Dorado Industries Trend watch q2 2015

TrendWatch 2.0 Q2 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.

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Random Thoughts

“We’re Number Three!”

Not the most daunting battle cry, or one often heard in collegiate or

professional sports arenas; still, running in third place behind a

couple of juggernauts does have its advantages. Consider the

nimbleness that American Express is afforded by avoiding the

regulatory and marketplace mean-spiritedness directed at Visa and

MasterCard. As a result, AXP is free to experiment and innovate

across wide market segments with targeted offerings like Bluebird

and Plenti.

Consider, too, the “plight” of the prepaid card industry. Once

considered a distant also-ran behind credit and debit cards and

primarily the stock-in-trade of the EBT segment, today’s prepaid

programs sizzle. What other offering accommodates the unique

needs of maritime employers and their ship-board employees?

Anyone else addressing the flu vaccination needs of the healthcare

industry? And when the U.S. Navy needed a highly secure way to

handle payments aboard and abroad, for its personnel, what industry

got the call? Right, prepaid.

When it comes to building a digital wallet strategy, perhaps we all

ought to be considering which third place player we should be

recruiting. Clearly, Apple Pay won’t cover all the bases; nor will the

Android or Samsung schemes. Trouble is, we need at least two of

these guys to cover the smart phone operating system waterfront.

Yet, what about the rest of the consumer (and merchant) preference

landscape?

Shouldn’t everyone be considering MCX’s CurrenC to cover off

those consumers who relish the idea of merchant loyalty and in-store

rewards? Shouldn’t credit unions be considering offers like CU

Wallet to meet the unique needs of their members and to share

costs? And, try as it might to hoist itself on its own petard yet again,

PayPal still has a viable claim on third place merely due to its size.

2

Since we’re all still in the formative stage with mobile payments and

digital wallets and the chances of an interoperability system are

pretty remote for now, it sure seems too early to be discounting

anyone jockeying for a share of the wallet war spoils. It’s a pretty

safe bet that consumers have yet to decide on a wallet preference,

even though its their decision to make. Seems to us that a wallet

strategy that doesn’t offer consumers a choice is going to come up a

bit short. Let’s hear it for Number Three! (Four, maybe?)

“We’re Number Two”

Well, it worked for Avis rent-a-car in the 1980s. True, Google did

announce Android Pay a distant second behind Apple but, is it

realistic to assume that the search engine behemoth can hold that

position or aspire to becoming the top dog? We’re not convinced.

After all, Google handsets basically suck and the other Android

devices are a couple of shades of gray away from the native

operating system (not to mention cluttered with handset or network

apps.) Then, there’s the nasty dust-up with Samsung over its Loop

Pay-augmented digital wallet. No, we think Google first needs to

decide how much variation it will allow in Android Pay (if any)

before there’s a victory lap to be run.

Alas, until we can collectively decide on how interoperability is

going to work, we’re faced with two of the world’s largest

companies vying for first place in a race that the consumer doesn’t

seem much interested in. Perhaps the Number Three finisher will

set us straight.

So it goes.

Until next time.

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Table of Contents

2015 Predictions 4

TrendWatch Scorecard/Summary 6

2015 Payments Industry Yields 7

Interesting Quarterly News That Got No Respect 8

Q2 M&A/Investor Activity 13

Useful Links for More Information 18

Back in the Day! 19

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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.

Jun: Well, this is going nowhere fast. A couple of small plays but nothing to write home about.

• 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.

Jun: Delays in Android Pay and Samsung Pay launches to Q4 gives new life for a few of the hangers-on.

• 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.

Jun: Still waiting for one of the southern U.S. MNOs to make a move.

• 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.

Jun: Walmart/Green Dot re-up agreement doesn’t count but it looks a lot like what will happen.

4

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More 2015 Predictions

• 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.

Jun: Android Pay, though delayed, will give consumers something to consider. Merchant acceptance will be the

kicker.

• 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.

Jun: Holding firm on this one until Twitter proves us wrong. Daily volume looks way down.

• 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.

Jun: Maybe the new leadership will warm up to the idea of a banking consortium becoming a partner.

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

Mar: Still taking nourishment but through a straw.

Jun: Clinkle staffing down to about a dozen after seven key employees marched out en mass in May over sellout

rumors centered on Apple.

