for 46 ears, the leading pulication covering pament … · for 46 ears, the leading pulication...

4 Investments & Acquisitions — Jan.7 U.S. Credit Card Outstandings8 Market Shares of Purchase Vol. 8 U.S. General Purpose Cards

9 Visa vs. Mastercard Purchase Vol. 10-11 U.S. Cards — Credit, Debit, & Pre-

paid Visa, Mastercard, American Express, and Discover Cards

2 – 3 Fast Facts 4 Investments & Acquisitions —

January 2017

INSIDE CHARTS

ID Insight Fights Account Takeover FraudWhen ID Insight started offering products in 2003 to combat takeover of an existing account as well as fraud tied to opening a new account in the name of an unsuspecting existing cardholder, a hot fraud trend was criminals trying to change the address of a

General Purpose Cards — U.S. 2016Credit, debit, and prepaid consumer and commercial cards issued in the U.S. for use on the Visa, Mastercard, American Express, and Discover networks generated $5.143 trillion in purchase volume (spending at merchants) in 2016, up 7.4% over 2015.

Included in that general purpose card purchase volume are PIN-based debit card figures for Visa (Interlink) and Mastercard. Not included are PIN-based cash withdrawals

Mastercard and Visa — U.S. 2016Mastercard and Visa credit, debit, and prepaid cards issued in the U.S. generated $4.326 trillion in purchase volume (spending at merchants) in 2016, an increase of 9.5% over 2015. All consumer and commercial card products are included in that amount.

Alipay QR Code Payments to the U.S./CanadaAlipay, the largest processor of online and mobile payments in China, is building brick and mortar merchant acceptance networks for its mobile wallet product in the U.S. and Canada to serve visiting Chinese consumers. The company says that more than

Sionic Mobile’s Rewards MarketplaceAirlines, hotels, car manufacturers, mobile network operators, large retailers, and other enterprises that offer mobile apps for customer loyalty see opportunities to “earn and burn” rewards points at each other’s locations. One example of earn and burn

with Change vs. 2015

$1.549

$0.693

$0.121

$0.619

$1.465

U.S. General Purpose BrandsPurchase Volume in 2016 (Tril.)

© 2017 The Nilson Report

AmericanExpress

Discover

MastercardCredit

VisaCredit

VisaDebit

MastercardDebit

$0.695

up7%

up3%

up6%

down3%

up7%

up15%

Equinox Payments Luxe 6000m TerminalThe modularly manufactured Luxe 6000m from Equinox Payments supports stand-alone, mobile, integrated, and semi-integrated point-of-sale interfaces with communication options that include multiport cable, Bluetooth BLE, Wi-Fi, 4G LTE,

Overdraft Credit for MillennialsThe Consumer Financial Protection Bureau says that revenues to financial institutions in the U.S. from overdrafts consumers made from their demand deposit accounts (DDA), commonly known as checking accounts, totaled $17 billion in 2016. The typical

> see p. 9

> see p. 7

> see p. 5

> see p. 12

> see p. 6

> see p. 5

> see p. 7

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Conferences & Seminars

Seamless Payments Africa 2017: March 14-15, 2017. The Cape Town International Convention Centre, Cape Town, South Africa. Estimated attendance: 2,000. Cost for the two-day conference is $1,046 until February 24 (group rates available). Subscribers to The Nilson Report will receive a 10% discount. Contact Ashleigh Hunt at Terrapinn, 27 (11) 516-4030, [email protected]. Register at www.terrapinn.com/exhibition/seamless-africa.

SCA 2017 Payments Summit: March 27-30, 2017. The Renaissance Orlando at Seaworld, Orlando, Florida. Estimated attendance: 900. Cost for the four-day conference is $1,245 until March 3 and $1,495 after that. Subscribers to The Nilson Report will receive a 20% discount. (Use code NILSDISC.) Contact Bryan Ichikawa at Smart Card Alliance, (703) 582-7862, [email protected]. Register at www.scapayments.com.

Seamless Payments Asia 2017: April 19-20, 2017. The Suntec Singapore International Exhibition & Convention Centre, Singapore. Estimated attendance: 8,000. Cost for the two-day conference is $896 (group rates available). Subscribers to The Nilson Report will receive a 15% discount. (Use code JWQE.) Contact Jancis Yap at Terrapinn, (65) 6322-2708, [email protected]. Register at www.seamless-expo.com.

KEYBANK has entered into a long-term revenue-sharing partnership with First Data for the bank’s merchant acquiring business. Key Merchant Services is the 32nd largest acquiring business in the U.S. It has been in a joint venture with Elavon, a unit of U.S. Bancorp. Key will now use First Data processing and related support services exclusively. Chris Foskett is EVP and Head of Corporate Development at First Data, (212) 515-0232, [email protected], www.firstdata.com.

PLANET PAYMENT’S dynamic currency conversion (DCC) service will be offered at 70,000 ATMs in the U.S. operated by Worldpay. DCC at ATMs enables international travelers to the U.S. to withdraw U.S. currency from an ATM while seeing the amount debited from their account in their own currency. Melissa Jones is SVP North America Sales & Acquirer Relations at Planet Payment, (516) 670-3200, [email protected], www.planetpayment.com. Mike Cowart is VP & GM, ATM & MSP ISO at Worldpay U.S., (678) 587-1330, [email protected], www.worldpay.us.

ZIPLINE, provider of mobile and card-based private label debit payment products, has received U.S. patent #9,489,673 covering use of a digital token to facilitate an ACH payment transaction. Danito Portal is CIO at ZipLine, (954) 449-9540, [email protected], www.zipline.biz.

PIGGY, a coupon and cashback rewards service, enables consumers to search for available discounts and coupons from more than 2,000 retailers before making online purchases. The company offers a free, 5 star-rated browser add-on that works on Google Chrome, Safari, and Firefox to scour the internet for the best deals. It automatically adds discounts at checkout and gives customers cashback rewards on their purchases. John Anderson is CEO, (407) 310-5883, [email protected], www.joinpiggy.com.

FTSI, an independent provider of technology services to 150 credit unions and community banks, mostly in the western U.S., has signed an exclusive agreement to offer Vantiv’s debit, credit, and ATM processing services and related support to its clients. Daniel Valdez is President at FTSI, (818) 241-9571, [email protected], www.ftsius.com. Bill Hampton is SVP and GM of Financial Institution Services at Vantiv, (913) 254-7781, [email protected], www.vantiv.com.

