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Updated: Thursday, April 24, 2014

Financial pressures on Square appear to mount

S quare Inc. is a favorite punching bag of the payments industry. With the Wall Street Journal reporting that Square lost roughly $100 million in 2013 and has engaged in acquisition talks with tech giants, critics have more ammunition with which to disparage the payment innovator. However, Square is not without resources and leverage among a significant class of merchants, and payment experts warn against making predictions of Square's imminent demise.

On April 21, 2014, the WSJ cited anonymous sources who said Square processed over $20 billion in transactions in 2013 and realized approximately $550 million in revenue from that volume. However, said sources stated the $100 million deficit last year had expanded over 2012 losses, and the startup had burned through about $340 million in venture capital since it was founded in 2009.

In the same article, the WSJ's sources claimed Square had approached Google Inc., Apple Inc. and PayPal Inc. about purchasing the San Francisco-based payment firm founded by social media pioneer Jack Dorsey. An April 21, 2014, Forbes opinion piece also said Square had "secret" acquisition talks with Visa Inc., which has a sizable investment in Square. But a Square spokesman denied these claims.

Using the same statement that has circulated in other media outlets, the Square spokesman told The Green Sheet that "We are not, nor have we ever been in acquisition talks with Google, and while we appreciate that Square may be an attractive target for some companies, we have never seriously considered selling to anyone or been in any talks to do so."

A change in FANF

If the numbers cited above are accurate and Square is far from even balancing its books, Visa's decision to change the ground rules on its Fixed Acquirer Network Fee (FANF) means Square's balance sheet will apparently skew further into the red.

In mid April, Visa circulated a bulletin among acquirers that reportedly said the FANF fee schedule would be officially modified on April 1, 2015, so that many micro-merchants using aggregators like Square and PayPal to process electronic payments would be individually accessed the fee, which will apparently raise costs for aggregators.

FANF was implemented two years ago to offset costs incurred by Visa for the dual debit card routing mandate of the Durbin Amendment to the Dodd-Frank Act. FANF obligates payment service providers to charge merchants an additional monthly fee based on their electronic payment volume. For traditional ISOs, that meant assessing the complicated FANF on all merchants in their portfolios.

However, FANF did not apply in the same way to aggregators, who pool small and micro-merchants into large merchant accounts controlled by the aggregators themselves. Instead, Visa charged the aggregators a lump sum of no more than $40,000 per month in FANF fees, based on the overall volume of payments from those merchants, and not merchant by merchant.

The change in FANF means the majority of individual merchants in those aggregated accounts will be assessed the fee based on a complicated calculation of card-present and card-not-present transactions processed by each merchant. The micro-merchants that process no more than $200 per month will apparently be the only aggregated merchants exempt from FANF.

For Square, the upshot of this change is that an unknown but substantial amount of its merchants will be assessed the fee individually, which will likely add up to more than the $40,000 cap now in place.

Don't underestimate Square

Ken Musante, President of Eureka Payments LLC, stated that "with a stroke of a pen [by Visa], Square's costs have increased dramatically." He said Square's main advantage and market differentiator is the simplicity of its marketing and charging merchants one flat fee. But the new FANF schedule might force Square to increase its fees on merchants. "If they raise rates, and they raise rates by a flat percentage, that keeps the simplicity but does not necessarily put the increase in revenue in line with the increase in costs," he said.

If the published reports about Square's processing versus its revenue are to be believed, FANF will only exasperate its attempts to achieve profitability. "It seems difficult for them to just be able to grow their way out; even if they get to a point where their margin is profitable, it's still not where they want to be," Musante said.

A popular thread on the GS Online MLS Forum zeros in on the vulnerabilities of Square's business model and its inability to gain profitability from its pool of low-volume/low-transaction merchants. But Musante cautions against underestimating Square.

"I see them as a very formidable competitor," he said. "They have access to a lot of capital number one. Number two, they're one of the few that has both consumers and merchants using their product, and money has been put into them at a $5 billion valuation. So regardless of whether they are making money, if that company is really worth $5 billion, they have created an enormous amount of wealth."

A match made in cyberspace?

