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Table of Contents

Lead Story

2014: A promising year in payments – Part 2

News

Industry Update

XP end times not an issue for ATM ISOs

California EBT fee issue highlights ISO opportunity

Square makes bitcoin play

Equinox opens new chapter

Power to payments

Features

MasterCard: M-payments tipping point has arrived

ISOMetrics:
Mapping mobile, PC and tablet frontiers

Views

Springtime in Wine Country – and merchant services

Brandes Elitch
CrossCheck Inc.

Is same-day ACH in the cards?

Patti Murphy
ProScribes Inc.

Education

Street SmartsSM:
A Square peg in a round industry - part 1

Tom Waters and Ben Abel
Bank Associates Merchant Services

How to compose an employee handbook

Vicki M. Daughdrill
Small Business Resources LLC

A data security solution primer

Cynthia Bailey
The Idea People

App licensing for ISOs

Adam Atlas
Attorney at Law

Company Profile

Impact PaySystem

New Products

Free tablet program for SMBs

Mobility for contractors, service pros

Protection for online merchants

Inspiration

Observations from the payments Ferris wheel

Departments

Readers Speak

Resource Guide

Datebook

A Bigger Thing

The Green Sheet Online Edition

April 28, 2014  •  Issue 14:04:02

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2014: A promising year in payments – Part 2

So far, 2014 has been a year of transformation for The Green Sheet. And it looks like the year will be a good one for our industry. The payments landscape, although ever-changing, seems to have entered a cycle of increased activity and innovation. While not every change will lead to significant opportunities, the possibilities of new technologies lend to an atmosphere of excitement and anticipation. We wanted to learn what members of The Green Sheet Advisory Board find compelling this year – both the hurdles to overcome and the best opportunities. So we asked them the following questions:

1. What are you seeing thus far for the industry in 2014? What excites you? What do you find to be challenging?

2. How can our readers utilize what you see as exciting? What should they be doing to prepare for the challenges?

3. What topics would you like to see The Green Sheet cover in the coming year?

Following is a portion of their responses. The first segment appeared in "2014: A promising year in payments – Part 1," The Green Sheet, April 14, 2014, issue 14:04:01.

Andrew Altschuler, AmeriMerchant

1. 2014 will continue to be a year of fast change; with mobile payments on the cutting edge, and EMV around the corner, there is plenty to be excited about.

2. Those in the payment space should be creating opportunities to interact with more of their customers, educating them on the updates and developments happening in the industry and how it affects them specifically. Also, readers should be concentrating on making payments EMV compliant ... this creates a chance for MLSs to second-sell their merchants products like, new equipment, gift cards ... and of course merchant cash advance...

3. At AmeriMerchant we are always following The Green Sheet and the topics they cover, and we are looking forward to hearing all about the latest and greatest opportunities in the payment and merchant financing space.

Matt Bruno, Payment Logistics

1. The most frequent topics that I hear about so far involve tablet POS systems, Square's movement up into larger merchants, Windows XP EOL announcement, and EMV – especially EMV with POS systems. The challenging aspect, in part, is what to tackle first. The most challenging thing though is the Windows XP EOL announcement with respect to existing merchants on POS systems.

2. Honestly, they all offer good opportunity for anyone in this industry. Tablet POS systems have provided a new way to connect with prospective merchants; Square's movement into customized pricing helps the acceptance of the flat rate pricing model (which I find to be a great sales tool); the Windows XP issue is helpful for new POS sales; and EMV (especially with POS) reopens the POS field for more tech focused ISOs like Payment Logistics – the biggest challenge for many.

3. Covering data security breaches at small and medium-sized merchants. Most merchants don't believe a breach can ever happen to them because the only ones they hear about are giant companies like Target.

Lane Conner, First American Payment Systems

1. and 2. Three topics are monopolizing the discussion this year: Data security, aggregation and tablet-based POS systems.

The data breaches at Neiman Marcus and Target have once again brought security to the forefront of everyone's mind. It is exciting to see hearings on Capitol Hill and organizations like the Electronic Transactions Association devoting a great amount of Transact 14 to PCI and data security. I am interested to see what the outcome of the hearings will be and what type of new legislation, if any, will be passed.

Aggregation is another topic that has been brought up quite a bit. Aggregation is becoming more popular and more well known with companies such as Etsy and Uber getting much larger national attention. Companies like Square are generating a reason for typical processors to move into that space.

Aggregation is not for every merchant type, but I believe that we will see more of the larger processors developing and expanding their aggregation models for a specific type of merchant. It will also be interesting to see how the major card associations react as aggregation grows. My personal opinion of aggregation is, if you can't beat them, join them! The stigma for merchant aggregators is going away very quickly.

Finally, tablet-based POS systems are becoming more prevalent in the market, and we are seeing some major ISOs and processors putting more dollars into developing new technology. There has been a great amount of speculation on whether a tablet-based POS system could ever compete with the major POS systems. While I believe that we are a ways off from seeing a product like 1stPayPOS at a national fast food chain, I don't think that it is too far off. The tablet POS systems are being improved every day.

