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The Green SheetGreen Sheet

The Green Sheet Online Edition

August 08, 2011 • Issue 11:08:01

Industry Update

The Green Sheet, Inc.NEWS

Durbin may spur move to EMV

An Atlanta Federal Reserve executive suggested the Durbin Amendment to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 may lead to more interest in moving debit cards to EMV (Europay/MasterCard/Visa) smart card technology.

Douglas A. King, a payment risk expert in the Retail Payments Risk Forum at the Atlanta Federal Reserve Bank, said the controversial cap on debit interchange fees in the Durbin Amendment will have "a positive impact on migration to EMV." His comments were published in an Atlanta Federal Reserve blog posted in July 2011.

"The [Federal Reserve] Board's final rule suggests that issuers may be able to recoup some, but not all, costs associated with an EMV migration," he wrote. "Given the board's addition of fixed costs as allowable costs, hardware and software costs incurred by issuers to migrate to EMV might be included in future adjustments to the base component of the interchange cap. Should issuers adopt EMV, R&D costs incurred are allowable under the fraud prevention adjustment standard."

King noted the Fed's final rule excludes the cost of card production and delivery - a requirement for migration to EMV - as an allowable cost.

In addition, King said he is "optimistic that future potential adjustments to the components of the interchange standard under the final rule's expanded set of allowable costs - along with the consideration of R&D costs as part of the fraud adjustment component - will have a positive impact" on development and implementation of EMV cards in the United States.

Global Payments' strong fiscal fourth quarter

Global Payments Inc., which ranked No. 5 among top acquirers in "The State of Acquiring 2010," GSQ Vol. 13 No. 4, December 2010, reported results for its fiscal fourth quarter and year ended May 31, 2011.

For the fiscal year, revenues grew 13 percent to $1,859.8 million (about $1.86 billion) compared to $1,642.5 million (about $1.64 billion) in fiscal year 2010. Normalized diluted earnings per share from continuing operations grew 9 percent to $2.77 compared to $2.54 in the prior year.

Global Payments Chairman and Chief Executive Officer Paul R. Garcia stated, "We are pleased with our strong fiscal year 2011 financial performance, which was driven by solid execution of our business strategy across our regions and the December 2010 addition of Spain.

"We delivered exceptional results in the fourth quarter, driven by strong performance in North America and outstanding results in our international segment. Our execution during fiscal 2011 established a basis from which we expect to drive margin expansion of as much as 30 basis points in fiscal 2012."

David E. Mangum, the company's Senior Executive Vice President and Chief Financial Officer, also commented. "On a cash basis, the company reported fiscal 2011 fourth quarter and full year diluted earnings per share from continuing operations of $0.86 and $3.08, respectively, which represents 32 percent and 10 percent growth over the respective prior year periods," he said.

"For the full year of fiscal 2012, the company expects annual revenue of $2,100 million to $2,150 million, or 13 percent to 16 percent growth over fiscal 2011."

SmartMetric promises vigorous patent defense

SmartMetric Inc., the maker of the biometric card computer that enables smart card technology, filed a form 8-K disclosure with the U.S. Securities and Exchange Commission notifying stockholders it will continue to vigorously defend its patent on both contact and contactless smart card technology.

The company disputes a June 2011 judgment finding Visa Inc., MasterCard Worldwide and American Express Co. did not infringe on SmartMetric's U.S. Patent 6,792,464 (the "'464" patent). The company said in both its SEC filing and in court appeals it believes the trial court was wrong in its interpretation of definitions and limits on the '464 patent.

"While the company is confident that the judgment in the Visa and Mastercard case and the AmEx case will be overturned on appeal, the results of any litigation is inherently uncertain, and there can be no assurance that we will prevail in the appeal of the litigation matters stated above or otherwise," SmartMetrics wrote. "We plan to pursue our claims and defenses vigorously and expect that the litigation matter ... will be protracted."

The Green Sheet, Inc.ANNOUNCEMENTS

Credomatic has touch-screen POS solution

Credomatic of Florida Inc. released its Ordyx Lite targeted to single terminal restaurants. Ordyx Lite turns an Apple Inc. iPad into a cash register. Peripherals include receipt and optional remote printers, mag stripe readers and cash drawers. The software package includes touch-screen POS and order entry, payment processing, employee timekeeping and a web-based back-office.