Aite Group LLC Analyst Nathalie Reinelt also reminded the payments industry that the acquisition talk surrounding Square is based on rumor and unnamed sources, and that Square has publicly denied the claims. However, in speculating about what type of business would benefit from purchasing Square, Reinelt turned to potential suitors coming from Silicon Valley rather than traditional payments.

"[I]t would make more sense for it to come from the tech sector," she said. "Their product, culture and user experience-centric payments philosophy is more in line with Silicon Valley, and that partnership would make more sense. Traditional acquirers already have small merchants covered, so there wouldn't be much in it for them to offer a large enough sum to make it attractive for Square to sell, whereas tech companies are notorious for having deep pockets."

Furthermore, Reinelt believes Square would be a better fit for Amazon or PayPal than Google Inc. or Facebook. "Google and Facebook use so much data for marketing, and payments is not their core focus, which could make merchants and consumers a bit leery," she said. "Amazon and PayPal are merchant-focused payment companies, which makes them a much better match."

Reinelt sees the intriguing possibilities of a Square-Amazon match, "considering Amazon has reportedly entertained the notion of taking their digital wallet into the brick-and-mortar space via their Kindle tablets." For that reason, "Square's business model would fit in nicely with that initiative, albeit they would have to address the fact that the Square Stand is an iPad versus a Kindle," she added.


Equinox opens new chapter
Monday, April 21, 2014

S cottsdale, Ariz.-based Equinox Payments LLC, an entity formed by private equity firm The Gores Group in August 2011, is in transition. Equinox was formed as a result of an anti-trust settlement agreement between the U.S. Department of Justice and VeriFone Inc. The agreement required VeriFone to separate aspects of its business from Hypercom Corp. for its acquisition of Hypercom to be approved.

On Feb. 6, 2014, Toronto-based NBS Payment Solutions Inc., a wholly owned subsidiary of Brookfield Asset Management, acquired substantially all of Equinox Payments' assets for an undisclosed sum. Under the agreement, Equinox will continue to operate under its brand name in the U.S. market; Brookfield Equinox LLC will be the combined entities' moniker.

NBSPS President and Chief Executive Officer Drazen Ivanovic said at the time of the acquisition, "NBS Payment Solutions has operated in Canada for over 25 years and is excited about partnering with Equinox in the U.S. market." He added that the combined strength of the two companies will enhance Equinox's position in the U.S. payment terminal space.

Ivanovic believes NBSPS's positioning with its NOIRE product offerings will complement the Optimum, Apollo and L-Series Multi-Lane POS products manufactured and distributed by Equinox. He also feels that NBSPS' expertise in Europay/MasterCard/Visa (EMV) chip card payments in the Canadian market will be valuable during the transition to EMV in the U.S. market.

Chapter 7 impact minimized

Soon after the acquisition of Equinox was orchestrated, reports surfaced that Equinox had filed a voluntary petition for Chapter 7 bankruptcy protection with the Delaware Bankruptcy Court under the name EP Liquidation LLC.

Court documents later confirmed that after EP Liquidation filed its initial petition, Chapter 7 Trustee Charles Sanziale Jr issued notice of a May 7 hearing to approve the motion to establish notice and service procedures; he set an April 30 deadline for receipt of any written objections to the granting of relief sought in this case.

Just how this case will impact the future of Equinox remains unclear, but in terms of the ownership transition under the acquisition agreement, Ivanovic issued this March 5 statement regarding the case: "Equinox Payments LLC changed its name to EP Liquidation LLC after completing the transaction to sell its assets to Brookfield Equinox. We understand that EP Liquidation has filed for bankruptcy protection.

"The EP Liquidation bankruptcy proceedings are in no way related to the business now operated by Brookfield Equinox LLC. We intend to maintain the Equinox brand and will continue to develop, market and support the full range of Equinox devices."

Equinox appeared buoyed by the potential for further expansion in the North American market. "NBSPS's success in product development and innovation provides a strong foundation for the combined operations of Equinox and NBSPS in North America," said Stuart Taylor, Vice President of Payment Solutions at Equinox.


