Dorado Industries TrendWatch Q3 2015

TrendWatch 2.0
Q3 2015
Payments System Industry
Synopsis
Notice: Materials contained in this document are drawn from several media sources, and Dorado Industries is not responsible for their accuracy. Opinions expressed
herein are presented without warranty. Brand names are the trademarks of their respective service offerors.
The reports of my
death have been
greatly
exaggerated!

Dorado Industries
655 Deep Valley Drive, Suite 125-P
Rolling Hills Estates, CA 90274
(310) 544-1316
jmacallister@doradoindustries.com
www.doradoindustries.com
Random Thoughts
“Do As I Say, Not . . . . .”
Another card brand “deadline” has come and gone and the Earth is
still rotating on its axis, our payments are not any safer than before,
and transactions now take more than a bit longer. Aw, progress.
Seems like the Triple DES and PCI DSS eras all over again.
Thousands of merchants are standing by the roadside watching the
EMV parade go by because they’ve done the math and things just
don’t add up while consumers (this one, in particular) see their
transaction times at Home Depot and other EMV-compliant retailers
double in length. And we chuckle at cashiers’ inability to sort things
out when something goes wrong. Terminal vendors and technology
players like CardFlight are raising VC money by the bushel to
deliver EMV readers to traditional POS devices, tablets, and
smartphones in anticipation of a crush of smartcard transactions
which, we figure, are a long ways off. Meanwhile, individual FIs
and other issuers are advising us that new cards will be arriving any
day now while their own trade associations admit that only 50
percent of US cards will be EMV-enabled by December. Hey,
where’s the gnashing of teeth over banks showing up late for the
party? If Dorado Industries was a retailer (well, it is, sort of) and
had gotten dressed up for the party and nobody showed, we’d be
pissed. Can’t imagine the amount of ruffled feathers sitting around
the table at NRF, NACS, and MAG meetings these days. Maybe,
one of these days, the card brands will get the issue of payments
system security right; but , we doubt it. Oh, and about that chip-
and-signature clap-trap? Let’s re-think that, shall we?
“Faster Is Better, They Say. Really?”
No one enjoys the final elimination round of an NHRA Top Fuel
drag race event more than the TrendWatch editorial staff. Sure, fast
is cool. But, is it the best we can do when re-architecting a
payments system?
2
Instead of faster, how about “more secure” or “cheaper” or “less
regulated” or “universal?” There are currently lots of smart bankers,
merchants, processors and (dare we say it) consultants burning lots
of midnight oil under the watchful eye of the Federal Reserve Bank
trying to figure out how the US can “improve” its payments system.
For the most part, it’s assumed that the objective is more speed and
we think there’s more to the story. Fortunately, the Fed is also
spearheading the Secure Payments Task Force to bring some
balance to the approach. Here’s hoping that both task forces
complete their assignments at the same time; otherwise, we might
wind up with a solution that meets the objective but which no one
really wants. Like EMV.
So it goes; off to Baja!
Until next time.

Dorado Industries
(310) 544-1316
3
Table of Contents
2015 Predictions 4
TrendWatch Scorecard/Summary 6
2015 Payments Industry Yields 7
Interesting Quarterly News That Got No Respect 8
Q3 M&A/Investor Activity 13
Useful Links for Quieter Companies 19
Back in the Day! 20

Dorado Industries
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2015 Predictions
• While a Herfindahl index analysis of the third party EFT processor segment might suggest no further mergers
would pass the DoJ sniff test, that’s not the case for merchant services players. There should be room for two
more major M&A transactions. One will occur in 2015.
Mar: Nothing so far. No guts, no glory.
Jun: Well, this is going nowhere fast. A couple of small plays but nothing to write home about.
Sep: Another round of foreign currency devaluations should do it. Check out the “Industry Yields” on page 7.
• Two digital wallet providers will fold up their tents and return to the desert.
Mar: Softcard is the first to go; Loop Pay became Samsung Pay (doesn’t count). Still waiting for number two.
Jun: Delays in Android Pay and Samsung Pay launches to Q4 gives new life for a few of the hangers-on.
Sep: Nothing this quarter; Christmas season will take its toll.
• At least one mobile network operator (MNO) will leave the playing field for the sidelines.
Mar: Could claim victory with the players in Softcard but that’s not fair. Still waiting for a hard fall.
Jun: Still waiting for one of the southern U.S. MNOs to make a move.
Sep: (Aug) Apple’s entrance as an MVNO may spur someone to exit stage left.
• Trade and popular press scribes will hail the three joint ventures that will occur in 2015 between issuers (or their
processors) and retailers.
Mar: Jungle drums are beating but, as yet, no major announcements.
Jun: Walmart/Green Dot re-up agreement doesn’t count but it looks a lot like what will happen.
Sep: AXP cuts a deal with Sam’s Club after being shown the door by Costco.
4