UNIRUSH and MASTERCARD must pay restitution in the $10-million range to consumers who were denied access to their prepaid funds or the ability to make payments with those funds when Mastercard Payment Transaction Services, payment processor for the RushCard, experienced technical problems with account management. The com-panies will also pay a civil penalty totaling $3 million. The Consumer Financial Protection Bureau took the action. About 45,000 of the 650,000 active RushCards were affected in the 2015 problem.

MASTERCARD’S Masterpass digital payment service is now accepted at 10,000+ small and medium-sized merchant customers of Sage Payment Solutions. Paul Bridgewater is CEO at Sage Payment Solutions, (703) 269-9154, [email protected], www.sage.com. Linda Kirkpatrick is EVP Merchants & Acceptance at Mastercard, (914) 249-2000, linda_kirkpatrick@ mastercard.com, www.mastercard.com.

CITI credit card customers in the U.S. can scan their cards using their mobile device’s camera when activating the Citi Mobile App. Once the card account number is scanned, they only need to input their CVV, date of birth, and last four digits of their Social Security number to activate their card. They do not have to input the 16-digit card account number. Pam Kornfeld is SVP, Head of Cards Servicing Journeys, (718) 248-7525, [email protected], www.citi.com.

FAST

FACT

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FEBRUARY 2017 ISSUE 1103

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No sponsored content of any kind. Ever.

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http://www.terrapinn.com/exhibition/seamless-africa/

ACI WORLDWIDE will offer merchants worldwide chargeback compliance, risk mitigation, and fraud management services from Chargebacks911 to fight illegitimate chargebacks. Monica Eaton-Cardone is CIO at Global Risk Technologies (parent company of Chargebacks911), (727) 461-1089, [email protected], www.chargebacks911.com. Jackie Barwell is Director of Fraud Product Management at ACI, 44 (148) 379-4984, [email protected], www.aciworldwide.com.

PAYMENT CLOUD TECHNOLOGIES (PCT) has launched the No.1 Currency Prepaid Mastercard Travel Card in partnership with Fexco. PCT is a prepaid card program manager and account processor. Fexco provides dynamic currency conversion and multicurrency pricing to customers in 29 countries. Through its No.1 Currency brand, Fexco provides foreign exchange services online and in more than 100 branches in the U.K. Ian Clowes is CEO at PCT, 44 (777) 495-6574, [email protected], www.paymentct.com. Denis Cleary is Managing Director at Fexco, 353 (66) 976-1258, [email protected], www.fexcoms.com.

SPIRE PAYMENTS has signed a five-year contract with Nets Merchant Services to supply its full range of POS devices and related support services. Kazem Aminaee is CEO at Spire Payments, 44 (787) 688-3730, [email protected], www.spirepayments.com. Asger Hattel is Group Executive VP, Merchant Services at Nets, 45 (2) 948-2646, [email protected], www.nets.eu.

WIRECARD is issuing the pay2d Visa card, the first virtual prepaid card for online payments in the Netherlands, in partnership with prepaid program manager 3V Beneleux. Consumers can top up their accounts online through iDeal or by bank transfer. They get a free IBAN and can do card-to-card transfers. Jack Harris is VP Financial Institutions & Fintech at Wirecard, 44 (780) 188-5417, [email protected], www.wirecard.com. Angelique Brussel is Managing Director at 3V Benelux, 31 (6) 5421-2108, [email protected], www.pay2d.nl.

KAZKOMMERTSBANK, the largest bank in Kazakhstan based on assets, has started JCB card acceptance. The merchants are already linked to the Discover Global Network (DGN). JCB has a partnership with DGN. Takashi Suetsugu is General Director, Eurasia at JCB International, 7 (495) 647-1036, [email protected], www.global.jcb/en/. Nurlan Zhagiparov is Managing Director at Kazkommertsbank, 7 (727) 258-5145, [email protected], www.kkb.kz.

VTEX, which provides a digital commerce platform to companies including Walmart, Danone, Whirlpool, Electrolux, Pandora, Avon, and Lego, will offer its customers Adyen’s payment gateway and risk management support. Jean Christian Mies is SVP at Adyen, 55 (11) 4130-2505, jean.mies@ adyen.com, www.adyen.com. Mariano Gomide de Faria is co-CEO at Vtex, 44 (741) 312-8811, [email protected], http://en.vtex.com.

INCOMM, a prepaid product and transaction services company operating in 30+ countries, has signed a five-year exclusive partnership with Ipiranga in Brazil to sell prepaid cards at 2,000+ convenience stores. Frank Monaco is EVP at InComm Int’l, (905) 286-5558, [email protected], www.incomm.com.

AEVI has added Appointedd’s booking system app to its Global Marketplace store for merchants and acquirers. Appointedd’s online scheduling solution provides merchants with a fully integrated online booking suite that enables 24/7 bookings, instant online payments, as well as a range of employee management tools. Leah Hutcheon CEO at Appointedd, 44 (131) 557-0857, [email protected], www.appointedd.com . Mike Camerling is Chief Product Officer at AEVI, 44 (134) 438-4800, [email protected], www.aevi.com.

RS2 SOFTWARE, a provider to issuers and acquirers of card management software, has a partnership with Alpha Payments Cloud to give banks in Thailand a one-stop-shop for omnichannel payment processing. Banks receive access to multiple financial and nonfinancial services through a single integration. Oliver Rajic is CEO at Alpha Payments Cloud, (65) 8660-0335, [email protected], www.alphapaymentscloud.com. Radi Abd El Haj is CEO at RS2, 49 (6102) 730-030, [email protected], www.rs2.com.

Paul Marcantonio has been appointed Head of U.K. and Western Europe at ECommPay, 44 (203) 036-0043, pmarcantonio@ ecommpay.com. Janet Johnston has been appointed Head of Payment Services at Raphaels Bank, 44 (203) 751-1600, [email protected]. Anita Boomstein, formerly at Hughes Hubbard and Reed, has been appointed Chair of the Global Payments Practice at Manatt, Phelps & Phillips, (212) 790-4580, [email protected]. Jay Meyers has been appointed Chief Information Officer at ZipLine, (954) 449-9540, [email protected]. Cristina Astore has been appointed Director, International Division at SIA, 39 (02) 6084-2720, [email protected].