XP end times not an issue for ATM ISOs
Friday, April 18, 2014

I SOs that operate independent ATM networks are apparently not affected by Microsoft Corp.'s termination of support for Windows XP, the operating system supposedly used in the vast majority of ATMs in the United States. Independent ISOs have nothing to worry about because their ATMs do not operate on XP, according to research conducted by the National ATM Council Inc.

The NAC reported on April 7, 2014, the day before Microsoft stopped its support for XP, that its discussions with the three biggest manufacturers of independent, nonbank ATMs in the United States concluded that virtually all ATMs managed by ISOs and other nonbank entities do not run on XP. The consequence of this information is that ATM ISOs remain unaffected by the XP support end date, NAC said.

The Green Sheet reported in January 2014 that the XP support end date meant that ATM ISOs would have to upgrade ATMs to other supported operating systems, like Windows 7 or 8, to keep them secure from fraud. The reasoning went that XP-based ATMs would be subject to more fraud because Microsoft would not be issuing new security "patches" to shore up future vulnerabilities in the OS.

However, that report appears to be partially incorrect. It is still true that bank-operated ATMs may be vulnerable to more fraud because most of those ATMs, in fact, do operate on XP. But for ATM ISOs, such is evidently not the case.

CE, not XP

Bruce Renard, Executive Director of the NAC, said the information the association received from the three largest suppliers of nonbank-affiliated ATMs Nautilus-Hyosung, Genmega/Hantle and Triton was that those ATMs employ Windows CE, not XP.

Renard noted that Microsoft continues support for CE, which is designed for embedded systems and is licensed by Microsoft to original equipment manufacturers, such as ATM manufacturers. ATM ISOs are thus off the hook on this issue and do not have to incur the expense of upgrading their ATMs to newer systems.

"The manufacturers knew the situation well," Renard said. "This is one cost that will not have to be borne by the ISOs/IADs [independent ATM deployers]. Between the costs they incurred with the ADA [Americans with Disabilities Act] implementation and now with EMV [Europay/MasterCard/Visa] migration, they needed and deserved a little break."

Renard explained that most of the media covering the ATM industry "missed the boat" on the XP issue. Reports that 95 percent of all ATMs in the United States use XP were factually incorrect, he said. "It may well be 95 percent of the bank ATMs," he stated. "But they never really looked at, or talked to, the ISO/IAD side of the business. And, of course, we [the nonbank ATM sector] now have most of the ATMs in the U.S."

Renard noted that the elimination of XP support is still an issue for banks. He said that manufacturers of ATMs for banks, such as Diebold and NCR, "have these issues because they use XP. And so, lots of the bank machines appear to be exposed with this. The independents seem to be in better position than the banks when it comes to the loss of XP support."

Independent ATMs dominate market

Renard was pleasantly surprised to discover through dialogue with the independent ATM manufacturers and other research that almost three out of every four ATMs in the United States are independently operated, which works out to almost 300,000 out of approximately 430,000 total ATMs.

"And, the trend for domestic ATM deployment continues," he said. "I think the banks have realized that providing off-premise ATM services is not their bailiwick. It's a 'messy' business from their perspective." By messy, Renard means servicing the machines and handling paper money.

Renard added that ATMs are the "bread and butter" of ISOs/IADs that manage ATM networks of units placed in malls and other nonbank retail locations. "Basically, we do it better and more cost effectively," he said.


Voices of Transact 14 part 3
Thursday, April 17, 2014

The Green Sheet concludes its tradeshow odyssey with a look at two mobile payment firms, a processor, a PCI specialist and a terminal manufacturer. What all the payment professionals interviewed for this series have in common is a mindset of always being focused on the future and intent on navigating the historic changes taking place in the industry. The Green Sheet thanks all the individuals who shared their stories with us at Transact 14: Powered by ETA.

Mitch Cobrin and Debra McAteer

AnywhereCommerce executives:

Mitch Cobrin, Chief Executive Officer and co-founder

Debra McAteer, Vice President, U.S. Reseller & ISO Channel

Mitch Cobrin, Chief Executive Officer and co-founder of AnywhereCommerce, had much to be pleased about at Transact 14. In particular, the company was previewing its mSuite mobile commerce ecosystem, and it released its AC CorePay Opened SDK development interface, which Cobrin said is a secure, reliable tool for developers and independent software vendors. Additionally, Cobrin was working closely at the AnywhereCommerce booth with payment veteran Debra McAteer, who recently joined the company as Vice President of Sales for U.S. Resellers and ISOs.

