Dorado Industries TrendWatch 2.0 Q2 2016 Industry Synopsis

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.

TrendWatch 2.0 Q2 2016

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Random Thoughts

Shoulda Seen This Coming

TrendWatch was never intended to be an overly academic periodical

and most would say we’ve met our objective. Still, academia does

play a role in payments (witness most of the testimony surrounding

the Durbin Amendment) and the recent demise of MCX is a good

case in point.

The diagram on this issue’s cover page was designed in 1972 by

Professor Larry E. Greiner and published in the Harvard Business

Review in conjunction with an abstract of a very large research

effort. The diagram illustrates that companies pass through a series

of growth opportunities and crises as they grow to maturity. The

MCX CurrentC mobile payments product was in beta testing when

the effort was shut down last month so the company never really

emerged from its formation stage. Yet, in the four short but

troubled years of its life, the company’s progress has been

chronicled in the public press, giving us the ability match up the

MCX opportunities and crises:

• Two changes in leadership

• Vacillation about its technology provider

• Acquisition of solution enabler Paydiant by PayPal

• Blockbuster issuer-side deal with Chase

• Natty ownership entanglements caused by exclusivity agreements

Had Professor Greiner’s analysis been readily available to all of us,

we might have been able to see what was coming from the very

beginning. Sorry for the shortsightedness on our part; we continue

to believe that MCX and its partners have a legitimate role to play in

consumer payments (mobile or otherwise) and eagerly await a

Phoenix-like next step in payments by the nation’s top retailers.

2

Banker-Merchant Equilibrium

Makes no difference if you’re a banker or retailer, there’s some good

news on the horizon. Creditcard.com just released the results of a

consumer study telling us that small dollar cash transactions are on

the way out while debit and credit cards will fill the gap. Due, in

large part, to . . . .(wait for it) . . . . . Millennials!

Banker-Merchant Disequilibrium

So, because the millennial cohort can’t bother to carry $5.00 to buy

a pack of gum, bankers and retailers are going to see a rash of new,

smaller, debit and credit clicks. Bankers will be happy until they

refer to their click-to-call center ratios and merchants won’t be

happy until they blow the dust off of old studies on the real cost of

accepting cash.

In the interim, its likely that we’re entering a new phase of

grumpiness and the courthouse fistfights we saw begin June will

continue for a bit. Too bad, our industry needs collaborating

bankers and merchants more than it needs processors, consultants,

and regulators. Otherwise, what the hell would we do? Fish more,

maybe?

Until next time.

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Table of Contents

2016 Predictions 4

TrendWatch Scorecard/Summary 6

2016 Payments Industry Yields 7

Interesting Quarterly News That Got No Respect 8

Q2 M&A/Investor Activity 13

Useful Links for Quieter Companies 19

Back in the Day! 20

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2016 Predictions

• The Big Three – Alphabet, Apple, and Facebook – will go on an acquisition tear in the payments arena to put

some distance between each other and the rest of the pack.

Mar: A couple of purchases already made in virtual reality and analytics fields.

Jun: More VR and augment reality buys and Microsoft is following suit.

• Lesser known payments schemes will begin closing up shop.

Mar: Google says goodbye to their prepaid debit card offering.

Jun: Coin is now part of FitBit; MCX CurrentC is MIA.

• VC/PE interest in payments startups will diminish while traditional bankers will step in with partnership and

investment deals.

Mar: Q1 2016 VC/PE pools received record funding yet set a record for the smallest number of actual investments

made.

Jun: It’s not likely that the VC/PE folks will buck the M&A trend we see from Apple et al.

• Despite intrigue created by CFPB’s interest in foreign transfers, the cross-border money movement sector will heat

up – new players and some M&A.

Mar: Transferwise gains another $58 million in VC funds to expand globally. Meanwhile, WorldRemit raked in $45

million. More “follow the money” evidence.

Jun: Two new players have acquired their way into the U.S. market.

4

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2016 Predictions

• Banks and credit unions will throw caution to the wind and begin offering their depositors proprietary branded

digital wallets to combat the zeal merchants have for steering customer loyalty.

Mar: No major announcements as yet.

