merchant processing fees in the u.s. purchase … · contactless payments by 2017. sberbank,...
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‘05 ‘07 ‘09 ‘11 ‘13 ‘15 ‘17 ‘18‘06 ‘08 ‘10 ‘12 ‘14 ‘16
Purchase Transactionsat Merchants Worldwide
by Type of Card
MasterCardCredit
14.4%
MasterCardDebit
12.4%
VisaCredit
22.1%
UnionPayDebit
3.8%
UnionPayCredit
4.1%
AmericanExpress
3.7%
JCBInt’l
1.1%
DinersClub
0.1%
VisaDebit
38.3%
Market Shares in 2013
Shares from2005–201850
40
30
20
10
42.339.3
26.322.7
20.9 20.117.9
14.9
8.9 9.76.4
3.92.78.5
13.7
33.4
38.7
© 2014 The Nilson Report
5 Purchase Transactions Worldwide 5 Top Buyers of Credit Card Debt 9 U.S. General Purpose Cards 1Q 12 U.S. Merchant Card Fees
2 – 4 Fast Facts 5 Card Debt Sales in 2013 7 – 8 ID using Mobile Phones 8 – 9 First Data Litigation
9 1Q Card Results in U.S.10 Visa/MasterCard in Russia10 G2 Web Services
INSIDE CHARTS
CARD TRANSACTIONS PROJECTEDVisa debit cards accounted for 38.26% of 168.86 billion transactions generated at merchants worldwide last year by all Visa, MasterCard, American Express, UnionPay, JCB, and Diners Club credit, debit, and
SECOND 50 LARGEST U.S. DEBIT CARD ISSUERSTurn to page 11 for issuers of Visa and MasterCard debit cards (including prepaid cards) in the U.S. ranked 51-100 based on dollar volume spent at merchants (consumer and commercial) in 2013.
MERCHANT PROCESSING FEES IN THE U.S.Credit, debit, and prepaid general purpose and private label cards generated $4.765 trillion in payments for goods and services in 2013. U.S. merchants paid $71.44 billion in processing fees
CORP. INVESTMENTS & ACQUISITIONS — APRIL 2014Turn to page 7 for a list of 52 acquisitions and corporate financing deals that occurred in April of 2014. Prior issues: 1,039, 1,037, 1,036
KREDITECH ONLINE CREDIT DECISIONSKreditech’s machine-learning algorithms analyze data available on the Internet about consumers and use it to make fast credit decisions for microloans. Since opening for business 20 months ago, the
SEQUENT HCE SOFTWARE FOR SBERBANKRussia’s largest payment card issuer expects to have 3 million host card emulation (HCE)-enabled Android smartphones making contactless payments by 2017. Sberbank, Russia’s largest savings
CORTEX MOBILE WALLETMobile wallet technology available from start-up Cortex MCP is designed to include risk management, analytics, and storage and verification of credentials. It aims to be more secure than both
2CHECKOUT’S GLOBAL PAYMENT SERVICESA full suite of services for online merchants interested in selling worldwide is the expertise of 2Checkout, formed in 1999. Online sellers in 196 countries are linked to 2Checkout, which operates both
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FOR 43 YEARS, THE LEADING PUBLICATION COVERING PAYMENT SYSTEMS WORLDWIDE MAY 2014 / ISSUE 1041
BLUESNAP has integrated into its payment gateway cloud-based soft-ware from Avalara that handles compliance requirements for sales tax, VAT, and other transactional taxes. Jeff Coppolo is Head of Global Business Development at BlueSnap, (781) 577-6638, [email protected], www.bluesnap.com. Marshal Kushniruk is EVP Global Business Development at Avalara, (206) 826-4900, [email protected], www.avalara.com.
CARDTEK, provider of EMV-compliant card management software for issuers and acquirers, has opened its North American headquarters in Chicago. Gokhan Inonu is President USA, (847) 376-8367, [email protected], www.cardtek.com.
VISA INC. has joined the FIDO Alliance and has been appointed to its Board of Directors. Visa Europe will join the alliance as a sponsor member. FIDO Alliance, which stands for Fast Identity Online, works to develop specifications for authentication technologies such as fingerprint, eye and iris scans, and voice and facial recognition biometrics, as well as to support existing standards for trusted platform modules, USB security tokens, embedded secure elements, smart cards, Bluetooth Low Energy, and Near Field Communications. Michael Barrett is President at the FIDO Alliance, (831) 479-1888, [email protected], www.fidoalliance.org.
FEATURED CONFERENCESubscribers to The Nilson Report will receive a 20% discount. 20%
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Topics include: mPOS ecosystem, perspectives, business models, merchant innovations, mPOS adoption – lessons learned, regulation, compliance, and legal requirements, evolution of mPOS for micro and small merchants, impact on traditional payments, POS and card acquiring, Big Data, apps, and technologies, future of POS, and mobile POS. Speakers represent: MasterCard, PayPal, Fashion Flash, Visa Europe, Gastrofix, Ingenico, Forrester Research, Payleven, SumUp, iZettle, orderbird, Yapital, VeriFone, AirPOS, Vodafone, Intuit, Revel Systems, JUSP, Spire Payments, Wirecard, Shopkeep, and more. Cost is $1,370. (Use code NRMPOS2014.) Contact David Vesely at Empiria Group, 421 (245) 248-931, [email protected]. Register at www.mpos-world.com.
MPOS WORLD 2014
Two-Day ConferenceJune 24-25, 2014The Kap EuropaFrankfurt, Germany
INGO MONEY now offers a software development kit that finan-cial institutions and prepaid card issuers can use to integrate Ingo's mobile account funding services into mobile apps to pro-vide their customers with instant access to check funds after deposit via iOS and Android devices. Drew Edwards is CEO, (678) 736-7000, [email protected], www.ingomoney.com.
GLOBAL PAYMENTS will provide payment processing services to Reynolds and Reynolds, which provides software, services, and forms to automobile dealerships. Global Payments technology will be inte-grated with Reynolds' management system platforms and software. Eddie Myers is President at Global Payments Integrated Solutions Division, (510) 795-4928, [email protected], www.globalpaymentsinc.com.
VERIFI'S Premier Chargeback Revenue Recovery Service has new capabilities including Fast-Trak integration, which reduces the need for involvement of IT staff. The service now also covers both Card Not Present and Card Present transactions for all major payment brands as well as PayPal. Tony Wootton is CRO, (323) 655-5789, [email protected], www.verifi.com.