"The mSuite is essentially a three-pronged solution: gateway, software and hardware," Cobrin said. "It isn't about hardware; it's a provisioning suite that is processor and acquirer agnostic. The gateway also has a back-end merchant portal that can do bulk uploads of merchant accounts. It has a host of features that are less typical of gateway infrastructures, and our portal offers every tier of administration; people with different credentials can see different things, depending on how the credentials are set up."

Cobrin said AnywhereCommerce has a strong relationship with Microsoft Corp. and supports Windows 8 across devices, including smartphones using Windows 8. And the company's hardware accepts mag stripe, Europay/MasterCard/Visa (EMV) chip and signature, and EMV chip and PIN payments. He noted, "We're ready for when EMV chip proliferates in the U.S.; we're already on our second generation of product and have great experience on the product from doing business in other parts of the world, including Latin America and the Asia-Pacific region."

Cobrin said the mSuite is a turnkey product for ISOs. "They don't have to deal with three different service providers hardware, software, gateway it's full service. ... All they have to do is bring marketing expertise and customers, and we'll take care of the technology behind it and the transparent data accessibility."

As for McAteer, Cobrin referred to her as a payments sales guru. "She's an industry veteran, and by the look of things, she's got movie star qualities by her presence in the industry," he said. "She's going to be leading the charge for us in the ISO community. We're thrilled. She's only been with us about a week, and she's already dazzled us."

Susan M. Sheen

TSYS executives:

Susan M. Sheen, TSYS Acquiring Solutions Group Executive, Marketing, Communications and Business Support

Lisa Ludolph, Associate Director, Sales & Marketing

Over breakfast at THE cafe at Mandalay Bay (seasonal fruit, berries and lusciously thick whipped cream, and good old-fashioned bacon and eggs), TSYS executives Susan M. Sheen and Lisa Ludolph shared their excitement about TSYS' decision to try something different this year at Transact 14. Instead of manning a booth, TSYS execs were on hand in a meeting room they'd rented in the exhibit hall for the duration of the show.

Sheen, TSYS Acquiring Solutions Group Executive, Marketing, Communications and Business Support, said, "We took one of the meeting spaces and turned it into a product lounge where we are essentially showing what I call our very flashy products: our mobile tablet solutions, and even our back-end solutions, our analytics-type products, and essentially showing how clients can use all the data they can collect, share that with their merchants and build their portfolios with these tools. We have really expanded our back-end solutions."

Sheen added that the meeting room has been very effective as a way to maximize business opportunities. "Anybody who is coming to us now wants to do business with us, both prospects and existing clients who want to expand the relationship," she said. "We're still very active in ETA. We sponsored the mini programs for this show and will continue to be a sponsor. We just wanted to make the most effective use of our time and sales resources and not just have a booth because it's what we've done in the past."

At the show, TSYS was also demonstrating TSYS Merchant Insights, a value-added service ISOs can offer to their merchant customers.

"It's a free social media-based tool that essentially takes care of that, so merchants can run their business and not worry about Yelp scores and other social media feedback," said Ludolph, Associate Director, Sales & Marketing at TSYS. "It aggregates the data and feeds it into one dashboard merchants log into and see how they're comparing to their competitors, and if they're getting negative feedback, it presents all the tools to make it easy for them to respond immediately and take action."

Sheen said TSYS partners with Womply to provide the social media tool, and when TSYS first offered it to 10,000 merchants, every one of them claimed the dashboard. "That's when we made the decision to offer it more broadly and to keep enhancing it and adding to it," she said. Other features enable merchants to reach out to customers with loyalty programs, special discounts and other targeted offers.

Paul Rasori

Paul Rasori, Executive Vice President, Product & Marketing, at PowaPOS

Paul Rasori, Executive Vice President, Product & Marketing at PowaPOS, was a man on fire (in a good way) at Transact 14. "The response that we've gotten this week is beyond our expectations," he said while demonstrating the PowaPOS offerings at the company's booth. "I've had lots of people come here and say, 'I was told I had to look at this product.' ... I've been in this industry a long time and haven't seen excitement like this in forever."

