Dorado Trend Watch Q2 2011
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Dorado Trend Watch Q2 2011

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Quarterly review of the electronic payments industry.

Quarterly review of the electronic payments industry.

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    Dorado Trend Watch Q2 2011 Dorado Trend Watch Q2 2011 Presentation Transcript

    • TrendWatch 2.0 Q2 2011 Payments System Industry SynopsisNotice: Materials contained in this document are drawn from several media sources and Dorado Industries is not responsible for their accuracy. Opinions expressedherein are presented without warranty. Brand names are the trademarks of their respective service offerors.
    • Editorial Comment Random Thoughts Sis, boom, bah! Or not. Ever wonder why they don’t sell supremacy when it comes to knowing how we behave when tickets to junior varsity football games? It’s because no one’s traveling or shopping, how we pay for things, and where we’ve been willing to pay to watch ‘em. Were we the only ones watching the before strolling into our favorite merchant’s store. Each of these live telecast the Fed’s final ruling on Durbin on June 29 who firms are serious players in their own right and ought to be taken thought about heading back to ticket booth for a refund? seriously. And, unlike the dot.com boom/bust or similar payments industry mosh pits, it’s not likely that competitor consolidation will be Q: “So, what are the consumer impacts from these rules?” the ultimate end-game. Sure, a goodly number of the garage band A: “Ah, we don’t know.” wallet players will devolve, but it looks to us that these six titans have the horse power to stay in the game and make the mobile Q: “How sure are you that the smaller issuer exemption will be wallet “thing” great spectator sport for a long time. maintained?” Oh, wait, someone’s missing. This wouldn’t be an authentic issue A: “Sort of.” of TrendWatch 2.0 without at least one reference to our extremely Q: “Is the 1¢ fraud prevention tax temporary or permanent?” mobile friend, Facebook. In addition to the “sizzling six” mobile wallet behemoths we ought to include FB since it’s now possible to A: “Yes.” use that social network’s Credits payment form to purchase real Frankly, we’ve become rather bored with the notion of waging a world goods. “Facebook Deals” imbedded in FB user news feeds battle solely on price when there are so many other ways to now encourage us to take advantage of real time, once in a lifetime, compete but that’s the way Congress wanted it so let’s play the offers for goods and services. In fact, what you’re getting is a hand. certificate good for the merchandise but why split hairs? Durbin might be interested in FB Deals interchange pricing. Merchants or Still, maybe it’s time for a new quarterback. digital goods developers pay a mere 30 percent. Seems fair to us. Okay, enough kvetching. Man, wasn’t this one hell of a quarter? ACH deal undone. BofA and Wells announce the demise of Take my wallet, please. So, what do Google, Visa, American Pariter, their ACH JV formed in 2008. This, just two weeks after Express, PayPal, Apple and ISIS (the company, not the announcing the formation of clearXchange with partner JPMorgan goddess) all have in common? They want us to use their brand- Chase for the purpose of slinging electronic online payments to each spanking new mobile wallet! Looks like another Oklahoma land others customers from their DDAs. The former Pariter partners both rush much like the ones we’ve seen involving P2P, EBPP, and cited their subsequent acquisitions (Merrill Lynch and Wachovia) as PCI compliance tools. The stakes are a bit higher here, being responsible for upsetting the apple cart. Hope the however, with traditional payments players, data aggregators clearXchange CEO got a long term deal. This won’t last either. and miners, and the telecommunications networks vying forDorado Industries Until next time. (310) 544-1316655 Deep Valley Drive, Suite 125-P jmacallister@doradoindustries.com 2Rolling Hills Estates, CA 90274 www.doradoindustries.com
    • Table of Contents 2011 Predictions 4 TrendWatch Scorecard/Summary 5 2011 Payments Industry Yields 6 Interesting Quarterly News That Got No Respect 7 New Names to Watch 10 Q2 M&A/Investor Activity 11 Useful Links for More Information 17 Thrill Seekers Unite 18Dorado Industries (310) 544-1316655 Deep Valley Drive, Suite 125-P jmacallister@doradoindustries.com 3Rolling Hills Estates, CA 90274 www.doradoindustries.com