Datacard's new card delivery system

Datacard Corp. enhanced its Datacard MXD Card Delivery System and Datacard MXD Mailer Card Delivery System. The changes reportedly allow financial institutions, retailers and other card issuers to deliver one-to-one marketing messages, cross-sell products and services, issue coupons and certificates, and encourage card activation. Marketing messages can be customized and printed on demand

Dwolla processing $1 million per day

Dwolla Corp., a mobile payment startup, reported it is now processing $1 million a day in transactions. Dwolla works with social networks Twitter and Facebook to send and deliver payments. Dwolla also offers financial institutions its FiSync integration service distributed through The Members Group; FiSync allows banks to connect to Dwolla technology on their existing systems.

Dynamics' large patent portfolio

Dynamics Inc. publicly acknowledged it acquired one of the largest patent portfolios in the payments industry. Its cards are currently in trials with payment card issuers. Its patents cover such payment cards as programmable mag stripe cards, exposed chip EMV cards and radio frequency identification contactless cards.

The company noted its patents also include phone-based payment devices; next-generation back-end processing schemes; portable and stationary payment terminals; and next-generation, form-factor agnostic payment applications such as reward redemption, coupon redemption, payment options, enhanced security and merchant promotions.

Element wins Trustwave's trust

Element Payment Services Inc. said its new Hosted Payments solution, an integration option to Element's Express Processing Platform, won Trustwave Holdings Inc. approval of the software's ability to remove integrated software vendors' applications from the scope of Payment Card Industry (PCI) Data Security Standard (DSS) and Payment Application DSS compliance requirements.

According to Element, Hosted Payments removes the need for software applications to keep cardholder data during authorization and settlement.

Itautec has free help for ATM vendors

Itautec S/A, a Brazilian manufacturer of ATMs, stated it has a new, free form ready for downloading that will assist financial institutions in the United States in assessing the readiness of their ATMs to meet current standards set in accordance with the 1990 Americans with Disabilities Act (ADA). ATM vendors in the United States have until March 15, 2012, to ensure their machines comply with new ADA regulations. Itautec estimates almost 55,000 ATMs "may not be worth upgrading" to meet the new regulations.

JHA has EMV cards

Jack Henry and Associates Inc. released Visa-branded EMV chip-and-signature cards for its credit union customers. The new cards were introduced by its JHA Payment Processing Solutions division and are targeted to credit union customers who regularly travel overseas.

pcAmerica has restaurant POS solution

Restaurant Pro Express Mobile, a new sales solution, was recently introduced by pcAmerica, a trademark of Automation Inc. The software works as a POS terminal on an Apple iPod or iPhone. The technology allows servers to take table orders, split checks with credit card payments made through an attached encrypted credit card reader, print receipts on a wireless mobile printer or simply email receipts, according to pcAmerica.

TMG text system fights fraud

The Members Group released the Fraud Text Alerts service for cardholders of its financial institution clients. The text alerts are triggered by a financial institution's fraud strategy. When a transaction looks risky to the financial institution, TMG fraud experts look at the transaction in the context of the account and the financial institution's strategies.

The customer is notified of the transaction verification by text message. The cardholder can then either dismiss the notice or confirm the transaction was fraudulent. If the consumer reports a fraud, a hold is put on the account, and a second text is sent to the cardholder with a request to phone the TMG fraud prevention team for more details and instructions.

The Green Sheet, Inc.PARTNERSHIPS

Avant-Garde markets Hypercom solution

Avant-Garde Marketing Solutions Inc. signed to market Hypercom Corp.'s Optimum M4230 multi-application mobile payment terminal and Mobile Network service. Avant-Garde selected Hypercom after a competition among global payment providers. Financial terms of the agreement were not disclosed.

First Data offering VeriFone's PAYware Mobile

Payment processor First Data Corp. is offering clients VeriFone Inc.'s PAYware Mobile solution for smart phones. Using PAYware, merchants can swipe customer credit cards, capture customer signatures, electronically transmit payments and email receipts.

First Data said the PAYware system is perfect for merchants who "operate remotely, or on the go, such as home services and in-home sales, events and markets, limo and taxi services, or restaurant delivery."

Mazooma, Discover partner

Mazooma Inc. and Discover Financial Services are partnering to introduce Mazooma's micropay-in-a-box, online banking-based payment solution for digital merchandise purchases.

Mazooma said its new solution can reduce fees 71 percent for digital merchants. The new technology allows consumers to pay using online bank accounts.