Dorado Industries
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More 2015 Predictions
• A truly viable mobile payments solution for owners of Android phones will arrive late in 2015 to compete with iOS
(and Apple Pay.)
Mar: Acquisition of Loop Pay by Samsung sort of fits the bill but not quite. Google’s acquisition of the Softcard
carcass sort of fits the bill but not quite either. Still waiting.
Jun: Android Pay, though delayed, will give consumers something to consider. Merchant acceptance will be the
kicker.
Sep: Samsung Pay went live September 28, a bit light on issuers. Android Pay took its first breath on September
10. So far, Atlas hasn’t shrugged.
• Try as it might (e.g., Buy With Twitter) to reverse its waning fortunes, Twitter’s year on year growth will be one-half
its current rate of 30 percent.
Mar: No statistics as yet but anecdotal evidence suggests that Twitter volume is on the wane. Probably a Q4
prediction.
Jun: Holding firm on this one until Twitter proves us wrong. Daily volume looks way down.
Sep: (Aug 3) Twitter shares hit an all time low since its IPO on a disappointing forecast and remain in the dumps.
• There is a deal to be had between MCX (CurrentC) and a banking consortium and it will be announced late in
2015.
Mar: MCX claims that issuers are lining up. Where, it won’t say.
Jun: Maybe the new leadership will warm up to the idea of a banking consortium becoming a partner.
Sep: Ohio CurrentC beta should tell the tale.
• Clinkle will disappear; but in a blaze of glory.
Mar: Still taking nourishment but through a straw.
Jun: Clinkle staffing down to about a dozen after seven key employees marched out en mass in May over sellout
rumors centered on Apple.
Sep: Still here, but hanging by a mere thread.
5

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TrendWatch Scorecard/Summary – Q2 2015
Market & Industry Situation
1 – Samsung Pay and Android Pay are now in the wild. Let the games
begin.
2 – Cardless ATM access gaining traction. Why, we’re not sure.
3 – Consumer credit levels swell as credit cards are swiped more often.
4 – Quiet on The Hill this quarter and CFPB is focused on lending.
5 – Another good, but not great, quarter.
6 – Non interest income still bolstering FI earnings in a big way.
7 – Lots of capital flowing into payments as new ideas and consolidation
economics drive decision-making.
8 – Experian takes a 15 million record hit. Loop Pay gets hacked for its
secret sauce. Scary times.
Industry Players To Watch
Retailers and Banks: Proverbial EMV line in the sand has been crossed.
Now what?
New Players: The payments conference season is upon us. Who’s
planning on “disrupting” the industry this year?
Apple: At the rate it’s buying artificial intelligence companies, one wonders
what the next watch, car, or television will do for us.
Fed Faster Payments: Fed releases its Draft 3 Faster Payments criteria to
the market for comment.
Starbucks: Will its planned acceptance of Apple Pay crimp its own app
and prepaid card volume?
The Internet of Things: Will the demise of Quirky and sale of Wink force
a re-think of the “smart home?”
5. New Venture Growth
4. Legal/Regulatory Issues
1. New Payment Forms
2. ATM Restructuring
3. POS Volume Trend
High
Med
High
Low
Med
High
High
Positive
Mixed
Negative
6. Earnings Announcements
7. Industry Investments
8. Payments Industry SecurityMed