    • 2011 Predictions • Despite good efforts to the contrary and Visa’s plan to support dual interchange schedules, exempt debit card issuers will suffer major product profitability declines as a consequence of Durbin. Mar. Won’t know until the end the year. Sit tight. Jun. Fed’s final rules changed things somewhat by raising the floor and putting the industry on notice that big brother will be watching. • A major retailer will take first-mover action to propel mobile payments out of its holding pattern in cottage industry land – doesn’t include early players McDonald’s, Starbucks, Coca Cola, or Jack in the Box. Mar. Major retailers at the Alternative Payments Systems Innovation conference stated that they wanted lower costs, shorter lines, strong security, dial tone reliability, easy implementation, and low maintenance in mobile payments. A tall order; might not happen this year. Jun. Now that the Fed has reneged on its first Durbin offer, it’s likely that retailers will move on with mobile. • Isis, the mobile payments consortium, will launch to a lukewarm response. Mar. Didn’t see any skyrockets when Isis announced its 2012 (really?) transportation pilot in Salt Lake City. Jun. Yet another change of direction announced – entering Austin market for pilots. We see the term “flip-flop” being used a lot. • Major retailer profits will grow in the second half of 2011 but we will not be able to cite Durbin as the reason. (And, if the issue is raised, the MPC will brush it off.) Mar. Waiting to see what happens in Q3 and Q4. Jun. Fed Chairman poured cold water on this prediction. • Having lost the pricing advantage between their products and POS debit, two providers of alternative payments schemes will fold or sell out cheap. Mar. Again tied to the Fed’s final rules – which won’t be ready by April 21 as required. Nice. Jun. Three on a match! FaceCash and Bling Nation shut down to “re-think” their business models. Tempo is both in a ditch and liquidating. • Starbucks will selectively open use of its proprietary prepaid card to retail partners. Target, with its 1,000 in-store coffee facilities, might be first. Mar. Nothing yet but it’s going to happen! Jun. Still waiting; come on guys, it’s the next logical step.Dorado Industries (310) 544-1316655 Deep Valley Drive, Suite 125-P jmacallister@doradoindustries.com 4Rolling Hills Estates, CA 90274 www.doradoindustries.com
    • TrendWatch Scorecard/Summary – Q2 2011 Industry Players To Watch PayPal: By acquiring Zong, it further widens its funding options to include carrier-direct billing. Could PP be planning to chase Google now? American Express: Changes to its 150 year old “commoners need not apply” approach may be coming. A low/no fee prepaid card and reasonably open wallet (Serve) are decidedly mass market looking. ct Positive m d pa el ct Vantiv (fka 5th 3rd): Recently announced plans for an IPO could alternative r I che ev Im pa Mixed yL en its business or go-to-market strategy. y P a tr str it En Negative tiv NCR: The venerable ATM manufacturer’s purchase of Radiant Systems ye duAc In gives it entrée to the point of sale business for the hospitality segment to goMed 1. New Payment Forms along with its grocery store attended/unattended systems and kiosks. Prepaid Card Industry: Fed final rules have triggered a reformationMed 2. ATM Restructuring within the industry. Lots of product attribute changes coming. MasterCard: Quiet during the Durbin commentaries and no counter-punchLow 3. POS Volume Trend announcement about a mobile wallet. What’s up with that? CFPB: Likely to launch without a leader, “idle minds/devil’s workshop”High 4. Legal/Regulatory Issues sort of thing.Mixed 5. Prepaid Card Growth Market & Industry Situation 1 – Mobile wallets, mobile wallets, mobile wallets.Med 6. Earnings Announcements 2 – Cardtronics has become acquisitive again. 3 – Credit growth continues to dwindle while debit (most forms exceptHigh 7. Industry Investments decoupled) continues apace. 4 – Merchants win, banks lose, prepaid jolted. Or is it merchants jolted, banks win, and prepaid loses? You decide. 5 – Prepaid take-up is still good but Fed rules may create a speed bump. 6 – Clever bankers are letting out their 2009 credit card reserves to keep earnings in line with quarterly guidance. 7 – Goodly amount of money coming into the VC/PE system and being invested in payments. Ask Jack Dorsey.Dorado Industries (310) 544-1316655 Deep Valley Drive, Suite 125-P jmacallister@doradoindustries.com 5Rolling Hills Estates, CA 90274 www.doradoindustries.com