So what was the all buzz about? A set of integrated products Rasori called "future perfect." These include PowaPOS and PowaPOS software development kit, PowaWEB and PowaTAG.

"The consumer download app is called PowaTAG," Rasori said. "It asks several questions, such as name, address and credit card info, and stores that on your behalf in a cloud-based wallet. We work with merchants to put PowaTAGs on merchandise and advertising, and we already have 300 brands signed up for it." PowaTAGs can be in the form of quick response codes consumers scan or screen icons consumers touch to make purchases, as well as audio recordings that contain a purchasing function.

PowaWEB is a software-as-a-service, cloud-based solution for e-commerce that PowaPOS believes is ideal for brands looking to extend their presence globally while working the local, domain, currency and language.

PowaPOS is a hardware and software platform designed to customize the payment experience at the physical POS and on the move. "This show is all about PowaPOS, the third leg of this everywhere commerce ability," Rasori said. "A trend in retail is the move toward smartphone- and tablet-based systems. ... Many POS configurations are all separate pieces with separate power connectors and pieces, separate PIN pad devices, and they're expensive, unreliable and look terrible. We've created an all-in-one solution with all pieces in one small footprint, using a single power cable."

Included in the compact, swivel device are a universal tablet POS, payment terminal that includes EMV acceptance capability, two dimensional QR and bar code scanner, thermal printer and cash drawer.

In addition, Rasori noted that the PowaPIN device, which is smaller than the palm of a typical woman's hand, supports all verification methods, including chip and PIN, chip and sign, swipe and PIN, and swipe and sign, "And it's all PCI compliant," he said.

Joan Herbig and Stacey Holleran

ControlScan executives:

Joan Herbig, Chief Executive Officer

Stacey Holleran, Senior Manager, Corporate Communications

Payment security and compliance solution provider ControlScan has historically researched acquirers' PCI practices, as well as merchants' views on security and compliance.

"Now we're looking at new avenues," Stacey Holleran, the company's Senior Manager, Corporate Communications, told The Green Sheet at Transact 14. "We surveyed small merchants to find out what they're thinking about Windows XP, whether they were aware Microsoft was going to end support for XP ... if they knew they were running XP or had no clue what they were running ... to find out where they were at, so we could meet them with educational content and help acquirers with educational content as well."

ControlScan found that 93 to 94 percent of merchants surveyed knew XP support was going to expire, but less than half said they were concerned about the security ramifications.

Herbig added that the company is focusing on shorter studies "so we can push out information and education quickly to merchants and their service providers to better service them."

For example, ControlScan's mobile study was in its second year last year and was very well received, according to Herbig. "We're going to recalibrate with that study and hone in on specific segments of mobile payments to figure out how small merchants are dealing with mobile," she said. "We've seen a significant increase year over year of merchants adopting tablet and smartphone devices to accept payments, so we want to delve into that."

At the show, ControlScan was also touting two recent partnerships. Just days before Transact 14 began, the company heralded its new partnership with Plano, Texas-based iScan Online to address security issues that arise due to consumer-grade mobile-device use in small to midsize business environments. Via this new relationship, ControlScan created ProTect Mobile, a tool for securing Apple iOS and Android mobile devices.

ProTect Mobile is a mobile scanning solution acquirers can make available to merchants so they can scan mobile devices being used in their operations; it provides the ability to detect vulnerabilities and protects cardholder data; it looks for information on the device that should not be stored and alerts merchants to the presence of that data, Herbig said.

Per the second partnership, announced during the show, ControlScan is now working with Israel-based EverCompliant, which provides merchant security risk and compliance management solutions. The aim of this partnership is to provide acquirers leading-edge brand protection monitoring.

Shan Ethridge

Shan Ethridge, Vice President & General Manager NAFG, VeriFone

Thursday afternoon, the show was winding down, but VeriFone's booth was still busy, and Shan Ethridge, the company's Vice President & General Manager NAFG, was still affably energetic as he sat down with The Green Sheet to discuss some of VeriFone's recent developments.