DEBIT MARKET SHARE CLARIFICATION. In the Top 50 U.S. Debit Card Issuers article in Issue #1,039 (page 9), the market shares of the 5 largest issuers based on combined signature and PIN volume (including prepaid) accounted for 38.02% of the U.S. industry's general purpose debit card purchase volume in 2013, down from 39.41% one year before. This is based on the debit card industry total purchase volume of $2.130 trillion in 2013 and $1.977 trillion in 2012, not the totals for the top 50. The top 10 issuers accounted for 46.20% of the industry total in 2013, down from 47.16% in 2012.
FEATURED CONFERENCESubscribers to The Nilson Report will receive a $300 discount.
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VIRTUAL AND DIGITAL CURRENCY CONFERENCE 2014
Two-Day ConferenceJune 24-25, 2014The InterContinental Chicago Magnificent MileChicago, Illinois
Topics include: the puzzle surrounding digital and virtual currencies: clarifying the various definitions for these types of currencies and how they affect your business and compliance efforts, Bitcoin case study: analysis of the virtual currency that has paved the way for all others, the developing federal legal and regulatory framework governing the digital and virtual currency landscape, BSA/AML considerations for digital and virtual currencies, the investment perspective on digital and virtual currencies, and the international digital and virtual currency landscape: assessing the evolving legal and business environments in key foreign markets. Speakers represent: Blackhawk Network, Gliph, TechFreedom, Federal Trade Commission, CitiFX, Unidos Financial Services, U.S. Securities and Exchange Commission, The Bitcoin Foundation, PayPal, Criminal Division U.S. Department of Justice, Circle Internet Financial, and more. Cost is $2,095. (Use code TNR300.) Contact Nicole O’Neill at ACI, (212) 352-3220 x5257, [email protected]. Register at www.americanconference.com/virtualcurrency.
$300
FAST FACTS
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LOOPPAY now offers a free LoopWallet app for Android handsets at the Google Play Store. The Loop fob device can be used by consumers to store all of their payment cards on their phones and pay at almost all brick and mortar locations. It costs $39. Gregory Lewis is President at Loop, (678) 641-6074, [email protected], www.looppay.com.
YIFTEE is a mobile app, Web service, and API that lets consumers and businesses send gifts to colleagues, clients, friends, and family via email, text, and Facebook. Recipients pick up their gifts using their smartphones at participating merchants. Yiftee has become Clearent’s digital gift voucher delivery tool. Ed Alba is AVP, Marketing at Clearent, (678) 524-3561, [email protected], www.clearent.com. Lori Laub is Co-Founder at Yiftee, (650) 564-4438, [email protected], www.yiftee.com.
WELLS FARGO'S Propel 365 American Express brand credit card offers cardholders triple rewards points on domestic gas purchases and double points on domestic restaurant charges. Cardholders can also earn an extra 10%, 25%, or 50% on their rewards points by maintaining a qualifying Wells Fargo check-ing or savings account or a PMA package. William Stredwick is SVP, Global Network Partnerships, North America at American Express, (212) 640-9527, [email protected], www.americanexpress.com. Beverly Anderson is Head of Consumer Financial Services Group at Wells Fargo, (415) 222-3344, [email protected], www.wellsfargo.com.
CITI'S Commercial Cards division has added Brazil to the 65 other countries operating on its proprietary global platform. The platform supports local issuance and creation of commercial card products. Citi issues commercial cards in over 100 countries. Manish Kohli is Head, Global Commercial Cards, (212) 816-7061, [email protected], www.citimanager.com.
LIGHTSPEED'S 2014 U.S. Credit Card Benchmark Study is a 160-page report based on feedback from 60,000 survey participants. Topics include credit card ownership by product (Chase Freedom, Citi AAdvantage, Capital One Venture, etc.) with data on more than 120 products, competitive cardholder profiles (age, income, credit score, broken down by issuer and product), wallet inventory, and competitive cross-ownership (competing cards owned by consumers with cards by issuer and product). For more information contact Greg Flemming, SVP at Lightspeed Research, (617) 912-2805, gflemming@ lightspeedresearch.com, www.lightspeedresearch.com.
PULSE will license MasterCard's common application identifier for EMV card transaction routing. Judith McGuire is EVP, Product Management at PULSE, (832) 214-0165, [email protected], www.pulsenetwork.com. Carolyn Balfany is Group Head, U.S. Product Delivery at MasterCard, (636) 772-6613, carolyn_balfany@ mastercard.com, www.mastercard.com.
DIGITAL RIVER WORLD PAYMENTS now offers small and medium-sized businesses, commerce providers, system integrators, and devel-opers in the U.K., turnkey access to payment card processing for Visa, MasterCard, and Maestro cards in euros and pound sterling. Souheil Badran is SVP and General Manager at Digital River, (952) 225-3736, [email protected], www.digitalriver.com.
Paul Todd has been appointed Senior Executive Vice President and Chief Financial Officer effective July 1, 2014, at TSYS, (706) 649-4261, [email protected]. Kevin Race as been appointed CFO at Bank of America Merchant Services, (212) 515-0179, kevin.race@ bankofamericamerchant.com. Nancy Anne Barnhart has been appointed Chief Information Officer at JetPay Payment Services, (972) 503-8900, [email protected]. William Keenan has been appointed Chairman and CEO at Pango Financial, (302) 543-8550, [email protected]. Nate Wigle has been appointed Vice President of Sales and Marketing at MyECheck, (916) 284-6424, [email protected]. Rick Slavin has been appointed Vice President, Technology at CarePayment, (503) 419-3500, [email protected].
MANAGEMENT CHANGES
EFAWATEERCOM is a new electronic bill presentment and payment system in Jordan that enables consumers to receive and pay bills electronically through Internet banking, ATMs, kiosks, mobile, and point-of-sale terminals. The system is operated by Emerging Markets Payments and Madfoo3atCom for Electronic Payments under the auspice of the Central Bank of Jordan. Hassan Mayassi is CEO Merchant Acquiring Service at EMP Jordan, (962) 7952-88886, [email protected], www.emp-group.com. Maha Al-Bahou is Executive Manager, Payment Systems & Domestic Banking at Central Bank of Jordan, (962) 7990-59767, [email protected], www.cbj.gov.jo. Nasser Saleh is CEO at MFEP, (962) 7766-00999, [email protected], www.madfoo3at.com.
ICP GROUP, a provider of payment processing services for more than 120,000 POS terminals in 7 European countries, will offer merchants mobile point-of-sale services through a partnership with payworks. Mike Weller is Head of Sales at ICP, 49 (69) 24432-62750, [email protected], www.icp-companies.eu. Christian Deger is CEO at payworks, 49 (89) 4161-58400, [email protected], www.payworksmobile.com.