5

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TrendWatch Scorecard/Summary – Q2 2015

Market & Industry Situation 1 – Android Pay and FB Messenger combine to murk things up a bit.

2 – How tough would it be to turn Bluetooth vending machines into ATMs?

3 – Credit card rewards be damned, debit volume is still up.

4 – Regulators in California think Bitcoin is in their wheelhouse but plan to

ignore it. Some regulators still peeved at payroll cards

5 – Another good, but not great, quarter.

6 – Lots of money being made in payments; particularly by the card brands.

7 – Who turned off the spigot? Incumbents are happy.

8 – No major breaches this quarter (except for AdultFriendFinder); oh, and

the IRS. Birds of a feather.

Industry Players To Watch MCX Retailers: How much longer will they hold out for a full rollout of

CurrenC before jumping ship?

PayPal: The Xoom acquisition could move the ball way, way, down the

field. Or not.

Facebook: FB Messenger payments is in full rollout. How many bar tabs

and bets will settle via linked debit cards? Few, we think.

Fed Faster Payments: Okay, those of us interested in providing FFP

services need to respond to a set of requirements but no specs or rules. Oy!

Amazon: Within-the-hour home delivery? Lots more payments coming.

The Internet of Things: Didn’t like the level of security in the old

Internet? Watch out for light bulb and baby monitor hackers.

5. New Venture Growth

4. Legal/Regulatory Issues

1. New Payment Forms

2. ATM Restructuring

3. POS Volume Trend

Low

Med

High

Low

Med

Med

Low

Positive

Mixed

Negative

6. Earnings Announcements

7. Industry Investments

8. Payments Industry Security High

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2015 Payments Industry YTD Yields

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

2015 YTD yield excludes dividends; based on 12/31/14 and 6/30/15 closing prices.

Greece kicked us in the groin on June 29th and may do us in further unless the sanctions are

agreed to. Still, average yields improved quarter-to-quarter while the Dow and S&P clawed their

way back to essentially zero YTD yields. AXP is still putting salve on the Costco wound while most

of the payments processors are out-performing the rest of the equity basket. Even Bitcoin has

revived a bit from its low ebb last quarter. Now is probably a better time for lenders over investors

but what do we know?

Industry Player 12/31/2014 6/30/2015 Price r Cap Value r YTD 2015 Yield

Alliance Data Systems 284.05$ 291.94$ 7.89$ 469.5$ 2.8%

American Express 93.03$ 77.72$ (15.31)$ (16,529.4)$ -16.5%

Blackhawk Network Holdings 38.92$ 41.20$ 2.28$ 119.2$ 5.9%

Cardtronics 38.58$ 37.05$ (1.53)$ (62.3)$ -4.0%

Discover Financial Services 65.50$ 57.62$ (7.88)$ (3,789.5)$ -12.0%

Euronet Worldwide 54.90$ 61.70$ 6.80$ 342.7$ 12.4%

Fidelity National Information Services 62.21$ 61.80$ (0.41)$ (78.2)$ -0.7%

First Data (Future Use)

Fiserv Inc. 70.97$ 82.83$ 11.86$ 3,018.3$ 16.7%

Global Cash Access Holdings 7.17$ 7.74$ 0.57$ 43.9$ 7.9%

Heartland Payment Systems 53.94$ 54.05$ 0.11$ 4.1$ 0.2%

Jack Henry & Associates 62.14$ 64.70$ 2.56$ 214.8$ 4.1%

MasterCard Worldwide 86.18$ 93.48$ 7.30$ 11,753.0$ 8.5%

MoneyGram International 9.09$ 9.19$ 0.10$ 5.8$ 1.1%

Total System Services 33.95$ 41.77$ 7.82$ 1,543.7$ 23.0%

Western Union 17.91$ 20.33$ 2.42$ 1,376.4$ 13.5%

Vantiv 33.95$ 39.19$ 5.24$ 1,299.4$ 15.4%

Visa 65.55$ 67.13$ 1.58$ 1,336.5$ 2.4%

.

