ROI Payments Presents Payment IQ Boot Camp #1: Names and Nomenclature in the Modern Payment Ecosystem


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ROI Payments will provide a comprehensive overview of the players in today’s payment landscape – ranging from banks to processors, card schemes to gateway platforms -- and HOW they fit together.

Additionally, learn key industry terminology that can help you navigate payment projects or relationships. Think: What is a back-end network? What is the difference between an acquirer and an ISO? Questions will be fielded from participants throughout the webinar.

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ROI Payments Presents Payment IQ Boot Camp #1: Names and Nomenclature in the Modern Payment Ecosystem

  1. 1. Brion BonkowskiManaging DirectorMay 29, 2013Boot Camp Week 1Improve your Payment IQNames & Nomenclature inthe Modern PaymentsEcosystem
  2. 2.  Overview of RecentConsolidation The Next 5 Years – MajorNew Entrances Wrap-up / Q&A Introduction Who is Interested in Payments? Understanding the Landscape Ecosystem Players Schemes Issuers Acquirers Processors Technology VendorsAgenda
  3. 3.  My Story – Moving into the Payment Space Who is ROI Payments? Why a Boot Camp Series?Introduction
  4. 4.  Who? Roles including Finance, IT, Sales, Marketing, and Treasury are all involved in the paymentchain at some point It is rare when someone is specifically assigned to payments, as such many people findthemselves unprepared to navigate the payment ecosystem ROI Payment Webinars attract A cross section of industries, including state/local government, non-profitorganizations, eCommerce, SaaS and payment industry insiders Senior Finance folks (CFOs, controllers, etc), technology execs, operations managers andsales/marketing team members Why? People become involved in payment projects and need a holistic overview of the industryso that they can dive deep into their project, work, etc. Wikipedia and Google searches don’t provide a comprehensive understanding Result? Everybody can benefit from an increased “Payment IQ” Comprehensive understanding helps in today’s environment (rapidly evolving)Who is Interested in Payments
  5. 5.  Useful to use a transaction flow to orient the ecosystem players For this example, we’ll use a Visa credit transaction Future boot camps will cover various transaction flows in detail 3 and 4 party networks, closed loop systems, emerging networks, etc ROI categorizes vendors into 5 major categories: Schemes, Issuers, Acquirers, Processors & Technology VendorsUnderstanding the Landscape
  6. 6. Typical Credit Transaction PartiesCustomerCardholder MerchantTechnologyIssuer AcquirerInterchangeProcessorSchemes
  7. 7. Ecosystem Players by Category
  8. 8.  Schemes set the rules and standards in a transactionnetwork, establish branding and spurring adoption Provide Customer (cardholder) and Business (merchant)rules, regulations and pricing schemes There are commercially adopted schemes and, in certaincountries, regulatory promoted schemesSchemesGlobal Regional Emerging
  9. 9.  Issuers own the customer relationship (i.e. they issue plasticand get cards into the wild) Issuers are a customer of the schemes (Visa/MC/etc) Issuers profit from debt, card holder fees and interchangeIssuers#1 in US Volume #1 in US Market Share
  10. 10.  Acquirers own the merchant relationship and enable businesses to participate in thepayment network In the US, Acquirers typically work through channel partners, called ISOs or “SuperISOs”, who act as their feet on the street selling and implementing solutions formerchants. Acquirers take liability for merchant activity, including financial obligations, regulatoryrequirements, security compliance and scheme rules & regulations They acquire the payment chain on behalf of merchant - which processor to use,which technologies work with their networks, etc.Acquirers#1 in US Volume#1 in US # of Merchants
  11. 11.  Processors handle the “muck” of transaction processing and are often called Backend Networks The industry has a small number of large processors, primarily because the economics support processors that canoperate at large scale They are technology focused banking networks performing back office functions such as: Authorization and settlement Funds transfer to the merchant Statement generation & interchange calculation Dispute management Equipment and software certification They generally own or have relationships with various front end networks (intermediates between merchant and issuingbank to authorize cards)Processors48% US Marketshare
  12. 12.  Technology is the most complex and disparate part of today’s payment ecosystem The Technology Space is innovating very quickly -- ROI focuses most of its attention on this part ofthe payment chain ROI includes everything from PSP’s to Payment Gateways to terminals in this bucket Technology is where merchants interact with the payment ecosystem Proxy transactions to front end networks Implement business rules (tax, fraud, notifications, rebills, verification, etc) Technology layer keeps merchants from having to interact directly from a technical standpointwith processors unless scale warrants itTechnology Vendors
  13. 13.  ROI Payments classifies payment ecosystem into 5 categories:Schemes, Issuers, Acquirers, Processors and Technology Vendors NOTE – The payment space is complex and multi-layered. Many vendorsplay in several categories and/or resell or bundle each others’ services Prime example is First Data, who is the processor for most of the majorcommercial banks in North America including Bank of America and Citi Today’s Webinar should be considered a starting point tounderstanding the industry High level terms - ROI has assembled a glossary of terms relevantto the payment ecosystem that will help you understandstatements, create RFP’s, and negotiate contracts. If you wouldlike a copy of the ROI glossary, please let us know.Ecosystem Recap
  14. 14. What’s Next?
  15. 15.  Recent acquisitions show change in the ecosystem Visa acquires CyberSource (2011) Acquisition positions Visa in the Technology Space with a leadingenterprise payment platform and SMB gateway Vantiv acquires Litle (2013) Acquisition moves Vantiv from processing into online retail solutions withexpertise in rebilling, tokenization, and reconciliation (2013) Ingenico acquires Ogone Acquisition provides global payment gateway to the hardwaremanufacturer (2013) Groupon acquired FeeFighters (2013)- demonstrates companiesoutside of the ecosystem are vying for entry into the market. Lesson learned? Many processors are building technology portfolios to increasesolution set and stay relevant ROI predicts more acquisitions and consolidation in 2013/14M&A Activity Shows Industry Change
  16. 16.  Mobile and Internet commerce are causing change andintroducing new competitors and technologies topayments Major new players will enter the payment stream in thecoming years, such as Mobile / telecom carriers (ATT, Verizon, etc) Technology companies (Apple, Microsoft, Google) New payment methods are gaining traction (Bitcoin) Regulatory and competitive forces may change the faceof the payment chain as we know it todayMissing Logos – Upcoming Entrances
  17. 17. Contact Information:Brion Bonkowskibrion@roipayments.com212.812.4177 x: 2134Questions & Contact Info