PEOPLES TRUST in Canada is issuing a prepaid MasterCard product for users of the suretap wallet available from mobile network operator Rogers. InComm is providing a network of reload locations for users to top up the MasterCard account. John Pals is COO at Peoples Card Services, (604) 694-6216, [email protected], www.peoplescardservices.com. Karen Budahazy is VP and General Manager, Canada at InComm, (905) 286-5560, kbudahazy@ incomm.com, www.incomm.com.
EVO PAYMENTS and PAY.ON have formed a technology partnership to provide an easy interface for payment card acceptance and process-ing to small and medium-sized merchants in Germany, Austria, and the Netherlands. EVO will provide acquiring and processing. PAY.ON will provide the technology for quick merchant operability. Wolfgang Berner is VP, Product & Integration at PAY.ON, 49 (89) 45230-306, [email protected], www.payon.com. Mark Spangenberg is European COO at EVO, 49 (69) 9593-28840, [email protected], www.evopayments.eu.
FAST FACTS
© HSN Consultants, Inc. 2014 THE NILSON REPORT 3MAY 2014 / ISSUE 1041 / THE NILSON REPORT
OPENWAY, a provider of payment processing and omnichannel banking software, has worked with 2can, an acquirer of mobile payments in Russia, to achieve EMV Level 1 and Level 2 as well as PCI DSS certification for Android and iOS mobile devices used as POS termi-nals. 2can is a trademark of Smartfin. Nikolai Zhmurenko is General Director at Smartfin, 7 (916) 571-7045, [email protected], www.2can.ru. Anton Kolomiets is Director at OpenWay, 7 (812) 324-4898, [email protected], www.openwaygroup.com.
GLOBALCOLLECT will be the payment service provider for recurring and one-time card payments to Presto, a streaming media service in Australia. Matthew Rainbow is Country Manager Sales, Australia and New Zealand at GlobalCollect, 61 (400) 188-409, [email protected], www.globalcollect.com.
THE GIFT & LOYALTY COMPANY is the new name for Contis Group's prepaid card and loyalty programs. Dannie McDonald is Managing Director at The Gift & Loyalty Company, 44 (175) 669-3558, [email protected], www.giftandloyaltyco.com.
CT-PAYMENT, a Canada-based payment card processor, will develop a custom payment application for Ria Financial, an affiliate of Euronet Worldwide. Denis Robert is CEO at CT-Payment, (514) 316-8293, [email protected], www.ct-payment.com.
CORNÈR BANK'S Cornèrcard payment card division will issue Diners Club cards in Switzerland starting next month. Alessandro Seralvo is Director at Cornèrcard, 41 (91) 800-5567, alessandro.seralvo@ cornercard.ch, www.cornercard.ch. Eduardo Tobon is President at Diners Club Int'l, (224) 405-3126, [email protected], www.dinersclub.com.
COMPASS PLUS has achieved Payment Application Data Security Standard Version 2.0 certification for its TranzWare Card Management product suite. Alexandra Kochergina is Head of Partnership Bureau, 7 (3519) 260-000, [email protected], www.compassplus.com.
MASTERCARD will buy the ElectraCard Services subsidiary of Opus Software Solutions in a transaction expected to close next month. Terms of the agreement were not disclosed. ECS provides card management software for ATM, POS, Internet, and mobile channels. Vicky Bindra is President, Asia/Pacific, Middle East and Africa at MasterCard, (65) 6390-6031, [email protected], www.mastercard.com. Ramesh Mangawade is Chairman at Opus, 91 (20) 6627-2100, [email protected], www.opussoft.com.
MAHINDRA COMVIVA has become a member of GlobalPlatform, the organization that standardizes the management of applications on secure chip technology. Kevin Gillick is Executive Director at GlobalPlatform, (952) 445-5094, [email protected], www.globalplatform.org. Srinivas Nidugondi is Head of Mobile Financial Solutions at Mahindra Comviva, 91 (80) 4340-1913, [email protected], www.mahindracomviva.com.
TSYS will provide credit card account processing and related services for the Virgin Money portfolio in the U.K. Virgin Money is launching its own credit card business following the purchase of $1.60 billion in credit card receivables from MBNA. Michele Greene is Director of Banking at Virgin Money, 44 (124) 489-3806, michele.greene@ virginmoney.com, www.virginmoney.com. Kelley Knutson is EVP, International Services at TSYS, 44 (190) 456-2001, kknutson@ tsys.com, www.tsys.com.
BKM and REDSYS, digital wallet providers in Turkey and Spain respec-tively, will make e-commerce transactions interoperable between their merchants and cardholders. The iupay wallet, managed by Redsys, will open more than 12,000 of its merchants to BKM Express cardhold-ers. Iupay cardholders will be able to shop online at BKM Express merchants, which currently number 600. Soner Canko is CEO at BKM, 90 (212) 350-7900, [email protected], www.bkm.com.tr. Jesús Verde is President at Redsys, 34 (91) 346-5300, [email protected], www.iupay.com and www.redsys.es.
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CONFERENCES & SEMINARSCARDWARE 2014: PAYMENT AND DIGITAL ID INSIGHTS: June 17-18, 2014. The Marriott Gateway on the Falls, Niagara Falls, Ontario, Canada. Estimated attendance: 350. Cost for the two-day conference is $1,450 (ACT Canada members and retailers receive substantial discounts). Contact ACT Canada, (905) 426-6360, [email protected]. Register at www.actcda.com/calendar/act-canada-events/cardware2014.
5TH CONGRESS: CARDS & PAYMENTS 2014: July 8-10, 2014. The HCTA – Hotel de Convencoes de Talatona, Luanda, Angola. Estimated attendance: 50+. Cost for the one-day congress (July 9) is $1,999, seminar 1 (July 8) is $1,599, seminar 2 (July 10) is $1,599. Subscribers to The Nilson Report will receive a 20% discount. (Use code 20%NILSON.) Contact Silene Silva at iiR Angola, 34 (91) 700-4340, [email protected]. Register at www.iirangola.com/Producto/default.asp?IdProducto=3680.
LOYALTY CANADA 2014: July 23-24, 2014. Toronto, Canada. Estimated attendance: capacity is limited at 90. Cost for the two-day conference is $2,795. Subscribers to The Nilson Report will receive a $200 discount. Contact Robin Yegelwel at Marcus Evans, (312) 894-6306, [email protected]. Register at http://bit.ly/1pg1aCW.
4TH HEALTHCARE PAYMENTS INNOVATIONS 2014 (HCPI): July 28-29, 2014 in Omni Parker House, Boston, Massachusetts. Estimated attendance: 150. Cost for the three-day conference ranges from $995 to $1,395. Subscribers to The Nilson Report will receive a $300 discount. (Use code: NILSON300.) Contact Kathleen Daffner at SSN, (203) 209-0520, [email protected]. Register at www.hcpaymentsinnovations.com.
