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Table of Contents

Lead Story

Expanding options through microfinance

Patti Murphy
The Takoma Group


Industry Update

Indictment for gambling processor

EPX, joining end-to-end and tokenization

Be the miracle

A silver anniversary for Fiserv

PCI SSC reaches Iron Mountain appoints new director


Payments on the edge: A conversation with Conrad Sheehan

The irrational truth of customer behavior

Industry Leader

Paul R. Garcia –
Apple thriving close to the tree

Selling Prepaid

Prepaid in brief

A new kind of smart card

A smarter way for the government to pay?

Card payments for caregivers


Financially strapped boost payment alternatives

Patti Murphy
The Takoma Group

Accounts receivable processing and the ISO revenue model

Brandes Elitch
CrossCheck Inc.


Street SmartsSM:
Blackjack savvy applied to merchant acquiring

Jon Perry and Vanessa Lang

How to do effective performance appraisals

Vicki M. Daughdrill
Small Business Resources LLC

Processing continuity: Threats and remedies

Dale S. Laszig
DSL Direct LLC

An operational look at improving sales force training

Deana Sellens
Take Charge Business Consulting LLC

Company Profile

M2 Global Ltd.

New Products

Flag and filter online payments

Shop BuyVoice
Planet Payment Inc.

Merchant management minus tech troubles

Hosted Download Management Service
POS Portal Inc.


Reflect that glory



Resource Guide


A Bigger Thing

The Green Sheet Online Edition

August 24, 2009  •  Issue 09:08:02

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Accounts receivable processing and the ISO revenue model

By Brandes Elitch

Three seemingly unrelated recent events should cause ISOs to think about the future of what we used to call the credit card industry. The first is that Visa Inc. published its quarterly earnings at the end of July 2009. Given the issues with the economy, you might have been a little bearish about Visa's earnings, but you would have been wrong.

First, Visa's earnings

Visa posted a top-line sales increase of over 2 percent year to year, and earnings were up 13 percent from July 2008. Visa's goal for next year is a 20 percent growth in earnings.

Visa now derives 60 percent of its U.S. revenues from debit cards and 40 percent of overall revenues from foreign transactions. If you haven't been paying attention, you might not have realized that Visa's transaction volume is now about twice that of MasterCard Worldwide, which even surprised me.

Also noteworthy is that unlike American Express Co., which issues its own cards, Visa is relatively isolated from credit exposure in the current consumer financial debacle, since its cards are issued by banks, not Visa directly.

If you are an ISO, keep a close watch on how Visa is generating its income, because up to now, being a successful ISO has been about handling merchant credit card processing, which increasingly means taking Visa transactions.

Second, Visa and U.S. Bank

Additionally, Visa and U.S. Bank N.A. created the joint venture, Syncada. (Who thinks up these names, anyway?) Syncada is "a B2B [business to business] global invoice exchange platform with integrated receipts and payable financing." This network processes and tracks invoices, makes and receives payments around the world, and offers payables and receivables financing through local and global financial institutions.

In this case, Visa decided to use a product developed by U.S. Bank, the sixth-largest commercial bank in the United States. Called PowerTrack, the product provides automated B2B electronic invoicing, payment processing and trade finance for "hundreds of customers."

That doesn't sound robust, until you realize that last year it processed $18 billion worth of invoices.

The real motivation for banks here is not to get the electronic invoicing business - that is just a modern, electronic version of the lockbox business. The real money is in the trade finance function: either loaning money to pay invoices, buying receivables at a discount or loaning money against them to increase cash flow for clients.

Visa's press release stated this is "a more efficient way to pay and be paid by replacing inefficient, paper-based B2B processes with an integrated, fully electronic financial supply chain platform." You could have lifted this very language from a press release First Chicago Bank & Trust did 20 years ago when it launched the GM Project, and not much has changed since then on this front, but perhaps enough has changed to make it different this time.

Third, BofA and Bottomline

The third event is that Bank of America Corp. entered into a "strategic relationship" with Bottomline Technologies to "advance the growth of Bank of America's market-leading electronic network for payment and invoice automation."

Bottomline will acquire BofA's PayMode product, operations and vendor network for B2B electronic invoicing, payment processing and remittance data delivery. BofA said it has about 550 clients that have processed about $300 billion since the inception of this product - that's a big number, although the time frame wasn't specified.

A BofA spokesman said, "After a thorough evaluation, we have concluded that working with Bottomline will accelerate the growth of PayMode."

What it means

Here's the way I see it:

Spotlight Innovators:

North American Bancard | Simpay | USAePay | Impact Paysystems | Board Studios