acquisitions/investments in mobile payments 2016...

7 Market Shares of Purchase Volume Worldwide

8 Discover Card U.S. 2016 9 American Express U.S. 2016

10, 11 Acquisitions & Investments: Mobile Payments and Mobile

Money Transfers — 2016

2 – 4 Fast Facts 5 Innowi Mobile POS Device

INSIDE CHARTS

Purchase Volume by Global Brand Cards — Projected to 2025General purpose payment cards with global brands — American Express, Diners Club/Discover, JCB, Mastercard, UnionPay, and Visa — collectively generated purchase volume of $20.422 trillion in 2015. They are projected to generate $54.891 trillion by 2025. These card-present and card-not-present payments for goods and services are generated by credit, debit, and prepaid cards.

There are more than 60 domestic-market-only general purpose card brands. They include Elo, RuPay, Star, Pulse, Interac, Shetab, Girocard, Carte Bancaire, BC Card, Accel, Hipercard, Banricompras, Mir, Redcompra, KB Kookmin, eftpos, Samsung Card, Post Finance, Pagobancontact, and Multibanco. Those figures are not included here.

American Express ResultsConsumer and commercial credit and prepaid cards issued in the United States by American Express and third parties generated $695.44 billion in purchase volume at merchants in 2016, down

Discover Financial ResultsCredit and prepaid cards carrying the Discover brand generated $121.47 billion in purchase volume at merchants in 2016, up 2.5% over the prior year. Cash advances (including balance transfers) of

Ingenico Payment Processing for Merchant BotsThere are at least 7.22 billion consumer messaging app accounts worldwide on the 10 largest platforms, led by Facebook Messenger (1.10 bil.), WhatsApp (1.10 bil.), WeChat (1.10 bil.), Tencent QQ

Deloitte Cards & Payments ConsultingMore than a thousand consultants contribute to Deloitte’s global Cards & Payments practice, which saw revenues increase more than 10% last year. Airlines, utilities, car companies, mobile network

Acquisitions/Investments in Mobile Payments 2016There were 34 acquisitions and 57 angel, seed, venture, and strategic investment transactions in mobile payment and mobile money transfer companies in 26 countries last year. These

Neustar Mobile Fraud Fighting PlatformSales projections indicate that online shopping from mobile devices will be on a par with desktop devices in five years. With that gain will come a concurrent rise in mobile payment fraud.

Software-based TEE for Mobile CardsMobile payment wallet providers including handset manufacturers, financial institutions, and mobile network operators use outside technology companies to provision tokenized card credentials

© 2017 The Nilson Report

4.8 / 9.7up 103%

0.4 / 0.7up 84%

3.0 / 7.0up 137%

0.3 / 1.1up 264%

11.4 / 35.1up 208%

0.6 / 1.3up 111%

Purchase VolumeWorldwide 2015 vs. 2025 ($Tril.)

LATINAMERICA

EUROPE ASIA-PACIFIC

MIDDLEEAST/

AFRICA

U.S. CANADA

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> see p. 7

> see p. 5

> see p. 12

> see p. 6

> see p. 8

> see p. 9

> see p. 8

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Conferences & Seminars

SEAA 2017: March 20-22, 2017. The Le Meridien, Charlotte, North Carolina. Estimated attendance: 750-800. Cost for the three-day conference is $99 in advance, $150 at the door. Contact John McCormick at General Credit Forms, (314) 216-8600, [email protected]. Register at www.southeastacquirers.com.

Cardware 2017 — Payment Insights: May 1-3, 2017. The Hilton Niagara Falls/ Fallsview Hotel & Suites, Niagara Falls, Ontario, Canada. Estimated attendance: 350. Cost for the three-day conference is $1,108 ($1,450 CAD). Contact Ellen Bansil at ACT Canada, (905) 426-6360 x 122, [email protected]. Register at www.cardware.ca.

TRANSACT 17 — Powered By ETA: May 10-12, 2017. The Mandalay Bay Convention Center, Las Vegas, Nevada. Estimated attendance: 4,000. Cost for the three-day conference is $1,345 for nonmembers. Subscribers to The Nilson Report will receive a $250 discount. (Use code NIL250.) Contact Del Baker Robertson at ETA, (202) 828-2635 x204, [email protected]. Register at www.etatransact.com.

SAGE PAYMENT SOLUTIONS, the U.S. division of U.K. software company Sage Group, might be available for acquisition. Sage Group has hired investment bankers to consider options. SPS is the 25th largest U.S. merchant acquirer. Paul Bridgewater is CEO, (571) 612-6127, [email protected], www.sage.com.

GROOVV POS FLEX is an alternative to countertop POS terminals. It features a Samsung Galaxy Tab E 9.6-inch tablet with an EMV-compliant and NFC-enabled card-reader device from Total Merchant Services. Groovv POS Flex comes pre-programmed with software for inventory management, reporting, and integrated marketing. The system connects wirelessly to a cash drawer, receipt printer, barcode scanner, and kitchen printer. John Gibson is Senior Manager at Samsung Electronics America, (201) 298-6987, [email protected], www.samsung.com/us. Joe Kaplan is CEO at Total Merchant Services, (916) 742-8421, [email protected], www.totalmerchantservices.com.

NYCA, a venture capital firm focused on innovation in financial services, has closed its latest capital fund with more than $125 million in total commitments. Hans Morris is Managing Partner, (212) 893-1177, hmorris@ nycapartners.com, www.nycapartners.com.

VERIFONE is offering an application called Verifone Points Redemption to the FIS Premium Payback Network, which supports loyalty points redemption at U.S. gas stations for 8.5 million consumers from 3,100 banks. When a shopper presents a loyalty card at a Verifone device, it will prompt them automatically if enough points are available to pay for their purchase. Verifone Points Redemption is aimed at retailers, restaurants, and other places where consumers use their payment cards. Glen Robson is EVP and Head of Verifone Solutions, (408) 334-4534, [email protected], www.verifone.com. Bruce Lowthers is EVP at FIS Global Retail Payments, (904) 438-6549, [email protected], www.fisglobal.com.

