

the others offer a free service. The differentiating sparkle for Reserve

is that it also provides its 114 (so far) restaurant sites with tablets and

software for checking out patrons. Curious note: Reserve’s co-

founder and the head of Human Ventures Capital are the same guy.

Dead Pool Amazon

mobile wallet

app

Mobile wallet app The mobile payments highway collected several new roadkill this

quarter. The first is Amazon’s mobile wallet app that came

embedded in the company’s under-performing Fire handset.

Designed to operate as a payments instrument using Amazon

devotees’ debit and credit cards, the results of a six month trial

shoved the service to the gutter. Users with stored balances on the

app have been quietly given prepaid cards loaded with their

remaining funds and sent packing.

Ingenico ROAM M-commerce terminals Ingenico steps up and acquires the remaining shares of ROAM to

strengthen the value of its Mobile Solutions brand headquartered in

Boston. Ingenico now claims the ability to meet the payments needs

of both in-store and mobile vendors and, more importantly, the

unique requirements held by retailers doing both. The ROAM name

and device brands will remain, at least for now.

New Enterprise

Associates, others

Raise Gift card reseller Who knew there was so much money in unwanted gift cards? Raise

has increased its capitalization (OPM, that is) to $81 million with a

new $65 million round of funding from NEA. Relatively young,

Raise launched in early 2013 and claims to have resold one million

gift cards in 2014. We wonder if FinCEN’s “follow the money”

mantra might be at work here, and with other gift card reseller sites.

Dorado Industries



(310) 544-1316

[email protected]


M&A/Alliance Activity - Continued


Visa TrialPay Offers platform TrialPay started out as a advertising and couponing service with a pay-for-

performance model. It has morphed into a real time consumer offers

platform with operations in 180 countries. Visa had licensed the software in

2014 and has leapt forward with full acquisition of the firm for an

undisclosed price. Clever folks, those Visa guys and gals.

PayPal Paydiant White label mobile payments

PayPal sets the electronic payments blogosphere afire by acquiring Paydiant

for $280 million. What happens to the FIS-Paydiant relationship? How

about the future of MCX and CurrenC? How do merchants desiring to keep

PayPal out of their stores but accept Paydiant-driven wallets protect their

turf? All good stuff but not very relevant, actually. Both PayPal and

Paydiant are leaders in their respective fields and both need each other.

Paydiant needs more capital to grow its offerings and PayPal needs the

technology necessary to keep the retailer community happy. All said and

done, this arrangement will ruffle a few feathers but will also work toward

the primary goal – migration to mobile payments and away from plastic at

the point of sale.

Mozido SimplyTapp HCE platforms Notable for its ability to attract investment capital, Mozido becomes an

investor in SimplyTapp at the $2.5 million level. SimplyTapp enables

retailers equipped with NFC terminals to add stored value and private label

card acceptance without much hassle. Funds (the total round was £10.1

million) will be used to gear up R&D and to expand its core engineering

team.

Dorado Industries



(310) 544-1316

[email protected]



Buyer/Investor Target Payments

Emphasis

Possible Strategy

Bain Capital

Ventures

InAuth Mobile app security One of the deep, dark, poorly-kept secrets of mobile is that fraud rates are 70

percent higher than on desktop devices. Recent (2011) startup, InAuth, delivers

embeddable technology for application developers which prevents fraudulent app

entry or hi-jacking. Bain leads a Series A round of funding totaling $20 million to

expand its offering. Current customers include four of the top five US banks.

Global Payments Realex Payments

Payments technology Irish payments technology firm, Realex, is acquired by Global Payments for €115

million as part of GP’s global assault on the physical and online payments

industry. The target processes more than €28 billion in purchases annually

through 12,500 merchant relationships. Notable Realex customers include Virgin

Atlantic, Vodafone, and Aer Lingus.

D+H Fundtech Transaction processing software

D+H has developed a huge appetite for big deals. It spent $1.2 billion on Harland

Financial Solutions just over a year ago and is now dropping $1.25 billion to tuck

Fundtech into its stable. Fundtech offers transaction banking software including

financial messaging (older readers will recognize this as FEDI), cash management,

and merchant services. In making this buy, Canada-based D+H is adding to its

North American (read: United States) customer base. CEO Gerrard Schmid is

quoted during the announcement as wanting the company to concentrate on

organic growth and debt reduction over the next couple years. Brilliant.