Management Changes

© HSN Consultants, Inc. 2015 THE NILSON REPORT 2FEBRUARY 2017 / ISSUE 1103 / THE NILSON REPORT

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Below is a list of 18 acquisitions and 39 angel, seed, venture, and strategic investment transactions that occurred in 15 countries in January 2017. The U.S. led with 29 deals, followed by Europe with 19, Asia-Pacific with 8, and Africa with 1. Those deals involved credit cards, mobile

payments, loyalty programs, money transfers, payment processing, prepaid cards, security technology, merchant acquiring, ecommerce platforms, business-to-business payment platforms, ATM processing, foreign exchange, alternative lending, hardware manufacturers, and

cryptocurrency. The monetary value of 27 of those 57 total transactions were not disclosed. The disclosed values totaled $1.85 billion. Ant Financial’s $880-million deal for MoneyGram was the largest.

Prior issues: 1101, 1100

Investments & Acquisitions — January 2017

ATM PROCESSING

Avery Scott PAI 1 * U.S. QikServe undisclosed round 2 $3.4 U.K. Spark ATM Systems Cardtronics 1 * South Africa B2B PAYMENTS

Tradeshift Wipro * U.S. CREDIT CARDS

Union Tank Eckstein (UTA) Edenred 3 $88.8 Germany CRYPTOCURRENCY

BitFury Credit China 4 $30.0 China Blockstack Series A 5 $4.0 U.S. Ripio Series A 6 $1.9 U.S. SatoshiPay undisclosed round 7 $0.9 U.K. ECOMMERCE

FreeCharge Series D 8 $56.6 India Magento undisclosed round 9 $250.0 U.S. FOREIGN EXCHANGE

Q Money FairFX 1 * U.K. HARDWARE

Advanced Card Systems HNA EcoTech 10 $67.0 Hong Kong LOC Pay Systems Intellitix 1 * Netherlands LENDING

Activehours Series A 11 $22.0 U.S. Funding Circle debt fi nancing 12 $40.0 U.K. Funding Circle Series F 13 $100.0 U.K. Zenbanx SoFi 1 * U.S. LOYALTY

Buzz Points undisclosed round 14 $1.9 U.S. Cartera Commerce Ebates 1 * U.S. Clutch undisclosed round 14 $5.3 U.S. Edo Interactive Augeo 1 * U.S. fl ok Wix.com 1 * U.S. Loyalty Prime Series A 15 $1.1 Germany

MERCHANT ACQUIRING

Anaraq Clarus Merchant Services 1 * U.S. Applied Merchant Systems undisclosed round 16 * U.S. BC Technologies Clarus Merchant Services 1 * U.S. Centro Servizi Consortili PAX Global 17 * Italy Concardis Advent/Bain 1 * Germany Fintech undisclosed round 18 * U.S. Genesis Payment Solutions MC Payments 19 * Singapore Heidelpay AnaCap 1 * Germany

Ipsidy debt fi nancing20 $3.0 U.S. Ipsidy debt-to-equity swap21 $5.5 U.S. iyzico Series C 22 $13.0 Turkey iZettle debt fi nancing 23 $48.2 Sweden iZettle Series D 14 $16.1 Sweden Kashing angel funding 24 $0.2 U.K. Latipay Series A25 $3.0 New Zealand No. American Merch. Serv. Clarus Merchant Services 1 * U.S. PAI Merchant Serv. Div. Clearent 1 * U.S. ParentPay Schoolcomms 26 * U.K. PayCash Daimler Financial 1 * Luxembourg Sterling Payment Technol. EVO Payments 1 * U.S. TechProcess Ingenico 1 * India United Payment Services Direct Connect 1 * U.S. MOBILE PAYMENTS

Button Series B 27 $20.0 U.S. Qvivr Series A 28 $5.0 U.S. MONEY TRANSFERS

MoneyGram Ant Financial 1 $880.0 U.S. TransferWise Seedcamp 29 * U.K. PREPAID CARDS

UniRush Green Dot 1 $147.0 U.S. PROCESSING

ClassWallet Brentwood Associates 30 * U.S. Doshii seed funding 31 * Australia Dwolla Series E 5 $6.9 U.S. SECURITY

Fraugster undisclosed round 32 $5.0 Germany Payfone Series E 33 $23.5 U.S. WISeKey seed funding 14 $1.3 India*Terms not disclosed. 1Acquisition. 2Led by Maven Capital Partners. 3Purchased another 17% of the company’s equity. 4Established a joint venture. 5Led by Union Square Ventures. 6Led by Huiyin Blockchain Venture. 7Led by Blue Star Capital. 8From Snapdeal. 9Led by Hillhouse. 10Purchased majority of the equity. 11Led by Matrix Partners. 12From British Business Bank. 13Led by Accel Partners. 14Investors not disclosed. 15Including Senovo. 16From BlueSquare Resolutions. 17Purchased 60% of the equity. 18From Luminate Capital Partners. 19Purchased controlling interest. 20By existing investors. 21From Stern Trust. 22Led by Vostok Emerging Finance. 23From Victory Park Capital. 24From Startup Funding Club. 25Led by Jubilee Capital. 26Merged. 27Led by Norwest Venture Partners. 28Led by Khosla Ventures. 29Sold undisclosed equity stake in a private placement. 30Purchased minority stake. 31From Reinventure. 32Led by Earlybird Venture Capital. 33Led by BlueCross BlueShield Venture Partners. © 2017 The Nilson Report

AmountCompany Buyer/Investor (mil.) Country

AmountCompany Buyer/Investor (mil.) Country

Investments & Acquisitions January 2017



and combinations of each. The device’s software architecture combines standard Linux/HTML with a proprietary operating system and enough memory to handle a suite of payment and value-added applications.

Four available configurations of power modules provide

either attachable wired or battery-charged power and are available with or without an integrated receipt printer.

The Luxe 6000m meets PCI PTS 5.0

security standards and supports all major

point-to-point encryption technologies. The EMV card

reader is Level 1 and 2 approved. The device’s multimedia touch screen,

which is protected by Corning Gorilla Glass, measures 2.4 inches (diagonally)

and handles passive pen and finger-based signature capture. The smartphone-sized (5.3 in. x 2.6 in. x 0.6 in.) 6000m supports magnetic-stripe, contact chip, and contactless chip technology. Use cases include countertop, mobile POS, pay-at-the-table, line-busting, and in-the-field payments.