FAST FACTS
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Credit card debt sold to third-party buyers after being charged off by issuers in the U.S. plunged by 46.5% to $18.92 billion in 2013. Only two years before, sales of charged-off debt sold directly by issuers topped $51 billion. Last year only two companies purchased more debt than they had the prior year.
The negative publicity generated by what is routinely referred to in the general press as predatory and abusive collection practices on the part of some debt buyers has devastated what was once a robust industry. Most major credit card issuers are not willing to risk the possibility of reputational damage through association.
Efforts by the Consumer Financial Protection Bureau and state attorneys general to curb collection practices, which began in 2012, continued to impact the industry last year. Debt buyers also faced the high cost of buying the debt that was available for sale.
These factors contributed to
Precision Recovery Analytics going out of business, Asta Funding discontinuing purchases of credit card debt, and Asset Acceptance agreeing to be acquired by Encore Capital. Prior issues: 1,019, 992, 969, 946, 921, 914
prepaid cards. However, that share was a decline of 101 basis points from 2012.
Visa credit cards generated 22.09% of last year’s purchase transactions, down 71 basis points. Credit and debit card purchase
transactions combined are projected to reach 164.08 billion in 2018.
MasterCard credit cards accounted for 14.43% of all purchases last year, down 45 basis points. Debit cards accounted for 12.40%, up 45 basis points. Combined MasterCard credit and debit card transactions are projected to reach 76.67 billion in 2018.
Last year UnionPay credit cards generated 4.06% of purchase transactions, up 89 basis points, and UnionPay debit cards accounted for 3.80%, up 94 basis points. In 2018, UnionPay brand
credit and debit card purchase transactions are projected to reach 51.57 billion.
American Express credit cards accounted for 3.75% of purchase transactions in 2013, down 16
basis points. In 2018, purchase transactions are projected to reach 10.34 billion.
JCB credit cards accounted for 1.12% of purchases last year, up 7 basis points. In 2018, purchase transactions are projected to reach 3.61 billion.
UnionPay card transactions will reach 51.57 billion by 2018.
Direct(1) Total(2)
Rank Buyer (mil.) Change (mil.) Change 1. Sherman Financial Group $4,298.7 –52.6% $6,230.0 –45.2% 2. Portfolio Recovery $3,959.5 –26.7% $7,860.1 18.1% 3. SquareTwo Financial $3,000.0 –11.8% $3,000.0 –25.0% 4. Encore Capital $2,820.0 –63.8% $71,300.0 285.4% 5. Ophrys $2,815.0 2.0% $3,860.0 19.5% 6. Unifund $650.0 –38.4% $1,400.0 32.7% 7. Fourscore $400.8 –45.3% $1,145.0 –26.5% 8. JH Capital Group $244.3 –41.5% $542.4 –21.2% 9. Oliphant Financial $244.0 54.4% $263.0 –27.1% 10. Atlantic Credit & Finance $145.6 –55.8% $414.3 –14.1% 11. eCast $115.1 –76.1% $445.7 –55.0% 12. Crown Asset Management $59.9 –39.3% $235.4 –7.0% 13. Absolute Resolutions $51.9 –72.1% $342.1 –22.1% Other(3) $110.2 –88.4% $1,000.7 –37.0% TOTAL $18,915.0 –46.5% $98,038.7 75.6%(1) Debt bought directly from card issuers. (2) Total purchases of all types of debt. (3) Includes Accounts Retrievable, Asset Recovery, and more.
© 2014 The Nilson Report
Top Buyers of Credit Card Debt 2013
VisaDebit
UPCredit
VisaCredit
MCDebit
MCCredit
UPDebit
JCBCredit
DinersCredit
AmexCredit
70
60
50
40
30
20
10
20122013
Purchase Transactions atMerchants Worldwide
(Billion)
Note: UP is UnionPay. ©2014 The Nilson Report
CREDIT CARD DEBT SALES IN 2013
CARD TRANSACTIONS PROJECTED from page 1...
© HSN Consultants, Inc. 2014 THE NILSON REPORT 5MAY 2014 / ISSUE 1041 / THE NILSON REPORT
bank, is also the largest merchant acquirer in the country with a 45% market share. Currently merchants it supports have deployed 20,000 POS terminals with contactless readers capable of handling payments from NFC-enabled phones. The bank (and other top acquirers in Russia) plan on promoting contactless payments at all new merchant locations added to their networks. Fewer than 50%
of the merchants in Russia have a card-reading POS terminal.
Host card emulation involves the storing of payment card details in the cloud instead of secure element (SE) hardware in a mobile phone. Issuers worldwide recognize that HCE is not as secure as having card details protected by an embedded secure element. However, few mobile network operators who control access to embedded SEs have presented
a business case that makes sense to most large card issuers to justify contactless payment partnerships.
Issuers can add HCE to the mobile banking app they already deploy, leveraging the existing authorization and verification credentials. Security in the cloud is handled through advanced tokenization. Security in the handset is provided by middleware.
In addition to Sberbank, which made an equity investment in Sequent in 2013, other customers of Sequent include CIBC and Rogers in Canada, Sprint in the U.S., and Trüb in Switzerland.
Those customers use Sequent’s over-the-air (OTA) issuance service to embedded secure elements. Its HCE software operates on the same platform. Sequent clients could use HCE or SE technology for different portfolios or geographics. Sequent has received Visa certification for its OTA service. Neither
company has processed 1 million applications from consumers in Poland, the Czech Republic, Spain, Australia, Mexico, and Russia, and has funded 250,000
loans totaling $75 million. The loans have generated more than $25 million in net cash flow. By year-end, when three new markets are opened, Kreditech expects issued loans to have reached $100 million.
The company says that 10,000 data points are analyzed in an approved loan. The decision to approve or deny a loan takes only seconds. Funds from an approved loan can be sent to a borrower’s bank deposit account within five minutes. Funding for the loans
comes from a credit line provided by Kreos Capital.
Kreditech uses its technology in markets where established lenders either have no access to traditional credit bureau data, which is based on a consumer’s prior history with credit, or where bureau data is too limited to generate a score using conventional, predictive statistical analysis. Because lenders don’t have competing products in the markets where Kreditech operates, its margins are very good.
Web data analyzed by Kreditech can be used to help with fraud protection including buyer identification as well as to supplement traditional predictive scoring. Data reviewed includes computer and phone location, a buyer’s shopping pattern, residence where the buyer files
taxes, Web pages viewed, cookies, devices being used, and many more. Kreditech takes all available data and runs it through an algorithm to see if a pattern is suggested.