Jun: Some minor movement but no marquee players following Chase Pay yet.

• In another search for scale, two established merchant services processors will merge.

Mar: All quiet so far; waiting to see the Global Payments/Heartland deal close. The TransFirst/TSYS deal comes

close but the buyer falls short of the “established” qualifier.

Jun: Crickets. Might be an end-of-year event.

• Blockchain will remain the new “glowing object on the horizon” but efforts to institutionalize it will not move the

needle much in 2016.

Mar: Lots of activity; BofA looking to patent apps and processing, over $1.0 billion has been invested in blockchain

through new VC pools or direct plays.

Jun: Huge number of small investments being made in blockchain exchanges. Lots of folks following a Roulette

Wheel investment strategy – small bets made across the full field of offerings.

• In-app payment options (e.g., “One Click” by Amazon) will go on autopilot and become less of an “end” and more

of a “means to an end.”

Mar: It appears that the “steering wars” has begun with both Visa (Visa Checkout) and MasterCard (MasterPass)

offering up new partnership deals with key mPOS and eCommerce retailers.

Jun: Lots of announcements with delayed go-live dates. We’ll see.

5

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TrendWatch Scorecard/Summary – Q2 2016

Market & Industry Situation 1 – No material offerings came forth; a pity.

2 – Apple and Samsung Pay being embraced by the ATM industry. EMV,

not so much.

3 – Millennials pumping up the volume of puny-sized transactions.

4 – Aside from the Democrat sit-in, what the hell is Congress doing?

5 – This is getting serious. Tantamount to the California water drought.

6 – Even stronger Q2 earnings than last quarter.

7 – Way off of prior periods and strangling new venture growth.

8 – Asia, Europe and Canada are taking security seriously; the U.S. still

lags.

Industry Players To Watch Walmart: Walmart Pay is fully rolled out. Customer reaction and usage

numbers should be arriving soon.

U.K. banking system: Anything to be learned in the post-Brexit world?

EWS’ clearXchange: Chase, Wells Fargo, and Capital One have joined

with BofA and U.S. Bank. Now what – the de facto Faster Payments

solution or just industry noise?

Ethereum and others in blockchain: What are the next steps needed to

avoid another “bank robbery” like the $60 million hit taken by Ethereum’s

DAO?

The Retailer/Banker Wars: More of the same or will the busted

settlement, new litigation, and EMV challenges make for even more

interesting times (and theater)? Please pass the popcorn.

5. New Venture Growth

4. Legal/Regulatory Issues

1. New Payment Forms

2. ATM Restructuring

3. POS Volume Trend

Low

High

High

Low

Low

High

High

Positive

Mixed

Negative

6. Earnings Announcements

7. Industry Investments

8. Payments Industry Security Med

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2016 Payments Industry YTD Yields

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

2016 YTD yield excludes dividends; based on 12/31/15 and 6/30/16 closing prices.

The Brexit fork in the road has been “taken” (to quote the late Yogi Berra) and has left a few of us weak in the knees. Actually,

our basket of payments equities wasn’t doing so well before the older cohort of Brits gave Brussels the one-finger salute; we

ended up taking a 5.4 percent haircut. Meanwhile, the Dow and S&P have posted 3.0 and 2.9 percent gains. And, as noted

elsewhere, FinTech has been taking a backseat to the artificial and augmented reality startups that are draining off VC money

while artificial intelligence is attracting the PE guys. Why is this chart and the M&A section relevant, again? Well, the last time

we looked, bootstrapped ventures have a very short life span. Like it or not, we need Wall Street to keep the payments

industry solvent. Congratulations to Bitcoin holders, you’re getting closer to breaking even on your investments.