Equinox Payments is owned by NBS Payment Solutions, which is a wholly owned subsidiary of Brookfield Asset Management, a company with over

$225 billion of assets under management. Brookfield Equinox LLC (dba Equinox Payments) was formed in 2014 after the acquisition of assets from Equinox Payments, LLC. Last year the company shipped more than 200,000 POS terminals. Rob Hayhow is Vice President at Equinox Payments

in Phoenix, Arizona, (480) 551-7857, rhayhow@

equinoxpayments.com, www.equinoxpayments.com.

Prior issues: 1101, 1095, 1094, 1086, 1082, 1079, 1034

three million Chinese travelers will be in the U.S. and Canada in 2017. Alipay is owned by Ant Financial Services Group, which is an affiliate of Alibaba, China’s largest ecommerce marketplace operator.

Unlike all top acquirers of payments from merchants, Alipay does not own the payment processing contracts with merchants it serves. It operates as a third-party provider. However, if it did own the acquiring contracts, Alipay would rank as the 8th largest acquirer in the world based on the amount of purchase volume (spending) handled for merchants.

At the point of sale, Alipay mobile wallet transactions are QR code-based payments. Consumers either use their smartphone’s camera to scan a QR code on

the merchant’s countertop or present a QR code on their phone’s screen to be scanned by a seller’s barcode scanner.

Alipay has established partnerships with First Data to help it grow merchant acceptance in the U.S. and Canada, and it will work with others. It also has partnerships with POS terminal

manufacturer Verifone. Alipay is working with independent sales organizations that provide card payment processing to Chinese restaurants and other establishments where tourists will frequent, particularly in California, Florida, New York, and Nevada. Alipay QR code acceptance is live in airport shops.

There are more than 80 apps available for the Alipay mobile wallet including ordering a taxi, sharing a restaurant bill, receiving offers from merchants, and wealth management. The Alipay customer demographic differs from top card network competitor UnionPay in its focus on younger consumers. In addition to lifestyle apps, Alipay offers millennials a revolving credit product.

...combines standard Linux/HTML with a proprietary OS.

> see p. 6

Equinox Payments Luxe 6000m Terminal from page 1...

Alipay QR Code Payments to the U.S./Canada from page 1...


http://www.equinoxpayments.com

cardholder they were targeting so that credit card statements with

fraudulent transactions would not be discovered for a few months. ID Insight developed a predictive model built with change-of-address requests received by banks and credit unions. Every night ID Insight analyzed those requests and created a score on the likelihood that the request was made by a criminal.

More than a decade later, ID Insight has created a predictive model for financial institutions that provides a risk score for change-of-phone number requests received. Changing

phone numbers is now a hot tactic in account takeover, and the

problem is worsening. Criminals recognize that when they initiate fraudulent money transfers

or some other activity not found in a consumer’s prior behavior, financial institutions are likely

to call or text their customer to confirm the transaction. Anticipating this defense, criminals use hacked personal data to pose as the legitimate account holder and change the customer’s phone number. Then when transaction verification phone calls or text messages are

sent by the financial institution, it is the criminal, not the legitimate customer, who responds.

ID Insight’s new product helps financial institution fraud investigators prioritize their workflow and handle the most suspicious phone number change requests first. Research findings built into ID Insight’s algorithm

include: the greater the geographic distance between a new

phone number and the old phone number, the larger the risk; there is a larger risk when the new area code is located a long distance from the customer’s current mailing address; changing from a landline to a mobile number, or vice versa, indicates higher risk than going from a mobile number

More than 450 million active customers (those who have made at least one payment in the last year) have access to Alipay QR code payments at 1 million taxis and 2 million restaurants, supermarkets, convenience stores, and retailers in China, in addition to the 3 retail (Taobao, Tmall, and Juhuasuan) ecommerce sites of Alibaba.

In 2016, Alipay wallets generated $17.80 billion in purchase volume from 1 billion purchase transactions on “Singles Day” (November 11) in China, the busiest shopping day of the year in that country. When Alipay customers make online purchases, they can use their phone to scan a QR code at the merchant’s checkout page or use a PIN. Alipay can make direct settlement with more than 200 Chinese banks.

Consumers move money into their Alipay wallets from bank deposit accounts, person-to-person money transfers, UnionPay debit cards, or Yué Bao money market fund accounts, which are jointly owned by Ant Financial and Tianhong Asset Management.

The company’s top competitor in China is WeChat, another QR code-based payment system. Though smaller than Alipay in number of payment transactions generated, WeChat has more active users (820 million) for its core business, which is a messaging app. UnionPay, China’s top card brand, has 800 million credit and debit cardholders and a merchant network of 21 million locations.

Alipay has been expanding outside China for two years. It has nearly 100,000 acceptance locations in

26 countries in Western Europe and Asia-Pacific as well as the U.S. and Canada. Both Alibaba and Ant Financial have equity

stakes in Paytm in India. Paytm has 190 million users in India for its QR code-based payment service, which is available at 350,000 small businesses.Souheil Badran is President, North America at Ant

Financial Services Group in San Mateo, California, (414)

801-5219, [email protected], https://antgroup.com.

Prior issues: 1100, 1096, 1090, 1085, 1084, 1078, 1065

...scores the likelihood that a request was made by a criminal.

Wallets generated $17.80 bil. in purchase volume on “Singles Day.”

Alipay QR Code Payments to the U.S./Canada from page 5

ID Insight Fights Account Takeover Fraud from page 1...


https://antgroup.com


and advances at ATMs using Mastercard and Visa credit, debit, and prepaid cards, as well as transactions from cards using the Cirrus and Plus ATM networks. All debit card figures in this article — text and charts — include prepaid.

For the first time since 2008, Visa credit cards generated more purchase volume ($1.549 trillion) than Visa debit cards ($1.465 trillion). For the fourth year in a row, Visa credit cards had better year-over-year growth in purchase volume (up 15.3%) than Visa debit (up 6.5%), Mastercard debit (up 6.5%),

to another mobile number; prepaid phone numbers and voice-over-IP lines are riskier than landlines or postpaid mobile phones; a change in phone number from a rural location to an urban area indicates higher risk than rural-to-rural or urban-to-urban changes.