Bitcoin Closing Price 315.95$ 265.20$ (50.75)$ -16.1%

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Interesting News This Quarter

Subject Source/Date Substance

Digital Currency regulation BI Intelligence

May

Startups and other promoters of digital currencies ought to be looking hard at California as the place

to set up operations. The CA Department of Business Oversight has ruled that it has the power to

regulate digital currencies but has opted not to exercise that right. Instead, CDBO suggests that the

California legislature ought to decide on how regulations should be formulated to control digital

money. Our Sacramento-based legislature being the best group of senators and assemblypersons

money can buy leaves the field of play wide open for anyone able to spell blockchain.

Instacart PYMNTS

June

Like the fast turn around delivery service provided by Instacart? Enjoy the prime servings of meal,

fish, and vegetables you get from Whole Foods? The next time you use Instacart to scrounge up

some goodies from Whole Foods, watch the screen closely. You’re going to be asked to opt in to a

personal data sharing program that asks you to share name and address, order details, and phone

numbers (you get to select which ones). Both of the players are mum on whom gets paid what by

who but rest assured, there’s money involved. A word to the wise.

PayNearMe TechCrunch

June

Where there’s smoke, there’s fire, they say. TechCrunch is reporting some smoke signals on the

horizon coming from the PayNearMe campsite. Seems the cash-to-online-payments firm recently

lost its relationship with Family Dollar, laid off a gaggle of employees, and may have come up short

on its recent round of funding. The company’s CEO claims the TC assertions are overly dire, as one

would expect. Too bad; the system needs companies like PNM to bring the underbanked segment a

bit closer to the nation’s payments flow and to supplement gaps in financial literacy. Hopefully,

smoke is all we’ll see.

Tango Card NEWSBTC

June

Rewards card processor, Tango Card is working with Amazon, Best Buy, Foot Locker and others

to provide a conversion metric between two shadow currencies – rewards points and Bitcoin.

Holders of Tango Card loyalty points can convert their gilt to Bitcoin via the SnapCard Bitcoin

wallet. In another twist of irony, cardholders can also earn Bitcoins through participation in

corporate wellness programs in 10,000 step increments. If only the airlines would play along, we

wouldn’t have to worry about blackout dates anymore.

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Interesting News This Quarter – Continued


Target CU Times

May

$19 million just doesn’t buy what it used to, it seems. Mega retailer, Target and MasterCard thought

they had a settlement with victims of the store’s huge pre-holiday 2013 data breach. Seems the card

issuers that took it on the chin because of Target’s lax security suffered more in losses than the

settlement provided. Round two of negotiations are underway now.

Google Finextra

April

Third-party digital wallet provider, Google, steps up its game and efforts to win over bank-leaning

adherents by adding FDIC insurance to Google Wallet. Other payments aggregators like PayPal and

Venmo haven’t responded yet but neither player is going to want to post a CFPB notice on their

respective products stating that deposited funds are not insured. Just another bump in the rocky road to

mobile wallet supremacy.

Zapp Finextra

June

Proponents of the Fed’s Faster Payments initiative and Anglophiles alike ought to be keeping track of

what’s happening in England with Zapp. The day following Apple’s announcement that Apple Pay will

be in the UK soon, VocaLink unveiled its Pay By Bank application for mobile devices. Powered by that

country’s Faster Payments rails, Zapp will be accepted by Sainsbury’s, Asda, House of Fraser and others

while HSBC first direct, Nationwide, and Santander have agreed to imbed the Zapp widget within their

phone and tablet apps. Note that the Faster Payments rails in the UK run parallel to the Visa/MasterCard

conduits, making some issuers a bit nervous about lost interchange. Might the Fed’s Faster Payments

initiative wind up with the same end-state? Highly possible. Adios interchange in that case.

Walmart Finextra

May

True, Walmart-backed MCX is late to the market with its CurrenC mobile payments application. But

that doesn’t mean that the retailer is sitting idly by. Walmart is now working with Alibaba in China to

enable Alipay Wallet customers to use their mobile devices for purchases made in 25 stores in Shenzhen

with plans to roll the system out to all 410 locations in the country. Alibaba technology sounds

somewhat akin to CurrenC and is based on 2D barcode scanning. For its part, Walmart has had to make

virtually no changes to its in-store systems to enable the 190 million Alipay users to settle up.