    • 2011 Payments Industry YTD Yields Quite a contrast, right? Visa and MasterCard get a huge bump from the Fed’s June 29th announcement of its Durbin final rules while Green Dot and NetSpend continue to get no love. Meanwhile, the Dow and S&P continue to post respectable YTD yields – 9 and 6.49 percent, respectively – while others of our equity basket collection deal with episodic movements in the market’s love/hate relationship with electronic payments and telecommunications. Beats a roulette wheel wager we think. Sorta. Industry Player 12/31/2010 6/30/2011 Price  Cap Value  YTD 2011 Yield Alliance Data Systems $ 71.03 $ 94.07 $ 23.04 $ 1,370.9 32.4% Cardtronics $ 17.70 $ 23.45 $ 5.75 $ 234.0 32.5% Discover Financial Services $ 16.68 $ 26.75 $ 10.07 $ 4,842.7 60.4% Euronet Worldwide $ 17.44 $ 15.41 $ (2.03) $ (102.3) -11.6% Fidelity National Information Services $ 27.39 $ 32.69 $ 5.30 $ 1,011.2 19.4% First Data (Future Use) Fiserv Inc. $ 58.56 $ 62.63 $ 4.07 $ 634.5 7.0% Global Cash Access Holdings $ 3.19 $ 3.18 $ (0.01) $ (0.8) -0.3% Green Dot $ 56.74 $ 33.98 $ (22.76) $ (927.5) -40.1% Heartland Payment Systems $ 15.42 $ 20.58 $ 5.16 $ 193.0 33.5% Jack Henry & Associates $ 29.15 $ 30.01 $ 0.86 $ 72.2 3.0% MasterCard Worldwide $ 224.11 $ 301.34 $ 77.23 $ 9,993.6 34.5% NetSpend $ 12.82 $ 10.00 $ (2.82) $ (247.5) -22.0% Online Resources $ 4.65 $ 3.26 $ (1.39) $ (41.3) -29.9% TNS $ 20.80 $ 16.60 $ (4.20) $ (105.4) -20.2% Total System Services $ 15.38 $ 18.58 $ 3.20 $ 631.7 20.8% Visa $ 70.38 $ 84.26 $ 13.88 $ 11,741.1 19.7% Sources: Company releases, Morningstar.com, Bloomberg.com 2011 YTD yield excludes dividends; based on 6/30/11 and 12/31/10 closing pricesDorado Industries (310) 544-1316655 Deep Valley Drive, Suite 125-P jmacallister@doradoindustries.com 6Rolling Hills Estates, CA 90274 www.doradoindustries.com
    • Interesting News This Quarter Subject Source/Date Substance Mobile Payments Industry Various • It’s getting tougher to keep track of the mobile payments line-up without a scorecard. FaceCash falls victim to California’s new money-transmission law and Bling Nation decides to sit things out for a while as it re-tools its business model. Meanwhile, two new players step up to fill the void. Start up Naratte launches Zoosh, a mobile payments service that uses ultrasonic technology to transfer payments data between user smartphones and merchant terminals while NuWallet comes to market with a “simple-as-pie” approach to mobile payments for online purchases. American Express Paybeforenews • Is it possible that American Express is planning on changing its business model? Last March the June company announced its Serve payments platform/wallet and talked about plans to attract members and non members interested in playing in the mobile payments space. Funding for Serve need not come through an AMEX card. This quarter AMEX launched its “American Express Prepaid Card” – catchy name, no? – and has dropped activation and maintenance fees while adding in Purchase Protection, Roadside Assistance, its Selects purchasing plan, and access to its Global assist hotline. Pretty gutsy stuff from a company that once touted its exclusivity and snob appeal. Corduro TechCrunch • From the folks that brought us the Google Wallet, Google is the power behind Corduro, a new May merchant services processor with a fee schedule that under cuts Jack Dorsey’s Square offering by up to 30 percent. Moreover, Corduro works the same way Square does in terms of “merchants” being able use its app to not only accept but make payments via Android and iPhone apps. Nice to see a bit of competition working to help out small businesses with their acceptance costs. Target American Banker • Not planning to leave any stone unturned, Target began to quietly market a prepaid card in 100 May of its stores last February. This one is co-branded with American Express of all people (note the earlier reference to a new business model for AMEX) and extends Target’s existing payment options which include the retailer’s private label credit and debit cards. Given the new pricing model at AMEX, this product takes a pretty serious swing at Wal-Mart’s Money Card. Silicon Valley Bank Press Release • Tech-focused business FI, Silicon Valley Bank (where Pete Hart hangs his hat), has launched the June first chip-enabled credit card available to businesses in the United States. Branded with MasterCard’s World Elite for Business moniker, SVB believes that the added security and compliance with global EMV specifications will provide added value to its globe-trotting business leaders and their management teams. The new product will include chips and magnetic stripes to make sure all the bases are covered.Dorado Industries (310) 544-1316655 Deep Valley Drive, Suite 125-P jmacallister@doradoindustries.com 7Rolling Hills Estates, CA 90274 www.doradoindustries.com
