PAYMENTS DEEP DIVE™

GE Capital's Toys "R" Us Deal Shows Cards M&A Is Growing Up Fast

2012-02-01T07:54:00.001-05:00

GE Capital's Toys "R" Us Deal Shows Cards M&A Is Growing Up Fast

JAN 31, 2012 4:06pm ET

GE Capital's deal to purchase the card assets of Toys "R" Us from JPMorgan Chase & Co.? Get used to it.

Selling the Toys "R" Us assets to GE Capital is an example of JPMorgan's disciplined behavior and approach to its credit card business, says Philip J. Philliou, a partner at Philliou Partners LLC. The bank is an extremely smart operator that acts decisively.

Go to http://www.americanbanker.com for full story.

Lunar New Year

2012-01-21T10:36:00.000-05:00

PayPal Can Thrive as Independent Entity

2012-01-08T15:09:00.022-05:00

Premise: As many analysts and investors have pointed out, PayPal and eBay need to separate. PayPal is brilliantly positioned for growth, and eBay can’t help but keep PayPal from achieving its potential.

Discussion: Spinning off PayPal from eBay is only the start. As a standalone business, PayPal will be able to increase acceptance from online retailers who have historically been threatened by eBay.

Internationally, PayPal should be able to run faster than without having to carry eBay along for the ride. Growth in Asia-Pacific and in Brazil should greatly benefit from independence. Although it has already started in this direction by retaining Blackhawk founder Don Kingsborough and making acquisitions such as Fig Card, an independent PayPal will be able to focus more intently on penetrating the physical world.

PayPal has the ability to capture a serious chunk of a consumers’ “share of wallet” for making in-store retail transactions. PayPal, via mobile devices and separate PayPal plastic, is uniquely positioned to marry both the online and in-store worlds. As reported in American Banker (January 6, 2012), PayPal is already testing in-store payments at Home Depot. In the U.S., in-store payments represent a $5 trillion payment transaction opportunity.

An independent PayPal may also have the courage to change the payments landscape altogether via a bold acquisition. Imagine if PayPal acquired Discover Financial Services. It could spin off the Discover Bank and keep the DIscover Network, Diners Club and Pulse. Both the rebranding of 57 million Discover Cards as PayPal cards and the ability to control card and ATM economics would be a game changer in an industry that is not used to the game being changed by anything other than regulation and litigation. The Diners Club card is accepted in more than 185 countries; this would give PayPal an immediate global retail presence that would capture everyone’s imagination and potentially, their spend.

Although I am personally sad to see Scott Thompson leave PayPal, his departure may serve as a catalyst for change, risk taking and unprecedented growth.

SEE MY OTHER POSTINGS ABOUT PAYPAL:

PayPal is well positioned to capture in-store retail transactions 11/5/11 by PAYMENTS DEEP DIVE™

PayPal likely to Quadruple its Share of Wallet via In-store 10/21/11 by PAYMENTS DEEP DIVE™

Storming the $5 Trillion In-Store Payments Fortress. 5/3/11 by PAYMENTS DEEP DIVE™

2011 Prediction: Discover Financial Services by PAYMENTS DEEP DIVE™

How fragile is PayPal's business model? cards, China Union Pay, MasterCard, mobile network operators, paypal, Visa 10/27/10 by PAYMENTS DEEP DIVE™

Valuing a Prepaid Card Portfolio

2012-01-04T17:00:00.000-05:00

What is a reloadable prepaid card worth? Just as banks that issue Health Savings Accounts have learned, scale matters. It simply costs too much for a small bank to issue certain card products. As such, smaller institutions have put their HSA book up for sale. The same is true for reloadable prepaid cards. Scale matters. The small will sell out to the large. The question is at what price? What is fair and reasonable?

We will share our perspective on how to value a prepaid card business on our weekly client calls.

The Return to Cobranding and Private Label deals in 2012

2011-12-24T11:38:00.000-05:00

2012 is already set to be a banner year for cobranding and private label card deals. Retailers, travel companies and large associations have been horribly mistreated by several issuers over the past 4 years and they going back into the market with leverage, confidence and expertise.

MasterCard's Network is the Differentiator says Philliou

2011-12-09T11:19:00.000-05:00

MasterCard Partners To Expand PayPass Network

By DOUG TSURUOKA, INVESTOR'S BUSINESS DAILY
Posted 12/08/2011 04:40 PM ET

Canadian drivers now can use the MasterCard PayPass contactless payment system at Precise ParkLink parking lots. MasterCard Canada View Enlarged Image

Global payments company MasterCard has launched several initiatives lately that bolster CEO Ajay Banga's strategy of moving consumers to "a world beyond cash."

Banga, who became CEO in April 2010, has a game plan to ramp up revenue at MasterCard (MA) by getting consumers to replace the use of cash and checks with payments made through the company's global electronic network. Analysts say the recent deal better positions the company to carry out this strategy.

"MasterCard is going well beyond being a network," said Philip Philliou, managing partner of Philliou Partners, a New York City-based payments consulting firm. "They're making it much easier for consumers to participate in electronic commerce."

MasterCard on Dec. 1 announced a pact and strategic investment in mFoundry, a provider of mobile banking services for financial institutions and retailers. The move lets consumers pay for goods or services with their mobile phones by using MasterCard's PayPass technology and mFoundry's mobile financial services platform.

Tap Technology

PayPass lets users tap a payment card or other device, such as a smartphone, on a point-of-sale terminal. Users don't have to swipe or insert the card.

On Nov. 29, MasterCard unveiled a separate tie-up with Western Union (WU) that expands the use of prepaid card services between the two firms worldwide. The expanded partnership makes MasterCard the preferred brand for Western Union-backed prepaid card programs and makes Western Union the preferred money transfer service for MasterCard.

And on Nov. 14, MasterCard said it was joining with chipmaker Intel (INTC) in payments technology. The collaboration is designed to provide more options for secure and easy processing for retailers and consumers using Ultrabook notebooks and future generations of Intel-based PCs.