"This is one of the most interesting times in this industry," Ethridge said. "We're seeing so many changes, especially with technology, so that merchants are going to have more access to data that will help them learn more about their customers. VeriFone wants to be an enabler in offering technology and solutions that help merchants grow their business through understanding consumer behavior."

Ethridge noted that VeriFone offers a range of solutions that help meet those objectives. "We have everything from cloud-based solutions to new and improved hardware that is going to be critical to helping merchants really understand how they can expand their offerings. ... We can't be all things to all people. We can't do it alone, so it's important to work with the right partners to make sure we're offering a soup-to-nuts solution to the market."

A primary objective for VeriFone at the show was to let the industry know that VeriFone is not just a terminal manufacturer. "We want to develop partnerships in the industry that allow us to be a critical component in commerce enablement," Ethridge said. "It's not just about the card swipe; it's about the experience, and it's about the data."

Ethridge added that the show was a positive experience for VeriFone. "We've received very good feedback," he said. "Our CEO, Paul Galant, was in attendance and was part of the keynote on Wednesday, and he's very pleased with the response he's received personally with a number of partners that he's met."


Voices of Transact 14 part 2
Monday, April 14, 2014

T ransact 14: Powered by ETA, the Electronic Transactions Association's annual event held April 8 through 10 at the Mandalay Bay Resort and Casino in Las Vegas, proved to be a bountiful opportunity for The Green Sheet to interview a dynamic cross-section of payment professionals. Part 2 of our three-part series provides insights from these payment pros into new products, new opportunities and how we can do a better job of securing the payments ecosystem from data security breaches.

Matt Getzelman

Matt Getzelman, PCI Practice Director at Coalfire Systems Inc.

This is the first year Coalfire Systems Inc. exhibited at the ETA's premier event. Matt Getzelman, PCI Practice Director at Coalfire, said he and his colleagues have attended in prior years and made so many good connections they opted for a booth this time around to provide a dedicated place to meet with current and prospective partners and clients. And at the Coalfire booth, the buzz phrase was "defense in depth."

What Getzelman means by defense in depth is for businesses to have multiple layers of security, and to think of it as a holistic process, not as just something to check off and forget about. He said the recent large data breaches serve as reminders that it's time for organizations to reevaluate their security and compliance, especially merchants and processors.

"There's an explosion of malware and easy-to-use tools on the black market, so it's easier than ever, even if you're not a traditional hacker, to get card data," Getzelman said. "Criminal syndicates are going after easy targets, and people need to ask, 'Are we the low-hanging fruit?'"

Getzelman identified three areas in which we, as an industry, failed to stop hackers in recent high-profile breaches. "First, attackers had to get malware... We had a chance to prevent these programs from getting into retail environments, and we failed," he said. "Second, we were unable to prevent propagation across the organization instead of restricting it to one location.

"And finally, they had to be able to access the cardholder data and route it out of the environment. So we had three opportunities to stop and mitigate the attacks, and we blew it." Ultimately, security solutions have to be a combination of everything applicable, he added.

"One exciting thing is the emerging payment technologies we're seeing offer additional options for merchants to protect data at the source. Point-to-point encryption, EMV chip and PIN in the United States are going to be tools that protect sensitive data at the point of interaction, so I would implore organizations to explore and research these technologies now."

Ralph Dangelmaier and Kelly Seelig

BlueSnap Inc. executives:

Ralph Dangelmaier, Chief Executive Officer

Kelly Seelig, Vice President, Marketing

BlueSnap Inc. Chief Executive Officer Ralph Dangelmaier and his colleague Kelly Seelig, the company's Vice President, Marketing, want to bring the world to U.S. ISOs and merchants, so at Transact 14 they were wining, dining, networking and helping to inform their industry peers. To that end, Dangelmaier ran an educational session at the conference on doing business in the BRIC (Brazil, Russia, India and China) region; Seelig was the moderator for a session on marketing.

Dangelmaier said interest in the BRIC session was strong. "We had someone from Russia, from Brazil, from India, and someone representing China Union Pay who is American, but knows China very well," he said. "We explained how the local people in those countries want to buy goods online using local currencies, local languages, and local payment types and the need to educate ISOs and merchants on that."