Industry Player 12/31/2015 6/30/2016 Price r Cap Value r YTD 2016 Yield

Alliance Data Systems 276.57$ 195.92$ (80.65)$ (4,798.7)$ -29.2%

American Express 69.55$ 60.76$ (8.79)$ (9,493.2)$ -12.6%

Blackhawk Network Holdings 44.21$ 33.49$ (10.72)$ (560.7)$ -24.2%

Cardtronics 33.65$ 39.81$ 6.16$ 250.7$ 18.3%

Discover Financial Services 53.63$ 53.59$ (0.04)$ (19.2)$ -0.1%

Euronet Worldwide 72.43$ 69.19$ (3.24)$ (163.3)$ -4.5%

Fidelity National Information Services 60.56$ 73.68$ 13.12$ 2,503.3$ 21.7%

First Data 16.03$ 11.07$ (4.96)$ (892.2)$ -30.9%

Fiserv Inc. 91.46$ 108.73$ 17.27$ 4,395.0$ 18.9%

Everi (fka GCA) 4.39$ 1.15$ (3.24)$ (249.8)$ -73.8%

Jack Henry & Associates 78.06$ 87.27$ 9.21$ 772.7$ 11.8%

MasterCard Worldwide 97.43$ 89.19$ (8.24)$ (13,266.4)$ -8.5%

MoneyGram International 6.27$ 6.92$ 0.65$ 37.6$ 10.4%

PayPal 36.20$ 36.51$ 0.31$ 378.2$ 0.9%

Square 13.04$ 9.05$ (3.99)$ (1,304.7)$ -30.6%

Total System Services 49.80$ 53.11$ 3.31$ 1,085.5$ 6.6%

Western Union 17.92$ 19.28$ 1.36$ 773.5$ 7.6%

Vantiv 47.42$ 56.60$ 9.18$ 2,276.5$ 19.4%

Visa 77.55$ 74.17$ (3.38)$ (2,859.1)$ -4.4%

.

Bitcoin Closing Price 430.05$ 672.49$ 242.44$ 56.4%

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Interesting News This Quarter

Subject Source/Date Substance

ChangeJar ATM Marketplace

June

Canadians with a desire to rid themselves of loose coins resulting from cash transactions now have

an option. ChangeJar, an Ottawa startup, has an Android and iOS app that enables consumers to

have their change credited to an account that can be used to make subsequent purchases or tip for

service. The list of participating merchants is pretty skimpy for now but could grow as merchants

and consumers realize how expensive it is to handle those shekels. Then again, without spare

change, what would panhandlers ask for and what would we put in our empty five gallon water

bottles?

Cardtronics ATM Marketplace

July

Smack dab on the heels of the Brexit vote, Cardtronics shareholders approve a proposal to

redomicile the company from Delaware to the U.K. Seems logical in light of 60 percent of

CATM’s workforce being Brits and the mature state of things in the U.S. ATM market (save for the

recently observed movement by large banks to shed off-premises cash dispensers.)

Walmart Various

June

Walmart takes the ultimate step in the issuer/merchant wars over the cost of acceptance and will

begin a phased plan to refuse use of Visa’s 50.6 million Canadian issued cards as of July 18, 2016.

The outcome of this ballsy (its in Webster; look it up) action could be a reduction in Walmart's

merchant discount rate or a snafu (ditto) that will make Costco’s botched Amex-to-Visa changeover

seem trivial. Either way, pass the popcorn, again.

Apple CardLinx

June

Nobody doesn’t like Apple Pay; then again, they don’t use it on a repeat basis for in-store purchases

all that much either. So, Apple is pivoting in the direction of online Apple Pay usage and has

signed up 21 of the top 100 cyber merchants. Touch ID will enable online purchases via users’

trusty iPhones or through Safari browsers on desk or laptops. While the mobile “pay” wars are far

from over, Apple is the first to blink, it seems.

MC10 Finextra

April

Digital healthcare solutions provider, MC10, is close to broadening its base into payments with the

introduction of its Wearable Interactive Stamp Platform, or WiSP. These thin-as-a-tattoo stickers

have been used to measure UV exposure and to transmit patient information interactively and may

have payments system implications if lab trials are successful. When paired with NFC-enabled

smart phones and readers, WiSP could be used to settle up a tab at a swim-up bar or make Amazon

purchases while in the shower. Security conscious readers should know that WiSP tears when being

removed from the skin, making the stored information unreadable. Reminiscent of the old Band Aid

removal days.