The deal specifically combines MasterCard's PayPass and Intel's Identity Protection Technology. IPT gives consumers personal security and hardware-based display protection. Users will also be able to pay for online purchases with a tap of their PayPass-enabled smart card or smartphone on the screen of an Ultrabook device.

The new Ultrabooks are based on the second-generation Intel Core processor, and are made by Lenovo, Toshiba and others.

MasterCard recognizes consumers want options in electronic payments, says James Anderson, senior vice president, mobile, for MasterCard Worldwide.

The recent moves "reflect that one size isn't going to fit all," Anderson said. "We're trying to put mobile PayPass into as many consumer hands as possible, and we want to do that through channels that make sense to them."

Anderson says the latest deals extend a series of partnerships that began in March, when MasterCard became a major partner in Google's (GOOG) Wallet, an Android app that lets smartphones act like virtual credit cards. The deal paved the way for Nexus S Android smartphone users to make purchases by tapping their device at 300,000-plus PayPass-enabled merchant terminals.

MasterCard also signed a deal in July with Isis, the mobile payments network created by AT&T (T), Verizon (VZ) and T-Mobile, to allow PayPass to work with Isis mobile payment terminals. Verizon's recent decision to block Google Wallet has no major impact on MasterCard.Visa (V), American Express (AXP) and Discover Financial Services (DFS) signed similar deals with Isis.

Network Is Differentiator

Consultant Philliou says MasterCard is setting itself apart from startups and smaller players, if not the big boys, in electronic payments because of its sheer scale. MasterCard operates in 210 countries and boasts a global network of participating banks and merchants.

"That network is truly the differentiator. As we become more global as a society and do more business over the Web, MasterCard is at the heart of all of that," Philliou said. "So we can expect that their market share and transaction volume is only going to increase."

Banga said in an interview with IBD in September that MasterCard's push for a cashless society takes in emerging economies like India and China with their rising middle classes, as well as advanced nations like the U.S. He says a prime target group for the global shift is the Generation Y 18-29 age group, the leading users of mobile phones.

MasterCard and Western Union - evolution of money transfer business

2011-11-29T14:50:00.002-05:00

Great partnership - lots of potential. The growth will probably come from professionals and students working and studying abroad, not immigrant workers. If that's correct, this partnership could greatly expand Western Union's reach.

NEW YORK (Dow Jones)--MasterCard Inc. (MA), which is trying to convert more cash transactions to plastic, is developing services with Western Union Co. (WU) that will allow consumers to send money to other consumers directly from their credit, debit and prepaid cards.

MasterCard said Tuesday it is connecting its payments processing technology with Western Union's platform, which already allows consumers to use cash and some prepaid cards to transfer funds through more than 485,000 agent locations worldwide, including retailers, check cashers and banks.

The companies will work together to expand those capabilities so customers can use existing MasterCard accounts to fund those transactions, Ajay Banga, president and chief executive of MasterCard, said.

"It could be card to card, cash to card or card to cash," Banga said.

The partnership expands an existing relationship the Purchase, N.Y.-based credit-card processor has had with Western Union. Last year, Western Union began selling prepaid debit cards that carry MasterCard's brand through its agent locations, which sell the money-transfer and bill-payment services that are its bread-and-butter.

Prepaid cards work like a traditional debit card but are not tied to a checking account and have been marketed primarily to consumers who rarely use mainstream banking services. Western Union has sold about 1.2 million prepaid cards and is beginning to roll out the products overseas.

Western Union's U.S. customers can currently use those cards to send money to and receive money from other U.S. customers, Hikmet Ersek, president and CEO of the Englewood, Co.-based company, said. By teaming with MasterCard, Western Union can expand options for its customers, a large number of which use its services to send money to family members in foreign countries.

"We currently have about 165 million customers globally," Ersek said. "We are in 200 countries. Most of our customers are banked but underserved."

Western Union's customers pay a fee to send money that varies depending on the amount and location the money is being sent to. Those fees should remain the same with the MasterCard partnership, said Michael Hafer, vice president of global cards for Western Union.

Banks and payment processors, including MasterCard and rival credit-card network Visa Inc. (V), have been pushing to make it easier for consumers to use their existing cards to pay each other, a market that has been largely cornered by alternative providers like eBay Inc.'s (EBAY) PayPal service.

MasterCard and Visa do not lend to consumers. Rather, they process the transactions for the banks that issue their cards and generate more revenue as their transaction volume grows.

"This does give banks another crack at participating in these transactions," said Philip Philliou, principal of the payments consulting firm Philliou Partners LLC and a former MasterCard executive. "They're now desperately seeking ways to monetize this space."

MasterCard already offers a service called MoneySend that lets its customers send money from existing accounts to customers in some locations.

Visa has been working with Western Union rival MoneyGram International Inc. (MGI) on similar services. Earlier this year Visa also unveiled a person-to-person payment service that lets consumers send money from one Visa card to another through their banks.

MasterCard is currently working with its partner banks to equip them with the ability to send to and receive money from their debit, credit and prepaid cards in conjunction with the Western Union partnership, Banga said. Banga said he expects some banks to be live with the service next year.

EPX is WORTH WATCHING - technologically advanced, privately held global merchant processor

2011-11-14T17:03:00.003-05:00

EPX is WORTH WATCHING - technologically advanced; superior customer service; privately held global merchant processor. Although well known to payments experts and savvy retailers, EPX has only recently become the talk of the processing world. Why? They had no marketing department until July 2009 and built an amazing global business based purely on client referrals. Why do some large retailers continue to let legacy processors walk all over them when they have choices like EPX?
Wilmington, Delaware USA and Copenhagen, Denmark – November 2, 2011 – Today Electronic Payment Exchange (EPX), a full-service payment processor providing combined tokenization and end-to-end encryption payment solutions to global merchants, and Cryptera, a world-leading provider of secure payment solutions and encrypting PIN pads, announced their partnership offering unattended payment solutions to the self-service market. Using Cryptera’s secure, EMV-certified UPT 7000 Unattended Payment Terminal with EPX’s tokenization-based payment processing platform, the companies will provide superior payment solutions for unattended kiosks, vending machines, fuel pumps, quick-service restaurants, electric vehicle chargers, and other self-service systems.