Adam Elliott is President at ID Insight in Minneapolis,

Minnesota, (612) 208-1285, [email protected],

www.idinsight.com.

Prior issues: 1093, 1087, 1086, 1063, 1060, 1041, 1040

overdraft triggered a $35 charge to the consumer. Overdraft fees particularly plague people who are 18 to 34 years old.

Float is a start-up that sees an opportunity to offer open-ended credit lines that range from $50 to $1,000 to help consumers, particularly the 83 million millennials (25 to 34 years old) facing cash flow problems that trigger overdrafts. It charges a flat 5% fee of the loan amount. When billed, the consumer repays

the full balance of the loan plus the 5% fee. Late payments incur a $15 fee. Float originated more than $300,000 in loans in 2016 during six months of testing its risk management platform. The average loan amount was $300.

Within minutes of approval, Float sends loan proceeds directly into the consumer’s DDA through links to Visa Direct, Star, Nyce, Pulse, and other debit networks. It reaches those networks through an application programming interface (API) to Payout.

Risk management on Float loans does not involve checking a

FICO score. It does include an examination of the applicant’s DDA account

behavior as well as recurring bill payments, including those for digital media subscriptions. Float receives that information from an API to Plaid Technologies.

Positive repayment of a Float loan will help build a

credit file at the credit bureaus. Millennials comprise the majority of the 53 million Americans who have thin or no files at a credit bureau. Only 37% of millennials have a credit card.

Float serves customers in California and Utah directly through state-chartered consumer finance licenses. It will expand to other states using that model and through partnerships with banks.

The company has received $3.0 million in angel funding from Camp One Ventures, Funders Club, and 500 Startups. Max Klein is CEO at Float in

Hollywood, California, (818) 943-

2034, [email protected],

www.hellofloat.com.

Risk management does not involve checking a FICO score.

Visa $419.85 48.78% $362.77 45.29% 15.7%

Mastercard $278.12 32.32% $272.40 34.01% 2.1%

American Express* $101.11 11.75% $107.85 13.47% –6.3%

Discover* $61.56 7.15% $57.94 7.23% 6.3%

TOTAL $860.64 100.00% $800.96 100.00% 7.5%

*Includes third-party issuers. © 2017 The Nilson Report

BRAND2016(bil.)

2015(bil.)SHARE SHARE ‘16 vs.‘15

U.S. Credit Card Outstandings

General Purpose Cards — U.S. 2016 from page 1...

> see p. 8

Overdraft Credit for Millennials from page 1...


http://www.idinsight.com

http://www.hellofloat.com

Mastercard credit (up 6.2%), Discover (up 2.5%), and American Express (down 3.0%).

American Express’s purchase volume in 2016 totaled $695.44 billion, a decline of $21.85 billion. American Express has been the second largest credit

card brand in the U.S. since 2011. Prior to that, it was third largest. Mastercard credit purchase volume totaled $692.93 billion in 2016, up $40.72 billion. Mastercard debit purchase volume totaled $618.78 billion, up $37.88 billion. Discover purchase volume totaled $121.47 billion, up $2.98 billion.

Visa credit cards added 207 basis points (bps) of market share in 2016 and accounted for 30.12% of the $5.143 trillion in combined credit, debit, and prepaid purchase volume. The market share of Mastercard

credit cards declined 15 bps to 13.47%. Visa debit cards’ share declined 24 bps and accounted for 28.49%, while Mastercard debit cards declined 10 bps to 12.03%. American Express’s share dropped 146 bps to 13.52%. Discover’s share fell 11 bps to 2.36%.

When measuring only the $3.059 trillion in purchase volume generated by credit card spending at merchants, only Visa gained share. This has been true for 7 years in a row. Its share increased 320 bps to 50.64% in 2016, while American Express declined 260 bps to 22.73%, Mastercard declined 38 bps to 22.65%, and Discover declined 21 bps to 3.97%.

American Express, Discover, Mastercard, and Visa credit card outstandings reached $860.64 billion in 2016, up $59.68 billion or 7.5%.

Credit card outstandings at year-end on Visa products increased by $57.08 billion over the prior year, and Visa had the highest percentage increase in outstandings versus the other brands, up 15.7%. Mastercard issuers added $5.72 billion, up 2.1%. American Express outstandings fell by $6.74 billion, a decline of 6.3%, in large part because of the sales of the Costco and JetBlue co-brand portfolios. Discover card outstandings were up $3.62 billion or 6.3%.

Credit card purchase transactions totaled 34.07 billion, up 10.7%. Debit card purchase transactions on the Visa and Mastercard networks increased to 55.47 billion, up 7.2%.

The market share of debit card transactions as a percent of all credit and debit card purchase

DOLLAR VOLUME (bil.) TRANSACTIONS (bil.) CARDS BRAND TOTAL CHG. PURCHASES CHG. CASH CHG. TOTAL CHG. PURCHASES CHG. (mil.) Chg.

Visa Credit $1,607.82 15.0% $1,549.09 15.3% $58.72 6.3% 19.19 17.2% 19.12 17.2% 344.7 13.5%

Mastercard Credit $724.43 6.4% $692.93 6.2% $31.50 10.9% 7.98 8.1% 7.94 8.1% 199.8 5.2%

American Express Credit $700.40 –2.9% $695.44 –3.0% $4.96 33.7% 4.92 –3.7% 4.88 –3.9% 47.5 –17.5%

Discover Credit $132.37 3.5% $121.47 2.5% $10.91 16.1% 2.18 4.8% 2.13 4.5% 51.4 –2.5%

CREDIT CARD TOTALS $3,165.02 8.1% $3,058.93 8.0% $106.09 9.6% 34.26 10.7% 34.07 10.7% 643.4 6.5%

Visa Debit & Prepaid $1,937.99 6.3% $1,464.87 6.5% $473.12 5.6% 43.13 6.6% 39.40 7.1% 493.6 5.6%

Mastercard Debit & Prepaid $810.40 5.8% $618.78 6.5% $191.62 3.7% 17.40 7.2% 16.07 7.7% 188.6 3.1%