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Diageo BI Intelligence

May

Diageo is the world’s largest producer of distilled spirits (booze) and the owner of the Johnnie Walker brand.

Connoisseurs of the JW Blue Label brand ($160/750ml) will soon note the addition of a tag containing an

antenna and integrated circuit. When scanned with a smartphone, the tag will broadcast sales information to

potential buyers. When the tag senses that the bottle has been opened, the messages change to sending drink

recipes. Seems a bit too much technology for suggesting that customers “add ice,” but what do we know?

(Sorry, just one of those stories that we couldn’t pass up.)

MasterCard Presser

June

The tokenization war is heating up. MasterCard announces an enhanced tokenization scheme for merchants to

overcome declines related to stored customer account numbers and expansion of the service to subscription

services, club dues, and utilities. Dubbed “MasterCard Digital Enhancement Services,” the system will soon be

opened to private label applications, eCommerce, and recurring bill card-on-file programs later this year. Next

up to bat: Visa.

Digital Wallets Petoskeynews

June

It looks like the battle lines for round two of the Digital Wallets war have been drawn. Round one, first to

market, was won by Apple. Round two is shaping up as a two-front endeavor with features and acceptance

points being two key differentiators. Apple is adding store-issued credit cards and a rewards program;

meanwhile, Google is playing the “me too” card, once the newest handset models are released, that is. Both

Apple and Google are knocking on retailers’ doors in an effort to get their solution wedged into already

overstuffed terminals (remember, we’re in the middle of the EMV rollout schedule). And, as noted elsewhere,

there’s the footrace to get vending machine deployers into the fold. We’re not picking a winner yet; watching

the race unfold is far more fun.

AdultFriendFinder PYMNTS

May

Yes, we said that we would leave discussions of merchant hacks to more credible writers but this one is too

good to pass up. Imagine being one of the 4 million members of AdultFriendFinder whose personal and

perhaps financial data was recently hacked. We suppose that the other 59 million users of the soft-sleaze site

are feeling a bit relieved that their penchant for non-traditional relationships is safely locked away in a safe spot.

For now. It’s not mind-easing to know that 48 hours after the hack, the data were available for download, in the

clear, no less.

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11


USPS Payments Source

June

Numerous countries utilize their postal services as banks but not the United States. (Well, not anymore.) Yet, if the

Inspector General has his way, the USPS will significantly expand its banking services in the future or become an

actual bank. The argument is relatively simple according to the postal service’s latest report: 68 million people in the

U.S. do not have full access to banking services and the USPS needs more revenue – pure market segmentation,

nothing more. The report suggests that $1.1 billion in fees could be generated over five years through the sale of bill

pay, international transfer, post office to post office transfers (the Western Union model), money orders, ATMs, and

check cashing services. With 31,000 retail locations, USPS as a bank could be an interesting competitor, once again.

(Older readers will remember the short-lived Postal Savings System (1911-1967) which actually took deposits, sold

certificates of deposit and savings stamps. Deposits peaked at $4 billion in 1947. Younger readers – Google it.)

Chase Bank PayNews

June

Speaking of the unbanked segment, Chase is taking a big step forward in its service delivery to that market by

retooling its “Liquid” prepaid card program. Liquid cardholders may now use the bank’s online bill payment service.

In the meantime, the bank has agreed to grant easier access to traditional checking accounts through modifications to

its screening process. Altruistic on Chase’s part? Not if you consider that the New York State Attorney General has

been twisting the bank’s tail (and that for others in the market) to expand banking services to the underserved

segment. Chase appears to be taking the lemons-to-lemonade approach while the others have merely capitulated

quietly.

Everlink PaymentEye

April

Everlink, the Canadian payments company recently invested in by CO-OP Financial Services, announces its “Lock N

Block” service for Interac debit cards (Interac is the dominate debit payments factor in Canada). Once users’ cards

are registered, cardholders can lock or unblock their debit cards depending on merchant location or status of the card.

Both iOS and Android (Samsung) operating systems are supported. Others do the same in the U.S. but at the FI level.