Mozido IdentityMind Global

Customer authentication

Just on the heels of its equity funds investment in SimplyTapp, Mozido announces

its participation in Series B funding for IdentityMind Global. The target has made

a name for itself by developing customer authentication systems for mobile

transactions. The company’s primary emphasis is on “thin file” consumers, those

that fall in the under- or unbanked category. The two companies will collaborate

to attack the rising level of card not present fraud that appears to be plaguing

mobile transactions and countries on the verge of rolling-out EMV – like the

United States.

Dorado Industries



(310) 544-1316

[email protected]



16


Comatose Pool Google Glass Wearable payments Google claims that Google Glass will resurface in a different but, as of

yet, undefined form (hence the “comatose” qualification.) No matter,

Google Glass is officially off the market as of January, 2015. It seems

that consumer aversion to being spied on and a notable “ick factor”

triggered by confronting a well-heeled technoid in the local pub led to

the product’s demise prolonged slumber. Surely, Google will find other

ways to conquer the mobile payments world.

Google Softcard Mobile payments Oh, right. Google swoops in and picks up the carcass of the latest

payments highway roadkill, Softcard. The former Softcard owners will

pre-install the Google Wallet app on all devices sold in exchange for no

longer having to support the cash hemorrhage that was Softcard. One

wonders how Samsung will react to having AT&T load the app on one

of its handsets which will already be loaded with Samsung Pay?

Yuan Capital, Qualcomm, Kholsa Ventures, others

21, Inc. Digital currency Despite the fact that the honchos at 21 haven’t told us what they plan to

do, the company has raised $116 million in venture funding.

Announcements on what’s coming down the pike are due soon but the

early hints suggest that 21 will strive to “drive mainstream adoption of

Bitcoin.” America OnLine did a pretty fair job of bringing web

browsing to the general public by passing out free application CDs on

airline flights, with movie popcorn and on the street corner. Could

something similar be in the future for 21? Lots of funding provides lots

of options.

Andreessen Horowitz

TransferWise P2P mobile transfer Series C financing totaling $58 million is provided by Andreessen

Horowitz to enable TransferWise to continue its torrid pace of global

expansion and to keep ahead of new market upstarts Azimo,

CurrencyFair, and peerTransfer. TransferWise claims to have moved

$3.0 billion in volume through its systems.

Dorado Industries



(310) 544-1316

[email protected]



17


Mozido PayEase China payments processing Three on a match! Mozido makes its third acquisition/investment this quarter.

PayEase is one of 22 licensed payments processors in China and offers in-app,

domestic online, Internet banking, and mobile POS services to China’s

providers of wallets and handset financial services applications. Mozido will

benefit from PayEase’s connections to CUP, and all the card brands. Current

customers include all the heavyweights: Amazon, iTunes, Burberry, and

H&M, and so on. Another clever move on Mozido’s part.

SBT Venture Capital

Mobeewave Payments technology Now that Apple Pay has anointed NFC as being viable, startup ventures are

beginning to build added value into their products. Mobeewave technology

turns any NFC-enabled handset into a secure contactless mPOS terminal

making it able to accept not only Apple Pay transactions but contactless cards

and most NFC wallets as well – even Google’s. SBT Venture invested $6.5

million in market expansion for the three-year old company.

Highland Capital Partners

WeTransfer File transfer system Dutch startup WeTransfer raises $25 million in new capital to enter the U.S.

market for digital content transfers. But it’s not what you’re thinking since

WeTransfer doesn’t move money, yet. Instead, the company uses cloud

technology to move large digital files under heavy security. Seems like an

excellent way to move money, too. Time will tell.

Technology Crossover Ventures, others

WorldRemit International money transfers

On the other hand, we have WorldRemit which just raised another $100

million in Series B funding. A new partnership with MTN, the telecom giant,

adds additional mobile device transfer services to the mix. Companies like

WorldRemit and Transferwise continue to apply pressure to the traditional

local agency model promoted by Western Union and MoneyGram as they

modernize the global funds transfer market. It’s too soon to be flogging the

“buggy whip maker” analogy; perhaps the time is coming shortly.

Dorado Industries



(310) 544-1316

[email protected]



18


Square Kili Technology Payments processing Square, the upstart company that set the merchant services industry

on its ear and then faded a bit, pays an undisclosed amount for Kili

Technologies, a Toronto-based payments technology firm. The

secret sauce that comes with the deal is the Kili “mobile POS on a

chip” solution for accommodating NFC and EMV cards on a

handset POS terminal (i.e., a cell phone.) Kili is also an

authentication solution provider which, when coupled with Square’s

integration with Apple’s Touch ID biometric play, could make a

future offering from Square/Kili a game changer.