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Interesting News This Quarter – Continued


Cash-recycling ATMs ATM Marketplace

April

Cash-recycling ATMs are pretty much non-existent in the U.S. but have been used successfully in Asia

and in countries with uber inflation rates for decades. Modified versions of the units have also been used in

branch automation efforts. Now, inefficient cash handling costs are catching up with U.S. banks and the

ATM manufacturing industry is gearing up to make recycling devices more appealing to ATM deployers.

Diebold, NCR and Nautilus Hyosung are preparing for big U.S. promotions of new models in view of

Federal Reserve and World Bank studies predicting the growth of cash demands by 1.7 percent through the

year 2021. Try as we might, getting rid of cash may be a task left to the next millennium's brain trust.

Credit Unions and FinTech CU Times

May

Credit unions don’t want to be left behind by deep pocket banks and app developers would like to get paid

better for their endeavors. The League of Southeastern Credit Unions has teamed up with Linqto to create

LEVERAGE, an app store for participating credit unions to draw on white-label apps including Mint,

Wallaby and others. Developers are paid by the credit unions for the right to brand the app and/or for

usage. More than one way to skin a cat, they say.

Bank of America Business

Intelligence

June

Bank of America ups its fan boy status with Apple Pay by rolling out the ability for users to get cash from

its ATMs through the app. The NFC technology in the upgraded machines isn’t quite as smooth as silk –

users first have to find a device with the NFC logo, open Apple Pay, tap the device to the reader, and enter

a PIN. Seems like a lot of extra steps. Oh, and Android Pay and Samsung Pay (NFC mode; not Loop Pay)

are also supported.

Discover Presser

April

Discover continues its global acceptance strategy by cutting a deal with Computop, an international

payments service player. Computop adds a broad base of European countries to Discover’s potential

acceptance footprint. The new relationship also adds Computop’s ProtectBuy online security service to

augment retailer protection when accepting Discover cards. Launched over five years ago, Discover’s

initiative to expand global acceptance to get closer to brand parity has paid off; its cards are now accepted

by 37 million retailers across 185 countries.

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Samsung Presser

April

It’s one thing to gain consumer adoption of your mobile payments product; it’s quite another to insure that

merchants have the tools to accept it (inclination to accept is another facet, altogether.) To that end, Samsung

has cut deals with most of the major POS device companies to insure that its consumers have places to use its

Samsung Pay service. Verifone, Ingenico, First Data (i.e., Clover), MagTek and the others have signed on to

support the new payments service for NFC card/terminal interaction. Your move, Apple.

Visa Finextra

June

Visa plans to introduce another wearable payments form factor at this year’s Olympic and Paralympic Games.

Athletes will be given NFC-enabled rings (isn’t that clever symbolism?) which can be used for purchases

throughout the Olympic village. We’re not sure if the technology embedded in the stylish gizmos is based on

what Kerv has been promising to deliver for nearly a year, but it might be a safe bet. By the way, the

promotional photo released by Visa shows the hand model wearing the ring on his middle finger.

Foreshadowing the competitive quality and living conditions of the 2016 Rio games, perhaps? Just a thought.

WePay Business

Intelligence

May

WePay, the enablement engine behind digital transactions platforms like GoFundMe, FreshBooks, and Constant

Contact, is taking its payments expertise into mobile. A white-labeled mobile application is now available to

these B2B and B2C platform operators. An SDK provides for customization so that end-users can deploy the

mobile app as if it were their own. FreshBooks and Infusionsoft are the first user/distributors of the app.

CU24 ATM

Marketplace

March

As more and more cards and POS terminals become EMV-enabled, fraudsters will have to start looking for

other ways to make a quick buck. Experience in other countries tells us that cyber retailers represent fair game

but ATMs may come in a close second. To prevent a spike in ATM-based fraud, credit union owned ATM

network, CU24, has teamed with FICO Card Alert Service to track and detect potential fraud across its 70,000

surcharge-free ATMs. An added benefit is that the Fico service will also track fraud across retailer POS

devices. Card Alert Service is not new; its been around since the 1990s. Being owned by FICO gives this old

reliable additional market punch, however.