PayPal is well positioned to capture in-store retail transactions

2011-11-05T14:35:00.000-04:00

PayPal is well positioned to capture a good piece of the entire consumer payments pie; online, mobile and in-store retail. For those of you who follow my postings, I've been saying this for years. It looks like this is coming together for PayPal over the next year. PayPal revenue could quadruple if they come even marginally close to achieving decent penetration in the in-store retail space. Exciting!

Read this:

“If someone had told me ten years ago that PayPal would be doing offline payments, I would have laughed,” said Laura Chambers, PayPal senior director of customer experience, at a showcase for the new PayPal Wallet Wednesday. “[but] it’s no longer going to be about online or offline commerce, ecommerce, m-commerce. It’s just going to be about commerce.”

PayPal Wallet, which is set to start rolling out within the next 12 months, is like its competitors’ counterparts in many ways. It allows users to pay from multiple accounts, store and use gift cards, access special offers and store receipts. Its biggest distinction is that it is not attached to NFC, and therefore not restricted to use on NFC-enabled phones. Users can pay at PayPal-enabled terminals using a PayPal credit card, typing in a PayPal pin or eventually by using an NFC-enabled tap.

This gives PayPal a huge immediate advantage. In order to use PayPal Wallet, users don’t need to own NFC-enabled phones — which very few of them do. Meanwhile, partner merchants only need a software upgrade to their terminals in order to begin accepting PayPal, not the hardware upgrade they would need to accept mobile tap-and-go payments.

Mobile payments enabled by NFC, however, still have the advantage of allowing consumers to choose which payment method to use before tapping a payment terminal. When they’re swiping a PayPal card or entering a pin, they can’t easily switch between gift cards or multiple accounts in the same way the Google Wallet allows users to swipe through their cards before paying. Technically, PayPal customers could adjust their default settings using the PayPal Wallet mobile app before swiping the card, but that will most certainly make the service less convenient.

In order to make up for this drawback, PayPal made an interesting move: It allowed customers to change their method of payment after they make a purchase. A user could pay for something using a Mastercard, take it home, and then later log in to his or her PayPal account to switch the payment method to Visa instead without any additional fee. Paypal is also offering a payment plan for expensive items at select merchants to some of its users. The merchants get paid immediately, but if the customer choses, they can pay PayPal in several payments.

Though PayPal is not the first payment company to use the word, it was possibly the first to truly be a digital wallet. The service was built on the capability to use multiple payment sources — credit cards, checking accounts and other loyalty cards — from one account. In fact, the company sued Google and two of its former executives shortly after the announcement of Google Wallet over trade secrets.

Even so, PayPal is not known for its exploits beyond payments. And like many payment companies, it has recognized that enticing customers to switch to a new form of payment is going to be about much more than payments.

“Swiping a credit card is a pretty good experience,” Chambers says. “A tap isn’t much easier than a swipe.”

In order to create deals and in-store integration features that it hopes will entice consumers to abandon their credit cards in favor of the PayPal Wallet, its parent company eBay has acquired several companies.

Where, which eBay acquired in April, holds a patent for a technology called geofencing that enables PayPal’s new wallet to alert customers when there are offers near them. When walking past a favorite coffee shop, for instance, a customer might get a push notification with a discount on coffee. In order for a merchant to send an alert, the recipient needs to add it to a white list (in other words, PayPal is not going to scare customers by blasting them with offers from surrounding merchants).

A related deals feature allows users to compile a wishlist of products. Their white list of companies can offer them deals on the item. If they’re compiling a grocery list, for instance, they’ll be alerted of the coupons available for the items on that list when they enter a vendor that accepts PayPal payments.

Two other recent eBay acquisitions, barcode-scanning price comparison app Redlaser and local shopping search engine Milo, are evident in a PayPal Wallet feature that allows customers to scan an item in a store in order to purchase it from that particular store.

The app also works as a loyalty card. Similar to the Starbucks card that PayPal powers, merchants can chose to reward customers who accumulate points for purchases and checkins.

With its loyalty points, offers and checkins, PayPal Wallet has not only moved into the competitive offline territory of credit card companies, but also into those of checkin apps like Foursquare and deals platforms like Groupon.

“In the offline world,” Chambers says, “if we just changed transactions, I don’t think anybody would take it up.”

Payments Innovation Day @ ATM, Debit and Prepaid

2011-11-02T14:29:00.000-04:00

Donna Embry is a class act. She complimented the other guy and is delivering a well thought out presentation

Credit Unions Embrace Prepaid BIN Sponsorship

2011-11-02T10:31:00.000-04:00

Exceptional turnout and participation at my BIN sponsorship workshop at the ATM,Debit and Prepaid Show. Credit unions very interested,

MasterCard Provides Options to US Debit Card Issuers

2011-10-27T09:00:00.001-04:00

--Huntington Bancshares converting debit cards from Visa to MasterCard

--MasterCard aiming to grow share in debit-card processing market

--New regulations could cause some banks to move debit-card portfolios

By Andrew R. Johnson 
   Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)-- MasterCard Inc. (MA) has won the debit-card portfolio of regional bank Huntington Bancshares Inc. (HBAN), a coup for the transaction processor as it tries to steal share from larger rival Visa Inc. (V).

Huntington said Thursday it is replacing its customers' Visa debit cards with MasterCard-branded Platinum debit cards and expects the conversion to be done by Nov. 1. The portfolio includes about 1.5 million consumer and business debit cards.

"This is a big deal for us and a pretty big deal in the universe of card conversions as well," said Steve Steinour, chairman, chief executive and president of the Columbus, Ohio-based bank.