SYNCHRONY FINANCIAL, the largest private label credit card issuer in the U.S., has received a multiyear renewal of its consumer financing program with department store Belk. Tom Quindlen is CEO at Synchrony Financial, (203) 585-6244, [email protected], www.synchronyfinancial.com.

FIRST DATA INTEGRATED SOLUTIONS GROUP is a newly formed business segment of the largest U.S. merchant card acquirer. It is focused on providing software tools that independent software vendors, value-added resellers, software developers, system integrators, and other market participants can use to integrate with First Data’s platforms including Clover. EJ Jackson is SVP, Integrated Solutions at First Data, (650) 864-1077, [email protected], www.firstdata.com.

GALITT U.S. is accredited to provide Discover D-PAS Consulting Services. Assistance is available for EMV issuing, EMV acquiring, and transit. Loic Berton is SVP-Emerging Payments at Galitt U.S., (312) 730 5662, l.berton@ galitt.com, www.galitt.com.

BMO HARRIS BANK has launched a digital wallet lineup with Masterpass, Android Pay, and Samsung Pay. All can hold BMO Harris Bank credit and debit cards for purchases in-store, in-app, and online. Patrick Strieck is Managing Director U.S. Retail and Small Business Payments at BMO Harris Bank, (312) 461-3997, [email protected], www.bmo.com.

BBVA COMPASS has renewed its processing agree-ment with TSYS, which will continue to provide account management, card and statement production, fraud and risk management, web and mobile service support, and other value-added services for the bank’s consumer, commercial, and small business credit card portfolios. Pam Joseph is President at TSYS, (706) 644-8750, [email protected], www.tsys.com. Jon Groch is EVP, Global Payment System Director at BBVA Compass, (312) 279-2038, jon.groch@ bbva.com, www.bbva.com.

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THE CARDLINX ASSOCIATION is offering an open source card-linking software suite from Microsoft. Companies can build on the code, which provides API access to payment networks. Microsoft is a member of CardLinx. Download at www.cardlinx.org.

ALTERNATIVE PAYMENTS, provider of local payment options to global brand credit and debit cards, has been integrated with Lime Light CRM, provider of campaign management services that help marketers streamline the creation and management of direct marketing campaigns. Alternative Payments can provide direct debit services to 520 million consumers in the European Union. Wolf Kring is President at Alternative Payments, (626) 585-1814, [email protected], www.alternativepayments.com.

WEX, a provider of payment products to corporations and small businesses, will offer its small business customers access to OnDeck’s suite of loans (up to $500,000) and lines of credit (up to $100,000). Brian Fournier is VP, Fleet Channel Partner at Wex, (207) 523-7792, [email protected], www.wexinc.com. Jerome Hershey is VP at OnDeck, (646) 412-5470, [email protected], www.ondeck.com.

CDS SOFTWARE and PAYMENT SAVVY have formed a partnership. Payment Savvy is a fully integrated payment processing company that specializes in medium- to high-risk companies. CDS Software has offered collection software since 1970. Chad Deatherage is CEO at Payment Savvy, (214) 431-3173, [email protected], www.paymentsavvy.com. Brett Menzie is Director of Sales at CDS Software, (805) 527-9977, [email protected], www.collectone.com.

PLANET PAYMENT offers airline members of UATP more than 300 local and alternative forms of payment to global brand credit and debit cards. Ralph Kaiser is CEO at UATP, (202) 774-5065, [email protected], www.uatp.com. Paul Levine is SVP at Planet Payment, (561) 859-0901, [email protected], www.planetpayment.com.

RS2’S BankWORKS payment processing software for global acquiring and issuing was recently given a benchmark test on hardware from Hewlett Packard Enterprise (HPE). It processed up to 62 million transactions per hour, which is 8,600 authorizations per second. The average response time was 0.096 seconds for the web-based user interface, 0.05 seconds for web services, and 0.025 seconds for the merchant portal. Radi Abd El Haj is CEO at RS2, (356) 2134-5857, [email protected], www.rs2.com.

THE U.K. COMMERCIAL COURT has found in favor of Mastercard and rejected claims by a group of U.K. retailers including Asda, Morrison, New Look, and Next that Mastercard’s interchange fees restricted competition and infringed on U.K. and European Union laws. Mastercard continues to fight litigation brought by U.K. merchants in more than 10 other lawsuits.

YELLOWPEPPER has announced new partnerships with Banco Davivienda and Bancoomeva to provide mobile payment services in Colombia. Previously, YellowPepper announced agreements with Banco Colpatria and Banco Corpbanca. YellowPepper has bank customers in Mexico and Ecuador. Serge Elkiner is CEO at YellowPepper, (786) 924-3814, selkiner@ yellowpepper.com, www.yellowpepper.com.

CORRECTION: BANESCO BANCO UNIVERSAL was ranked as the fifth largest credit card issuer in Venezuela in issue #1098 measured by outstand-ings at year-end 2015. We made an error in our foreign exchange conversion. The bank should have ranked as Venezuela’s second largest credit card issuer.

ACCEO TENDER RETAIL, a payment processing and device management service used by retailers in Canada and the U.S., now links to Mastercard Payment Gateway Services. The combination provides PCI-validated pay-ments through tokenization, point-to-point encryption, EMV support, hosted payment pages, SecureCode, and Masterpass. Joey Vaccaro is VP Business Development and Strategic Alliances at ACCEO, (514) 868-0333 x4420, [email protected], www.acceo.com. Tim Fletcher is General Manager Mastercard Payment Gateway Services Americas, (914) 249-2655, [email protected], www.mastercard.com.

EQUINOX PAYMENTS has integrated its entire line of POS terminals with Android Pay. Its client Walgreens is the first retailer to integrate a loyalty program with Android Pay. One tap of a phone at the terminal conveys loyalty, coupon, or prepaid card information so consumers can earn points or have discounts applied. Rob Hayhow is VP at Equinox, (416) 621-7410 x504, [email protected], www.equinoxpayments.com.