    • Interesting News This Quarter – Continued Subject Source/Date SubstanceCard.io American Banker • Pretty soon using a smartphone camera and a software application to turn the instrument into a remote June capture system for checks will seem pretty tame. Or that’s the hope of Card.io, a San Francisco start- up that is offering software to eliminate the need for card-swiping hardware. The company is offering its software to mobile operators to integrate with their payment applications and will charge 15 cents per scan. Perhaps this card image-to-settlement option will serve as a bridge solution until NFC and 2D/3D enabled phones reach critical mass?clearXchange PaymentsSource • BofA, Wells Fargo, and JPMorgan Chase evidently want to challenge PayPal’s dominant lead in P2P May functionality. This triumvirate has announced plans for a joint venture which will initially be limited to customers of its owners but will ultimately be offered to other banks. In a classic “whistling past the graveyard” announcement one competitor – CashEdge – suggested that the JV would be good for it. CashEdge subsequently sold out to Fiserv. Not much in the way of details yet but the ACH will be used to move the money between people via email addresses or mobile telephone numbers.Wescom Central CU Credit Union Journal • Not to be outdone by the big banks in clearXchange, Wescom Resources, a unit of Wescom Central May CU has cut a deal with PayPal to offer P2P services to credit unions. PayPal’s Send Money application has been integrated into Wescom’s MemberEdge Mobile Banking solution which is made available to credit unions nationwide. International in scope because of the PayPal connection, all of Wescom’s participating credit unions are free to use the service. Again, details are sketchy at this point.Google Forrester • Google takes the covers off one of the worst kept secrets in recent payments history and announces the May Google Wallet with partners Sprint, Citibank, MasterCard and First Data. This, mere months after pirating two PayPal payments professionals away from the P2P payments leader. Unlike several other wallet offerings, Google does not intend to monetize the payments component of its wallet and more likely will concentrate on the value proposition associated with aggregating each wallet’s behavioral data. CVS, Sports Authority and Macy’s are three notable merchants accepting the wallet initially. So which competitor should be the most worried about Google’s offering – Visa, AMEX, or ISIS? Yes.Google TechCrunch • Google immediately (like the next day) moves to fill a significant hole in its Google Wallet offering by May making stickers available for users of smartphones that do not yet support NFC (i.e., the vast majority of them). Stickers could be linked to a single debit/credit card and would provide less robust offerings than through full NFC. Google is desperately trying to get ahead of competing wallets – Visa, Serve, ISIS, et al in the rush to reach critical mass.Dorado Industries (310) 544-1316655 Deep Valley Drive, Suite 125-P jmacallister@doradoindustries.com 8Rolling Hills Estates, CA 90274 www.doradoindustries.com
    • Interesting News This Quarter – Continued Subject Source/Date Substance Square American Banker • Well-funded Square takes its device/app centric approach to merchant services one step farther by May launching Card Case, an imbedded application in the Square app. Card Case stores users’ payment details for future access from a mobile device after consumers have swiped their card once. Of course, consumers have to opt in but are prompted to do so via text message. A photo is uploaded to the on-phone application or wallet during the enrollment process. The photo is displayed on merchant terminals through Square’s Register app for verification purposes. Sort of like FaceCash, except that Square is still in business. Visa/ANZ ZDNET • Visa and ANZ Bank jointly announce that their NFC pilot launched in March 2011 was a dude. Well, sort June of. The real stinkaroo here was the MicroSD technology used to deliver NFC functionality to users’ smartphones. In classic understated prose, the pair said that the “MicroSD card system used in the trials did not meet all our expectations” and that they “will continue to look for ways to support contactless payments in the market.” DeviceFidelity, a company closely linked to Visa, is the technology developer. Verizon Finextra • Verizon appears to have adopted the “cover all bases” approach to mobile wallets. The telecom giant is an June ISIS member, has put together a relationship with start-up BilltoMobile for carrier-direct billing and recently joined American Express in a consortium that has invested $19 million in Payfone. The last act brings to Verizon the ability to offer a service for its subscribers that enables online payments and a broad array of payment options. PayDivvy American Banker • Here’s an interesting solution for social or service minded groups seeking a way to simplify the handling of May shared expenses. PayDivvy has been operating in invited-beta mode since 2009 and recently went to open status. Group participants are prompted when their shares of common expenses are due and the system handles delivery of remittances to landlords, utilities, cable companies and cleaning services. 