MasterCard, which has a very small share of the debit-card market today, has been working to grow that business in the face of new restrictions.

While the logos of Visa and MasterCard appear on banks' credit and debit cards, the companies do not lend to consumers. Rather, they help process transactions made by the customers of their client banks.

"The more debit cards that have MasterCard's logo on them, the more payment volume and transactions MasterCard will be processing, and therefore the more revenue and profit MasterCard will be earning," said Jason Kupferberg, an analyst with Jefferies Group Inc.

A Visa spokesman declined to comment.

Huntington's debit-card customers made $6.7 billion in purchases in 2010, according to Nilson Report, a payments industry newsletter.

A spokesman for Huntington declined to say how long its contract with MasterCard lasts but such agreements can run five to seven years in some cases. The deal doesn't affect Huntington credit cards, which are issued by a Bank of America Corp. (BAC) unit and include Visa's and MasterCard's brands.

Huntington signed its contract with MasterCard in April, though discussions between the two companies began in 2010, Steinour said.

"Converting debit portfolios is like hand-to-hand combat," said Philip Philliou, a payments industry consultant with Philliou Partners LLC and a former MasterCard executive. "These deals are very difficult to do."

MasterCard's U.S. debit purchase volume was $333 billion in 2010 compared with Visa's debit purchase volume $1.05 trillion, according to Nilson Report.

Executives at Purchase, N.Y.-based MasterCard and analysts have said its efforts could get a lift from the Durbin amendment, a provision in last year's Dodd-Frank financial regulation law that ushered in new rules for debit-card processing.

In addition to capping the fees that banks can charge merchants when a customer swipes a debit card, it also included provisions that require banks to offer merchants multiple processing options on their debit cards. The rationale for the requirement is having more options would create more price competition, saving money for merchants.

For example, a bank that uses Visa to process transactions authorized with a customer's signature would have to offer a separate network on its cards not operated by Visa for processing transactions made with a PIN.

The so-called network exclusivity provision is expected to affect Visa more than MasterCard because Visa has more exclusive processing relationships with banks. MasterCard, which operates a PIN debit processing network called Maestro, could win more deals as a result, analysts said.

Visa's PIN debit network, Interlink, will likely lose a portion of its transaction volume as a result of the regulations, Joseph Saunders, chairman and chief executive of Visa, said during the company's earnings conference call Wednesday.

But Saunders said he is confident pricing changes the company is rolling out will help Visa maintain its top position in the market.

MasterCard is constantly pursuing potential deals with banks but has no other U.S. debit portfolio wins to announce in the near term, said Chris McWilton, president of U.S. markets at MasterCard.

Huntington's decision to switch its portfolio to MasterCard wasn't driven by the Durbin amendment, Steinour said. He added that unlike other banks that are adding monthly fees on checking accounts and debit cards to compensate for lost revenue from the regulation, it won't charge customers to use their debit cards. It also is marketing "Asterisk-Free Checking," a checking account that lacks minimum balance requirements and monthly fees.

Huntington's new debit cards include extended warranty coverage on certain purchases, a "price protection" feature that lets customers receive a reimbursement if the prices of certain items drop within 60 days of buying them, travel assistance and other perks.

-By Andrew R. Johnson, Dow Jones Newswires; 212-416-3214; andrew.r.johnson@dowjones.com

PayPal likely to Quadruple its Share of Wallet via POS Strategy within 2-3 years

2011-10-21T11:59:00.001-04:00

Most payment providers started with in-store retail transactions and have tried to enter the online market. PayPal's history is the opposite, having come at the payments business from the online world. Having succeeded in online, PayPal is now trying to capture the entire field. Their goal is to provide PayPal accountholders with the ability to transact with offline and online retailers, from a mobile device. The inclusion of the in-store retailer opportunity in their strategic roadmap represents the brightest of opportunities for PayPal. As retailers embrace mobile payments, PayPal may in fact be the largest beneficiary. With $3- 4 trillion of transactions occuring between consumers and retailers in the US, PayPal has enormous earning and profit potential.

Will discuss on weekly call.

philip@philliou.com

News

PayPal Getting “Steak Ready Before the Sizzle” on POS Moves, eBay Boss Says
Oct. 19, 2011

PayPal Inc. will pilot its latest move to the point of sale with an undisclosed merchant this quarter, add more merchants early in 2012, and establish merchant pricing for the service over the next three to six months, eBay Inc. chief executive John Donahoe told stock analysts on Wednesday.

Donahoe, who would not name the test merchant, characterized the initiative as a “friends and family pilot.” “The focus is helping them drive incremental sales,” he told analysts attending eBay’s third-quarter earnings call.

PayPal, a unit of eBay, unveiled last week an unembossed, PIN-secured mag-stripe card that account holders can use at the point of sale to access funding sources in their PayPal wallets. The company at the same time demonstrated a cardless companion service called Empty Hands, which allows users to pay at a POS terminal by entering a phone number and PIN. Both services are slated for rollout to some 20 unnamed merchants in the first half of next year following a pilot in the fourth quarter, PayPal officials told Digital Transactions News last week.

But, perhaps with handset-based payments in mind, Donahoe on Wednesday hinted that the initiative may at some point take on forms beyond the card and Empty Hands. “We’re building the POS so it’s not dependant on any form factor,” he said.

A dominant processor of e-commerce transactions, PayPal has been formulating a POS strategy for at least the last two years. Donahoe told analysts merchants have been asking for it. “We’ve had a number of off-line retailers approach us to say they want to bring PayPal to the point of sale,” he said. He compared the POS strategy to that used about five years ago when PayPal moved beyond its historical base in the eBay marketplace to sell its brand directly to established online merchants. That initiative, known as merchant services, now generates about two-thirds of PayPal’s dollar volume.