SECURIONPAY, a gateway for online and mobile card payments accepted by merchants in Europe, now also offers “Cross-Sales,” software those mer-chants can use to boost sales by contacting buyers with offers for products and services related to their initial purchases. Lucas Jankowiak is CEO, 34 (6) 7901-5699, [email protected], www.securionpay.com.

CIRCULO DE CREDITO, which claims a 45% market share among credit bureaus in Mexico, says it has been using the FICO Extended Score to score people with little or no credit history, and has increased the percentage of people who can be scored from 45% to 85%. FICO and Circulo de Credito developed a customized score based on the high correlation of an individual’s risk with the risk level of people who live at the same house The partners aim to calculate a risk score on some 10 million Mexicans who lack credit history. Jim Wehmann is EVP for Scores at FICO, (612) 758-5617, jimwehmann@ fico.com, www.fico.com. Juan Manuel Ruiz Palmieri is Director at Circulo de Credito, 52 (55) 1720-9977, [email protected], www.circulodecredito.com.mx.

Janet Johnston has been appointed Head of Payment Services at Raphaels Bank, 44 (203) 751-1600, [email protected]. Edward Garcia has been appointed Chief Operating Officer at Pivotal Payments, (514) 313-1190, [email protected]. Devora Henderson has been appointed Vice President, Retail, Americas at Diebold Nixdorf, (330) 490-4000, devora. [email protected]. Russell Scudder has been appointed President and Chief Operating Officer at ZipLine, (954) 449-9540, [email protected]. Tracy Cray has been appointed Director of Card Scheme Compliance at Chargebacks911, 44 (203) 750-5197, [email protected].

Management Changes

© HSN Consultants, Inc. 2015 THE NILSON REPORT 2JANUARY 2017 / ISSUE 1102 / THE NILSON REPORT© 2017 HSN Consultants, Inc. THE NILSON REPORT 3JANUARY 2017 / ISSUE 1102 / THE NILSON REPORT


AFS, a provider of credit and debit card processing, ATM and POS driving, and related payment services to banks and other organizations in the Middle East and North Africa, has launched Bahrain’s first NFC-based mobile payment service in partnership with Ithmaar Bank and Batelco. Shiraz Ali is Director – Frictionless Payments at AFS, (973) 3222-0505, shiraz.ali@ afs.com.bh, www.afs.com.bh.

APRIVA, provider of end-to-end wireless transaction processing support, has completed EMV integration and certification with Metric Parking, a provider of payment services to over 60,000 parking terminals worldwide. The certification includes Visa, Mastercard, American Express, and Discover. Peter Aylward is Managing Director at Metric Parking, 44 (179) 339-3250, [email protected], www.metricgroup.co.uk. David Riddiford is President at Apriva, (480) 421-1210, [email protected], www.apriva.com.

ETHOCA and FICO have formed a partnership. Card issuers using the FICO Falcon Fraud Manager will be able to connect to Ethoca’s Global Collabora-tion Network to improve the recovery of card-not-present fraud losses and minimize costs tied to the chargeback process. Robert Duque-Ribeiro is VP at FICO, 55 (11) 98111-2019, [email protected], www.fico.com. Trevor Clarke is EVP, Business Development at Ethoca, (416) 849-6094, [email protected], www.ethoca.com.

WIRECARD CARD SOLUTIONS is offering Apple Pay to its boon prepaid Mastercard customers in France. Boon is based on an automatic app-to-wal-let integration. Georg von Waldenfels is EVP Consumer Solutions at Wirecard, 49 (89) 442-4331, [email protected], www.wirecard.com.

CO-OPERATIVE BANK (CB Bank) in Myanmar has started to issue JCB brand platinum, gold, and standard debit cards. CB Bank is the second JCB card issuer in Myanmar. Yuji Matsushita is Country Manager at JCB Interna-tional (Thailand) Yangon Branch, 95 (1) 860-3397, [email protected], www.global.jcb/en/. U Zayar Aung is General Manager at CB Bank, 95 (1) 378-905, [email protected], www.cbbank.com.mm/.

U.K. COMPETITION APPEAL TRIBUNAL has denied an appeal by Mastercard to reconsider its previous award of $86.4 million (£68 mil.) to grocery store chain Sainsbury related to fees charged on credit card transactions. Mastercard will appeal this decision to the Court of Appeal for England and Wales based in London.

SMART2PAY, which offers online merchants local payment methods in 80 countries, has added China’s WeChat Payment to its platform. Jamie Flinterman is CEO at Smart2Pay, 31 (35) 533-5370, james@ smart2pay.com, www.smart2pay.com.

BARCLAYCARD is embedding its bPay contactless payment technology in personalized smartphone cases available through Case Station. Cardholders can design their own cases for iPhone, Samsung, and LG handsets online using images, texts, and designs by Case Station. BPay chips link to digital wallets that can be used by anyone holding a U.K.-registered Visa or Mastercard debit or credit card. They can be offered in a variety of wearable payment devices. Tami Hargreaves is Commercial Director, Digital Consumer Payments at Barclaycard, 44 (777) 619-0360, tami.hargreaves@ barclaycard.co.uk, www.barclaycard.com.

MASTERCARD has created 2KUZE, a mobile payment platform that connects small farmers, agents, buyers, and banks in Kenya, Uganda, and Tanzania. Farmers can buy, sell, and receive payments for agricultural goods via their feature phone. Eighty percent of farmers in East Africa are classified as smallholder because they have less than two acres of farmland. Michael Elliott is VP, Innovation Management and Head of Mastercard Lab for Financial Inclusion, 254 (71) 909-4000, [email protected], www.mastercard.com.

AF PAYMENTS in the Philippines will offer unbanked commuters in Manila multipurpose smart cards they can use for transit and purchases of goods at stores. OT (Oberthur Technologies) will supply the cards. Peter Maher is CEO at AF Payments, 63 (2) 810-0398, [email protected], www.beeptopay.com. Mark Garvie is Asia Financial Services Institutions Managing Director at OT, (852) 2838-8507, [email protected], www.oberthur.com.