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11


Uber PayBefore

June

350,000 Uber drivers will now be able to receive their share of the ride fare through an expanded relationship

between the category killer and Green Dot. GoBank is offering a special GoBank Uber debit card in conjunction with

the transportation firm’s Instant Pay program. Drivers can be paid as frequently as they prefer with the proceeds being

credited to the prepaid debit card. Good news for Green Dot whose stock has been off a bit lately because of an ugly

proxy fight – which is, itself, another sign that the prepaid card industry might be reaching maturity.

Tangerine Bank Finextra

April

Canadian depositors with Tangerine Bank (once known as ING Direct) now have two new options for biometric

identification. The SociaBank’s subsidiary has a new app that incorporates retinal/iris identification (courtesy of

EyeVerify) and voice recognition (via Nuance.) As yet only available for the iPhone, the app also includes the ability

to hold real-time secure chat sessions with Tangerine’s banking reps.

JPMorgan Chase Bloomberg

June

Back in March, BofA’s CEO encouraged his banker brethren to get off the fence and go live with the EWS

clearXchange program for real-time payments. A few short months later, Chase has joined the parade while Early

Warning spokespeople are telling us of an “en masse” online stampede within the next sixty days. With PayPal,

Xoom, and Venmo handling $41 billion in annual P2P payments, wouldn’t you think that Chase and others would

move a bit quicker to join the party?

Vocalink Mobile Payments Well, maybe not. Vocalink’s “Pay by Bank” app has been in flight for the past couple of years but has never been

made available for consumer use due to “multiple delays.” Now, the scheme operator is suggesting that we’re just a

hair away from Bank of Scotland, Barclays, Halifax, and Lloyd’s Bank depositors being able to make point of sale

purchases in real-time with their banking credentials. Truth is, getting a cartel of competitors to get a collaborative

effort across the finish line isn’t as easy as it sounds. Add the need to gain the cooperation of other parties (e.g.,

merchants) to the mix and you’re likely to have a cocktail recipe that sounds good but never tastes quite right. The

U.S. faster payments project might take heed. Or not.

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12


Walmart, MasterCard,

Green Dot

New York Times

June

It’s pretty obvious that Congress doesn’t have much to do these days. Barely minutes after Walmart

MoneyCards experienced an extended outage, a passel of Senators fired off inquiry letters and scheduled a

hearing. No technology is perfect and when you undergo a system conversion, things happen. Sure, the outage

disadvantaged a lot of people, but come on. The entire banking system in Ireland went down for six months in

1970 due to a labor dispute and no one panicked (Google it.) Maybe we Americans need to toughen up. Lord

knows, the next four years will be trying enough without regulators and legislators wringing their hands every

time an ATM fails to spit cash.

Discover Retail Dive

April

Here’s something you don’t see every day and might never see again. Discover CEO David Nelms stepped on

the stage at a trade show recently and calmly articulated all the reasons why he believes that chip and PIN is far

more secure that chip and signature – for both debit and credit cards. Now, it would be more impactful if

Discover had market share somewhere north of four percent and if Discover actually issued credit cards that

came with a PIN but, hey, small steps. Merchant trade and lobbying associations jumped all over Mr. Nelms’

comments while we got cricket chirps from the other card brands. So it goes.

Ethereum Bank Innovation

June

When asked why he persisted in robbing banks, notorious artisan and felon, Willie Sutton, said “because that’s

where all the money is.” The same may apply to the hack that occurred at the Distributed Autonomous

Organization or DAO. Someone figured out that DAO is like a bank and drained the vault of $60 million in

“Ethers,” a cryptocurrency that runs on the Ethereum blockchain platform. Willie would have had his work cut

out for him to haul away $60 million in greenbacks but the cool operator who hit the DAO used a thumb drive.

Aw, progress (and a not-so-subtle hint to those all atwitter about blockchains and cloud computing; after all, it’s

where all the money might be one day.)

Visa, MasterCard,

American Express,

Discover

Various

June

Americans can’t be the only time-starved people on the planet, or can they? Seems like we’re the only ones to

bitch about the amount of time an EMV transaction takes at the point of sale despite the fact that we’re the last

to arrive at the party. The rest of the world (except us and North Korea) have been through the EMV migration,

have learned which end of the card holds the chip, and don’t appear to get puffy-faced as the transaction occurs.