Asked by one analyst to name the pilot merchant, Donahoe said the retailer will disclose itself later in the quarter. “We won’t get into any press-release wars,” he said. “We’ll get the steak ready before the sizzle.” POS payments, he said, are “an enormous opportunity” and called them “the next chapter in PayPal’s playbook.”

Referring specifically to mobile payments, Donahoe said PayPal has built an advantage over rival providers with a 5-year-old service called PayPal Mobile that is now projected to process $3.5 billion in payments this year, quintupling the volume processed in 2010. Among other things, he said, PayPal is ahead of competitors in managing mobile risk. “Mobile payment is a fundamentally risky thing,” he told the analysts. “With $3.5 billion in real transactions, our risk models are learning very rapidly how to underwrite mobile transactions.”

For the quarter, PayPal reached 103 million active accounts, up 14% from the third quarter of 2010. It processed 459.2 million transactions, a 29% increase over the year-ago period, while total dollar volume grew 31% to $29.3 billion. The company’s transaction margin after transaction expense and losses slipped slightly from 62.1% to 61.5%.

Launching a Prepaid Program in a New Payments Environment: Weighing Risks and Rewards

2011-10-18T13:38:00.000-04:00

Click here to view online.

Learn about the Philliou Partners
pre-conference workshop:

Launching a Prepaid Program in a New Payments Environment: Weighing the Risks and Rewards

and use our discount code to save $200.

November 1-4, 2011 › Bellagio Hotel › Las Vegas, NV

19th Annual Payments Source ATM, Debit & Prepaid Forum 2011

The 19th Annual ATM, Debit & Prepaid Forum has grown to encompass all aspects of ATMs, debit cards, prepaid cards, and alternative payments, establishing itself as fall's premier electronic payments event. On November 1-4, the forum will bring together financial institutions, networks, ISOs and solution providers, equipping you with the long and short term view of industry trends and opportunities.
I am pleased to announce that Philliou Partners, LLC will be part of this leading electronic payments event. On Tuesday, November 1, 2011 at 2:00 Pm – 4:00 PM I will be leading a pre-conference workshop, Launching a Prepaid Program in a New Payments Environment: Weighing the Risks and Rewards.
Regulatory changes and actions have had a noticeable chilling effect on the traditional program manager/BIN sponsorship card issuance model. Prepaid card processors and program managers are frustrated by their inability to find BIN sponsors for new card programs. The lack of BIN sponsors in the US is now at a crisis level.
Philliou Partners recently met with regulators, issuers and program managers about this crisis yielding a detailed understanding of what is required to be a BIN sponsor in this new environment.
During this workshop you'll understand the new requirements and procedures for BIN sponsorship and address the redefined role of a BIN sponsor; and focus on operational, financial and regulatory requirements.
As a presenter at this year's ATM, Debit & Prepaid Forum, I am happy to offer you a $200 discount to attend the conference. Click here to visit the conference website and use the PROMO CODE: PHIL to register.
Attend ATM, Debit & Prepaid Forum on November 1-4, 2011 at the Bellagio Hotel to meet with your peers and have the business critical brainstorming, exchanging of ideas and initiatives along with the most trusted content and though leader speaker roster available to you. Attendees will learn strategies from top industry executives on overcoming market challenges, and connect with peers who are similarly working the payments terrain. I am pleased to be speaking this year and look forward to seeing you in Las Vegas.
Let me know if you have any questions. Hope you can join us November 1-4, 2011.

Philip J. Philliou
Philliou Partners, LLC

email		send email ›
office		+1 212.521.4442
mobile		+1 201.921.9535
skype		pjphilliou

19th Annual Payments Source ATM, Debit & Prepaid Forum 2011November 1-4, 2011 › Bellagio Hotel › Las Vegas, NV

Prepaid Card Processor Selection 2012 - Making the Right Choice

2011-10-10T16:52:00.001-04:00

Prepaid Card Processor Selection 2012 - Making the Right Choice

Will discuss on weekly conference calls during October, as well at our workshop on November 1st at the ATM, Debit, Prepaid Forum in Las Vegas.

Steve Jobs: May his Memory be Eternal

2011-10-06T09:17:00.002-04:00

Steve Jobs: Genius, Visionary, Henry Ford of Our Time

BY PETER KAY - Steve Jobs was more than just a a tech industry visionary and genius. Historians will see him in the same genre as the Henry Fords and Nelson Rockefellers.

Let’s just think about what Apple-channeling-Steve brought to our world: from a strictly product perspective: Apple ][, Mac, iPod, iPhone, iPad, and iTunes.

From a cultural perspective, he brought us the personal computer, the mp3 music player for the rest of us, the smartphone for the rest of us, the tablet for the rest of us, legitimized digital music and movie downloads, and he essentially led the entertainment and telecom industry into the 21st century.

I count myself fortunate to have been at the right place at the right time to have not only witnessed this history, but to have played an active role in it, starting my tech career with assembly language programming the hardware in the Apple ][.

The nearest possible relevant comparison is Bill Gates. Even though Gates is a giant in the industry, he doesn’t even begin to compare to what Steve brought to our world.

When one passes on, the Orthodox Christians say, “May his memory be eternal."

Regardless of your belief system, the memory and legendary “Reality Distortion Field” of Steve Jobs will eternal as the man that represents more than any other our entrance into the 21st century.

Cell Phone Orders on the Menu

2011-09-29T12:55:00.001-04:00

Print Close

TECHNOLOGY

Orders-Via-Smartphone On Menu At Restaurant Of Future

By DOUG TSURUOKA, INVESTOR'S BUSINESS DAILY
Posted 09/28/2011 06:14 PM ET

E-payments consultant Philip Philliou has a vision of how smartphones will transform restaurants.

He says diners armed with smartphones that can read smart tags affixed to restaurant menus might soon be able to access extensive data on those dishes. This includes ingredients, nutrition and other details. Once the choice is made, their order will be electronically zipped to the kitchen and later billed to the diner's credit card account.

The technology to carry this out is already out there, Philliou says.