WELCOME REAL TIME’S At Store mPOS real-time reward application is available to banks and merchant acquirers for their small merchant customers on AEVI’s Global Marketplace, which is a white-label, business-to-business app store and cloud platform. Pierre Boces is Head of Product Marketing and Consulting for Welcome Real Time, 33 (4) 4297-5887, p.boces@ welcome-rt.com, www.welcome-rt.com. Mike Camerling is Chief Product Officer at AEVI, 44 (134) 438-4800, [email protected], www.aevi.com.

DIGITAL RIVER WORLD PAYMENTS, a payment service provider, has integrated into its online platform the ACI Pay.On Payment Gateway. ACI Pay.On brings Digital River bank connections, payment features, and alternative payment types, particularly in Latin America and Europe. Hayden Reed is SVP and General Manager at Digital River, (952) 253-1234, [email protected], www.digitalriver.com. Markus Rinderer is SVP at ACI Worldwide, 49 (89) 452-300, [email protected], www.aciworldwide.com.

AMP CREDIT TECHNOLOGIES’ version 4.0 of its proprietary automated lending platform for banks and other institutional lenders includes new functionalities such as omnichannel document ingestion and analysis, document management, and risk management. Thomas DeLuca is CEO, (852) 2541-3180, [email protected], www.amp-creditech.com.

APPLE PAY is being offered in Spain by Mastercard, which is working with several issuers including Banco Santander and prepaid company Ticket Restaurant. Issuers receive tokens for their primary account numbers from the Mastercard Digital Enablement Service. Ovidio Egido is General Manager for Spain at Mastercard, 34 (91) 566-2500, [email protected], www.mastercard.com.

MONERIS SOLUTIONS, Canada’s largest acquirer of debit and credit card payments, has received a five-year contract extension from ATB Financial to provide merchant services. Jeff Guthrie is Chief Sales Officer at Moneris, (416) 734-1281, [email protected], www.moneris.com. Teresa Clouston is EVP, Business and Agriculture at ATB, (403) 245-8110, [email protected], www.atb.com.



Former Motorola engineers from the design team for Razor and Droid smartphones are behind the design of the ChecOut M mobile device pictured here, which is expected to receive PCI DSS 4.1 certification in the second quarter of 2017. Start-up Innowi created CheckOut M, which allows for ordering and paying from anywhere in a store while simultaneously updating inventory, employee, CRM, and SCM management information systems.

The device incorporates Intel’s Atom 2.24 GHz processor running either the Android Marshmallow or Windows 10 operating system. Offering a choice of operating systems gives third-party developers more flexibility when creating software for the ChecOut M. Connectivity options include Wi-Fi ac 2.4/5 GHz, Bluetooth, and

4G LTE. An optional biometric fingerprint reader is available for employee sign-in. Battery options offer either 8 or 10 hours of continuous use. The ChecOut M is EMV Level 1 and Level 2 contact and contactless chip certified.

Most mobile POS terminals support barcode scanners using the device’s built-in camera. Innowi licensed high-end integrated peripheral barcode

scanner technology and miniaturized it for the ChecOut M. The result is 1D and 2D high resolution

barcode scans that are completely effective for environments where consumers can check out and pay anywhere. The high-speed scanner can also be used for inventory SKU management and price lookup, as well as enabling tickets to be scanned in transit applications.

The ChecOut M measures 7.14 inches by 3.59 inches by 0.49 inches. There are front (2 MP) and rear (8 MP) cameras that can be used for customer and back-office communications. Its front screen features a

6.4-inch (diagonal) FHD display with a 440 NITS brightness level. Its rear screen, which is used for PIN on glass, measures 2.4 inches diagonally. The screens are manufactured with scratch- and drop-resistant surfaces.

Innowi’s chief financial backer is Whizz Systems, which also manufactured the ChecOut M prototypes. Production models will be available in the third quarter of 2017. Jeffrey Brooks is Chief Marketing Officer at Innowi in

Santa Clara, California, (408) 476-3123, jeffrey.brooks@

innowi.com, www.innowi.com.

Protecting against that fraud while maximizing the number of sales

approved without triggering any action by a seller’s fraud fighting team is the goal of Neustar Fraud Detection Solutions. The company’s platform, which ties

“fingerprints” of mobile devices to personally identifiable information (PII) of the prospective buyer, is currently in use by 2 of the top 10 U.S. financial institutions to assist with fraud protection in the opening of new credit cards and bank accounts. The company is now offering its technology to merchants.

Neustar has connections to all mobile network operators in

the U.S. and Canada that permit verification of a mobile phone and its user, as well as a check on the device’s history. Neustar can tell if a phone number has just been issued or has been held by the new account applicant or prospective online buyer for up to a decade. By matching online identity data (IP addresses and device identity data) with offline identity data (name,

Its rear screen, which is used for PIN on glass, measures 2.4 inches.

> see p. 6

Innowi Mobile POS Device

Neustar Mobile Fraud Fighting Platform from page 1

© 2017 HSN Consultants, Inc. THE NILSON REPORT 5JANUARY 2017 / ISSUE 1102 / THE NILSON REPORT

http://www.innowi.com

address, and phone number), Neustar ties the device to its valid user, creating a historical profile that combines desktop and mobile banking transactions with desktop and mobile payments. It can also extend buyer profiles to include family members using other devices.

Device fingerprinting alone does not protect lenders or sellers from criminals who have successfully “spoofed” a handset, which allows them to use it for fraud. Neustar’s PII combats spoofing and can be particularly helpful to call centers, where criminals try to obtain additional personal information about a cardholder to supplement what they already

know through theft or from data purchased from other criminals.

Customers link to Neustar’s platform through the company’s application programming interface (API). The platform can be operated on a customer’s site or hosted by Neustar, which earns revenue on a per-transaction basis.