5,000 billers have been pre-loaded into the application and the system adapts to manually-entered billing sites. This single-site approach may put some the group members in conflict with past practices (e.g., bill payment via bank websites) but may gain transaction in one-off social groups like HOAs, college fraternities, and buying clubs.Dorado Industries (310) 544-1316655 Deep Valley Drive, Suite 125-P jmacallister@doradoindustries.com 9Rolling Hills Estates, CA 90274 www.doradoindustries.com
    • New Names to Watch FinovateSpring 2011 was held in San Francisco in early May. Sixty-four companies presented seven minute demos (no PowerPoint slideshows) of their emerging financial services products. Here, courtesy of our friends at Payments Views (Glenbrook Partners consultancy) are snippets on those companies we consider to be up-and-comers. Firm/Product Highlights • Gifting network of merchants and FIs. • FI elects to provide customer cardholders with merchant incentives. FreeMonee • Customer purchases highlighted merchandise offers with their registered card and receives partial or full rebate from the FI. • Mobile app that encourages users to save money or reduce debt. GoalMine • User sets “pledges” for meeting their goals; e.g., spend less at Target. • Geo location capability alerts the user when s/he may be nearing a destination included in a pledge. • Focused on community banks and credit unions. Q2ebanking • Super secure online, mobile and phone banking. • FIS, Andera, Yodlee, Centrix, and iPay in the background. • P2P payments app using Facebook friends for making payments. Liqpay • Three year old company making a change of direction. • Emphasis is payments security. OpenCuro • One time code generated to represent the user and payment. • Can be integrated with existing online banking portals. • Merchant funded offers connected to bank cards using geo location services BankOns • Designed to add oomph to FI cards sitting in digital/mobile wallets. • Geo located offers are linked to user payment/purchase history.Dorado Industries (310) 544-1316655 Deep Valley Drive, Suite 125-P jmacallister@doradoindustries.com 10Rolling Hills Estates, CA 90274 www.doradoindustries.com
    • M&A/Alliance Activity Buyer/Investor Target Payments Emphasis Possible Strategy Motorola Solutions Scanbuy Mobile barcode solutions Scanbuy, creator of the ScanLife mobile barcode Venture Capital, Hudson scanning app, raises $5 million from new and Ventures, others returning capital sources. Recent partnerships with Home Depot, Miller/Coors and Bloomingdales ought to leverage the 35 million copies of ScanLife sitting on mobile phones in the U.S. Visa Square Payment acceptance Visa plops down an unclosed amount of investment money in Square, seriously increasing its previously-raised $40 million in capital. Another roulette table investment for Visa, a serious endorsement for Square. Square subsequently raised another $100 million, placing the company’s value at $2 billion and making Visa’s investment seem pretty shrewd. PayPal Fig Card Mobile payments Fig Card payments are enabled through a smartphone app and a USB device attached to merchant cash registers or POS terminals. Feels like yet another move by PayPal in the mobile payments space. Just a week earlier PayPal announced the acquisition of WHERE, a location media company and local discovery mobile app into which it will integrate its host of payment options.Dorado Industries (310) 544-1316655 Deep Valley Drive, Suite 125-P jmacallister@doradoindustries.com 11Rolling Hills Estates, CA 90274 www.doradoindustries.com