Dorado Industries
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2015 Payments Industry YTD Yields
Sources: Company releases, Morningstar.com, Bloomberg.com, Coinbase.
2015 YTD yield excludes dividends; based on 12/31/14 and 9/30/15 closing prices.
Man, oh, man! We were just getting over our swollen nether regions caused by the Greeks when
China decided to come clean and kicked the props from under its Yuan. The Dow and S&P took it
on the shins, losing 8.7 and 6.8 percent, respectively. Meanwhile, our basket of payments equities
posted a 2.8 percent gain over last year – after giving back a bunch of gains from Q2. Multi-faceted
processors did very well and most payments houses scratched out a decent living. Single-stream
folks took it on the chin. There’s a message here?
Industry Player 12/31/2014 9/30/2015 Price r Cap Value r YTD 2015 Yield
Alliance Data Systems 284.05$ 258.98$ (25.07)$ (1,491.7)$ -8.8%
American Express 93.03$ 74.12$ (18.91)$ (20,417.4)$ -20.3%
Blackhawk Network Holdings 38.92$ 42.39$ 3.47$ 181.5$ 8.9%
Cardtronics 38.58$ 32.70$ (5.88)$ (239.3)$ -15.2%
Discover Financial Services 65.50$ 51.99$ (13.51)$ (6,497.0)$ -20.6%
Euronet Worldwide 54.90$ 74.09$ 19.19$ 967.2$ 35.0%
Fidelity National Information Services 62.21$ 67.08$ 4.87$ 929.2$ 7.8%
First Data (Future Use)
Fiserv Inc. 70.97$ 86.61$ 15.64$ 3,980.2$ 22.0%
Everi (fka GCA) 7.17$ 5.13$ (2.04)$ (157.4)$ -28.5%
Heartland Payment Systems 53.94$ 63.01$ 9.07$ 339.2$ 16.8%
Jack Henry & Associates 62.14$ 69.61$ 7.47$ 626.7$ 12.0%
MasterCard Worldwide 86.18$ 90.12$ 3.94$ 6,343.4$ 4.6%
MoneyGram International 9.09$ 8.02$ (1.07)$ (61.9)$ -11.8%
PayPal (Since 7/20/15 IPO) 41.60$ 31.04$ (10.56)$ (12,883.2)$ -25.4%
Square (Future Use) .
Total System Services 33.95$ 45.44$ 11.49$ 2,268.1$ 33.8%
Western Union 17.91$ 18.35$ 0.44$ 250.3$ 2.5%
Vantiv 33.95$ 44.92$ 10.97$ 2,720.3$ 32.3%
Visa 65.55$ 69.40$ 3.85$ 3,256.7$ 5.9%
.
Bitcoin Closing Price 315.95$ 239.05$ (76.90)$ -24.3%

Dorado Industries
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Interesting News This Quarter
Subject Source/Date Substance
7-Eleven PYMNTS.COM
September
7-Eleven has partnered with DoorDash, an online delivery service to deliver convenience store
merchandise to your door, right now. No piker in the delivery service realm, DoorDash has raised
over $80 million in capital and has made its name in restaurantand other food deliveries. The
service will be initiated soon in Chicago, Los Angeles, and NYC although we think this service is
better suited to Seattle and Denver, where the craving for munchies will overshadow the notion of
paying a delivery service premium for merchandise which, itself, has a premium price “baked” in.
Sorry, couldn’t resist.
Apple Watch Mobile Insider
September
So, is Apple Watch long for this world or a flash in the pan? BI Intelligence cites a study by
Wristly wherein 66 percent of those surveyed considered themselves “very satisfied” with the
wearable and another 31 percent were “somewhat satisfied.” Combine a 97 percent approval rating
with 11,000 downloadable apps for the Apple Watch and it’s hard not to declare the product a
winner. Apple Pay? Well, maybe not so much.
Fiserv Presser
September
Yet another processor has joined the ranks of the cardless access ATM devotees. Fiserv is pleased
with the results of the pilot test run with VyStar Credit Union in Jacksonville, Florida over the past
several months. Fiserv’s processing partner in the test was Payments Alliance Internationalwhich is
keen on the idea of re-curving the growth rate of ATM transactions(currently flat) and device
functionality(pretty anemic compared to its potential.)
ShopTalk conference and
trade show
PayBefore
September
Mark your calendars for May 16-18, 2016. These are the dates scheduled for the inaugural
ShopTalk conference to be held in Las Vegas. The show’s founders are Anil Aggarwal and
Jonathan Weiner, the brains behind Money20/20 (which itself, is coming up soon.) Anil and
Jonathan are joined by Don Kingsborough, founder of the Blackhawk network. ShopTalk is
focused on exploring and discussing the ways consumers stumble onto products, shop and buy.
Anil and Jonathon sold Money20/20 shortly after last year’s show and are moving on to other
things. This conference should be winner for those interested in the nexus between consumers and
retailers. Bankers, take note.

