July 13th, 2012

Edition #312

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In this Issue

	LevelUp Declares Payment War, Kills Interchange Fee for Merchants
	Merchants Say Fine-Tuned Daily Deals Are Starting to Pay Off
	TSG Analysis: Cielo Acquisition of Merchant e-Solutions
	Consumer Sentiment in U.S. Drops to Lowest This Year: Economy
	Warren Buffet Says Economy Slowed in Last 2 Months
	The Art of Merchant Risk Management
	Brooklyn Court Could Be More Inclined to Rule Reform Than Interchange Cuts
	WikiLeaks Wins Battle Against Visa, MasterCard
	JetPay, EMS Acquired by New Company Founded by Payments Veteran Bipin Shah
	First Data Releases June 2012 SpendTrend®
	Bank Fees Squeeze Retailers
	One-Third of U.S. Consumers Now Use Mobile Payments
	ISOs Can Alert Merchants To The Cost Of Fraud
	New PCI Rules Will Force Retailers To Set The Risk Level
	Square Sets Lawyers on mPowa Over Web Site Pic
	The Death of Cash
	Heartland Payment Systems(R) Adds Payments Industry Veteran Ian M. Drysdale as President - Network Solutions
	PayPal Looks to Mobile Payments and Partnerships With Banks to Stay on Top
	Approaching $1 Billion in Transactions, BigCommerce Selects SecureNet for Credit Card Processing
	Super G Funding, Cynergy Data Team Up to Fuel ISO Growth
	Heartland Payment Systems(R) Acquires LunchByte Systems, Inc. as Part of Strategic Growth Plan for Heartland School Solutions Division
	Can Clouds and Contactless Chips Coexist?
	Mythbusters Banned From Hacking RFID Chips

In Other News

This Day in History 1985

Live Aid Concert

On July 13, 1985, at Wembley Stadium in London, Prince Charles and Princess Diana officially open Live Aid, a worldwide rock concert organized to raise money for the relief of famine-stricken Africans. Continued at JFK Stadium in Philadelphia and at other arenas around the world, the 16-hour "superconcert" was globally linked by satellite to more than a billion viewers in 110 nations. In a triumph of technology and good will, the event raised more than $125 million in famine relief for Africa.

Live Aid was the brainchild of Bob Geldof, the singer of an Irish rock group called the Boomtown Rats. In 1984, Geldof traveled to Ethiopia after hearing news reports of a horrific famine that had killed hundreds of thousands of Ethiopians and threatened to kill millions more. After returning to London, he called Britain's and Ireland's top pop artists together to record a single to benefit Ethiopian famine relief. "Do They Know It's Christmas?" was written by Geldof and Ultravox singer Midge Ure and performed by "Band Aid," an ensemble that featured Culture Club, Duran Duran, Phil Collins, U2, Wham!, and others. It was the best-selling single in Britain to that date and raised more than $10 million. Click here to read more.