It is great to see SMBs that were priced out of a typical POS system be able to purchase something where they have better control over their business. Tablet- based POS systems also allow the merchant level salesperson to stop selling price and start focusing on solutions. MSPs can now lead with trying to improve the merchant's bottom line rather than leading with "I can save you x percent from your current processor."

3. I would love to see The Green Sheet cover the above three items.

Possibly take a look at different aggregators and how they are using the model to help merchants. Put out some information on the good, the bad and the ugly of aggregation – who can use it and who should stay away from it. I know that The Green Sheet has already done a couple of articles on aggregation, but I think that a bit more time should be spent on it. I was on a panel at SEAA on aggregation, and I was told it was the best attended panel of the entire show. People are looking for more information; we need to give it to them.

In terms of security, it would be interesting to take a look at what the Electronic Transactions Association is doing on Capitol Hill to lobby. Maybe interview the people that are closely involved with everything that they are doing and present it to the readership.

Like aggregation, I think that there is a lot of confusion on tablet-based POS. Large ISOs and processors are looking to either outsource or develop their own. Tablet-based POS system A is not like tablet-based POS B. Would be interesting to see an article on the early developers (NCR Silver, POS Lavu) and what is hitting the market now such as Clover and 1stPayPOS.

Nancy Drexler, Acquired Marketing

1. What is both challenging and exciting right now is the wealth of unique value-added products and services entering the payments arena. While it is a challenge for ISOs to identify and choose which products to offer, and to learn the ins and outs of each unique product and marketplace, each new offering also adds a tremendous opportunity to open new doors, close new deals, and boost both merchant retention and portfolio value.

2. Larger ISOs should invest in their product development departments. Smaller ISOs might want to join forces to identify and leverage opportunities. All should be thinking vertically: if I want to add dry cleaners to my portfolio, what unique products or services will make me stand out – and be more relevant and more appealing? Building strength in vertical niches is a smart way to build brand and value.

3. I only look at the ads.

Noel Fundora, First Data Corp.

1. Passionate discussions and ideas for innovating to connect payment channels and consumers in a meaningful and informative way. It's an exciting time for First Data as we are moving quickly to maximize our unmatched distribution to merchants and financial institutions. Change will challenge the status quo and disintermediation will happen; the industry will be disrupted as innovations take hold.

2. Consult with clients to look for simplicity in products and partner with those companies that offer innovative payment solutions.

3. Security and evolution of the POS/how apps and other technologies will change the POS.

Marc Gardner, North American Bancard

1. It is early in the year so, not surprisingly, the topics we're discussing are still relative to events of 2013, topics like breaches at large retailers, overall security, EMV and, most importantly, the increasing importance of mobile payments.

I think, like many, that 2014 will be the year that we see the mobile payments industry start to define itself. There's been such a large push over the last year to improve NFC and iBeacon technologies – it will be interesting to see if companies like Apple jump into the mobile payments game, and to see if mobile wallets actually take off.

As far as what excites me, I think shifting our focus to address the needs of our existing and target customers based on what they say versus how we analyze data. For us, 2014 will be about simplifying our processes, based on merchant feedback, and finding new ways to improve both how our company operates and how our products serve our customers. Giving our merchants a voice, and really listening to their feedback, will be a big part of how we shape our programs and services.

Overcoming antiquated thinking and the "that's the way it's always been done" mindset are some of the challenges facing us. The payments landscape is rapidly changing. In order for us to remain relevant and innovative, we are going to have to really start to think outside of the parameters we've traditionally had for ourselves.

And really, we are going to have to decide how we want to evolve in order to continue to be successful. We've started to plot a course for innovation that I think is exciting and has a clear focus.

2. They can acknowledge the value of the voice of the customer. Every piece of feedback you receive from your customer is free market research. As I stated above, this is something that will be a big part of our strategy as well. There are so many avenues now for customers to give feedback, whether through traditional surveys or social media like Facebook and Twitter. All of these channels are available at little to no cost, and the value you get from analyzing what your customers say they want and need is priceless.

To prepare for the challenges, educate yourself about current technology, new methodologies and, most importantly, open your mind. Because things are rapidly changing in this industry, it's important to make sure you are up to date on the latest news. And don't be afraid of new things. This industry is about innovation; don't be afraid to try something new; you never know what could stick.

3. As The Green Sheet always has, continue to cover relevant and fresh topics around payments and all the interrelated industries associated with it. It's a big, complex industry that touches many different markets, so I'd like to continue to see articles about things that affect not just agents, but merchants as well. In addition, it would be nice to see more about data security and how agents can reassure their merchants that their data is safe and secure.

Curt Hensley, Impact Payments Recruiting

1. I'm seeing a realization of the "back to normal" that has been envisioned since 2010. I am excited to see the payments industry grasp technology. As the processors all utilize systems that are 30 to 40 years old, there is a wave of new players that are advancing the technology of payments on a daily basis.