Seelig's marketing session covered the basics. "We talked about how to build a plan, how to think about marketing strategically, how to integrate PR, social media and advertising and how that all works together for e-commerce and storefront businesses," she said.

Dangelmaier has found that few U.S. merchants understand how to sell outside of the United States. "There was a recent article that said only 27 percent have the ability to do it, which means 73 percent don't," he said, adding that "guys like Stripe and Braintree get significant press coverage about sexy APIs that let merchants build their own checkout pages, but they don't enable them to optimize globally."

BlueSnap saw a need it could fill and rolled out its global gateway about a year ago. The company markets prebuilt checkout pages that "encompass most currencies and most languages in 80 countries, and 110 of the most prevalent payment types in those countries," Dangelmaier said, adding that he is in talks with "a few large ISOs right now who are really strong domestically but want their domestic folks to sell overseas."

Dangelmaier said physical stores are seeing between 5 and 15 percent of sales going online, and those are interactions that are no longer going through the POS. He feels that most ISOs are "swipe guys" and, by not helping merchants also move into international e-commerce, "they are missing out on a big revenue opportunity." It was Dangelmaier and Seelig's mission at Transact 14 to let exhibitors and attendees know just how easy it is to work with BlueSnap to bring an international commerce value-add to their merchants.

Thinking about the current state of the industry, Dangelmaier said, "I've been doing this for 25 years and never seen anything like this. There are 250 different payment types, and most people think of five; you have all these people who don't have bank accounts trying to buy stuff; you have 17-year-old kids in Brazil saying they can compete with companies like First Data.

"All this stuff is happening at once. Before it was like, wow, there's an ATM; we spent 10 years going, wow, there's an ATM. Then it was, oh, there's an Internet 10 years of that. And now this is like all these new things hitting you the convergence, the disruption, the risk and the opportunity all at once. It's the Big Bang of payments."

Jonathan Ellman

Jonathan Ellman, Senior Vice President, Regulatory Compliance and Government Affairs at Vantiv

From a comfy corner of Vantiv's busy booth at Transact 14, Jonathan Ellman, Vantiv's Senior Vice President, Regulatory Compliance and Government Affairs, sat down with The Green Sheet to share insights about recent developments in the regulatory sphere and how they are affecting the payments landscape.

Ellman said that regulation has risen dramatically on the industry since the financial crisis that gripped the country with the collapse of Lehman Brothers in late 2008. "Merchants who are providing goods and services to consumers are being asked to provide those services and goods in a manner consistent with consumer advocates in the government," he said.

Ellman noted that, by executive order, the government launched an interdepartmental initiative called Operation Choke Point, which is specifically focused on our industry as "the best vehicle they could see to make sure that bad-acting merchants are cleansed from the ecosystem."

In response, the industry is establishing more of a robust, comprehensive and dynamic culture of compliance within organizations. "This means every department is impacted in one way shape or another, and it's really important that we do that both for our own protection, and also for our clients and their consumers," Ellman said.

Vantiv has endeavored to help educate regulatory agencies on how the industry works. Ellman said that in an attempt to cleanse the system, the government can overreach, which can increase costs and negatively affect consumers, as well as stifle innovation. "I don't necessarily agree the level of pressure is appropriate to the problem," he said. "So we are working very hard to work cooperatively ... but also to articulate our position."

Ellman lauded the ETA's efforts in this arena, stating that the association has done a fabulous job and has been a strong voice for the industry in working through regulatory issues. "Today, at this conference, they released a comprehensive set of guidelines for ISOs and processors on how they should underwrite, monitor and otherwise manage their relationships with their customers," Ellman said.

Jason Oxman

Jason Oxman, Chief Executive Officer at the Electronic Transactions Association

In the midst of ensuring that myriad activities deliver the desired punch for Transact 14 attendees, Electronic Transactions Association Chief Executive Officer Jason Oxman stopped in at the media room to share his enthusiasm for the ETA's "rebranded and reenergized" premier event.

"We've expanded the schedule so we're three full days now including high-level keynotes, 77 conference sessions and an exhibit hall that is larger than at any show in our history," Oxman said. "It's really become a truly global hub of activity in the payments industry."