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LevelUp Declares Payment War, Kills Interchange Fee for Merchants 7/12/12 GigaOm    Every month, it seems players in the mobile payment market try to outdo each other, offering merchants a slightly lower transaction fee in a game of one-upmanship. LevelUp, a Boston-based loyalty and payment startup, has played that game to some extent, pushing down its fee to 2 percent. But now, it’s laying down the gauntlet to competitors by doing away with processing fees forever in what it calls a bid to achieve “Interchange Zero.” Merchants Say Fine-Tuned Daily Deals Are Starting to Pay Off 7/10/12 All Things D    It may have taken some fine tuning over the past four years, but merchants say that daily deals have started to perform better in recent months, according to a new survey. The survey, which tracked 641 small-and medium-sized businesses during three time periods over the past year, found that the industry is performing better based on at least a couple of key metrics. In particular, it noted two areas of improvement: consumers are more willing to spend beyond the deal’s value and the amount spent by repeat customers on their next visit has increased. TSG Analysis: Cielo Acquisition of Merchant e-Solutions 7/13/12 PaymentsPulse.com Key Finding: Value driven by Cielo’s desire for ecommerce platform Consumer Sentiment in U.S. Drops to Lowest This Year: Economy 7/13/12 Bloomberg    The Thomson Reuters/University of Michigan index of consumer sentiment dropped to 72 this month from June’s 73.2 reading. The gauge was projected to rise to 73.5, according to a median forecast of 69 economists surveyed by Bloomberg News. The weakest quarter of hiring by companies in two years along with stock market volatility tied to Europe’s debt crisis threaten to hold back the household spending that accounts for about 70 percent of the economy. Sales at retailers such as Hhgregg Inc. (HGG) may struggle as fewer consumers expect incomes to increase. Warren Buffet Says Economy Slowed in Last 2 Months 7/12/12 The Washington Post    Billionaire investor Warren Buffett says the overall economy has been slowing down in the last two months as fears about Europe’s debt woes mounted, but businesses tied to residential housing are improving a bit. Buffett, who is chairman and CEO of Berkshire Hathaway Inc., said during an interview on CNBC on Thursday that he’s not sure why the general economy is slowing, but he sees evidence of it at Berkshire’s retail, jewelry, carpet and other businesses. The Art of Merchant Risk Management 7/11/12 TSG    Commentary by Michael Campbell, Senior Associate – Acquiring & Issuing Risk Specialist Merchant risk management is an art as opposed to an exact science; no acquirer should be lulled to sleep by five plus years of low levels of chargebacks with any high volume merchants.  It is easy to do when the merchant has great name recognition and has been in business for many years; however, there are far too many cases wherein a merchant changes the nature of their business, slows down on the delivery of their product or decides to shut their doors Brooklyn Court Could Be More Inclined to Rule Reform Than Interchange Cuts 7/11/12 Digital Transactions    With a trial date looming in September, speculation is rising that a major antitrust case challenging credit card interchange will result in new rules handing merchants wider latitude in surcharging for transactions, routing payments, and steering customers to other cards or forms of payment. Settlement talks in the case, known as MDL 1720, are focusing increasingly on ways to allow merchants to track interchange costs in a more timely way, route transactions to lower-cost networks, and pass acceptance costs on to customers who use rewards cards and other cards that carry higher interchange. WikiLeaks Wins Battle Against Visa, MasterCard 7/12/12 Mashable    WikiLeaks won an important legal battle against Visa and MasterCard in Iceland on Thursday — where the credit card companies’ local partner was ordered by a judge to resume processing credit card donations made to the controversial secret-sharing site. The Icelandic court ruled that Valitor, Visa and MasterCard’s local partner, ran afoul of contract laws when it stopped processing donations to WikiLeaks, according to the Associated Press. JetPay, EMS Acquired by New Company Founded by Payments Veteran Bipin Shah 7/09/12 Philadelphia Business Journal    TSG is advisor on this transaction. Special purpose acquisition company Universal Business Payment Solutions Acquisition Corp. said Monday it will acquire “three profitable and growing companies to facilitate its strategy of providing end-to-end transaction processing services to small businesses.” UBPS said it will acquire: Electronic Merchant Systems, JetPay and A D Computer Corp. in a transaction valued at about $179 million. First Data Releases June 2012 SpendTrend® 7/11/12 First Data    First Data Corporation, a global leader in electronic commerce and payment processing, today released its First Data SpendTrend® analysis for the full month of June 2012 compared to June 2011. SpendTrend tracks same-store consumer spending by credit, signature debit, PIN debit, EBT, closed-loop prepaid cards and checks at U.S. merchant locations. Year-over-year dollar volume growth was 6.4% in June, down from May’s 7.0% growth. Bank Fees Squeeze Retailers 7/11/12 Yahoo! Finance    Most people are keenly aware of the annoying ATM fees, late fees and over-limit fees that some banks impose. Yet few know about the credit-card "swipe fees," which are invisible to consumers and have been the bane of hundreds of thousands of merchants, including Mike and Suzanne Schumann, furniture-store owners in Minneapolis. For the Schumanns, who own three storefronts, staying ahead of the cost of these swipe fees is as critica as staying ahead of interior design trends. One-Third of U.S. Consumers Now Use Mobile Payments 7/10/12 BTN    The use of mobile payments among U.S. consumers has grown dramatically in the past year, an IDC Financial Insights study released yesterday has found. A third of consumers — 33.9% — make purchases with their