"The Holy Grail is to create a cashless but data rich environment," said Philliou, managing partner of Philliou Partners, a payments consulting firm in New York City.

It's possible now for a customer with an iPhone, BlackBerry or other smartphone to review the items on a menu by scanning a QR code or smart tag placed next to a description of the food.

"The scan will inform the customer of the calorie count, nutritional value, food allergies, price and freshness," Philliou said. If fish is on the menu, for instance, it can indicate if it was part of a daily catch. Data could also include preparation times and customer reviews.

From there, the order's transferred to the restaurant's food preparation system. The order can also be uploaded into the eatery's financial system. The credit card approval, receipts and payment are all handled electronically. The data go into the eatery's accounting and inventory management system.

Philliou can envision Google (GOOG) becoming a leader in this field. It recently announced its Google Wallet tie-ups with Visa (V) andMasterCard (MA), and just bought restaurant guide Zagat.

Other possible leaders in the e-restaurant field, he says, might include OpenTable (OPEN), eBay's (EBAY) PayPal and NCR (NCR) .

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Cell Phone Orders On The Menu
Investor's Business Daily
The technology to carry this out is already out there, Philliou says. ... Philliou can envision Google (GOOG) becoming a leader in this field. ...

MasterCard Profits From 'Cashless' Trend
Investor's Business Daily
"The obvious advantage of accepting electronic payments only is transaction speed and reduced handling costs," said Philip Philliou, managing partner of ...

CNBC: Google Wallet Hopes to Cash in With Mobile Commerce

2011-09-20T14:17:00.000-04:00

Coleman: Google Wallet Hopes to Cash in With Mobile Commerce

Published: Tuesday, 20 Sep 2011 | 12:34 PM ET

By: Lauren DeLisa Coleman
Socio-Economic Digitalist, Emerging/Mobile Tech Consultant

Source: google.com

Google has just announced the official launch of the Google Wallet which will allow users who have NFC-enabled phones to pay for products with just a tap against a compatible card reader.

While limited in a number ways, Google [GOOG 555.0195 8.3495 (+1.53%) ] just has made a stellar contribution to one of the industries-to-watch: mobile commerce.

In fact, one of the most intriguing points regarding newly projected 6 billion connections that will exist globally by the end of 2011 could actually be in the sheer force of what those connections will soon represent in financial transaction power. Thus, the real news regarding the advent in the Google Wallet is not just in the wallet itself, but as the latest development indicative of the titanic mobile payment phenomenon which is to come.

Commerce is rapidly deepening its convergence with mobility; creating an exciting new terrain of m-commerce where the stakes are high, the impact limitless. And it's a sure bet that once these developments are fully implemented, our transaction behavior will never look the same again.

However, one might find all such activity and prognosis a bit curious given the fact that most business in the US seem to lack definitive mobile strategies. In fact only 14% of businesses in the US even have a fully-functioning mobile transaction site, according to Chief Marketer magazine. But in this instance it is actually consumer behavior, with the aid of tech engineers, that leading the mobile commerce charge creating a true power shift whose pace it seems is forcing industry to catch up. In fact, according to a whitepaper from computer technology giant Oracle [ORCL 28.7919 -0.2281 (-0.79%) ] earlier this year:

First, for those not familiar, m-commerce is best defined as the buying and selling of products and services via mobile phones; and Alon Kronenberg ofIBM Global Business Services [IBM 177.09 3.96 (+2.29%) ] says that exploration and commerce testing via mobile devices actually began globally as early as 10 years ago. He confirms that it will be disruptive yet take place incrementally. These increments, according to MobilePaymentsToday.comtake such forms as mobile point-of-sale ("tap and go" made possible my near-field communication chips which device makers are rushing to place into future models), text-to-purchase, in-application billing (currently available today) and mobile "wallets" such as the Starbucks' [SBUX 41.82 0.66 (+1.6%) ] offering which garnered $3 million in sales just in its first two months. M-commerce also includes capability of merchants to use mobile devices to accept credit card payments through new hardware created from such tech start-ups as Square which recently hit Best Buy [BBY 25.35 0.25 (+1%) ]shelves.

29% of US consumers have made at least one purchase via mobile device in 2010 vs. 13% in 2009, up more than 123% in just one year
48% of customers browsed/researched via mobile device while in-store in 2010 vs. 27% in 2009

"Consumers are learning about products online, receiving incentives online, paying for the goods online and then picking up the goods or services at the physical retail location," explains Philip Philliou a partner at Philliou Partners a New York-based consulting firms specializing in payments. "So it only makes sense that mobility and mobile payments would only increase such activities currently."

But imagine soon being able to move from the aforementioned activity to complete and utter elimination of carrying cash, credit/debit cards, coupons and transit passes, all thanks to your mobile device.

This is, actually, the ultimate concept behind the term mobile wallet. Indeed a Google spokesperson told CNBC.com, "We're excited about ushering in the next generation of mobile payments, where people can pay and save — faster and easier — with a tap of the phone." Meanwhile, ISIS, a mobile wallet venture between AT&T [T 29.08 0.50 (+1.75%) ], T-Mobile and Verizon [VZ 36.81 0.53 (+1.46%) ] is reported to be entering the testing phase, reinforcing the fact that well-positioned companies are going after an extremely robust business opportunity which is projected to reach up to $31 billion by 2016 according to analyst firm Forrester Research.

Given such developments from carriers and tech companies alike, some futurists have said that banks could actually find themselves on the near-obsolete end of the scale just as the music industry has given the advent of technology in its industry. But other experts feel it will just be a matter of banks providing new value solutions in order to remain relevant. For instance, US Bank has developed a location-based "concierge" that would enable product-specific coupons to be pushed to consumers via their mobile devices while they were browsing in the same aisle categories in retail outlets. "The original concept behind the mobile concierge was really not a wallet for payments at all," explains Dominic Venturo, Chief Innovation Officer US Bank Payment Systems. "It was a retailer-centric solution that would enable, for example, a retailer to make it easier for a customer to create shopping lists, identify offers (coupons, for example) related to their purchasing needs and prior purchase history, and redeem those offers. This work is still in the proof of concept phase."