Oxman believes the show's rebranding captures the expansion of the industry to include global technology companies entering the payments business. "Our show floor includes the world's leading payments and technology companies that are offering innovative new products and services for merchants," he said.

In addition, he stated, "More payments industry business gets done during the Transact show than at any other place on earth. You see all the meetings taking place, all the discussions on the show floor. There's an incredible amount of business getting done. It's really efficient for attendees because all their current and prospective customers are here. If I do 20 meetings while at Transact for three days, that's 20 separate trips to see customers that I don't have to do."

At the conference, the ETA was also spreading the word about its advocacy and educational activities. "ETA has been very active as an advocate for the payments industry in Washington, on Capitol Hill and with federal regulatory agencies," Oxman said. "We've also expanded our educational initiatives, including our ETA CPP [Certified Payments Professional] program. Nearly 1,000 industry executives have participated in the certification program. We're proud of the professional education we're providing; it's a unique member benefit and is helping our industry grow."

The ETA's Transaction Trends magazine also sponsored the media room, which was graciously hosted by members of the London-based SkyParlour public relations team. It was a much appreciated haven for media representatives.

Jeff Fortney

Jeff Fortney, Vice President, ISO Channel Management at Clearent LLC

While Jeff Fortney, Vice President, ISO Channel Management at Clearent LLC, was manning his company's booth at Transact 14 on Wednesday afternoon, he divulged a secret. "When I come to a show, I concentrate on two objectives only," he said. "If I meet them, the event is a success; if not, I'm not OK."

His first objective this year was to find a partner to provide a good solution for medical offices. "One of my ISOs said he needs a medical solution that'll work alongside HIPAA [Health Insurance Portability and Accountability Act] requirements, so I'll spend my time when I'm not stuck at the booth looking for that," he said.

The second objective was to get the word out on the Clearent Payments Platform, the processor's recently rolled-out open application programming interface (API) that integrates with e-commerce websites, mobile apps and back office systems. "You have a POS system, and it either works directly with the processor like a terminal or it works with a third-party like a gateway," Fortney said. His message for ISOs: "Now that we have our API, you can map to our API and take the third party out. This can save money for you and your merchants."

By Thursday afternoon, the last day of the show, Fortney had a smile on his face and a lilt in his voice as he said he'd met his two objectives and was satisfied.

Stacey Finley Tappin and Benjamin Hurley

Apriva executives:

Stacey Finley Tappin, Senior Vice President, North American Sales & Marketing Communications

Benjamin Hurley, Director, Mobile Product Management

The buzz at Apriva's booth on Transact 14's exhibit hall floor was all about Apriva Pay Plus 3.0 and its web companion merchant portal 1.0 that is set for release on April 28. A private conference room within Apriva's ample booth was where Benjamin Hurley, the company's Director, Mobile Product Management, and Stacey Finley Tappin, Senior Vice President, North American Sales & Marketing Communications, discussed the key features of their new offerings.

Here are some of the points they made about Apriva Pay Plus 3.0:

Hurley and Tappin also emphasized that AprivaPay Plus 3.0 does far more than process payments. "Merchants receive push notifications on transactional activity," Hurley said. "We don't want end users to just use it to process payments. We want to create a dependency. ... We notify them daily of the amount cleared that day and will let them know when transactions are taking place in real time."

Tappin added that the product's interactivity "keeps [merchants] engaged in the product, and it becomes a business tool they use on a daily basis."

AprivaPay Plus 3.0 also offers detailed analytics on activity within the mobile application. Hurley said the solution "provides data on where customers are activating geographically, by state and city ... demographic data, anonymized on gender, age, etc., to create end-user profiles; top devices used; which features are used, and which ones nobody uses." All this data is then provided merchants in monthly reports, and the data can be exported to accounting applications, Hurley added.

Hurley noted that the merchant portal's web companion is also white-labeled and hosted on the customer's URL in Apriva's data centers. It is built on responsible design technology, which allows the portal to adapt as needed for any screen interface.

In addition, Tappin said that the web companion is integrated with customer care via a ticketing system, and its inventory capability can create items, prices and descriptions that representatives in the field can automatically sync up with, so no manual entry of updated product prices and features needs to be done.

The third portion of interviews done at Transact 14 will be posted soon.


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