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April 20th, 2012
Edition #300
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In this Issue
In Other News
This Day in History 1980
Castro announces Mariel Boatlift
On April 20, 1980, the Castro regime announces that all Cubans wishing to emigrate to the U.S. are free to board boats at the port of Mariel west of Havana, launching the Mariel Boatlift. The first of 125,000 Cuban refugees from Mariel reached Florida the next day.
The boatlift was precipitated by housing and job shortages caused by the ailing Cuban economy, leading to simmering internal tensions on the island. On April 1, Hector Sanyustiz and four others drove a bus through a fence at the Peruvian embassy and were granted political asylum. Cuban guards on the street opened fire. One guard was killed in the crossfire.
The Cuban government demanded the five be returned for trial in the dead guard's death. But when the Peruvian government refused, Castro withdrew his guards from the embassy on Good Friday, April 4. By Easter Sunday, April 6, some 10,000 Cubans crowded into the lushly landscaped gardens at the embassy requesting asylum. Click here to read more.
TSG Fun Fact
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4/20/12 TSG  
The ETA Annual Meeting Event in Las Vegas was the most attended conference in history and broke all previous records. There was a very discernible “buzz” of activity at this show that had been missing from past recent shows. There is a feeling of impending momentous change that could be felt for a number of reasons including the new entrants into the space such as PayPal, new technology developments such as mobile and NFC, VISA/MC fee changes affecting all participants and the definite increase in M&A transactions all contributed to the conversations heard while networking.
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4/20/12 TSG
TSG, a management consulting company focused on the electronic payments industry, announces the release of the 300th edition of NewsFilter. TSG’s NewsFilter, started in 2006 by Editor Mike Strawhecker, Vice President & Director of TSG Metrics, and has been released every Friday to TSG’s ever-growing subscriber base. “It’s crazy to think back – NewsFilter started with only a handful of subscribers and it now sent to over 6,000 industry professionals, it has truly become an important aspect of our business.”
“We couldn’t do this without readers, they are what drives the industry and what motivates Andrew and I to deliver fresh news each Friday. The feedback they provide has helped us reach where we are today,” says Strawhecker.
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4/18/12 ETA
The Electronic Transactions Association (ETA), the global trade association representing the payments processing industry, today announced that Jason Oxman has been named the association’s Chief Executive Officer. The announcement came as thousands of the world’s leading payment industry professionals gathered in Las Vegas for the year’s most important industry event, the 2012 ETA Annual Meeting and Expo, which continues through April 19. Oxman will assume the CEO role at ETA on May 7.
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4/20/12 The New York Times
Some of the same spoilers that interrupted the recovery in 2010 and 2011 have emerged again, raising fears that the winter’s economic strength might dissipate in the spring. In recent weeks, European bond yields have started climbing. In the United States and elsewhere, high oil prices have sapped spending power. American employers remain skittish about hiring new workers, and new claims for unemployment insurance have risen. And stocks have declined.
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Gerritt Kerkstra, TSG Of Counsel
U.S. acquirers are wrestling with potential modifications to their merchant pricing strategies based upon recent fee changes and new fee introductions announced by Visa and MasterCard. Factors to be considered include recovery through acquirer pricing changes, internal/external sales force training, merchant communication, competitive response, attrition management, and regulatory oversight. Given these changes to Visa and MasterCard pricing, TSG expects that acquirer pricing models will evolve and could vary markedly while the market absorbs the changes.
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4/20/12 Digital Transactions
In the wake of the Durbin Amendment’s debit card price controls taking effect last fall and other new regulations, the payments industry is feeling politically battered and bruised and fearing that more fights with merchants are on the way. “Our era of self-regulation of pricing has ended,” Mary Weaver Bennett, director of government and industry relations for the Electronic Transactions Association, said Thursday at the merchant-acquiring trade group’s annual conference in Las Vegas. “Government scrutiny will increase.”
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4/19/12 Business Solutions
I think Steve Elefant of the Strawhecker Group, a consulting company in the payments industry, probably gives the most succinct and wise advice to VARs and ISVs when he says, “I think we all need to realize that PCI compliance does not equal security. Unfortunately today, we are dealing with very sophisticated adversaries from around the world. These are 21st century bank robbers — organized criminal gangs — literally patterned after the mafia, that are powered by Ph.D.-educated bad guys that have nothing to do but go after our money and our critical infrastructure."
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4/16/12 EPC
New data released today finds that gas retailers are saving $1 billion annually at the expense of consumers, thanks to the so-called “Durbin amendment,” a provision of the Dodd-Frank legislation which capped what retailers pay to accept debit cards beginning in October 2011. According to the U.S. Energy Information Administration, nearly 134 billion gallons of gas were sold in 2011, with approximately 48 billion gallons purchased using debit – the type of payment impacted by the Durbin amendment, which reduced interchange rates by about 70 percent for this category.
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4/19/12 ISO&Agent
ISOs face internal and external threats that could put most of them out of business in the next few years, speakers said here April 18 at the Electronic Transactions Association Annual Meeting & Expo. Their numbers could shrink from about 1,200 today to the 1998 level of 300 or so, Henry Helgeson, co-CEO of Merchant Warehouse, a Boston-based ISO, told attendees at a session entitled “What Keeps You Up At Night.” From the outside, powerful companies that include Square Inc. and PayPal Inc. are encroaching on ISOs’ core business of selling card-acceptance services to merchants, warned another speaker, Marc Gardner, president and CEO of NAB.