But while the US may be in the testing out-meets-gearing up phase, the developing countries are actually demonstrating the fastest implementation and adoption.

Mobile payments have not yet taken off in US market as payments are already highly efficient and relatively inexpensive," reasons Philliou. But in Africa, for example, mobile payments are solving for a broken payments infrastructure." And perhaps improving lives while doing so. The United Nation's World Food Program provides an interesting example in which it drew from actress Drew Barrymore's foundation to create a payment system where each time a villager wants to draw clean water, they send a money transfer via mobile phone which then credits a fob that enables her to open a solar-powered tap. The program is a reported success in the region on many levels.

Brazil, while exhibiting different completely different cultural uses from Africa, is being watched closely among m-commerce leaders. "Brazil is indeed a dynamic space for mobile finance, too," explains Andre Xavier, a partner at The Boston Consulting Group in Sao Paulo. "What is very prevalent is the use of cellphone coverage to extend the reach of traditional card (credit and debit) acquiring networks to far-flung areas of the country (or stores with a non-permanent nature, ie a food and beverage stand near a beach)." Xavier continues, "The 'killer app' here would be adoption of a mobile payments scheme by a large city's public transportation authority; there are many rumors that could happen soon."

The amount of data captured from such activity whether abroad or here is what is considered to be quite attractive by m-commerce analysts and even said to be the "new oil." It is perhaps the data which will truly create competitive leverage for businesses: who is buying what, when, where, why and how. However, the question will be which party will actually own the data within the ecosystem that represents the transaction process? "What we do know," explains Venturo, " is that retailers have demonstrated for years that purchase data can be a very powerful marketing tool. Customers who participate in loyalty programs and receive offers that are highly relevant to them find real value in the relationship. In these situations, the consumer has explicitly agreed to share purchase data as part of being a member of the loyalty program. What that tells us is where there is a level of trust and loyalty between the parties, then the mobile device might be another way to enable that information sharing to occur, at the customer’s discretion and in accordance with current and future legal and regulatory requirements."

Indeed, in addition to data ownership concerns and functionality issues, regulations could affect the next steps m-commerce revolution pace as well. "As the underlying payment mechanism in mobile payments is governed by a well-defined laws and regulations it is highly doubtful that regulators will have much to weigh in on," explains Philliou. "That said, it is still early on. Customer authentication, Know Your Customer (KYC) rules, anti money laundering, fee disclosures, risk management, and collection practices are just a few of the things that the mobile payments companies need to be mindful of regarding this new terrain."

What is certain is that the next 1-5 years will be transformation for the payments industry in the U.S. and abroad. As new entrants and established financial transaction players gear up for a race to the top, the winners will be those who see end users as more than just numbers and statistics. Given the intimate nature of mobile coupled with the fact that consumers have created a power shift, a new paradigm is being built. Companies that seek not just to build a better commerce mousetrap; but rather focus selling added value, truly understanding human/cultural behavior and exceeding at engagement will become the business leaders in this space and change how we live our lives for decades to come.

Financial Tech Conferences this Tues in NYC and Wed in Toronto

2011-09-19T08:15:00.000-04:00

Finovate and Sibos this week! Look for www.fuzenetwork at Finovate. I am helping to judge a $100k prize at Sibos. Email me if you want to learn more.

Sibos is the world’s premier financial services event.

Every year Sibos brings together influential leaders from financial institutions, market infrastructures, multinational corporations and technology partners to do business and shape the future of the financial industry. Facilitated and organised by SWIFT for the SWIFT community, Sibos is much more than a conference and exhibition. It is a unique forum to collaborate and take collective action in payments, securities, cash management and trade. With the power to draw over 8,000 participants from across the globe, Sibos is unparalleled in its reputation to reach the entire financial services industry.

One week, one place, one Sibos. Join us in Toronto from 19-23 September.

Google Wallet - The movement from mag stripe to mobile device has started!

2011-09-18T18:26:00.001-04:00

The vision
In the past few thousand years, the way we pay has changed just three times—from coins, to paper money, to plastic cards.

Now we’re on the brink of the next big shift.

Introducing Google Wallet
Google Wallet is an Android app that makes your phone your wallet. It stores virtual versions of your existing plastic cards on your phone. Simply tap your phone to pay and redeem offers using near field communication, or NFC.

Payments, offers, loyalty, and so much more
Google Wallet has been designed for an open commerce ecosystem. It will eventually hold many if not all of the cards you keep in your leather wallet today. And because Google Wallet is a mobile app, it will be able to do more than a regular wallet ever could, like storing thousands of payment cards and Google Offers but without the bulk. Eventually your loyalty cards, gift cards, receipts, boarding passes, tickets, even your keys will be seamlessly synced to your Google Wallet. And every offer and loyalty point will be redeemed automatically with a single tap via NFC.

The future of commerce starts today
Google Wallet is coming soon. When it launches, you’ll be able to use Citi® MasterCard® cards and the Google Prepaid Card with Google Wallet. You’ll be able to tap to pay at hundreds of thousands of merchants.

At launch, Google Wallet will be compatible with Nexus S 4G by Google, available on Sprint. Over time, we plan on expanding support to more phones.

This is just the beginning, but we believe that, in time, your phone with Google Wallet will be the one thing that holds everything you need to carry.

How it works ›

Pursuing the Top of the Pyramid: the Affluent and the Banked who aspire to be Affluent

2011-09-16T08:55:00.001-04:00

MasterCard: Focus on Affluent Customers, Prepaid Cards Key to Growth

NEW YORK — MasterCard Inc. is emphasizing products aimed at affluent consumers as well as emerging categories like prepaid cards and mobile payments in an effort to drive growth, executives said Thursday.