Neustar says its platform, in operation for 18 months at its bank clients, approves more than 95% of all new account applications. Its success at reducing “false positives,” those transactions that suggest fraud might be occurring but which are actually valid, have already saved those banks millions of dollars in extra risk management action, such as contacting applicants for additional information or using two-factor authentication. Ken Jochims is Director, Fraud and Risk Solutions at

Neustar in San Francisco, California, (415) 659-1472,

[email protected], www.neustar.biz.

to smartphones and wearable devices. Those companies, which include Sequent Software, Bell ID, Oberthur, Gemalto, and

G&D, must work with multiple types of hardware and software technologies in mobile devices that protect credentials linked to applications for payment (including transit), government, healthcare, identification, loyalty, and access control.

Hardware that stores data and sensitive logic and executes cryptography can come in the form of secure elements, SIM cards, and trusted platform modules. NXP and ARM are top hardware manufacturers for secure elements in mobile devices. Other manufacturers include Qualcomm, which makes chips that include the secure element

for Apple Pay. Software includes “white box” encryption, available from companies including Arxan, Inside Secure, and WhiteCryption.

Other companies including V-Key combine encryption with threat

analytics to create what they call a virtual secure element.

MagicCube is a start-up that has created what it claims to be an industry first — a full, entirely software-based trusted execution environment (sTEE) platform. Its patented, device agnostic software is offered to mobile wallet and IoT (Internet of Things) providers to be linked to their payment application in the cardholder’s device. The MagicCube SDK creates an intelligent software secure element the company refers to as “the

Cube” that protects data storage and sensitive logic and conducts cryptographic operations.

MagicCube clients also receive a secure appliance called a miniCloud, which includes a hardware security module and trust authority. The appliance works with the Cube through a proprietary security connection, which includes multiple technology layers, protocols,

encryption, and obfuscations to handle listeners, loggers, man-in-the-middle attacks, network threats, and impersonation.

Unlike other software that stores tokenized card credentials, MagicCube can facilitate offline payments when a mobile phone can’t get a network signal, such as when underground for a transit

... ties the device to its valid user and creates a historical profile.

Device agnostic software is offered to mobile wallet and IoT providers.

Software-based TEE for Mobile Cards from page 1...

Neustar Mobile Fraud Fighting Platform from page 5...


http://www.neustar.biz


Global brand credit, debit, and prepaid cards issued in the Asia-Pacific region are expected

to generate 63.99% of worldwide spending at merchants in 2025, up from a 55.87% share of global purchase volume in 2015. Asia-Pacific cards are projected to generate $35.126 trillion in purchase volume by 2025, up from $11.409 trillion in 2015.

Cards issued in the United States held a 23.44% share of global brand purchase volume in 2015. That share will fall to 17.69% by 2025, even as card spending reaches $9.711 trillion, up from $4.786 trillion in 2015.

Credit, debit, and prepaid cards in Europe with global brands accounted for 14.51% of worldwide purchase volume in 2015. Europe’s market share will decline to 12.79% by 2025 when purchase volume is expected to reach $7.018 trillion, up from $2.964 trillion.

Latin America held a 2.92% share in 2015. By 2025, market share of the region is projected to slip to 2.29%. Purchase volume is

expected to reach $1.260 trillion in 2025, up from $0.597 trillion.

Cards with global brands from Canada had a 1.75% share of the worldwide market in 2015. By 2025, cards from Canada

are expected to hold a 1.20% share, with purchase volume projected

at $0.659 trillion, up from $0.358 trillion in 2015.

Global brand purchase volume market share for cards issued in the Middle East/Africa region was 1.50% in 2015. It is expected to reach 2.04% of the worldwide total by 2025. Purchase volume is projected to be $1.117 trillion, up from $0.307 trillion in 2015.

application. MagicCube is compliant with EMVCo token service provider specifications.

The company earns revenue from yearly license fees for the miniCloud. Each license comes with a select number of Cubes. MagicCube has received funding from Visa, Epic Ventures, and BVP.

Sequent Software, which digitizes payment, transit, loyalty, and identification cards for wallet providers, is

the first card credential provisioning company to form a partnership with MagicCube. Sequent works with every type of hardware and software on the market that safely contains tokenized card credentials for smartphones and wearables. Sam Shawki is CEO at MagicCube in Sunnyvale,

California, (650) 863-9723, [email protected],

www.magiccube.co.

Hans Reisgies is CTO at Sequent in Santa Clara,

California, (408) 888-9080, [email protected],

www.sequent.com.

Purchase Volume by Global Brand Cards — Projected to 2025 from page 1

Spending worldwide is project-ed to reach $54.891 tril. by 2025.

2025(outside)

2015(inside)23.4%17.7%

12.8% 64.0%

1.8%>

<2.3%

<2.9%<1.5%

<2.0%

1.2%>14.5%

55.9%


Market Shares ofPurchase Volume Worldwide

Asia-Pacific

up812

U.S.down575

MiddleEast/Africa

up53

LatinAmerica

down63

Europe

down173

Canada

down55

Change in Basis Points


http://www.magiccube.co

http://www.sequent.com

$10.91 billion increased by 16.1% versus 2015. Purchase volume and cash volume combined reached $132.37 billion, up 3.5%. Cash volume accounted for 8.24% of total volume in 2016 compared to 7.35% in 2015.

Outstanding credit card receivables grew from $57.94 billion to $61.56 billion, an increase of 6.3%.

Net principal credit card charge-offs of $1.34 billion were up 10.1%. The net principal charge-off rate was 2.34%, up 12 basis points from 2015.

Credit card debt delinquent for more than 30 days past the payment due date increased by 32 basis points to 2.04%. Delinquencies greater than 90 days past the payment due date at 0.97%, were up 12 basis points from 0.85% in 2015.

Discover brand credit cards were also issued in 2016 by DFS network partners First National Bank of Nebraska and Alliance Data. However, purchase volume on those cards amounted to less than 0.04% of total Discover card purchase volume in 2016. As a percentage of total outstandings

(0.91 bil.), Viber (0.81 bil.), Instagram (0.60 bil.), Tumblr (0.55 bil.), Line (0.40 bil.), Kik (0.33 bil.), and Twitter (0.32 bil.). Businesses can engage in customer

service and commerce on these and other social networks with messaging apps including Sina Weibo, Telegram, Snapchat, Pinterest, Skype, and Slack using a form of artificial intelligence called a chatbot, which engages with consumers who type in messages.