The concept of security is challenging. The first thing that must be agreed to is that there is no security system that is 100 percent. I find it challenging that the industry suffers large public breaches, and everyone involved believes that they have done all that is possible. To avoid the proliferation of alternative currencies and payment methods, this issue needs to be addressed in a way that provides the consumer a higher comfort level, or our industry will suffer.

2. Stay on top of new products to determine to stay in front of the competition. What should they be doing to prepare for the challenges? Eat, pray, love? Contact a PR firm and a good law firm.

3. How to monetize new products, technologies and currencies.

Dee Karawadra, Impact PaySystem

1. It seems like the industry is ever so evolving, as it has in the last 15 years I have been in the industry. The evolution is lot more technology focused than it has been in the past. Remember when HP partnered up with Microsoft and First Data to bring an "affordable" POS system? We all expected the leasing days to come back.

A couple of years ago, the cloud-based POS was introduced. This was revolutionary, and the stability of the Internet allowed for this to become the norm. The POS dealer charged a monthly fee and created another recurring revenue. 2014 brings new things. I think the industry will be leaning back to credit card processing. The "cloud"-based technology will be an avenue to get to the processing.

What excites me is the new technology that will change how we process payments. From mobile to cloud, it all leads to a newer, better, more complex payments acceptance. What I find challenging is that with technology, there are always challenges. However, the greater challenge will be more related to the governance of the industry. We should expect more government involvement.

2. Look for the newest and greatest technology-related products. Regional shows, ETA and The Green Sheet are great sources to see the new technology. What should they be doing to prepare for the challenges? To prepare for government involvement, the readers need to get more involved with their local politics. This is a good way to get your opinion and vote to count. 3. I'd love to see more focus on selling successfully. I think all the technology and certification is great, but what the feet on the street want is more sales.

Andie Kolb, Vantiv

1. It's no secret that our industry has been heavily focused around what we refer to as "omnicommerce." This is the ability to offer payments options to consumers through multiple channels. I believe we will continue to see these channels evolve, but more importantly, we will begin to see the rise of the "omniconsumer."

The omniconsumer is idealistic, brand loyal, connected and tech savvy. They are the future and look for payment enablement across all channels. As an omniconsumer myself, it's exciting to be so close to this expanding technology. The challenge that we face with this rapidly changing technology is that it has to be as good as or better than a traditional mag stripe card. There is no room for mistakes because consumers can be unforgiving when it comes to adopting new technologies.

2. Stay in touch with the changes that are happening around you. Follow industry media such as The Green Sheet and other publications to get a basic understanding of what is on the horizon. Vantiv offers insight into the payments landscape through published material such as white papers, which can be downloaded by the public.

3. This coming year I'd like to see The Green Sheet continue to cover regulations and how it will or is affecting the payments industry, continue to follow industry trends and lastly, learn more about how to keep the sales coming in this evolving environment!

Steven Peisner, Acquiring Solutions International

I see more and more merchants switching from one provider to another for pennies. … I see more unregistered MSP/ISOs every day destroying and/or undermining the industry. How can those of us who do it the right way compete with the "Wholesale Division of MasterCard & Visa?"

It's amazing to me how many merchants are "currently overpaying on their merchant bill every month, and that they had better act now before Visa and MasterCard increase their rates!" I mean, honestly, how can we compete with free machines, free supplies, free wireless units, next-day funding, no annual fees, no termination fees and month-to-month contracts?

I see an industry without any kind of regulation … self-imposed or otherwise. Convicted felons should not be allowed to get out of prison and get a job selling bankcard services. … I see $10,000 a year to be in this business as nothing more than one of the reasons why Visa and MasterCard stock is trading where they are respectively per share.

I see the word "fee" as being the new norm, and another reason why the card companies are turning profits in the hundreds of millions. … I see government thinking that when you are born you get two things: a Social Security number and a merchant account, thanks to PayPal and Square.

I see an industry so devalued on a daily basis by "giving it all away for fee," terminals and processing, that it's amazing that anyone reading this is still in business. … I see merchants hating "us" every day. … I see the look of disgust on a merchants face when I say, "Who are you processing with?" … I see myself wishing I sold when I had the chance.

The fact that I am still in business excites me. 2013 was the worst year I have ever had in this wonderful industry. Things are looking up for 2014 – going back to basics one merchant at a time. Telling a merchant the truth – after the last guy filled their heads with lies – is a challenge. Merchants hear what they want to hear and believe what they want to believe.

2. Keep your eyes and ears open, listen to half of what they hear and believe half of that – this should keep you one step ahead at all times.

3. I think that a section on government would be greatly utilized, and maybe a who's who in bankcard.

Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.

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Spotlight Innovators:

North American Bancard | USAePay | Humboldt Merchant Services | Impact Paysystems | Electronic Merchant Systems