The Purchase, N.Y., credit card company is trying to convert more of the world's transactions from cash and checks to electronic payments and capture a larger share of those transactions, President and Chief Executive Ajay Banga told analysts on a conference call for investors.
Currently 85% of retail transactions worldwide are made with cash or check, providing MasterCard with a big opportunity to capture more volume with its credit, debit and prepaid cards, Banga said. The company makes money by processing transactions made with its branded payments cards, which are issued by partner banks.
The company has been putting a bigger marketing effort behind its World Elite program, a rewards program offered to affluent consumers, said Tim Murphy, MasterCard's chief product officer. The company also this summer launched its Priceless Cities program, which will allow MasterCard customers to gain access to special events using their cards. The first market for the program is New York.
"It's a wide-ranging campaign that goes from television advertising to print to outdoor to make sure that consumers that live in New York and want to enjoy what is available here can really get access to it," said Alfredo Gangotena, chief marketing officer at MasterCard said.
Prepaid cards, which traditionally have been offered to low-income or "underbanked" consumers, are a focus as well. Increasingly, interest in prepaid cards "will be driven by banked consumers looking" to divide up and budget their spending, Murphy said.
Earlier this year, the company formed a partnership with Wal-Mart Stores Inc. to sell versions of the discount retailer's prepaid MoneyCard carrying the MasterCard brand. Wal-Mart also sells versions carrying the brand of MasterCard competitor Visa Inc.
Additionally, in April MasterCard completed the acquisition of the prepaid program management operations of Travelex Holdings Ltd. for $481 million. MasterCard renamed the operations to Access Prepaid Worldwide and is using it to grow prepaid product offerings geared toward international travelers.
MasterCard's shares were down 1.1% at $333.41 in recent trading.

MasterCard Courts the Analyst/Media Community

2011-09-15T20:45:00.003-04:00

MasterCard really hit it out of the ballpark today with their briefing session. Great midtown venue - so easy to get to! Straight talking CEO Ajay Banga kicked it off with a state of affairs speech and then, instead of high tailing it out of there, pressed the flesh with all of the invitees. The entire MasterCard Executive Team was greeting, explaining, and engaging - it doesn't get much better than that. The individual product demonstrations were also extremely informative - MasterCard had the "A team" staffing the booths.

MasterCard has an amazing team of Communication professionals. They really know how to put on a show and get their key messages out. They are also well-complimented by their PR agency, Weber Shandwick who have some of the nicest and most responsive people working on the MasterCard account.

All in all, a wonderful use of time. Learned a few things and made some new contacts.

Sibos Innotribe $100k Start Up Challenge

2011-09-12T20:00:00.000-04:00

Innotribe $100K Start-Up Challenge

The 2011 Innotribe $100K Start-up Challenge will introduce the most promising FinTech and Financial Services start-ups to SWIFT’s community of more than 9,700 banking organisations, securities institutions and corporate customers in 209 countries.

On September 21, 2011 at Sibos in Toronto, 10 finalists, selected from over 100 applicants by expert judges and community votes* will present to an invitation-only audience of dozens of decision makers from the world’s largest financial institutions, serial entrepreneurs, investors and media. And on September 22^nd, two of those companies will each be presented with a check for $50,000 in front Sibos’ audience of 8000 financial industry professionals.

2011 Finalists

	BillShrink’s StatementRewards creates transaction-based services to deliver a win-win-win scenario for financial institutions, merchants and consumers. View Application
	Cellfony offers the first anti-malware mobile payment and card reader solution that makes a mobile payment wallet and card reader as simple and secure as a chip and PIN. View Application
	ChangeIt automates online charitable giving by offering donors a simple and secure way to donate small change to their favourite charitable causes with every debit and credit transaction. View Application
	Duo Security’s two-factor authentication is the simplest and safest way to secure any Internet login or transaction and prevent online fraud and account takeover.View Application
	FaceCash completely replaces plastic payment cards, letting you pay with your phone and sign with your face. View Application
	GuardTime's software generated keyless signatures provide a provable audit trail for electronic data including proof of time, origin and integrity. View Application
	miiCard’s user-centric federated identity solution serves as a digital passport, enabling pure online validation that proves “you are who you say you are” View Application
	SynerScope is the fastest, easiest way to visualize relationships in Big Data event records including web traffic, payment transactions, mobile call records, IRC logs.View Application
	TransferWise is a better way of exchanging currency, allowing you to avoid banks and brokers save the 5% commission they usually collect. View Application
	Wave Accounting offers ridiculously easy online accounting for small businesses.View Application

Learn more about the Challenge or check out the finalists and semi-finalists.

MasterCard Money Matters National Education Day and What You Can Do

2011-09-06T16:43:00.002-04:00

Promote financial literacy - this is a no-brainer for financial services people to rally behind. MasterCard and the American Payroll Association have made it so easy to empower people to help their local schools participate. Just do it!

Help the American Payroll Association promote financial literacy by volunteering for MasterCard Money Matters National Education Day! Send this letter to your school principal, along with the new and improved lesson to convince your local schools to participate. 2011 materials are now available to download; just sign up below to be directed to the download portal!

Volunteers will teach more teens than ever before thanks to MasterCard Worldwide's exclusive sponsorship of Money Matters National Education Day
	2011! As part of MasterCard Money Matters National Education Day, the APA will provide four scholarships from a random pool of eligible teens who pass the Money Matters National Education Day official scholarship quiz.

Helping our kids understand their money has never been easier. All volunteer instructors receive an easy-to-use lesson plan and worksheets (for each student) to teach students at local high schools or youth groups about their paychecks, electronic payment methods like direct deposit and paycards, and the payroll withholding system.

MIT solution to wireless hack on mobile devices. Important for payments!

2011-08-29T14:12:00.000-04:00

The "man in the middle" attack describes a hack where the attacker gets in between two other wireless devices. It's a real issue when you think about mobile payments. Thank goodness the boys up at MIT have this issue on their radar screen. Read the story from the MIT press office and let's discuss on weekly client call.