NPC renews deal with Select Merchant Services

National Processing Co., a Vantiv LLC company, renewed its contract with ISO Select Merchant Services Inc. (doing business as Retriever Merchant Solutions) to provide processing services for the ISO. SMS has been with NPC for more than 10 years.

USA ePay teams with Payliance

USA ePay, a GorCorp Inc. company, will deliver Payliance's ICL Check Truncation service through its payment gateway. The ICL Check Truncation product eliminates high bank return fees for merchants with higher than average return rates who process all types of check transactions as a cost saving alternative to credit and debit card processing, the companies said.

Vantiv, CB&S join up

Vantiv and Alabama's CB&S Bank are collaborating on the release of Vantiv's Sales Force Administration (SFA). The SFA service is a component of Vantiv's Merchant Bank sales referral strategy program. SFA is reportedly a proven method for mining sales prospects among debit, credit and merchant services businesses. CB&S is the first bank to offer this in addition to Merchant Bank.

The Green Sheet, Inc.ACQUISITIONS

ACI bid puts S1 Corp. in play

Global payment solutions provider ACI Worldwide Inc. bid $9.50 a share in cash and stock for the outstanding shares of integrated financial services provider S1 Corp. S1 is valued at approximately $540 million. S1 currently has an agreement to merge with Fundtech Ltd. in a $700 million stock deal. If stockholders accept the ACI deal it would scotch the Fundtech merger.

Cardtronics gets EDC ATMs

Cardtronics USA Inc. purchased EDC ATM Subsidiary LLC and Efmark Deployment I Inc. for $145 million. The buy gives Cardtronics 3,700 ATMs in the United States. The company reported it now has ATM branding relationships with eight of the 15 largest U.S. banks.

Transactis, Data Impact merge

Business-to-business and business-to-consumer payment processors and electronic billing companies Transactis Inc. and Data Impact Inc. have merged. The two companies stated that, combined, they process more than $2 billion in payments annually. They also include a number of large U.S. banks in their account portfolios. Financial terms of the deal were not disclosed.

The Green Sheet, Inc.APPOINTMENTS

Badran named Senior VP at Digital River

Souheil Badran was named Senior Vice President and General Manager of Digital River World Payments Inc. in Minneapolis. Badran will be responsible for leadership and strategic direction to drive business growth in his newly created position. Previously, he was a Senior Vice President and General Manager of the e-commerce Solutions Division of First Data.

BofA's Gordon joins National Cyber Security Alliance

Bank of America Corp. Senior Vice President for Online and Mobile Channels Keith Gordon joined the board of directors of the nonprofit public-private cyber security group The National Cyber Security Alliance. Gordon develops authentication and security strategies for BofA.

Guerrino named EVP at FS-ISAC

The Financial Services Information Sharing and Analysis Center (FS-ISAC) appointed Eric Guerrino Executive Vice President of Operations.

Guerrino previously served as Treasurer of the association formed to share information about physical and cyber security threats and vulnerabilities.

Guerrino will be responsible for improving incident response processes and member products. He served as a Director of the FS-ISAC from 2006 to 2008 and formerly worked as an executive at the Bank of New York Mellon.

MoreMagic brings Obremski aboard

Kimberly Obremski joined MoreMagic Solutions Inc. as the Vice President of Sales, North America. She joins MoreMagic from Velti PLC, a mobile marketing and advertising platforms and solutions firm, where she was Vice President of Sales. Obremski will be selling MoreMagic's mobile commerce and financial services technology and solutions to U.S. and Canadian service providers.

Ready to Accel Partners

Bill Ready, former President of iPay Technologies, joined Accel Partners, a venture capital and growth equity firm, as Executive in Residence. Ready is responsible for working with companies in the Accel Partners portfolio and for finding new investment opportunities.

The Green Sheet, Inc.BOTTOM LINES

  • The National Retail Federation's 2011 Back-to-School and 2011 Back-to-College surveys by BIGresearch found families will spend $600 on primary and secondary school students and $800 on college students. Total spending for school supplies, apparel, electronics, dorm furnishings and so forth is expected to reach $68.8 billion.

  • According to a mid-July ShopperTrak National Retail Sales Estimate, general merchandise, apparel, furniture and other retail sales saw 3.2 percent growth year-over-year for the same period in 2010.

  • Research by comScore estimated online flash sales of $1 billion in 2010. By 2015 that figure could reach $6 billion, based on analytics from BIA/Kelsey. Said flash sales (limited-time offers of designer brands at bargain prices) emerged in recent years to encourage consumer spending on luxury goods.
end of article

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