American Express was the first card issuer to deploy a chatbot. That happened in September 2016 on Facebook Messenger. Amex uses its bot to advise cardholders about recent purchases as well as to make restaurant recommendations and to send messages about Membership Rewards. Cardholders can also add their account details and billing information to facilitate payment on Facebook for games and for purchases from the social network’s Shop section.

PayPal and financial institutions have rolled out customer service bots. PayPal uses a bot for its Venmo person-to-person money transfer service. It also interacts with bots deployed by merchants including Uber. Mastercard is building a bot for card issuer

customer service as well as for links to Masterpass. Bank of America will soon have a bot for cardholders on Facebook Messenger. Technology for bots is available from companies including IBM, Kasisto, and Personetics.

Merchants have also deployed bots for customer service, and they are moving quickly into bots for targeted commerce. One problem with commerce is that payments are likely to occur at another website or in an app, undercutting one of the values of using a bot in the first place.

Ingenico ePayments, a payment service provider that handled $60 billion in card and noncard online

payments last year, can embed its payment and multicurrency processing service inside a merchant’s bot, removing the need to leave the messaging app to complete a purchase. Merchants can customize a bot user experience once and deploy it in multiple messaging networks. Ingenico’s platform integrates with the merchant’s existing systems and finalizes the payment in the messaging app.Gertjan Dewaele is Product Intelligence & Innovation

Manager at Ingenico ePayments in Brussels, Belgium,

32 (2) 613-0424, [email protected],

www.ingenico.com.

The platform finalizes the payment in the messaging app.

2016 2015 Chg.

Cards (mil.) 51.4 52.7 –2.5%Accounts (mil.) 44.3 44.8 –1.0% Active Accounts (mil.) 20.0 20.1 –0.5%Transactions (bil.) 2.18 2.07 4.8% Purchases (bil.) 2.13 2.03 4.5% Cash (bil.) 0.05 0.04 18.2%Volume (bil.) $132.37 $127.88 3.5% Purchases (bil.) $121.47 $118.49 2.5% Cash (bil.) $10.91 $9.39 16.1%Outstandings (bil.) $61.56 $57.94 6.3%

All categories include third-party issuers, although they account for less than 1% of Discover’s business.


Discover Card U.S. 2016

Discover Financial Results from page 1...

Ingenico Payment Processing for Merchant Bots from page 1...


http://www.ingenico.com


3.0% versus 2015. Credit card outstandings declined 6.3% versus the prior year to $101.11 billion. Cards in circulation in the U.S. totaled 47.5 million, down 17.5%.

Amex-branded cards were issued by Bank of America, Bank of Hawaii, Barclays, BBVA Compass, Citigroup, First National of Nebraska, Pentagon Federal Credit

Union, USAA, U.S. Bancorp, and Wells Fargo.

Total volume (purchase volume plus cash advances) on all American Express cards issued in the U.S. was $700.40 billion in 2016, down 3.0% versus 2015. Both

travel and entertainment (T&E) volume and non-T&E volume declined by 3% versus 2015. In the fourth quarter of 2016, T&E volume accounted for 23% of total volume, while non-T&E volume accounted for the remaining 77%.

Proprietary consumer volume was down 7%, while proprietary small business and corporate services volume was up 2%.

Worldwide total volume generated by American Express cards, including spending tied to cards issued by all third-party partners, was $1.038 trillion in 2016, up 1% on a local currency basis. Also on a local currency basis, volume was

down 1% on cards issued directly by American Express, while cards issued by the hundreds of partners linked to the Amex Global Network Services business grew by 10%.

In its Japan/Asia/Pacific/Australia region, total American Express card volume was up 14% on a local currency basis. For Latin America and Canada it was up 6%. For Europe, the Middle East, and Africa it was up 8%.

Proprietary consumer card volume on cards issued outside the U.S. was up 8% on a local currency basis, while proprietary small business and corporate services volume on cards issued outside the U.S. was up 7%.

Cards issued in the U.S. generated 67.51% of total Amex volume worldwide in 2016, down from 70.20% on a local currency basis in 2015.

on all Discover brand credit cards, network partners accounted for 0.06% compared to 0.07% in 2015.

The number of Discover credit cards in circulation issued by DFS and its network partners combined totaled 51.4 million, down 2.5%.

DFS had net income of $2.39 billion for 2016, up 4.2%. This included card, mortgage, student loan, and

personal loan businesses. Its Direct Banking segment generated pretax income of $3.66 billion, up 1.2%. Total loans reached $77.25 billion, up 6.7%.

Discover’s Payment Services, a segment that includes the PIN-based Pulse Network, network

partners, Diners Club International, and business-to-business transactions handled for AribaPay, contributed $107 million in pretax income, up 7.0% versus 2015.

Diners Club purchase volume in 2016 increased 7.7% to $28.60 billion.

Total volume on Pulse cards in 2016 (including purchases, cash back at the point of sale, and ATM cash withdrawals) dropped 8.1% to $138.00 billion. The number of transactions processed on the Pulse Network totaled 3.46 billion, a decline of 11.2% from 2015.

Diners Club purchase volume in 2016 increased 7.7% to $28.60 bil.

Total volume in the U.S. was $700.40 bil., down 3.0%.

American Express Results from page 1...

2016 2015 Chg.

Cards (mil.) 47.5 57.6 –17.5%Accounts (mil.) 37.4 44.8 –16.5% Active Accounts (mil.) 24.6 29.4 –16.3%Transactions (bil.) 4.92 5.11 –3.7% Purchases (bil.) 4.88 5.08 –3.9% Cash (bil.) 0.04 0.03 33.3%Volume (bil.) $700.40 $721.80 –3.0% Purchases (bil.) $695.44 $717.29 –3.0% Cash (bil.) $4.96 $3.71 33.7%Outstandings (bil.) $101.11 $107.85 –6.3%

All categories include third-party issuers. © 2017 The Nilson Report

American Express U.S. 2016


transactions are in addition to the 53 acquisitions and 59 investments in merchant acquiring and related processing companies identified in 28 countries last year, which we published in issue #1101.

