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Table of Contents

Lead Story

Tapping into portfolio power players


Industry Update

Debit surcharges targeted by California lawmakers

Have NFC payments reached tipping point?

Skimmers shifting from ATMs to gas pumps

Trade Association News

Selling Prepaid

Prepaid in brief

Legislative fallout for gift card providers

Thom Aldredge
World Gift Card


ISOs, MLSs and financial services re-regulation

Patti Murphy
The Takoma Group

Fraud trends in 2010

Nicholas Cucci
Network Merchants Inc.


Street SmartsSM:
Variations on valuations

Ken Musante
Eureka Payments LLC

Going global in Europe

Caroline Hometh

Succeeding at PCI compliance - Part 4: Maintaining the program

Dawn M. Martinez
First Data Corp.

Technical details: What to share and what to spare

Dale S. Laszig
Castles Technology Co. Ltd.

Are your online contracts enforceable?

Sarah Weston
Jaffe, Raitt, Heuer & Weiss PC

The proper care and feeding of LinkedIn

Marc W. Halpert

Company Profile

Federated Payment Systems LLC

New Products

iPhone terminal with gateways galore

iPay POS
Rapadev LLC


Shuffling the deck on negative people


10 Years ago in
The Green Sheet


Resource Guide


A Bigger Thing

The Green Sheet Online Edition

August 23, 2010  •  Issue 10:08:02

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Best not complain about innovation

In light of recent MLS Forum posts criticizing PayPal and Google Checkout, a recent article, "A New Wave for Payments?" published by David Randolph in Prairie Trails Software Inc.'s newsletter, A Consultant's View, bears consideration.

Randolph stated that "according to Warren Buffet, there are three I's in any business cycle: Innovators, Imitators and Idiots. One way to tell when the Idiots have taken over is when price is the only differentiator.

"When we see that, it is time to start watching for new innovation to happen in that business. The human dynamic is that the Idiots do so much harm to the customers that new Innovators see how to take those customers away."

I immediately thought of the Imitators and Idiots copying the bankcard/credit card model, unbundling pricing to make it appear cheaper when it really is more costly, but selling it on prices composed of smoke and mirrors.

The article went on to say that most innovation begins at the low end where established companies are unwilling to go and that in the payments industry the low end is small merchants who don't qualify for standard merchant accounts.

Randolph pointed out that while "the card processors have pushed NFC (and not gotten very far), PayPal had a million people download their iPhone application in [the] first three weeks after it was launched."

He also noted that merchant acceptance of PayPal is on the rise, and some traditional merchants who qualify for merchant accounts are opting to use PayPal instead.

"The challenge to the ISO community is that of relevance," Randolph added. "If the merchants can be served either by a low-cost 'commodity' provider or they can go to PayPal and not bother with a merchant service provider, why deal with an ISO?"

I propose that there are only a handful of Innovators in today's acquiring world, and some of those grousing about the service provided by alternative payment providers are my generation, baby boomers, and some immediate post-boomers.

Reflecting on one MLS Forum member's comment about being dissatisfied when phoning PayPal and other online entities for service, I concluded:

Like it or not, service no longer exists, though boomers (my generation) expect service and are willing to pay a bit more for it. But we are a dying generation.

Biff Matthews
CardWare International


Thank you for sharing your thought-provoking perspective in response to excerpts from the GS Online MLS Forum thread "Why us over PayPal or Google Checkout," published in the Forum section of The Green Sheet, July 12, 2010, issue 10:07:01.

Those who want to read the entire thread, begun July 14, 2010, can do so online. Just register and log on at To read "A New Wave for Payments?" in full, visit,


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