BankMobile Bank Innovation

May

Mobile-only financial institution, BankMobile, appears to be reversing its original position on branching but it may

only be a matter of semantics. What BankMobile is doing is staking out franchise operators on college campuses that

will act as brand ambassadors for this new approach to banking. New tools for BankMobile include a personal

financial management platform and educational twists designed to increase college student financial literacy. Bottom

line, BankMobile has learned that just being available in an app store isn’t going to be enough oomph to gain users

and use. A lesson we can all gain from.

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12


Nacha Business Wire

May

Nacha blinks when confronted by challenges to its proposed 8.2¢ fee for same day ACH transactions. Instead,

the price has been set at 5.2¢ for transactions that settle beginning with the first window of 10:00 a.m. PT. The

phased rollout will allow credits to flow first for hourly payroll, P2P, and same day bill payments. Phases 2 and

3 will open up utility, mortgage and credit card payments plus “instantaneous” payments that meet the 5:00 p.m.

local time window. How Same Day ACH will fit within the Fed Faster Payments roadmap has yet to be seen.

MasterCard Finextra

May

MasterCard launches MasterCard Send, a personal payments service that enables merchants to handle

payments to those who often deal in checks. The quasi-B2B service provides an electronic pathway for

insurance claims, rebates, social benefits and refunds, those traditionally constrained to paper check remittances.

MasterCard is using its debit rails and can thereby reach just about every debit card in the U.S., regardless of

branding. Great service; sadly, one that might get lost in the shuffle of comings and goings by Google, PayPal,

and Apple.

EMV Mobile Payments

Today

June

A new research report by IHL Group has a title “EMV: Retail’s $38 Billion Money Pit,” which just about says it

all. The report goes on to say that rather than focus on EMV, retailers ought to be emphasizing investments

which result in end-to-end encryption and tokenization. In addition to the frightfully large cost of new EMV-

ready terminals, merchants can expect to encounter five to eight seconds in transaction time increases, a labor

cost that can never be recaptured. Based on these research findings, we suspect that the Visa/MasterCard EMV

mandates and liability shift dates won’t do much to engender greater warmth between merchants and the card

brands.

Internet of Things BI Intelligence

May

Now that the battle for mobile payments supremacy has been denigrated to merely a fistfight between mobile

operating systems – after all, why bother with small matters like customer experience and merchant preferences

– we move on to the next war zone, the Internet of Things. The early combatants are IBM, Cisco, and Intel.

Newer warriors include Google, Apple, Samsung, and Microsoft. And, again, operating systems are at the

forefront of the fray. This go-round appears to be focused on who can make the lightest OS rather than the most

feature-rich. That follows, doesn’t it? After all, how much horsepower does a WiFi-connected baby monitor

need? Or a set of mood-altering Hue lights? Or, for that matter, anything associated with Apple’s highly

anticipated HomeKit platform? Google is about to launch Brillo, an IoT OS for small, single-task devices –

appliances, other home machines, and connected automobiles. Hopefully, Google and the others haven’t

thrown security over the side to skinny down these OS-lite platforms. Otherwise, we all are in deep yogurt, for

sure.

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M&A/Alliance Activity

Buyer/Investor Target Payments Emphasis Possible Strategy

CO-OP Financial

Services

Everlink

Payment

Services

Canadian transaction

processing

Credit union network and EFT processor, CO-OP acquires a majority

interest in Everlink along with minority shareholder Celero Solutions.

The move represents the first international expansion for CO-OP,

originally a southern California-based ATM network. Terms were

not disclosed. U.S.-based processor FIS had been an investor.

Blackstone and Carlyle NCR Banking devices Private equity firms Blackstone and Carlyle are teaming up on an

offer to purchase NCR for a reported $10 billion. If it happens, this

will be yet another round of ping pong for NCR investors who were

rewarded with a $7.5 billion payday in 1991. AT&T grew bored

with NCR and spun it off to then-current shareholders in 1996. The

market has taken some of the sizzle off this deal as NCR stock is

back to trading in its usual $30 range. Time will tell how this

transaction might impact ATM and POS device innovation. Clearly,

AT&T wasn’t much help.

Goldman Sachs Circle Bitcoin scheme Goldman Sachs and returning investors plop down $50 million to see

if Circle will be successful in its efforts to bring Bitcoins to the

common folk. Circle claims to have mastered the ability to maintain

a fungible relationship between Bitcoin and U.S. dollars at little or no

cost to the investor/holder of the respective currencies. In the

meantime, additional heavy money is being moved in the direction of

startups focused more on the opportunities afforded by blockchain

technology rather than Bitcoin value.