Combined, the value of the 91 acquisition and investment transactions in mobile payments and mobile money transfers exceeded $927.4 million. The exact amount is higher but isn’t known because 32 transactions were disclosed without any monetary value being revealed. In particular, the value of the acquisitions isn’t known because terms were not announced on 26 of the 34 transactions.

What is known is that acquisitions in mobile payments and mobile money transfers occurred in 16 countries. The 8 deals with announced values amounted to $514.3 million.

The largest acquisition with a known value was the $386-million purchase of Union Mobile Pay in China by Qingdao Haili Metal One. The second largest was the $50-million acquisition in Nigeria of Vanso by Interswitch.

Of note were the mobile payment company acquisitions made in the U.S. by Germany-based

automakers BMW and Volkswagen. Their actions preceded the announcement this month that Germany-based Mercedes Benz, would buy mobile payment company PayCash of Luxembourg.

Other companies making acquisitions were financial institutions Standard Bank and Societe Generale, bill-to-mobile phone specialist Bango, and

payment card acquiring processors Net Element and Net1 UEPS.

There were 11 acquisition transactions

in the U.S., 10 in Europe led by 4 in the U.K., 7 in Asia including 2 each in India and Vietnam, 3 in Canada, and 3 in Africa.

Investments in mobile payments and mobile money transfers occurred in 19 countries and totaled at least $413.1 million. The exact amount of the 57 investment transactions is not known because only 51 transactions were announced with financial terms disclosed. No amounts are available for the other 6 transactions.

The largest investments based on known amounts were the $60-million Series B round for Paytm in India, the $50-million Series C round for MobiKwik in India, two $38-million rounds for U.S.-based

Acquisitions/Investments in Mobile Payments 2016from page 1...

Union Mobile Pay Qingdao Haili $386.0 China Vanso Interswitch $50.0 Nigeria VNPT Epay UTC $33.8 Vietnam PayPoint Volkswagen Financial $32.5 U.S. MeaWallet Seamless $4.9 Norway BilltoMobile Bango $3.5 U.S. CardsMobile Lanit $2.5 Russia TagPay Societe Generale 1 $1.1 France Axiologix/SLA Mobile joint venture * U.S. D1 Mobile Ackroo * Canada Dash Reserve * U.S. Firepay Standard Bank 2 * South Africa Glidera Kraken * U.S. Global CashSpot Trailblazer Resources * U.S. Masterpayment Net1 UEPS 3 * South Africa MiniCheckout omNovos * Canada Nexcharge Net Element * U.S.

Onebip Dimoco * Italy ParkMobile BMW * U.S. ParkX Passport * U.S. Pay2Global TerraPay * U.K. Paymill KliknPay * Germany PayStar Net Element * U.S. PhonePe Flipkart * India PowaPOS SuperCom * U.K. PowaTag undisclosed * U.K. PowaWeb Greenlight Digital * U.K. Prabhu Telenor * Malaysia Qarth Technologies Ola * India Rabbit Line Pay BSS Holdings 4 * Thailand Securus Payments Chyp * U.S. Transfert Credit Ding * France Vietnam MPOS Tech. SoftPay Mobile * Vietnam Zomaron management buyout * Canada

Amount Company Buyer (mil.) Country

*Terms not disclosed. 1Purchased undisclosed equity stake. 2Purchased majority stake. 3Purchased 60%. 4Purchased 50%. © 2017 The Nilson Report

Mobile Payments and Mobile Money Transfers — 2016 Amount Company Buyer (mil.) Country

Acquisitions

The value of the 91 acquisitions and investments exceeded $927.4 mil.



Remitly, and a $23-million Series B round for South Korea-based Viva Republica.

There were 22 investments in Europe led by 9 in the U.K., 19 investments in the U.S., 12 investments in Asia led by 5 in India, and 1 each in Africa, Canada, Latin America, and the Middle East.

Acquisitions and investments in mobile payments and mobile money transfers continued in the first month of 2017 including the $48 million in debt financing received by Sweden-based processor iZettle,

which also completed a $16-million series D venture funding round.

Deals in merchant acquiring and processing in 2017 have included Advent International and Bain Capital purchasing ConCardis, EVO buying Sterling Payment Technologies, and Clarus Merchant Services buying North American Merchant Services and BC Technologies.

Prior issues: 1100, 1098, 1096, 1094, 1092, 1090, 1088

Paytm Series B 1 $60.0 India MobiKwik Series C 2 $50.0 India Remitly Series C 3 $38.5 U.S. Remitly Series D4 $38.5 U.S. Viva Republica Series B5 $23.0 So. Korea Ping++ Series B 6 $20.0 China Azimo undisclosed round 7 $15.0 U.K. Paidy Series B 8 $15.0 Japan Zoona Series B 9 $15.0 Zambia GoCardless Series C 10 $13.0 U.K. Afrimarket Series B 11 $11.2 France Kyash Series A 12 $8.5 Japan Passport Series B 13 $8.0 U.S. Lydia undisclosed round 14 $7.8 France TransferWise undisclosed round 15 $7.5 U.S. Seamless private placement 16 $6.0 Sweden Juspay Series A 17 $5.8 India Wyre Series A 18 $5.8 U.S. Instarem Series A 19 $5.0 India Mobile Credit Payment undisclosed round 20 $5.0 Singapore PayIt Series A 21 $4.5 U.S. MobiKwik undisclosed round 22 $4.0 India PayQR undisclosed round 23 $3.9 Russia TransferGo Series A 24 $3.4 U.K. Giftagram undisclosed round 25 $3.2 Canada Flexion undisclosed round 25 $3.0 U.K. PinPay undisclosed round 26 $2.5 Lebanon Revolut seed funding 27 $2.5 U.K. YouTransactor undisclosed round 16 $2.3 France