mobile phone, according to the survey of 2,663 U.S. adults. In the same survey last year, 19.3% of respondents had made a payment using a mobile device. IDC uses a broad definition of mobile payments that includes Amazon, iTunes, App Store and PayPal payments. ISOs Can Alert Merchants To The Cost Of Fraud 7/11/12 ISO & Agent    ISOs and agents could use fraud data to convince merchants to take security seriously, observers say. As it now stands, retailers and consumers may not be pushing for stronger card security because they feel protected by the systems already in use. But today’s security measures are not protecting the public from the real costs for fraud. Consumers who fell victim to fraud experienced an average loss of $240 per incident in 2011. New PCI Rules Will Force Retailers To Set The Risk Level 7/10/12 StorefrontBacktalk    PCI version 2.0 changed July 1. There actually are no new requirements, per se. But as of this date, the stated “best practices” for identifying and ranking risk vulnerabilities in Req 6.2 became mandatory. Merchants and service providers need to realize that this change reverberates through at least two other PCI requirements. Merchants and service providers who ignore this change may find themselves up a PCI tree later this year or when they begin their next compliance validation, especially if they don’t update their internal vulnerability scanning. Square Sets Lawyers on mPowa Over Web Site Pic 7/12/12 Finextra    UK-based mPowa became Square's latest competitor last month with the US launch of its dongle and app-based system for turning phone handsets into credit card readers. The company made an aggressive pitch for business, boasting that it would be "capitalising on weaknesses" in Square, arguing that its system is superior because it offers chip and PIN payments and merchants can use it through their existing banking arrangements. The Death of Cash 7/09/12 CNN Money    Café Grumpy is the kind of hipster hangout that wouldn't deign to trumpet itself. Tucked away on a quiet street in New York's Chelsea neighborhood, it's easy to miss. There's no sign out front, just a frowning face stenciled on a large shop window. And yet when I walked in for the first time, I immediately felt like one of the regulars. "Charge it to Miguel," I told the barista after ordering a cappuccino, and charge it he did -- to my phone. Not that I ever pulled my iPhone from my pocket. Heartland Payment Systems(R) Adds Payments Industry Veteran Ian M. Drysdale as President - Network Solutions 7/13/12 HPS    Heartland Payment Systems® (NYSE: HPY), one of the nation's largest payments processors, today announced that it has hired Ian M. Drysdale as president - network solutions. In his new role, Mr. Drysdale will be responsible for Heartland's growth in retail, petroleum and ecommerce markets."Ian is a seasoned senior executive with more than 20 years of success in electronic payments, ecommerce and POS payments," said Robert O. Carr, Heartland's chairman and CEO. PayPal Looks to Mobile Payments and Partnerships With Banks to Stay on Top 7/09/12 Bank Systems & Technology    In a recent interview with Bank Systems & Technology on the future of peer-to-peer payments Arkady Fridman, head of business development at PayPal's Financial Innovations, talked about the advantages of the company's partnerships with financial institutions on mobile payments. PayPal's Financial Innovations team works specifically to partner with financial institutions to offer P2P services. Approaching $1 Billion in Transactions, BigCommerce Selects SecureNet for Credit Card Processing 7/11/12 SecureNet    BigCommerce, the world’s fastest growing global e-commerce platform, has selected SecureNet Payment Systems, a leader in payment processing technology, to provide its online retailers and merchants with advanced payment processing solutions. Through this agreement, SecureNet will service and support the payment processing and settlement needs of BigCommerce’s ever-expanding 25,000+ merchants, powering nearly $1b in online sales for retailers of all sizes and experience levels. Super G Funding, Cynergy Data Team Up to Fuel ISO Growth 7/11/12 The Green Sheet     Super G Funding, a leader in the residual based lending business has signed an agreement with Cynergy Data, one of the larger ISO’s in the country, to offer Business Loans to its ISOs and Agents. Super G Funding has found that many ISO's and Agents are in need of additional capital to expand their sales force, increase marketing, open a new office, buy equipment in bulk, upgrade their technology, or buyout a partner. Heartland Payment Systems(R) Acquires LunchByte Systems, Inc. as Part of Strategic Growth Plan for Heartland School Solutions Division 7/09/12 Heartland Payment Systems    Heartland Payment Systems, one of the nation's largest payments processors, has acquired LunchByte Systems, Inc., a school foodservice back office management and point-of-sale (POS) company led by its NUTRIKIDS® (www.nutrikids.com) solution of menu management, inventory management and POS solutions for K-12 administrators, staff, parents and students. The LunchByte Systems acquisition further expands Heartland School Solutions' market-leading position in the K-12 school nutrition and POS technology industry. Can Clouds and Contactless Chips Coexist? 7/09/12 Portals and Rails    Mobile wallets have started to make their way into the market this year. Inevitably, industry stakeholders are joining opposing camps on the technology that these wallets use to keep payment information and other personal data safe and secure: contactless chips or cloud-based technology. The chips are embedded in a mobile handset that communicates with a terminal via NFC, while the cloud-based technology involves an application downloaded to the mobile handset. Mythbusters Banned From Hacking RFID Chips 7/10/12 NBC    The Mythbusters love getting to the bottom of a myth, but sometimes the protectors of the myth hold the bigger stick. The crew was all set to air a show about how hackable and trackable RFID chips that are found in many credit cards are, when some big name advertisers stepped in to shut it down.