Kreditech is headquartered in Hamburg, Germany. It hires nationals from the countries in which it operates to manage all
online marketing efforts in their home countries. Kreditech has received $25 million in venture funding and debt capital. It is preparing for a Series B funding round.Sebastian Diemer is CEO at
Kreditech in Hamburg, Germany,
49 (40) 6059-0560, sebastian@
kreditech.com, www.kreditech.com.
Issuers can add HCE to their existing mobile banking app.
10,000 data points are analyzed in an approved loan.
SEQUENT HCE SOFTWARE FOR SBERBANK from page 1...
KREDITECH ONLINE CREDIT DECISIONS from page 1...
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Visa nor MasterCard has yet certified any HCE technology.Mircea Mihaescu is Managing Director at Sberbank
Digital Ventures in Moscow, Russia, 7 (495) 957-5155,
[email protected], www.sberbank.ru.
David Brudnicki is Chief Technology Officer at Sequent
Software in Mountain View, California, (650) 262-0351,
[email protected], www.sequent.com.
Financial institutions can use technology from IDchecker to let consumers open an account online by sending a photograph of a government identification document such as a driver’s license from the camera of a smartphone or computer. IDchecker algorithms automatically validate the characters on the document to satisfy Know Your Customer
requirements. Applicants can also submit a photograph of themselves, which IDchecker will match against the photo on the identification document.
When ID documents do not include an address, IDchecker can validate a utility bill that includes that information. Combining these
services can expedite the account opening process by several days versus waiting for delivery of
corroborating documents by a postal service.
... can automatically approve card-not-present transactions.
Nautical Technologies QuickPay2 * U.S.Nelson, Watson & Assoc. CBE2 * U.S.Net Element convertible note19 $11.2 U.S.Netagio GoldMoney20 * JerseyOndot Systems undisclosed equity round9 $18.0 U.S.Pinpoint MasterCard2 * AustraliaPioneer Credit IPO21 $40.0 AustraliaPriorityOne Conquest Agri22 * AustraliaProcurify seed funding23 $1.2 CanadaPrypto IPO * IrelandShell Fuel Cards Fleetcor24 * GermanyShopKeep POS Series C25 $25.0 U.S.Signifyd seed financing9 $2.2 U.S.Social Finance Series C26 $80.0 U.S.Springstone Financial LendingClub2 $140.0 U.S.Square debt financing round27 $200.0 U.S.TangoCard undisclosed equity round28 $3.3 U.S.Tele-Works Paymentus2 * U.S.Transaction Labs CurvePay2 * U.S.Travel Club Aimia29 * SpainTSYS Japan TSYS30 * JapanWitt Merchant Serv. Intrix Technology2 * U.S.
2Checkout Series A1 $60.0 U.S.Altius Plus Spire Payments2 * RomaniaAsia Pacific Card Sys. Datasonic2 * MalaysiaBuzz Points Series D3 $19.0 U.S.Centrel SIX4 * LuxembourgClosely Series A5 $3.0 U.S.CMSI FIS2 * U.S.Cobre Bem Technologia Worldpay2 * BrazilCurrency Cloud Series B6 $10.0 U.S.Digital Persona Cross Match2 * U.S.Electronic FraudSource Warburg Pincus2 * U.S.Express Technology Dejavoo Systems2 * Canadafreee Series B7 $8.0 JapanFundBox Series A8 $17.5 U.S.GlobeSherpa debt financing round9 $0.8 U.S.GP Net Visa10 * JapanGrove Capital Encore Capital2 * U.K.Harlands Debitsuccess2 * U.K.Hundsun Zhejiang Finance Credit11 $532.0 ChinaHybrid Paytech private placement12 $1.5 CanadaIdentiv line of credit13 $20.0 U.S.InOne Nayax2 * U.S.Jameson Bank Assoc. Foreign Exchange14 * U.K.Karmasphere FICO15 * U.S.LendingClub debt & equity16 $115.0 U.S.LendUp credit debt facility17 $50.0 U.S.MCS Software Heartland Pay. Sys.2 * U.S.Metaforic Inside Secure2 $11.6 FranceMi-Pay AimShell $5.7 U.K.Mozido Series A18 $13.4 U.S.
*Terms not disclosed. (1) Led by Chicago Growth Partners. (2) Acquisition. (3) Investors included Discover Financial. (4) Acquired the remaining 50% of Centrel it did not already own. (5) Led by Grotech Ventures. (6) From Atlas Venture and others. (7) Led by Infinity Venture Partners. (8) Led by Khosla Ventures. (9) Undisclosed investors. (10) Acquired all equity it did not already own. (11) Purchased 20% stake. (12) Buyers not identified. (13) From Opus Bank. (14) Purchased the bank’s foreign exchange and payments businesses. (15) Purchased the company’s Big Data analytics technology. (16) From T. Rowe Price, Wellington Mgmt., and others. (17) From Victory Park Capital. (18) From seven investors. (19) Investor Cayman Invest will get 15% of outstanding shares. (20) Spinoff of digital currency unit. (21) Announced. (22) Reverse takeover to gain stock listing. (23) Led by Nexus Venture Partners. (24) Acquired part of the portfolios. (25) Led by Thayer Street Partners. (26) Led by Discovery Capital. (27) Led by Goldman Sachs. (28) Led by Allegro Venture Partners. (29) Purchased 25% stake. (30) Divestiture of card processing to local investors.
© 2014 The Nilson Report
AmountCompany Buyer/Investor (mil.) Country
AmountCompany Buyer/Investor (mil.) Country
Payment Industry Acquisitions & Investments April 2014
IDENTIFICATION VALIDATION USING MOBILE PHONES
> see p. 8
© HSN Consultants, Inc. 2014 THE NILSON REPORT 7MAY 2014 / ISSUE 1041 / THE NILSON REPORT
as an independent sales organization (ISO) and a payment service provider (PSP).
For small and midsized customers 2Checkout is a PSP. For larger merchants it is an ISO. In both cases the merchants integrate with 2Checkout, which then forwards transaction data to their acquirer for authorization and settlement.