Us being us, the major card brands have gone back to the drawing board and have come up with a “quick

chip” solution that lets us take our precious cards back before the transaction is completed. Well, la-tee-dah.

Wonder what this is going to cost us consumers and the industry and what the unintended consequences might

be. Stay tuned or man up; your choice.

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M&A/Alliance Activity

Buyer/Investor Target Payments Emphasis Possible Strategy

PayPal, Rakuten

FinTech Fund

Acorns Investment app Remember the stir BofA caused with its “Keep the Change” program?

The bank rounds up purchase transactions and puts the added juice

into a savings account. Investment shop Acorns hopes to make the

same market stir with its on-the-fly investment app that rounds up card

purchase transactions to the nearest dollar and investments the

difference in exchange traded funds (ETFs). PayPal takes the lead in a

$30 million round, upping Acorns’ funding to $62 million. What’s in

it for PayPal? Clicks and a future service offering maybe? You bet.

Scale Venture Partners,

Sequoia, NEA

Forter Online fraud detection There are just two types of e-retailers in the world: those who have

been defrauded and those who will be. Forter, a San Francisco-based,

fraud detection/prevention outfit, hopes to keep the latter group as

large as possible by offering a 100 percent guarantee against charge-

backs related to fraud. Scale Venture and others put up $32 million to

increase total funding to $50 million as Forter addresses the issue of

online fraud which it claims is behind 2.7 percent of every online

transaction request.

Stripes Group Remitly Money transfer service While others of its ilk try to expand their universe in Big Bang

fashion, Remitly remains committed to the remittance corridor

approach. Stripes Group invests $38.5 million to enable the company

to open corridors between Canada and India, and Canada and the

Philippines. This is Remitly’s seventh round of funding for a total of

$61.5 million. The company’s three U.S. corridors include Mexico as

well as the other two regions. Perhaps the outcome of the November

elections will punch up its U.S.-Canada trade as some folks self-

deport.

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M&A/Alliance Activity - Continued


SumUp Payleven Mobile point of sale Damn it, just a few months after our 2015 forecast of industry consolidation

lapsed, two key European POS players merge. Both companies had sucked

up $50 million in VC/PE funding and both handled about $1.0 billion in POS

traffic. Even at these levels, both know that scale is what keeps the wheels

on and the new company will operate under the SumUp name and will be led

by the SumUp founder, David Klein. Watch for more consolidation (or

capitulations) in this arena.

Dead Pool Jumio Mobile authentication Tough business, sorting out who is real is who’s not. Mobile authentication

outfit, Jumio, folds its U.S. subsidiary and sells the assets to early investor

Eduardo Saverin (of Facebook fame). Jumio found itself in a jam with

regulators and “legacy issues,” both of which combined to prevent additional

funding for operations and expansion. Saverin has put up nearly $4.0 million

to keep the doors open. Time will tell.

Cardtronics Chase cash

dispensers

Off-site ATM deployment “Déjà vu all over again.” It wasn’t that long ago that U.S. banks were

looking to free up capital invested in hard assets like ATMs. A few deals

were done and then the bankers reversed course, invested even more in of-

premises devices and co-branding, and here we are. Now, Chase Bank and

Cardtronics have agreed to a deal which passes 2,586 cash dispensers to

CATM. The devices are situated in, among others, Walgreens, am/pm and

Duane Reade stores along with others in airports and hither and yon. Chase

customers will continue to receive surcharge free access to their cash under

the agreement with CATM. Cardtronics ought to do well in the future if the

deal with Chase is a harbinger of things to come – read: other banks may

take the money and run.

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Bango BilltoMobile Carrier billing Mobile identity focused player, Danal, sells its BilltoMobile asset to Bango

for $3.5 million. The transaction gives Bango carrier billing coverage with

all four U.S. mobile network operators (MNOs) and knocks a competitor out

of the ring (always a good strategy, until its not.) Boku and Fortumo remain

in the carrier billing game to keep the playing field in motion. Try as we

might to ignore carrier billing, it’s still out there, siphoning off transactions.