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4/18/12 Tech Crunch
During eBay’s earnings call today, eBay CEO and President John Donahoe said that over 200,000 merchants have signed up for PayPal Here, the company’s Square-like mobile payments hardware and software platform for small businesses. We haven’t seen any sign-up numbers for the mobile payments service since PayPal revealed it was seeing 1,000 new registrants per hour for the new service. Donahoe says the reader will launch to the public in the second quarter, and will be available in the US, Canada, Hong Kong and Australia at launch. He adds that he’s not sure they can manufacture enough PayPal Here devices to keep up for demand.
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4/18/12 StorefrontBacktalk
When IBM on Tuesday (April 17) announced it was selling its entire POS business to Toshiba TEC for US$850 million, it was arguably the most explicit sign yet that the retail POS hardware business is on its last legs. Not IBM’s POS business, but retail POS activity in general. Beyond IBM’s history of selling out key areas (printers, laptops, disk drives, etc.), it’s the popularization of in-store tablets along with the integration of mobile and E-Commerce. Retail Columnist Todd Michaud predicted in January that this year would see the death of the traditional POS. IBM apparently agrees.
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4/20/12 BankThink
I was reminded recently that the origin of the term vigilante stemmed from the vigilance committees formed in our nation's early days on the frontier where official law enforcement was either weak or nonexistent. They were established for the purpose of providing an environment where law abiding folks could be protected from the law breakers. Vigilance committees were noble and well-intentioned, but often quickly deteriorated into mobs and were characterized by outbreaks of mob rule.
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4/18/12 PaymentEye
MasterCard is wading into the daily deals space, enabling its bank and merchant partners to offer deals to cardholders, as interest around the space continues, despite ongoing concerns regarding its long-term sustainability. MasterCard’s service will be powered by daily deals aggregator Local Offer Network, and will be distributed through mobile, social networks and what the firm describes as “traditional shopping channels”.
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4/18/12 All Things Digital
Square is seeking to raise a fresh round of capital at a massive valuation of up to $4 billion, according to multiple sources familiar with the situation. If the company is successful, it will have quadrupled its worth since raising $100 million at a $1 billion valuation only 10 months ago. It’s important to note that negotiations continue, and that investors could ultimately value the company at a more modest number (hmm, like $3 billion?!).
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4/20/12 Finextra
Twitter has overtaken Facebook as the social network most favoured by financial services firms, according to analysis from Corporate Insight, which singles out American Express' use of the channel for special praise. Of the 90 companies covered in its report, 57% used Facebook in 2010, and 51% Twitter. By the end of 2011, 88% of those with a social media presence were on Facebook and 92% on Twitter.
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4/18/12 The Wall Street Journal
American Express Co. (AXP), the largest credit-card issuer by spending, posted a 7% increase in first-quarter earnings as customers used their cards more and loan quality improved. The New York-based company, which lends primarily to affluent consumers and businesses, said it earned $1.26 billion, or $1.07 a share, up from $1.18 billion, or 97 cents a share, a year earlier. Its revenue, net of interest expense, rose 8% to $7.61 billion. Analysts polled by Thomson Reuters estimated the company would earn $1 a share on revenue of $7.6 billion.
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4/17/12 PR Newswire
Pivotal Payments, North America's fastest growing payment processor today announces a partnership with NetSecure Payments to develop a mobile payment application for smartphones and tablets. This application will allow merchants to swipe, authorize and settle credit card transactions without the use of hardwired terminals. It will be released in Canada during Q2 2012 and U.S. availability will follow.
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4/17/12 FTNI
Financial Transmission Network Inc. (“FTNI”), a provider of industry leading payment solutions, today announced that it has expanded its invoice presentment functionality within its award winning ETran Integrated Receivables Management platform. As merchant’s interest in moving to self-service payment portals continues to increase, FTNI’s ETran Integrated Receivables Platform continues to stay ahead of the curve.
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4/17/12 Bloomberg
The International Monetary Fund raised its global growth forecast for the first time in more than a year, with the U.S. boosting the outlook while recent improvements remain “very fragile.” The world economy will expand 3.5 percent this year, compared with a January projection of 3.3 percent, the Washington-based IMF said today in its World Economic Outlook. It sees growth of 4.1 percent in 2013, up from 4.0 percent. It raised its forecasts for the U.S. to gains of 2.1 percent this year and 2.4 percent in 2013.
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4/20/12 BTN
Check out the slides to get an idea of what the future holds.
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4/18/12 KC Fed
The main demand-side barrier has been the uncertain value of mobile payments to U.S. consumers. In some other countries, there have been obvious advantages to consumers of using mobile payments. Mobile payments were adopted rapidly in Japan as a convenient way of paying for mass transit. In some African countries, mobile payments gained traction because consumers lacked access to other noncash forms of payment such as checks or credit cards. Neither factor is as important in this country, raising the question of how U.S. consumers would benefit from mobile payments.
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