Muume Series A 28 $2.2 Switzerland Shopbox undisclosed round 25 $2.2 Denmark ModoPayments angel funding 25 $2.0 U.S. Tide seed funding 29 $2.0 U.K. MovoCash seed funding 30 $1.8 U.S. Covercy Tech. Trading seed funding 31 $1.5 U.K. Dream Payments undisclosed round 32 $1.5 U.S. SwissPay seed funding 33 $1.5 Switzerland Toast pre-Series A 34 $1.5 Singapore Roam seed funding 25 $1.2 U.S. CoinTent seed funding 35 $1.1 U.S. Minkasu seed funding 25 $1.0 U.S. Cringle crowdfunding $0.9 Germany Ensygnia Series A 36 $0.7 U.K. MovoCash seed funding 37 $0.7 U.S. SpeedETab seed funding 38 $0.7 U.S. Tricount seed funding 39 $0.7 Belgium Droplet crowdfunding $0.6 U.K. CodiPark seed funding 25 $0.5 U.S. CashCodes seed funding 25 $0.3 Ireland PaySur seed funding 40 $0.3 Brazil soCash angel funding 25 $0.3 Singapore My-Send seed funding 25 * U.S. PennyPass angel funding 25 * U.S. Reserve Diageo 41 * U.S. Seamless Tikvah Management 42 * Sweden TransferGalaxy undisclosed round 25 * Sweden Waltz undisclosed round 43 * U.S.

*Terms not disclosed. 1Led by Mountain Capital. 2 Led by GMO Payment Gateway. 3 Led by Stripes Group. 4 Combination of debt and equity. 5 Led by Goodwater Capital. 6 Led by China Broadband Capital. 7 From Rakuten Fintech Fund. 8 Led by Eight Roads. 9 Including IFC and Accion. 10 Led by Passion Capital. 11 Led by Global Innovation Fund. 12Led by Jafco. 13Led by MK Capital. 14 From NewAlpha AM and Oddo & Cie. 15 From Baillie Gifford. 16 From existing investors. 17 Led by Accel Partners. 18Led by Amphora Capital. 19Led by Vertex Ventures. 20Led by 2W Group. 21 Led by Advantage Capital Partners. 22 Led by Net1 UEPS. 23 From Sergey Kozlovsky. 24From Vostok Emerging Finance. 25Investors not disclosed. 26From Fransabank. 27 Including Index Ventures. 28 From Heliad Equity Partners. 29 Including Passion Capital. 30Led by Tech Coast Angels. 31Led by SGVC. 32From Connecticut Innovations. 33 Including Edipresse Groupe. 34 Led by Aetius Capital. 35 Led by Y Combinator. 36Led by Gate Ventures. 37Led by Cox Orange. 38From AVenture Capital. 39From Belcube. 40 Individual investor. 41 Strategic investment. 42Increased ownership to 5.8% of voting shares. 43From Outfront Media. © 2017 The Nilson Report

AmountCompany Investor (mil.) Country

AmountCompany Investor (mil.) Country

Mobile Payments and Mobile Money Transfers — 2016Investments


operators, theme parks, and other merchants now account for more than half of Deloitte’s Cards & Payments clients. Merchants have changed their thinking on

payments, moving beyond seeing them as a cost center and instead viewing them as a strategic asset. They are spending money on consulting and professional services to control their own mobile wallets, giving consumers the ability to load multiple payment instruments into those wallets while influencing the choice of the default payment option, which could be a proprietary card, a co-branded card, or a noncard account.

Merchants want their wallets to be tied to the calendar of a customer’s mobile device to influence spending decisions “upstream” and “downstream” from what will occur on their premises. For example, a hotel could promote a restaurant outside its own property once a guest declines a promotion for an on-premises eatery. That guest might also want information about local tourist experiences while staying at the hotel and need a car rental and other travel arrangements before they get to the property. While this concept has been around for some time, it is catching on now.

Deloitte expertise includes services tied to whether or not these mobile wallet operators want to be the merchant of record for all transactions including those upstream and downstream. Those

services include all regulatory, accounting, and tax issues

related to payments.Deloitte creates a

mock-up of the mobile wallet to give merchants

a better understanding of both the capabilities and potential liabilities. It also provides consulting on selecting a wallet technology provider, and then integrates, tests, and deploys the wallet.

Payment card issuers continue to use Deloitte to manage improvements in operational performance and in meeting growth strategies. Issuers are also looking for assistance in digitally adding new accounts, inclusive of all needed fraud protection.

Deloitte served more than 100 clients in 2016. Most were U.S.-based. Consulting was provided for mergers & acquisitions in merchant acquiring and specialist processors as well as operational readiness for real-time payments in the U.S. and PSD2 in the European Union. That consulting included how to implement treasury functions that help replace lost “float” income. Deloitte sees real-time payments and PSD2, which require expanded transaction messages, opening

up new vertical markets for specialty processors.

Other Deloitte clients in 2016 included healthcare processors, business-to-business (B2B) and business-to-consumer payment processors, and processors of insurance payments. Deloitte can help clients with technology they implement to immediately clear and settle micropayments for insurance on travel, scuba diving, skydiving, and other products not previously available for monetization.

For B2B processors, Deloitte offers predictive analytics that accelerate efficiencies in real-time ordering and receipt of raw materials.

Deloitte provided consulting to China-based payment companies that want to do business in the U.S., where credit card interchange rates remain attractive. Other consulting includes the use of the blockchain for loyalty points in addition to payments.Brian Shniderman is Principal at

Deloitte Consulting in Phoenix,

Arizona, (602) 738-7600,

[email protected],

www.deloitte.com.

Prior issues: 1101, 1099, 1063, 1055,

1046, 1034, 1029, 1006, 980, 971,

968, 959, 951, 923, 915, 908

Merchants now account for more than half of the practice’s clients.

Deloitte Cards & Payments Consulting from page 1...


© 2017 HSN Consultants, Inc. THE NILSON REPORT All Rights Reserved. Reproducing or allowing reproduction or dissemination of any portion of this newsletter in any manner for any purpose is strictly prohibited and may violate the intellectual property rights of HSN Consultants, Inc. dba The Nilson Report.

David Robertson, PublisherJanuary 31, 2017

http://www.deloitte.com


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