FTV Capital WePay Ecommerce payments WePay, the payments engine behind GoFundMe and Care.com,

raises $40 million from new and returning investors. The company

focuses on insuring that crowdfunding sites are legitimate and

insuring that donated funds reached their intended recipients. Must

be a need; WePay has raised $75 million thus far in its short history.

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M&A/Alliance Activity - Continued


Wellington

Management, New

Enterprise

Associates, Morgan

Creek Capital

Tabbedout Hospitality payments TrendWatch favorite, Tabbedout, ups its capital to $39 million through

Series C funding provided by newcomer Wellington and returning PE firms.

Tabbedout intends to use the new funds to expand user acquisition rates with

rewards campaigns and expansion into 20 new U.S. markets. New brand

partners interested in the data being tracked through Tabbedout systems

include Dos Equis, Heineken, and our dear friend Budweiser. Credit and

debit card data remains confidential throughout the data mining process

Tabbedout says.

IDEA Fund Partners, Alerion Ventures, Knoll Ventures, Hallett Capital

CloudTags In-store data platforms CloudTags raises $2.0 million in expansion capital as it broadens its in-store

services for phone and tablet shoppers. Branded as “In-Store Remarketing,”

the service enables consumers to research products while shopping and to

opt-in for email product updates. The company touts a 20 percent click-

through rate back to the retailers’ websites for follow-up purchases.

Jim Pallotta,

RRE Ventures,

Liberty City

Ventures, Jay Jordon

II

ItBit Digital currency exchange Investors fund $25 million in new money to enable itBit to enter the U.S.

Customers of this new exchange will be relieved to know that funds will be

maintained in on-shore FDIC insured accounts and that the New York

Department of Finance will oversee operations of the trust designated for

holding investor funds. We think the Bitcoin blockchain market is getting a

little crowded and expect to see some consolidation in the next couple of

years. With well-heeled backers and gobs of capital already at hand, itBit

could be one of the survivors.

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Buyer/Investor Target Payments

Emphasis

Possible Strategy

Dead Pool Tugboat

Yards

Online barter system Around since, 2012, Tugboat Yards provided publishers and online content

developers with a way to use their subscription lists to barter for donations. It

worked with podcasters and e-zine publishers so well that Andreessen Horowitz

and Greylock Partners jumped in early. Along comes Facebook with a fat check

and pink slips. Tugboat has been shuttered with no announced plans for a

replacement service – FB branded or otherwise. Too bad; Tugboat offered a good

service for scribes like us.

IVP, RRE Investors, iGlobe Partners

NerdWallet Financial services shopping mall

NerdWallet raises $64 million in its first round of funding, far more than it was

trawling for. The personal finance assistance site tailors credit card, insurance,

auto loan, and mortgage options to the specific needs of inquiring consumers. The

Board of Directors and Advisors include the likes of Joe Montana and Vikram

Pandit. Oh, and Arjan Schutte, too. The talent is definitely there. The question is

whether consumers know they’re in need of financial literacy and if they will seek

out the company’s website. Time will tell.

Matrix Partners PayRange Vending machine payments

It’s not your father’s Coke machine anymore. Startup operator, PayRange, offers

a vending machine retrofit that uses Bluetooth to communicate with a mobile

phone app for product dispensing. Matrix and others invested $12 million in

Paresh Patel’s new hope for the vending machine industry. You may recall that

200,000 of Apple Pay’s initial 700,000 acceptance sites were vending machines.

No discussion provided by PayRange on security or cyber-skimming so we’ll just

have to wait and see.

Verizon SimplyTapp Mobile payments We now know that the lead investor of $5.9 million in new funds for SimplyTapp

was Verizon Ventures, also one of the Big Three behind Softcard (FKA Isis).

Seems like Verizon had been hedging its Softcard bet by promoting SimplyTapp’s

HCE-based alternative to using the NFC Secure Element staunchly supported by

Softcard and the other telco investors. Wonder if Verizon was the only nervous

telly?