Optimal Payments Skrill Group Online prepaid cards Optimal Payments (the NETELLER folks) pay a staggering €1.1

billion for Skrill, a significant market competitor. Investment houses

CVC Capital and others had big payday as CVC held a controlling

interest in Skrill that cost it a mere €600 million in 2013. Skrill’s

most recognized offering is paysafecard, a big European and U.S.

prepaid card system. Another example of how the OPM model

works in real life.

Diebold Phoenix Interactive Design

ATM software developer Diebold makes a move to put pressure on NCR (or, perhaps, to catch

up) by acquiring Ontario-based Phoenix Interactive. The plan is to

meld the target’s channel migration capabilities with Diebold on-

board systems to better integrate its ATMs with other delivery

channel operating systems. Notable tag-along clients include TD

Canada Trust, National Australia Bank Group, and Fifth Third

Bank. Seems that neither ATMs nor the dreaded “omnichannel”

approach to financial services are going away anytime soon.

Dorado Industries



(310) 544-1316

[email protected]



19


Dead Pool Square Order app Pre-order app for merchants The Square Order app, thought to be the replacement for the

shuttered Square digital wallet, never fully made it out of beta

testing in New York and San Francisco. Those few consumers that

did enjoy the app’s benefits can continue their pre-ordering ways via

the Square Online Store. It seems that consumers have yet to find a

fit between their needs and Square’s offerings while smaller

merchants swear by the services the company provides. Maybe

asymmetrical product and market offerings have a chance, after all.

Goldman Sachs Private Capital Investing, Bain Capital Ventures, others

Billtrust Outsourced bill presentment and payment

Billtrust, the NJ-based high flyer in B2B and B2C invoice

presentment and payment, nabs another round of funding; this time,

its worth $25 million. In addition to rock-solid technology, Billtrust

sports a blue ribbon Board of Directors. Injection proceeds are

earmarked for organic growth acceleration and acquisitions.

Dorado Industries



(310) 544-1316

[email protected]


Useful Links for More Information

We threw a lot of new names out again this quarter. Here’s a list of links for you to

learn more.

Company Role Link

Glassjar P2P payments www.glassjar.co

WorldRemit MTS provider www.worldremit.com

TransferWise MTS provider www.transferwise.com

21 Inc. Not quite sure www.21.co

Mobeewave App user authentication www.mobeewave.com

Dwolla Alternative payments www.dwolla.com

BankMobile Mobile-only banking www.bankmobile.com

GlobalOne Mobile-only banking www.globaloneltd.com

Jawbone Equipment manufacturer www.jawbone.com

http://www.glassjar.co/

http://www.worldremit.com/

http://www.transferwise.com/

http://www.21.co/

http://www.mobeewave.com/

http://www.dwolla.com/

http://www.bankmobile.com/

http://www.globaloneltd.com/

http://www.jawbone.com/

Dorado Industries



(310) 544-1316

[email protected]


Back in the day!

21

Congratulations to Q4 Back in the Day contest winners Rick Comandich

(ex-US Bank), Rick Lyons (ex-MasterCard and the MOST EFT network),

and Henry Friedman (FIS). All three recalled that Deluxe Data started out

as part of A. O. Smith, the hot water heater company based in Wisconsin.

You, too, could be sporting Dorado Industries gear by being the first to

respond by email with answers to this quarter’s contest.

“April 7, 2015: Early Warning Services (EWS) acquires

Authentify, a provider of multifactor authentication services.

The acquisition will enable EWS to offer organizations digital

multifactor authentication and the ability to integrate, manage

and prioritize multiple digital channel authentication methods

via one platform, reducing fraud and risk while improving the

consumer experience.”

When It launched in 1992, digital phones were nascent at

best and the company’s focus was on another form of

payment.

The Q1 BITD contest questions are these:

1. What form of payment did EWS initially protect?

2. What company started EWS on its path to glory?

3. What was the first organizational name when EWS was

launched?

Same rules – Dorado apparel to the first correct email;

several readers are ineligible and you know who you are.

Dorado Industries TrendWatch 2.0 Payments System Synopsis Q1 2015

Mobile

Transcript of Dorado Industries TrendWatch 2.0 Payments System Synopsis Q1 2015