A majority of 2Checkout’s 50,000 merchants and a majority of its transaction
volume is in Europe, Asia, Latin America, Russia, and the Middle East. Half of those merchants sell physical goods. The other half of its merchants either sell digital goods or use the 2Checkout platform for recurring billing. In addition to its direct sales force, merchants come to 2Checkout through channel
partners including Shopify and Brinks. Merchants can access 2Checkout’s
platform using an API or either of two hosted service models. Those using a hosted service minimize PCI
requirements and the concurrent costs because they do not store card data. The platform supports 26 currencies and operates in 15 languages. 2Checkout, which has received $60
million in private equity funding in two tranches since the fourth quarter of 2012 from Chicago Growth Partners and Trident Capital, is headquartered in Columbus, Ohio. It has an operations office in Ireland and will open two new operations and sales offices outside the U.S. by year-end.Kevin Gallagher is Senior VP, Business Development
at 2Checkout in Columbus, Ohio, (678) 493-8853,
[email protected], www.2checkout.com.
Prior issues: 1,033, 1,004, 986, 877
In addition to fraud fighting and risk management, the technology helps mitigate abandonment by applicants who don’t want to execute data entry online, as well as opening cross-border business opportunities.
Banks in the U.K. use
IDchecker to help open online savings accounts. Card-not-present merchants can automatically approve orders that would be handled by manual review.
IDchecker validates a document using its own
algorithms. It returns a yes/no score to clients. Yes scores include a number suggesting the degree of accuracy of the consumer’s data. Michael Hagen is CEO at IDchecker
Inc. in San Francisco, California,
(415) 441-2141, michael@idchecker.
com, www.idchecker.com.
First Data, the largest U.S. acquirer, saw an opportunity to
earn revenue beginning in 2012 with PCI Rapid Comply, a PCI compliance service for merchants. Going to market with an in-house PCI compliance service meant ending a relationship with
SecurityMetrics, a third party specialist whose services First
Data had been promoting to merchants and ISOs that use First Data for processing support. The relationship between First Data and SecurityMetrics quickly
deteriorated to the point where First Data brought litigation against SecurityMetrics in October of 2012 in federal court in Baltimore, Maryland, alleging it faced a campaign of false
advertising and unfair business practices by SecurityMetrics after terminating the vendor’s services.
SecurityMetrics counterclaimed, alleging First Data violated the Lanham Act, which prohibits false advertising, and the Sherman Act, an antitrust statute that prohibits anticompetitive activities.
Among other things, SecurityMetrics claimed that First Data violated the Lanham Act by using “PCI” to describe its PCI
...has received $60 million in private equity funding.
2CHECKOUT’S GLOBAL PAYMENT SERVICES from page 1...
IDENTIFICATION VALIDATION USING MOBILE PHONESfrom page 7
FIRST DATA/SECURITYMETRICS LITIGATION
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Visa, MasterCard, American Express, and Discover brand consumer and commercial credit, debit, and prepaid cards issued in the U.S. generated $1.030 trillion in purchase volume in the first quarter of 2014, up 8.1% over the same period in 2013.
Credit card purchase volume of $595.03 billion grew by 8.5%.
Visa was up 10.6%, MasterCard up 8.1%, American Express up 6.1%, and Discover up 3.9%.
Credit card cash volume of $22.15 billion from balance transfers, ATMs, over the counter, and paper checks increased 5.2%. As a percentage of total volume,
cash volume was 3.59%. One year earlier it was 3.70%.
Debit and prepaid card purchase volume of $435.42 billion increased 7.5%.
MasterCard debit and prepaid card spending was up 9.6%. Visa debit and prepaid card spending increased 6.7%.
Credit cards generated 35.5% of all purchase transactions at merchants, up from 35.4%. Purchase transactions using Visa credit cards accounted for 51.15% of all credit card transactions, up 135 basis points over 2013. MasterCard purchase transactions held a 24.55% share, down 64 basis points. American Express’s market share of all credit card transactions was 16.81%, down 45 basis points, and Discover’s 7.49% share was down 25 basis points.
compliance service despite its lack of certification by the PCI Standards Council, which SecurityMetrics argued amounted to a false endorsement. It also alleged that First Data’s pricing for PCI Rapid Comply
amounted to an illegal “tying” arrangement because it bundled the security service with other processing services and allowed fees paid to First Data to count towards ISO billing minimums, while denying that benefit to third party providers.
When First Data sought dismissal of SecurityMetrics’ counterclaims, Judge Richard
Bennett ruled that SecurityMetrics had sufficiently stated its claims and allowed the litigation process to continue.
Since April of this year the litigation has been in the discovery phase, an expensive process that calls for both parties to produce documents related to the facts of the case.
Processors and acquirers looking to offer PCI compliance services directly from in-house resources need to monitor this case.
Consulting services related to this issue are available from the law firm of Arnall Golden Gregory. Edward Marshall is Co-Chair of the Payments Practice
at Arnall Golden Gregory LLP in Atlanta, Georgia, (404)
873-8536, [email protected], www.agg.com.
Credit card purchase volume of $595.03 billion grew by 8.5%.
The lawsuit has been in federal court in Baltimore since Oct. 2012.
UYU.S. General Purpose Cards 1Q 2014 vs. 1Q 2013
Dollar Volume (bil.) Purch. Trans. Brand Total Chg. Purchases Chg. Cash Chg. (bil.) Chg.
Visa Credit $281.26 10.2% $269.32 10.6% $11.94 1.4% 3.15 10.7%
American Express Credit $159.20 6.1% $158.15 6.1% $1.05 6.1% 1.03 5.0%
MasterCard Credit $144.52 8.1% $137.78 8.1% $6.74 8.1% 1.51 5.1%
Discover Credit $32.20 4.8% $29.78 3.9% $2.42 17.9% 0.46 4.3%
CREDIT CARD TOTALS $617.18 8.3% $595.03 8.5% $22.15 5.2% 6.16 7.8%
Visa Debit & Prepaid $408.42 6.4% $305.32 6.7% $103.10 5.5% 7.99 6.3%
MasterCard Debit & Prepaid $174.43 9.0% $130.10 9.6% $44.33 7.3% 3.21 9.8%
DEBIT CARD TOTALS $582.85 7.1% $435.42 7.5% $147.43 6.0% 11.20 7.2%
CREDIT & DEBIT TOTALS $1,200.03 7.8% $1,030.45 8.1% $169.58 5.9% 17.35 7.4%
Visa Totals $689.68 7.9% $574.64 8.5% $115.04 5.0% 11.13 7.5%
MasterCard Totals $318.95 8.6% $267.88 8.8% $51.07 7.4% 4.72 8.2%
VISA & MC TOTALS $1,008.63 8.1% $842.52 8.6% $166.11 5.8% 15.85 7.7%
Includes all consumer and commercial credit, debit, and prepaid cards. American Express and Discover include business from third-party issuers. Figures include PIN-based debit figures for Visa (Interlink) and MasterCard to match their reporting. © 2014 The Nilson Report
FIRST QUARTER CARD RESULTS – U.S.