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16


Mitek IDchecker Mobile capture Mitek, the company that literally started the mobile capture industry,

pays a mere $10.6 million for Netherlands-based IDchecker and its

“Strong ID” technology. Strong ID is used around the world to verify

customers against passports and other forms of official identification.

The IDchecker facial recognition systems should complement the work

Mitek has been doing recently the realm of KYC and innovative uses for

smartphone cameras. Nice, cheap, business combination.

MoneyStream H&R Block Personal financial management

You knew it would only be a matter of time before new PFM providers

would emerge to challenge Mint now that it is part of the cozy Intuit

family. MoneyStream works via mobile applications on iPhone and

Android handsets and helps users tract historic and future payments.

H&R Block and others invest $3.2 million in MoneyStream for market

expansion and additional service development. Astute readers may

recall that Acorns, another PFM player, won a round of funding of over

$20 million last quarter. A trend, perhaps?

ANZ Shout for Good Social donations platform Here’s something we don’t see in the United States. Australian bank

ANZ acquires Shout for Good, a platform used by consumers to fund

donations to over 150 social benefit programs like Goodwill, pediatric

diabetics research, and the YWCA. Seems like a logical way for a

financial institution to promote crowdfunding for social betterment.

IDG Capital Partners, CME Group, and Seagate Technology

Ripple Labs Cryptocurrency Ripple is pretty much avoiding the consumer play in cryptocurrency;

instead, the company is chasing the decrepit international money

transfers system in hopes of taking systemic friction out of it. Ripple has

its adherents as evidenced by the $28 million Series A funding it

received in May. The plan is to introduce IP technology to international

funds movement in much the same way we replaced twisted-pair copper

wires for ATMs two decades ago. About time.

Dorado Industries



(310) 544-1316

[email protected]



17


Pitney Bowes Borderfree International ecommerce Pitney Bowes pays $395 million for Borderfree, a major player in

international retail payments and logistics. Blue chip customers include

Bloomingdales, Macy’s, J. Crew and so on. Among other services,

Borderfree holds chargeback risk for its ecommerce customers.

Amazing what one can do with a postage meter cash cow.

PayPal Xoom International remittances PayPal takes a global expansion step forward and acquires Xoom, the

international remittances company with 1.3 million U.S.-based users and

presence in 37 countries. PayPal’s price of $890 million represents a 32

percent premium on Xoom’s current valuation. Despite the hefty price

tag, this is a pretty heady move for PayPal and its new CEO Dan

Schulman. Should put some pressure on Apple Pay and its two country

footprint.

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

NerdWallet Financial services www.nerdwallet.com

PayRange Vending machine payments www.payrange.com

SimplyTapp Mobile payments (HCE) www.simplytapp.com

MoneyStream PFM platform www.moneystream.com

Circle Bitcoin for common folks www.circle.com

CO-OP Financial Services Credit union payments www.co-opfs.org

CloudTags In-store data tracking www.cloudtags.com

Mitek RDC and identity www.mitek.com

CU Wallet Mobile wallet www.cuwallet.com

http://www.nerdwallet.com/

http://www.payrange.com/

http://www.simplytapp.com/

http://www.moneystream.com/

http://www.circle.com/

http://www.co-opfs.org/



http://www.cloudtags.com/

http://www.mitek.com/

http://www.cuwallet.com/

Dorado Industries



(310) 544-1316

[email protected]


Back in the day!

19

Congratulations to Q1 2015 Back in the Day contest winners Jim Hayes

(old Cash Station) and Rob Myhre (just old.) Both remembered that Early

Warning Services started out as Star Chek before being spun out from Star

System, the San Diego-based ATM and EFT network. Guys, I promise,

your stuff is going into the mail this week!

Remember when we used to be able to accept a forecast

from Nilson or ATM & Debit News as Gospel? Sure, the

questions were simple then – “how many ATMs will ship next

year,” or “how much POS growth can we expect by the end of

the decade?” Maybe we were more interested in an answer

rather then the answer. Whatever.

Today, things are bit more complex, right? Business Insight

Intelligence was as amused as we were over the far-flung

results of these two surveys conducted by two different

groups at approximately the same time. Simple question:

“Apple Pay or PayPal?” Answer: “yes.”

No trivia question this quarter; we’re off to Baja to teach some

folks how to fish and won’t be around to read the answers.

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