DEBIT CARD TOTALS $2,748.39 6.2% $2,083.65 6.5% $664.74 5.0% 60.53 6.8% 55.47 7.2% 682.2 4.9%

CREDIT & DEBIT TOTALS $5,913.41 7.2% $5,142.58 7.4% $770.83 5.6% 94.79 8.2% 89.54 8.5% 1,325.6 5.7%

Some prior year fi gures have been restated. Use percent change shown to calculate new 2015 fi gures. American Express and Discover include business from third-party issuers. Figures include PIN-based debit card fi gures for Visa (Interlink) and Mastercard to match their reporting. However, card fi gures for Visa do not include Plus cards that are not Visa cards. © 2017 The Nilson Report

U.S. General Purpose Cards 2016 vs. 2015

American Express Mastercard DiscoverVisa


Market Shares of Purchase Volumeon U.S. General Purpose Cards in 2016

59%

CreditCardsOnly

Credit& DebitCards

50% 23%

14%

23%

25%

4%

2%

General Purpose Cards — U.S. 2016from page 7...



transactions combined declined again in 2016, something that has occurred since 2014. The debit card share dropped to 61.95% from 62.70%.

Debit card purchase volume of $2.084 trillion accounted for 40.52% of combined credit, debit, and prepaid purchase volume last year, down 34 bps from 40.86% in 2015.

The average amount of a credit card purchase transaction was $89.78, down 2.4% from $92.01. Visa’s average credit card purchase transaction

was $81.02, down 1.6% from $82.35. Mastercard’s average credit card purchase transaction was $87.23, down 1.8% from $88.78. American Express’s average purchase transaction was $142.51, up 0.9% from $141.23. Discover’s average purchase transaction was $57.14, down 1.9% from $58.26.

The average amount of a debit card purchase transaction was $37.57, down 0.7%. The average amount of a Visa debit card purchase transaction was $37.18, down 0.5% from $37.37. The average amount of a Mastercard debit card purchase transaction was $38.51, down 1.1% from $38.93.

Prior issues: 1080, 1057, 1034, 1011, 988

Purchase volume increased 10.9% on Visa cards. Mastercard purchase volume grew by 6.4%. Visa’s market share versus Mastercard climbed to 69.68% of spending at merchants last year, up from 68.79% in 2015.

Combined purchase volume for Mastercard and Visa credit cards reached $2.242 trillion, an increase of 12.4%. For the third year in a row, credit card spending on Visa cards was more

than double that on Mastercard credit cards.

Combined purchase volume on Mastercard and Visa debit and prepaid cards reached $2.084 trillion, an increase of 6.5%. As a percent of all Visa and Mastercard purchase volume (including credit), debit and prepaid cards generated 48.17% of combined

Visa and Mastercard spending, down from 49.50% in 2015. This continued a trend. Debit and prepaid card spending as a percentage of all card purchase

volume has declined every year since 2011. It peaked that year at 52.52%.

Visa credit card purchase volume grew 15.3% last year. Signature and PIN-based Visa debit and prepaid card purchase volume, which includes Interlink, grew 6.5%.

Mastercard credit card purchase volume increased 6.2% last year. Signature and PIN-based debit and prepaid purchase volume grew 6.5%.

Combined Mastercard and Visa credit card cash advances equaled 3.87% of total (purchases and cash) credit card volume, down from 4.02%. This is the lowest share that it has ever been, even though the dollar amount has been steadily increasing. Visa and

Credit card purchase transactions increased 10.7% to 34.07 bil.

Purchase volume for credit cards reached $2.242 tril., up 12.4%.

Visa vs. Mastercard Purchase Volume (Tril.)

3.01.3

1.5

1.5

0.7

0.6

TOTALCredit

Debit2.71.2

1.3

1.4

0.7

0.6

2.51.1

1.2

1.3

0.6

0.5

2.31.1

1.1

1.2

0.6

0.5

2.11.0

1.0

1.1

0.5

0.4

2.00.9

0.9

1.2

0.5

0.4

1.90.8

0.8

1.1

0.5

0.3

1.60.8

0.8

0.9

0.5

0.3

1.60.9

0.8

0.8

0.5

0.3

1.50.8

0.8

0.7

0.5

0.3

2013201220112010200920082007 201620152014

Mastercard Credit Debit Visa Credit Debit © 2017 The Nilson Report

Mastercard and Visa — U.S. 2016 from page 1

> see p. 10


Mastercard cash advances totaled $90.22 billion in 2016, up from $83.65 billion in 2015. For Visa, cash accounted for 3.65% of total credit card volume, down

from 3.95%. For Mastercard, cash equaled 4.35% of total credit card volume, up from 4.17%. Combined Mastercard and Visa credit card outstandings

Visa Mastercard American Express Discover Category 2016 Chg. 2016 Chg. 2016 Chg. 2016 Chg.

ACCEPTANCE LOCATIONS (mil.) 10.7 9.0% 10.7 9.0% 8.5 7.6% 10.4 8.2%CARDHOLDERS (mil.) 123.8 4.6% 91.1 4.3% 35.0 –12.3% 43.1 0.5%CARDS (mil.) 344.7 13.5% 199.8 5.2% 47.5 –17.5% 51.4 –2.5%

Per Cardholder 2.78 8.5% 2.19 0.8% 1.36 –6.0% 1.19 –2.9%Per Account 1.22 2.4% 1.20 0.7% 1.27 –1.2% 1.16 –1.5%

ACCOUNTS (mil.) 282.0 10.9% 166.0 4.4% 37.4 –16.5% 44.3 –1.0%Per Cardholder 2.28 6.0% 1.82 0.1% 1.07 –4.8% 1.03 –1.4%

Active Accounts (mil.) 162.7 9.2% 95.4 2.9% 24.6 –16.3% 20.0 –0.5%Percent Active 57.68% –90 bps 57.48% –85 bps 65.78% 15 bps 45.14% 21 bps

TRANSACTIONS (mil.) 19,187.0 17.2% 7,981.0 8.1% 4,917.0 –3.7% 2,175.6 4.8%Per Account 68.0 5.7% 48.1 3.6% 131.5 15.3% 49.1 5.8%Average Amount $84 –1.9% $91 –1.6% $142 0.9% $61 –1.2%

Purchases (mil.) 19,120.0 17.2% 7,944.0 8.1% 4,880.0 –3.9% 2,125.6 4.5%Percent of Total 99.65% 5 bps 99.54% –1 bps 99.25% –21 bps 97.70% –26 bpsAverage Amount $81 –1.6% $87 –1.8% $143 0.9% $57 –1.9%