© HSN Consultants, Inc. 2014 THE NILSON REPORT 9MAY 2014 / ISSUE 1041 / THE NILSON REPORT
Helping acquirers understand what merchants are doing online and in brick-and-mortar locations has been the business of G2 Web Services since 2004. The company has 300 customers in 50 countries that use its business intelligence and analytics platform to monitor 3 million merchants monthly.
G2 maintains a history on 29 million merchants worldwide. It identifies those cited for fraud, for violations or near violations of card network regulations, and for violations of a country’s
commerce regulations. It also determines if they are selling something that acquirers do not want to be associated with. Owners of businesses are also reviewed for their online reputations.
U.S. banks are given assistance in meeting Office of the Comptroller of the Currency (OCC) and Federal Deposit Insurance Corporation (FDIC)
guidelines related to monitoring their merchants and third-party processors to see
if they are in turn monitoring their customers as required by Know Your Customer regulations.
Due diligence on prospective merchants is available, including profiles of risk history, shopping cart security, their Web host, and any other third-party vendor they use, and can be provided within 24 hours or less.
The company’s KYC Governor service, which delivers OCC, FDIC, Electronic Transactions Association, and card network requirements for monitoring U.S. merchants, can be deployed anywhere in the world. More than 40% of merchants monitored by G2 are outside the U.S., where the company is headquartered. It maintains a development center in Buenos Aires, Argentina, and offices in London, Shanghai, and Sydney. Ed Barton is President at G2 Web Services in Bellevue,
Washington, (425) 749-4040 x249, [email protected],
www.g2webservices.com.
When service to four Russian banks was suspended by Visa and MasterCard in response to U.S. sanctions over Russia’s annexation
of Crimea, Russian lawmakers passed legislation that would require Visa and MasterCard to deposit several hundred million dollars at the Central Bank of Russia as collateral as a hedge against any future similar action. Now Visa and MasterCard are in discussions with Russian authorities to create domestic payment card settlement centers in Russia. By doing so, they will not be obligated to fund collateral deposits. Building those data
centers will take more than a year.
Revenues earned from business in Russia accounted for slightly more than 2% of MasterCard’s worldwide total last year. About 15% of revenues from Russia came from switching domestic transactions. At Visa, business in Russia accounted for slightly less than 2% of total revenues last year. A majority of revenues in Russia came from cross-border transactions.
Visa and MasterCard combined account for more than 85% of card payments in Russia. While building a Russian national payment card settlement system is an option, problems exist. Restrictions exist on the convertibility of the ruble,
Russia’s currency. And establishing bilateral relationships with
acquirers worldwide to accept locally issued
cards would take years and be very expensive. Ilya Riaby is General Director for
Russia at MasterCard in Moscow,
Russia, 7 (495) 937-7710, ilya_
[email protected], www.
mastercard.com.
Andrew Torre is General Director
for Russia at Visa in Foster City,
California, (650) 432-1088, atorre@
visa.com, www.visa.com.
Prior issue: 1,039
...maintains a development center in Argentina and a sales office in Australia.
Building the data centers will take more than a year.
G2 WEB SERVICES
VISA/MASTERCARD IN RUSSIA
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TOTAL DEBIT & PREPAID SIGNATURE PIN PREPAID ‘13 ‘12 Purchase Vol. Trans. Cards Purch. Vol. Purch. Vol. Purch. Vol. Cards Issuer, Brands Issued Rank Rank (mil.) Chg. (mil.) (000) (mil.) Chg. (mil.) Chg. (mil.) Chg. (000)
Randolph Brooks FCU MC 51 56 $3,049.5 16% 83.8 383 $1,734.4 19% $1,313.2 13% $1.8 251% 32 Synovus Bank V 52 48 $3,033.3 3% 73.7 722 $2,011.1 –5% $1,006.9 21% $15.2 221% 9 BancorpSouth MC 53 51 $2,920.0 4% 74.4 352 $1,487.2 7% $1,431.2 2% $1.6 293% 3 FirstBank (Colo.) V 54 52 $2,858.7 2% 78.7 449 $2,691.3 2% $167.4 1% — — — SchoolsFirst FCU MC 55 57 $2,807.9 11% 76.9 512 $1,539.0 13% $1,268.9 8% — — — Webster Bank V 56 55 $2,797.0 5% 59.5 1,172 $1,186.5 1% $987.5 2% $622.9 20% 729 FirstMerit Bank MC/V 57 58 $2,614.7 9% 69.8 640 $2,023.1 6% $585.1 21% $6.5 –43% 38 Alaska USA FCU V 58 60 $2,541.3 8% 56.7 280 $1,392.0 10% $1,149.3 6% — — — Desert Schools FCU V 59 59 $2,521.4 7% 68.9 275 $1,722.9 27% $798.4 –20% <$0.1 –80% — Central Trust Bank MC 60 61 $2,349.8 3% 71.9 698 $1,044.7 11% $866.0 4% $439.1 –15% 375 First Nat’l Nebraska V 61 62 $2,326.0 5% 62.6 415 $1,741.2 5% $584.8 5% — — — Mountain America CU V 62 64 $2,166.7 3% 52.5 330 $1,082.1 4% $1,084.6 2% — — — Bank of Hawaii V 63 63 $2,132.2 0% 42.3 579 $1,560.1 0% $572.1 0% — — — Susquehanna Bank V 64 67 $2,112.5 6% 48.8 359 $1,413.9 6% $697.1 4% $1.6 6% 39 Old National Bank V 65 65 $2,100.0 3% 55.6 410 $1,349.0 4% $747.6 3% $3.4 1% 130 San Diego County CU V 66 68 $2,004.1 17% 41.6 296 $1,019.3 28% $984.3 7% $0.4 4771% 2 Security Service FCU MC 67 66 $1,996.2 0% 54.3 451 $1,910.9 9% $85.3 –66% — — — Redstone FCU V/MC 68 83 $1,833.5 55% 50.4 214 $1,069.1 127% $763.7 8% $0.7 2% 5 Trustmark Nat’l Bank MC 69 71 $1,789.9 22% 47.2 312 $938.8 19% $851.2 24% — — — First Tech FCU V 70 70 $1,544.5 3% 41.2 267 $763.7 4% $780.8 3% — — — Delta Community CU V 71 76 $1,526.7 17% 42.1 203 $1,604.5 18% $462.2 14% — — — First Hawaiian Bank MC 72 69 $1,522.1 2% 31.5 344 $925.5 0% $596.6 4% — — — BancFirst V/MC 73 75 $1,485.7 10% 38.6 162 $1,282.3 8% $200.2 26% $3.2 –5% 8 University FCU V 74 73 $1,454.2 4% 43.4 126 $1,027.4 4% $426.8 2% — — — Northwest Savings Bank V 75 74 $1,409.0 3% 38.0 266 $824.6 4% $584.4 2% — — — Space Coast CU (1) V 76 72 $1,379.7 –2% 35.3 253 $1,379.4 –4% — — $0.3 –38% 3 IberiaBank V 77 80 $1,338.5 11% 31.6 158 $827.2 10% $511.3 11% — — — Ent FCU V 78 79 $1,309.9 8% 34.2 157 $781.1 11% $528.0 5% $0.7 1% 6 First Midwest Bank MC 79 78 $1,293.6 6% 32.5 176 $788.2 7% $505.4 4% — — — ESL FCU V 80 82 $1,291.8 7% 35.8 256 $1,001.1 12% $289.2 –6% $1.5 –12% 13 Patelco CU V 81 85 $1,239.9 7% 28.3 281 $592.5 12% $610.7 4% $36.7 –1% 51 American Savings Bank V 82 81 $1,218.6 1% 28.7 213 $711.4 2% $507.2 1% — — — Arizona FCU V 83 77 $1,209.3 –2% 34.2 139 $649.2 1% $560.1 –6% — — — Municipal CU V 84 90 $1,165.5 12% 26.0 138 $677.5 15% $487.9 10% — — — Wescom CU V 85 84 $1,131.6 –3% 30.0 201 $560.6 5% $570.0 –10% $1.0 2% 8 Virginia CU V/MC 86 98 $1,115.1 20% 34.1 186 $792.8 37% $322.4 –9% — — — E*Trade Bank V 87 86 $1,109.1 1% 25.7 304 $560.1 1% $549.0 0% — — — ADP FCU V/MC 88 127 $1,087.9 72% 46.2 903 — — — — $1,087.9 72% 903 Fulton Financial V 89 87 $1,078.2 1% 29.5 309 $673.4 1% $404.8 1% — — — First Federal S&L (S.C.) V 90 88 $1,073.7 1% 27.3 134 $607.7 2% $466.0 –1% — — — Hudson Valley FCU V 91 130 $1,073.2 79% 18.4 135 $737.6 44% $335.6 286% <$0.1 –97% <1 PSECU V 92 102 $1,073.0 19% 31.9 383 $1,073.0 19% — — — — — First Financial Bank (Ind.) V 93 89 $1,063.0 2% 33.9 84 $278.4 4% $784.6 2% — — — Members 1st FCU V 94 97 $1,041.2 11% 28.9 228 $773.6 11% $264.3 11% $3.3 12% 43 Grow Financial FCU V 95 93 $1,038.9 2% 32.9 139 $412.9 4% $626.0 1% — — — Teachers CU MC 96 91 $1,037.3 1% 53.7 187 $792.9 1% $244.4 1% — — — Sterling Bank V 97 94 $1,016.3 2% 24.1 186 $547.4 2% $468.9 2% — — — SAFE CU (Calif.) V 98 99 $1,007.3 9% 26.3 126 $471.0 13% $535.5 5% $0.8 >999% <1 GTE Financial MC 99 92 $996.7 –2% 26.4 220 $683.5 6% $313.2 –16% — — — CEFCU V 100 101 $970.4 5% 27.9 187 $637.4 20% $331.7 –14% $1.3 9% 32Includes both consumer & commercial cards. (1) PIN figures included with signature. © 2014 The Nilson Report
Second 50 Largest Debit Card Issuers in the U.S. 2013
© HSN Consultants, Inc. 2014 THE NILSON REPORT 11MAY 2014 / ISSUE 1041 / THE NILSON REPORT
including interchange to handle that business. One year before merchants paid $66.60 billion to accept $4.419 trillion in purchase volume.
The weighted average of fees as a percentage of purchase volume from Visa and MasterCard credit, debit, and prepaid cards, American Express credit and prepaid cards, Discover credit, debit, and prepaid cards, EFT system PIN-based debit cards, and private label credit and debit cards was 1.50%. The weighted average was 1.51% in 2012.
Debit cards settled on the Visa, MasterCard, and EFT system networks generated $2.131 trillion in purchase volume in 2013, and accounted for 44.72% of all purchases last year. These cards generated 22.16% of the total fees paid by merchants.
Merchants pay processing fees in return for credit risk, fraud liability, network services, and value-added services provided by acquirers of card transactions.Prior issues: 1,022, 983, 944, 936,
877, 862, 833
host card emulation of Near Field Communication (NFC) and standard tokenization technologies, while providing similar functionality.
For point-of-sale purchases the Cortex platform emulates tokenization by adding a 16-digit alphanumeric number to a 4-digit alphanumeric PIN selected by the cardholder. All 20 characters are combined only in the Cortex system when linked to the valid card account. In the consumer’s mobile phone, only the 16-digit number exists. It has no value to a hacker.
Cortex MCP has filed for intellectual property rights for its system, which relies on the discretionary data field on Track 1 of a magnetic-stripe card to trigger POS terminals to seek an authorization request from Cortex’s server. The system conforms to the recently released EMVCo specifications for
tokenized transactions. Controls can be added to card accounts
using the Cortex mobile wallet including merchant category, geolocation,
purchase amount cap, velocity restrictions, and more.
The controls can also support the system’s analytics capabilities, which include
cardholder opt-in for value-added offers pushed by merchants.
Over time the Cortex mobile commerce platform will
support multiple credentials — driver’s license, loyalty program, etc. — with verification confirmed by the third parties tied to the credential.
Cortex was formed in 2012. The intellectual property and product development have been funded by angels. A Series A funding round will soon be announced with proceeds aimed at taking the technology to market.
The company sees QR code-based payments as likely for the first tests of its platform later this year.Robert Stringer is Head of Business Development at
Cortex MCP in Cambridge, Massachusetts, (617) 359-
9831, [email protected], www.cortexmcp.com.
... conforms to the recently released EMVCo specifications.
U.S. Merchant Card Fees 2013 Fees Purchase Weighted Type (bil.) Vol. (bil.) Average
V/MC credit $35.56 $1,638.67 2.17%American Express $15.01 $633.29 2.37%V/MC debit $12.75 $1,677.58 0.76%PIN debit $3.08 $453.09 0.68%Private label $2.63 $235.19 1.12%Discover $2.40 $127.11 1.89%
Total $71.44 $4,764.93 1.50%© 2014 The Nilson Report
MERCHANT PROCESSING FEES IN THE U.S. from page 1...
CORTEX MOBILE WALLETfrom page 1...
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© 2014 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, PublisherMay 30, 2014