    • M&A/Alliance Activity - Continued Buyer/Investor Target Payments Emphasis Possible Strategy Total Systems TermNet Merchant Merchant services processor TSYS acquires a merchant services processor to expand Services its market share reaped in its First National Bank of Omaha transaction last year. TermNet is ranked as 52nd in size with 327,000 merchant relationships. Terms were not disclosed. WorldPay Envoy (UK) eCommerce payments WorldPay, jointly owned by Bain and Advent International, expands in cyberspace payments enablement by buying Envoy, an international eCommerce solutions provider that offers 40 alternative payments options for online purchasing. New Enterprise Tabbedout Mobile payments NEA provides $5.75 million in Series A funding for Associates Tabbedout, a start-up mobile payments company that specializes in restaurants and bars. Patrons can open a bar or meal tab via an iPhone or Android app, review their purchases online and pay the tab at anytime. Total funding so far for Tabbedout is $6.5 million, a goodly sum for a niche market player. Hope there’s another round. Cheers! Morgenthaler Pageonce Mobile wallet/account aggregation Pageonce raises its capitalization to $25 million through a Ventures, Pitango $15 million tranche. Its Money & Bills application Ventures, others organizes multiple bank and credit card accounts, tracks transactions, manages bills as they become due and sends mobile alerts. Pageonce claims 4.5 million users, $556 billion in tracked payment transactions and $55 billion in assets held by its users. Virtually all types of smartphones are supported and there’s a web application.Dorado Industries (310) 544-1316655 Deep Valley Drive, Suite 125-P jmacallister@doradoindustries.com 12Rolling Hills Estates, CA 90274 www.doradoindustries.com
    • M&A/Alliance Activity - Continued Buyer/Investor Target Payments Emphasis Possible Strategy DCM & SK Telecom Billing Revolution Mobile billing and payments Billing Revolution uses a single click approach to Ventures eCommerce and physical world purchases using iPhone or Android apps. Payment type information is entered at the time of purchase and an SMS receipt is sent to the phone. Subsequent to this $6.6 million round, Citibank Ventures made an undisclosed amount of “strategic” investment in the company. eBay Zong Mobile payments eBay/PayPal pays $240 million for Zong, a carrier- direct billing payments system based in Menlo Park, CA. Zong uses a network of 250 mobile network operators to reach 9 million merchants worldwide. Integrating Zong with PayPal provides yet another payment option for the company’s digital/mobile wallet approach to payments. Yet, Zong’s pricing model – it collects a 25-45 percent fee from digital goods retailers – will likely change as mobile network operators get a sense of the disintermediation risk PayPal represents. What we may have here is a countermove to Visa’s acquisition of PlaySpan. Fiserv CashEdge P2P payments Fiserv pays a staggering $465 million for CashEdge, the developer of POPmoney, a serious competitor to Fiserv’s ZashPay P2P payment system. The acquisition brings with it 500 CashEdge clients including Citibank.Dorado Industries (310) 544-1316655 Deep Valley Drive, Suite 125-P jmacallister@doradoindustries.com 13Rolling Hills Estates, CA 90274 www.doradoindustries.com
    • M&A/Alliance Activity - Continued Buyer/Investor Target Payments Emphasis Possible Strategy Wellington Partner, others eWise Online payments eWise, the payments engine behind Nacha’s Secure Vault Payments scheme, raises $14 million from new player Wellington and returning investors. A portion of the monies raised are earmarked for mobile payments. Visa Fundamo Mobile financial services South Africa based Fundamo is Visa’s latest target of opportunity. The card brand paid $110 million to gain an international leg up on financial services enablement for the unbanked and underserved segments. The acquisition brings 50 installed sites in 40 countries with the bulk of them being based in Africa and the Middle East. AccountNow Ready Financial Prepaid card program manager Two GPR companies with a shared objective of serving Group the unbanked market are merging. Industry pundits point to the need for competitors to Green Dot and NetSpend to catch up quickly or be lost in the dust of these two segment leaders. Old Willow Partners, AisleBuyer Mobile payments AisleBuyer raises another $7.5 million, raising its others capitalization to $11.5 million. The AisleBuyer app is pretty clever; it allows consumers to a) scan barcodes to obtain product reviews, b) order directly from a store’s website if the desired product is not in stock, and c) make a purchase in the aisle rather than at a checkout counter. Payment card data entry is completed through use of the phone’s camera instead of the keyboard. Intuit Citibank Mobile banking Intuit pays an unspecified price for the Citi/SK joint SK Telecom venture for mobile banking. Initially funded at $16 million in 2008, not much has happened since.Dorado Industries (310) 544-1316655 Deep Valley Drive, Suite 125-P jmacallister@doradoindustries.com 14Rolling Hills Estates, CA 90274 www.doradoindustries.com