Dorado Industries
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Interesting News This Quarter – Continued
Kerv Finextra Here’s a wearable payments solution we can get behind. Kerv is a payments ring made of Xirconia
materialand operates without batteries in any country where contactless technology exists. Based in the
UK, the company is using Kickstarter to get its initialfunding of $120,000. If all goes well, the first
rings will ship in April 2016. We think it’s worth laying a few quid on the No Pass line just to see how
this thing works.
Wienerschnitzel Mobile Payments
Today
August
Nobody loves a hot dog more than the Dorado Industries staff. Yet, in this health-conscious
environmentin which we live, the lowly Chicago, New York or Los Angeles wiener is on the outs. It
follows that a hot dog vendor would do just about anything to remain top-of-mind. Chili-dog peddler,
Wienerschnitzel,has launched a “Wiener Rewards” mobile app that allows frequent visitors to earn
free meals. The interface sounds a little clunky; it requires an in-store sign-in and use of a three digit
code which the clerk keys into the POS device. Still, free “gourmet” hot dogs plus a free corn dog or
sundae on your birthday is nothing to sneeze at. And there’s a prepaid payments option in the app as
well. Now, if DoorDash would deliver the goodies we order ahead, life would be grand.
PayPal Bank Innovation
September
PayPal is tinkeringwith its P2P application again – after the head of its consumer business took off for
somewhere else. Indeed, the top dog bolted the day before PayPal.me was announced. PayPal.me uses
URLs for use by those paying you. The URLs can be sent via text or in emails in a relatively simple
manner but, for now, PayPal.me is not fully integrated into the company’s mobile app. Did we mention
that PayPal.me is optimized for mobile but runs on a desktop? Thought not. Sorry, not ready for prime
time just yet.
Bitcoin PaymentEye
October
Bitcoin protagonists will be dismayed to learn that the cryptocurrency is as dead as the proverbial do-do
bird in Australia. Thirteen of the country’s seventeen cryptocurrency exchanges were shut down in
September, leaving bankers and businesses with the clear picture that the jig is up. Despite the fact that
10 percent of Bitcoin’s value is domiciled in the land of OZ, merchants received lukewarm responses
from customers and banks poked fingers at the token’s lack of transparency and regulatory oversight.
Well, they would, wouldn’t they?

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10
Discover Presser
August
Discover Financial Services demonstrates once again that achieving global acceptance status doesn’t mean you
have to own everything, everywhere, lock, stock and barrel. DFS has inked an agreement with Elo Global
Cards, the largest Brazilian credit card brand, allowing Elo cardholders to make purchases internationallyand
access cash outside of Brazil. The Discover Network, PULSE, and Diners Club all are in on the deal. Caught
up short on the acceptance side less than ten years ago, the Discover Network now encompasses 185 countries
and territories, making it the (claimed) third largest acceptance network in the world. Refreshing.
Mozido PayBefore
September
Mozido, another globe-trotting US player, has launched TradeEase, a platform that enables merchants in China
to sell through e-commerce sites to customers in Russia and vice versa. There are lots of moving parts in the
arrangement including PayEase, a Mozido affiliate; Yandex.Money, a Russian payments processor; the Bank of
China, and the Suifenhe Government, part of the Chinese governing body located on the border between China
and Russia. Plus, the Russian and Chinese e-merchants and their customers, of course. Now, if Mozido can
make this work, why can’t the Fed get US retailers, bankers, and processors to come together on a new and
elegant payments solution for America? Oh, right;they’re trying.
Chase Bank Payments Insider
September
We’re not sure why this is news but here goes. Reuters reports that merchants using Chase Bank’s version of
VisaNet will experience lower interchange fees when Chase acts as both the card issuer and the transaction
acquirer. Really? Back in 2013 when it was created, even a blind squirrel could see the advantages that
“ChaseNet” would create under these conditions. With retailers clamoring for lower acceptance costs, what
better way than to treat “us-on us” transactions as interchange-free and start the merchant services negotiations
from there. What confounds us is that it has taken so long for the popular and business press to see the logic of
the 2013 deal. Particularlywhen it’s realized that there is little chance that another arrangement like ChaseNet
can ever be replicated. Very smooth play, Chase.
Kash Finextra
September
While the Fed and 320 (make that 319) of the best and brightest minds in payments confer on how to make the
US payments system faster and more secure, another stealthy startup has stepped up to disrupt the system.
Kash has been around for the past year, working in seclusion on “liveACH,” an API that uses proprietary
algorithms and ACH rails to offer up a payments solution that does away with traditional interchange pricing.
The algorithmsunderwrite the transaction risk and clear it live using banking networks. Fees are in the .5
percent range. Not so stealthy are recent HR moves by Kash. Joe Saunders, former Visa President, has joined
as chair while Sam Wen, the technical genius behind Square, has taken on a development role. In the meantime,
VC Green Visor Capital has invested $1.5 million to keep things interesting.