Cash Advances (mil.) 67.0 1.5% 37.0 9.5% 37.0 33.3% 50.0 18.2%Percent of Total 0.35% –5 bps 0.46% 1 bps 0.75% 21 bps 2.30% 26 bpsAverage Amount $876 4.7% $851 1.3% $134 0.3% $218 –1.7%

TOTAL VOLUME (bil.) $1,607.82 15.0% $724.43 6.4% $700.40 –2.9% $132.37 3.5%Per Card $4,664 1.3% $3,626 1.2% $14,745 17.8% $2,577 6.1%Per Account $5,701 3.7% $4,364 1.9% $18,727 16.4% $2,986 4.5%

Purchases (bil.) $1,549.09 15.3% $692.93 6.2% $695.44 –3.0% $121.47 2.5%Percent of Total 96.35% 30 bps 95.65% –17 bps 99.29% –19 bps 91.76% –89 bps

Cash Advances (bil.) $58.72 6.3% $31.50 10.9% $4.96 33.7% $10.91 16.1%Percent of Total 3.65% –30 bps 4.35% 17 bps 0.71% 19 bps 8.24% 89 bps

OUTSTANDINGS (bil.) $419.85 15.7% $278.12 2.1% $101.11 –6.3% $61.56 6.3%Percent of Total Volume 26.11% 17 bps 38.39% –163 bps 14.44% –52 bps 46.51% 120 bpsPer Card $1,218 2.0% $1,392 –2.9% $2,129 13.7% $1,198 8.9%

Delinquencies (bil.) $9.78 15.2% $6.29 3.0% $1.29 6.2% $1.85 24.5%Pct. of Outstandings 2.33% –1 bps 2.26% 2 bps 1.28% 15 bps 3.00% 44 bps

GROSS CHARGE-OFFS (bil.) $16.30 22.0% $12.34 6.3% $2.30 1.0% $1.79 7.6%Pct. of Outstandings 3.88% 20 bps 4.44% 18 bps 2.27% 16 bps 2.90% 4 bpsPct. of Total Volume 1.01% 6 bps 1.70% 0 bps 0.33% 1 bps 1.35% 5 bps

Recoveries (bil.) $2.82 13.7% $2.24 1.6% $0.48 3.2% $0.44 0.7%Pct. of Gross Charge-offs 17.30% –126 bps 18.17% –85 bps 20.83% 44 bps 24.80% –170 bps

NET CHARGE-OFFS (bil.) $13.48 23.8% $10.10 7.4% $1.82 0.4% $1.34 10.1%Pct. of Outstandings 3.21% 21 bps 3.63% 18 bps 1.80% 12 bps 2.18% 8 bpsPct. of Total Volume 0.84% 6 bps 1.39% 1 bps 0.26% 1 bps 1.01% 6 bps

Credit/Nonfraud (bil.) $12.34 24.4% $9.45 7.3% $1.55 0.1% $1.23 10.6%Pct. of Total Volume 0.77% 6 bps 1.30% 1 bps 0.22% 1 bps 0.93% 6 bps

Net Fraud Loss (bil.) $1.14 18.3% $0.64 8.9% $0.27 2.5% $0.12 4.9%Pct. of Total Volume 0.071% 0 bps 0.089% 0 bps 0.038% 0 bps 0.089% 0 bps

Some prior year fi gures have been restated. Use percent change shown to calculate restated 2015 fi gures. American Express & Discover include third-party issuers. © 2017 The Nilson Report

U.S. General Purpose Credit Cards

Mastercard and Visa — U.S. 2016 from page 9...



grew 9.9% to $697.97 billion last year. Outstandings at Visa

issuers grew 15.7% to $419.85 billion. MasterCard issuers had

outstandings increase 2.1% to $278.12 billion. Visa outstandings accounted for 60.15% of combined Mastercard and Visa outstandings, up from 57.11% the prior year.

Mastercard and Visa credit card purchase transactions combined grew 14.4%, reaching 27.06 billion. Combined Mastercard and Visa signature and PIN-based debit and prepaid card purchase transactions increased 7.2% to 55.47 billion.

As a percent of combined Visa and Mastercard credit, debit, and prepaid purchase transactions, debit and prepaid cards held a 67.21% market share versus credit, a drop from 68.62% in 2015. Visa’s share of combined Mastercard and Visa purchase transactions on credit, debit, and prepaid cards, at 70.90%, increased from 70.46%.

Credit, debit, and prepaid cards in circulation with Visa and Mastercard brands increased 7.2% to reach 1.23 billion at year-end 2016. Debit and prepaid cards increased by 31.6 million. Credit cards increased by 50.8 million. Debit and prepaid cards equaled 55.61% of the total, down from 56.85%.

Visa added 67.0 million cards. Mastercard added 15.4 million cards. Visa’s share of credit, debit, and prepaid cards in circulation was 68.34%, up from 67.40%.

Visa added 41.0 million credit cards and 26.0 million debit and prepaid cards. Debit and prepaid cards accounted for 58.88% of all Visa cards in circulation in the U.S., down from 60.62%.

Mastercard added 5.6 million debit and prepaid cards and 9.8 million credit cards. Debit and prepaid cards accounted for 48.56% of all Mastercard cards issued in the U.S., down from 49.06%.

Prior issues: 1080, 1057, 1034, 1011

Visa Mastercard Total Category 2016 Chg. 2016 Chg. 2016 Chg.