Bankers with deep pockets

R3 Blockchain consortium Big bank backers are being asked to pony up $200 million to fund new

developments coming out of the R3 blockchain consortium’s lab. Key on

the list of ways to spend the money is a shared utility that will run

blockchain-enabled applications developed either by R3 or its investors. R3

plans to retain a share in the new venture just to be on the safe side. If it

flies, the new R3 vehicle will be among good company including Blythe

Masters’s Digital Asset Holdings, London based SETL, and DTCC, a big

player in the credit default swap gambit. Go big, or go home, they say.

(Although, $200 million is merely “lunch money” for there guys.)

Target Global Ventures

Zooz Digital payments platform The U.S. market for digital payments processors is about to get one notch

tighter as Zooz, the Israeli startup, reels in another $24 million in funding to

enable it to expand into Germany and the United States. San Francisco and

Berlin are the sites of new offices for the company which puts it squarely in

the patch with competitors Spreedly and BlueSnap. Like others, Zooz has

the sense that payments will take on a far more global flair in the future and

the company plans to be ahead of the game. Put another way, WU and

MoneyGram are in the Zooz crosshairs.

Rakuten Azimo Money transfer service UK-based Azimo plucks another $15 million in funding from new and

returning investors to increase the pressure on established MTS providers.

One has to wonder if, with all the international money transfer service

available, will there be any money left in the originating countries like the

U.S? MTS is another market segment that is very hard to ignore.

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16


Upserve Breadcrumb Restaurant POS systems Restaurant management and payments software firm, Upserve, executes a

forward integration strategy by acquiring the Breadcrumb assets from Groupon.

Breadcrumb utilizes Apple iPad equipment and cloud software to deliver POS

systems to restaurants, bars and nightclubs. The two firms have been

collaborating under a strategic marketing agreement since 2015 and this

acquisition makes things more permanent. Groupon will retain a minority share

in Upserve as a result of the deal.

Fitbit Coin All-in-one card We were divided on the value of the Coin all-in-one card product. First, it was

a pretty cool way to shrink leather wallets and the ergonomics were snazzy. On

the other hand, Coin first launched (very late) as a mag stripe-based solution

and was likely to have limited life. Coin 2.0 has NFC capabilities and has

completely sold out. Alas, white knight Fitbit has acquired Coin so those of us

with Coin cards won’t be able to re-up when the on-board battery takes a dive in

a couple of years. Curiously, Fitbit has said it has no plans to incorporate

Coin’s NFC systems in newer fitness tracking models; at least, not for the next

couple of years. There’s no word on the outcome of the earlier announced

partnership between Coin and MasterCard in that card company’s efforts to

ring-fence the wearables segment. It just gets more curious everyday.

Shasta Ventures, AITV, Silicon Valley Bank, Cowboy Ventures

Tally Credit card management app

Credit card issuing banks won’t like Tally. The company’s app enables

consumers to register their cards and learn if the APR charged by the issuing

bank for outstanding balances is more than what Tally charges on its line of

credit offering. If so, cardholders can then draw on the line of credit to pay off

monthly card purchases and make monthly balance reduction payments to Tally

instead of their bank. Investors have put up another $15 million on top of $2.0

million raised earlier to watch Tally evolve through its current private beta state.

If this form of “decoupled credit” works out for Tally, be on the lookout for

imitators.

Dorado Industries



(310) 544-1316

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17


Goldman Sachs

Investment Partners,

others

Plaid API platform Bankers won’t like Plaid either. The company increases funded capitalization

to $59.3 million with a whopping $44.0 million tranche led by GS. The

company’s secret sauce is its API skills that enable financial service

application developers to access depositor accounts. There are currently two

key services offered to app developers – its Auth: product “authorizes ACH

payments based on the information users know in their heads; and Connect: a

solution that offers developers access to user-permissioned financial data.”

More elegant than screen-scraping and perhaps more permanent. Banking

used to be so simple, right?