    • M&A/Alliance Activity - Continued Buyer/Investor Target Payments Emphasis Possible Strategy Capital One ING Direct Online bank $9 billion for an $82 billion (deposits) bank? Seems a tad on the high side but relatively cheap when you consider Capital One gains 7.6 million new customers. The move takes Cap One to being ranked fifth in the U.S. behind the really big banks and should cause numerous online players to shudder when considering the collective marketing muscle this acquisition creates. Wall Street seems to like the deal; COF is up 9.6 percent since the June 16 announcement. Cardtronics EDC ATM ATM deployment and Cardtronics pays $145 million (plus or minus adjustments) Subsidiary, service for access to 3,700 ATMs and numerous ATM placement LLC/Efmark agreements with high-traffic retailers. Also included in the Deployment I deal are ATM branding contracts with some of the largest US FIs. Upon closing, CATM will have a combined owned and branded ATM fleet of over 41,000 units. The markets likes this transaction too – CATM is up 10 percent since the late June announcement. EDBI (Singapore), Sing ViVOtech POS/Mobile terminal Ten-year old ViVOtech raises another $24 million in equity Tel Innov8, Motorola technology funds to finance growth and broaden its global footprint. Solutions Venture Capital One returning investor is Citibank who is betting on ViVOtech being one of the mobile payments winners. Acadia Woods, others MOBIbucks Mobile marketing and MOBIbucks lands $5.0 million in Series A funding from a payments consortium of players to provide growth capital for its pay- by-phone-number system. Concurrently, the company announced deals with several U.S. restaurant chains.Dorado Industries (310) 544-1316655 Deep Valley Drive, Suite 125-P jmacallister@doradoindustries.com 15Rolling Hills Estates, CA 90274 www.doradoindustries.com
    • M&A/Alliance Activity - Continued Buyer/Investor Target Payments Emphasis Possible Strategy Accel Braintree Online merchant services Braintree is the payments engine behind LivingSocial, OpenTable, Shopify, and several lesser known online product and service providers. Accel makes a Series A investment in Braintree to finance expansion of the company’s engineering, sales, and marketing efforts. The company’s 2,000 merchants have enabled it to become profitable in just under four years since its founding. DCM Revel Systems POS systems Revel provides iPad point of sale systems for the restaurant and retail industries DCM injected $3.7 million to finance market share expansion. Western Union Travelex Global International B2B WU further expands its trans-border B2B segment (it Business Payments payments acquired Custom House in 2009) as it pays £606 million for the division with 2011 forecast revenues of £150 million – must have wanted it in the worst way. TGBP provides its services to over 35,000 business clients including 500 banks. Footnote on venture fundraising: Dow Jones reports capital raised by venture funds during the first half of 2011 rose 20 percent over 2010’s first six months. U.S. private equity funds for the same period grew 35 percent. But the numbers can be confusing – early stage funds actually shrank during the first half while late stage money had its strongest first half since 2007. European funds, on the other hand, had their worst showing since 2004, declining by 45 percent in the first half of 2011.Dorado Industries (310) 544-1316655 Deep Valley Drive, Suite 125-P jmacallister@doradoindustries.com 16Rolling Hills Estates, CA 90274 www.doradoindustries.com
    • Useful Links for More Information We threw a lot of new names out again this quarter. Here’s a list of links for you to learn more. Company Role Link Corduro Low cost merchant services www.corduro.com Silicon Valley Bank Tech and vineyard focused bank www.svb.com Card.io Photo based card acceptance www.card.io PayDivvy Social shared payments www.paydivvy.com FreeMonee FI/merchant gifting network www.freemonee.com Liqpay Facebook related payments www.liqpay.com BankOns Coupons tied to card use www.bankons.com GoalMine Save money/reduce debt system www.goalmine.com OpenCuro User and payment security www.opencuro.com Zoosh Sonic based mobile payments www.naratte.com NuWallet Mobile wallets made easy www.nuwallet.comDorado Industries (310) 544-1316655 Deep Valley Drive, Suite 125-P jmacallister@doradoindustries.com 17Rolling Hills Estates, CA 90274 www.doradoindustries.com
    • Thrill Seekers Unite!Dorado Industries (310) 544-1316655 Deep Valley Drive, Suite 125-P jmacallister@doradoindustries.com 18Rolling Hills Estates, CA 90274 www.doradoindustries.com