CARDS (mil.) 493.6 5.6% 188.6 3.1% 682.2 4.9%ACCOUNTS (mil.) 423.0 7.6% 185.0 2.8% 608.0 6.1%Active Accounts (mil.) 249.5 8.0% 105.8 3.6% 355.3 6.7%

Percent Active 58.98% 22 bps 57.21% 45 bps 58.44% 31 bpsTRANSACTIONS (mil.) 43,125.0 6.6% 17,400.0 7.2% 60,525.0 6.8%

Per Account 102.0 –1.0% 94.1 4.3% 99.5 0.6%Average Amount $45 –0.3% $47 –1.3% $45 –0.6%

Purchases (mil.) 39,398.0 7.1% 16,069.0 7.7% 55,467.0 7.2%Percent of Total 91.36% 42 bps 92.35% 41 bps 91.64% 42 bpsAverage Amount $37 –0.5% $39 –1.1% $38 –0.7%

Cash Withdrawals (mil.) 3,727.0 1.6% 1,331.0 1.8% 5,058.0 1.6%Percent of Total 8.64% –42 bps 7.65% –41 bps 8.36% –42 bpsAverage Amount $127 4.0% $144 1.8% $131 3.3%

TOTAL VOLUME (bil.) $1,937.99 6.3% $810.40 5.8% $2,748.39 6.2%Per Account $4,582 –1.2% $4,381 3.0% $4,520 0.0%

Purchases (bil.) $1,464.87 6.5% $618.78 6.5% $2,083.65 6.5%Percent of Total 75.59% 16 bps 76.35% 49 bps 75.81% 26 bps

Cash Withdrawals (bil.) $473.12 5.6% $191.62 3.7% $664.74 5.0%Percent of Total 24.41% –16 bps 23.65% –49 bps 24.19% –26 bps

Includes PIN-based debit fi gures for Mastercard and Visa (Interlink). © 2017 The Nilson Report

U.S. Visa and Mastercard Debit & Prepaid Cards

Visa Mastercard Total Category 2016 Chg. 2016 Chg. 2016 Chg.

CARDS (mil.) 838.3 8.7% 388.4 4.1% 1,226.7 7.2%ACCOUNTS (mil.) 705.0 8.9% 351.0 3.5% 1,056.0 7.1%Active Accounts (mil.) 412.1 8.5% 201.3 3.3% 613.4 6.7%

Percent Active 58.46% –23 bps 57.34% –16 bps 58.09% –19 bpsTRANSACTIONS (mil.) 62,312.0 9.6% 25,381.0 7.5% 87,693.0 9.0%

Per Account 88.4 0.6% 72.3 3.8% 83.0 1.8%Average Amount $57 0.4% $60 –1.3% $58 –0.1%

Purchases (mil.) 58,518.0 10.2% 24,013.0 7.8% 82,531.0 9.5%Percent of Total 93.91% 48 bps 94.61% 29 bps 94.11% 42 bpsAverage Amount $52 0.6% $55 –1.4% $52 0.0%

Cash (mil.) 3,794.0 1.6% 1,368.0 2.0% 5,162.0 1.7%Percent of Total 6.09% –48 bps 5.39% –29 bps 5.89% –42 bpsAverage Amount $140 4.0% $163 2.6% $146 3.6%

TOTAL VOLUME (bil.) $3,545.81 10.1% $1,534.83 6.1% $5,080.64 8.8%Per Account $5,030 1.1% $4,373 2.5% $4,811 1.7%

Purchases (bil.) $3,013.96 10.9% $1,311.71 6.4% $4,325.67 9.5%Percent of Total 85.00% 62 bps 85.46% 21 bps 85.14% 49 bps

Cash (bil.) $531.84 5.7% $223.12 4.6% $754.96 5.4%Percent of Total 15.00% –62 bps 14.54% –21 bps 14.86% –49 bps


U.S. Visa and Mastercard Credit, Debit, & Prepaid


would be to pay for your mobile phone bill using frequent flyer miles. Consortiums of disparate merchants that allow the customers they share to redeem

bonus points earned from other members already exist. They include American Express-operated Plenti in the U.S. and similar Amex-owned programs called Payback in Poland, Germany, Mexico, India, and Italy. Additionally, there is Air Miles in Canada. All of these programs are primarily card based.

A new competitor is Sionic Mobile. It has built a cloud-based web and mobile app consortium loyalty marketplace that supports mobile payments from most iOS and Android devices with links to bank-issued credit or debit cards. Every transaction is initiated by a mobile app user.

Sionic Mobile calls its real-time service Mobile Rewards Marketplace. It connects through APIs to the loyalty programs of large enterprises. There are no upfront costs, integrations, or technology upgrades required. Small to medium-sized businesses (SMBs) participate using Sionic Mobile’s ION Commerce Engine (ICE), which works with Verifone, Ingenico, Micros, and Aloha/NCR (soon) point-of-sale systems. Enterprises and SMBs maintain their stand-alone rewards

programs. Additional POS system technology vendors are being signed.

Enterprise-sized customers gain access to automated data

analysis and data-driven dashboards powered by IBM

Watson Analytics, allowing them to use simple business rules to deliver individualized rewards in real time. For Mobile Rewards Marketplace transactions, enterprises pay Sionic Mobile a percentage of the transaction amount.

For SMBs and consumers, Sionic’s mobile app facilitates only mobile-to-mobile payments, which can be initiated by a QR code or a 3-digit code from a smartphone. The app designates that a participating merchant’s reward for the immediate purchase, typically 2% to 10% of the checkout amount, be delivered, for example, in frequent flyer miles, not as a discount. SMBs pay Sionic Mobile 1% of the checkout amount on top of the fee they pay to process the card payment. SMB payments are processed by Chase Merchant Services.

Sionic is working with Chase, i3 Verticals, and PAI to sign enterprise and SMB participants and is looking for other partners to help expand the network of participating merchants. So far,

100,000 merchants are signed. Larger enterprises include Lowe’s and Panera. There are no exclusivity agreements for the merchants within a particular vertical market.

ION Commerce Engine works with Sionic Mobile’s GeoSense iBeacon network, which delivers personalized greetings to consumers when they walk into a participating marketplace member location. The consumer’s phone vibrates and they receive a message that reminds them to pay with the marketplace app. The aim is to create awareness of the marketplace and generate more frequent app usage at all participating businesses. The

consumer can select to pay for the purchase using a payment card or using an existing pool of loyalty points from any participating merchant. To pay with existing frequent flyer points at a restaurant, the consumer would open the airline’s loyalty app.

Sionic Mobile’s ION Commerce Engine is part of the General Motors/OnStar connected cars initiative that involves IBM’s Watson.

Sionic has received $14.5 million in investments. Ron Herman is CEO at Sionic Mobile

in Atlanta, Georgia, (404) 606-

3585, [email protected],

www.sionicmobile.com.

...uses simple business rules to deliver rewards in real time.

Sionic Mobile’s Rewards Marketplace 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, PublisherFebruary 15, 2017

http://www.sionicmobile.com


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