Baillie Gifford TransferWise Money transfer service Not to be outdone by MTS upstarts Zooz and Azimo, TransferWise, the 800

pound gorilla in the digital MTS provider arena, raises $26 million, pegging

its valuation at $1.1 billion. Welcome to the unicorn club, TW. This, despite

TransferWise being caught in the sights of regulators who are peeking into the

affairs of one of the company’s banking partners. Sort of like being

exonerated from claims of wrong-doing even though you’re tagged with the

“extremely careless” admonishment. (Sorry, just too funny.)

Jafco Quoine Bitcoin exchange Astute speculators are well aware that their high-flying wagers on Bitcoin are

beginning to pay off as the cryptocurrency gets religion and starts building

honest-to-goodness currency exchanges and some (but not yet enough)

structure around security. Quoine is one such exchange and its equity funding

recently grew by $16 million to $18 million through a tranche led by returning

investor, Jafco. Not nearly the largest exchange – it’s number seven behind

six Chinese entities – Quoine hopes to cash in on Japan’s $50 trillion annual

foreign exchange market. Blockchain is currently getting all the FinTech ink

but Bitcoin investors are getting the payoffs. For now.

Dorado Industries



(310) 544-1316

[email protected]



18


Binary Capital,

others

Recharge Hotel reservations Tinder, the risqué hook-up app, should have thought of this. Recharge is a

San Francisco-based startup whose app enables users to book hotel stays for

67¢ per minute or $40 per hour. Hyatt and Starwood have signed up to split

the proceeds with Recharge. Investors think the novel idea is worth $2.3

million of early round funds to see if Recharge cuts into working hours

productivity. Count on it; yet another HR nightmare. BTW, Recharge is not

alone in the space; check out www.hotelsbyday.com for a look-see at the

competition.

Seed Money Digitzs Payments platforms As the corral of payments platforms becomes nearly overcrowded, new

entrants need to do some serious targeting. Digitzs was formed by former

Visa, PayPal and Apple execs who have focused the company’s efforts on

sporting events, non profit organization donations, and property managers.

Pretty far afield verticals, we note, but each one probably isn’t deep enough to

hold extended investor interest. To-date, $2.3 million plus has been wagered

on the company’s future success.

MK Capital Passport Public and private parking Passport is another example of thin market slicing. The company focuses on

the gut-wrenching (for some) experience associated with finding and paying

for a place to leave the family sled while shopping or attending a ball game.

MK Capital and others have raised the funding ante by $8.0 million to add to

the $7.0 million or so already in Passport’s coffers. The company boasts of

having presence in 30 of nation’s top cities and 2,000 parking facilities in the

fold. There are others out there, but none bigger than Passport; or so they say.

PayNearMe Prism Money Consumer PFM app PayNearMe customers use the application to make online purchases and settle

up with cash deposits at local convenience stores and other sites. Prism

Money offers PayNearMe customers the ability to track their balances, make

bill payments, and track payment due dates. This acquisition helps bring

better financial literacy to a market segment that definitely needs it. Nice job.

http://www.hotelsbyday.com/

Dorado Industries



(310) 544-1316

[email protected]


Useful Links for More Information

Here are some companies that haven’t received press coverage lately but which are

worth a look-see.

Company Role Link

Tally Credit card management tool for

consumers

www.meettally

Ethereum Blockchain platform www.ethereum.org

Passport Public and private automobile parking

industry leader

www.passportinc.com

Plaid API developer focused on enabling app

developers to gain access to depositor

accounts and permissioned information

www.plaid.com

http://www.ethereum.org/

http://www.passportinc.com/

http://www.plaid.com/

Dorado Industries



(310) 544-1316

[email protected]


Back in the day!

20

This quarter’s trivia question is likely to be a bit harder

than previous contests because it dates back to the mid

1980s. Name each of the men pictured below and tell us

about their respective contributions to the electronic

payments industry. First email with the correct answers

gets some Dorado Industries stuff.

In the meantime, here’s a 400#

yellow fin tuna picture to drool over.

Dorado Industries TrendWatch 2.0 Q2 2016 Industry Synopsis

Economy & Finance

Transcript of Dorado Industries TrendWatch 2.0 Q2 2016 Industry Synopsis