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Giesecke &
Devrient
PYMNTS.COM
September
EMV-compliant debit remains a stumbling block for many of us. “That damned Durbin Amendment keeps getting in
the way,” some say. According to the company, Giesecke & Devrient have introduced the first dual-interface card in
the US market and it is fully compliant with Durbin Amendment tenets. The product can support both contact and
contactless interfaces and supports all major payment brands operating in the US today. Price? Not discussed in the
press release.
Citibank BI Intelligence
July
Driven by greater operating efficiencies, the impact of mobile, or just good timing, Citibank is learningto do more
with less. Year-over-year branch counts are down by 15 percent while account balances and retail card acquisitions
are up 7 and 10 percent, respectively. Two Citibank competitors have posted smaller branch network reductions – 5
percent for JPMorgan Chase and 6 percent for Bank of America. Meanwhile, US Bank executives plan to stand pat
with the branches they have; opting instead to diversify the branch fleet based on functionality.
EMV Presser
October
Here’s a clever idea: cover merchant EMV exposure during the re-terminalization period. SterlingPayment
Technologies, a purveyor of merchant acquiring services to the restaurant, hospitality and retail verticals, is offering to
cover up to $2,000 in merchant liability as client POS systems are adapted to accommodate EMV functionality. Many
of Sterling’s merchant portfolio fall into the small/mediumretailer category, the group most often cited as being
unprepared for the EMV liability shift. The offer extends to Sterling’s ISO network for those existing or new
merchantsstrugglingto bring their systems into conformity.
JCB Finextra
October
Japan credit card brand, JCB, is working with Fujitsu to make Apple’s Touch ID five times better. The company is
testing palm-scanning technology that uses multi-digit readers to authenticate system users. The customer waves,
rather than presses, the palm over the reader which ships the captured image to a remote authentication server for
comparison and approval. Others, those promoting facial recognition, would probably like to see this experiment fade
away.

Dorado Industries
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12
Apple TechCrunch
September
Here’s something that might keep you, your bankers, and merchants alike, up at night. Apple has a new app
named Been Choice which is promoted as an ad-blocker. That it is, and a little bit more. Users who sign up for
Been Choice agree to have their data routed through a VPN to Been Choice servers which analyze the streams
and remove advertising content. Sounds pretty good so far; read on. Also, the user has the option to share data
with others and be paid for it. The Been Choice terms of service claim that the app excludes personal
information and data held by financial and e-commerce services in the packets sold to third parties. Then again,
the app does read emails and texts to learn more about the user (and, theoretically, enhance the value of the
information to the third party.) One small glitch in this Orwellian app is that, for now, Been Choice is screening
Apple’s News service app which might cause some angina in Cupertino. [Hat tip: Steve Mott,
BetterBuyDesign]
Dwolla Bank Innovation
September
Iowa-based Dwolla puts a shot over the bow of the Fed Faster Payments Task Force by offering up a white label
service for FIs. It has created an API related to its FiSync application which banks can use for B2B transactions
over the ACH. Dwolla has eschewed variable pricing over flat rate pricing similar to its consumer P2P and C2B
applications. At the same time that it’s taking pot shots at the Fed and B2B, it is white-labeling its ACH
application;a decidedly obvious run at Stripe.
Visa Various Visa continues to have its up and down days. First, an appeals court reinstated an ATM access fee suit
involving three class actions. Not good; more legal costs. Next, the Australian Federal Court slapped the card
brand with an $18 million fine (plus another $2.0 million in litigation costs) for freezing out competing currency
conversion services on terminals that accept Visa cards. Not good; less money for “field research” junkets. On
the up-side front, Visa has cut a clever deal with Chevron which enables mobile smartphone users (NFC only,
please) to purchase fuel with their personal devices. Twenty Chevron stores in California will receive the
$10,000 to $100,000 system upgrades required to make NFC work with fuel dispensers during the test. Geez,
guys, Exxon Mobil’s Speedpass wasn’t quite as elegant but a whole lot cheaper. So it goes in the card brand
and mobile wars.

Dorado Industries
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13
M&A/Alliance Activity
Buyer/Investor Target Payments Emphasis Possible Strategy
Remitly Talio Mobile messaging Jeff Bezos-backed, mobile remittances startup, Remitly, uses a
portion of the $12.5 million in VC funds raised in March to acquire
Talio. Talio specializes in customizable mobile messaging and
Remitly is eager to link mobile payments and messaging to create a
new form of tender delivery. The company claims to move over
$300 million per year over its remittance app. This move isn’t too
dissimilar from Mr. Bezos’ drone-based approach to merchandise
delivery; wouldn’t it be cool for the money and message to be the
same thing? Good-bye delayed settlement. Are you listening, Fed
Faster Payments Task Force?
Allegis Capital, IA
Ventures, Resolute
Ventures, Tekton
Ventures
Signifyd eCommerce fraud
prevention
Signifyd helps eCommerce merchants avoid future chargebacks by
pre-qualifying them and then guaranteeing against a subsequent
dispute. The system relies on behavioral psychology and machine-
learning tools to evaluate consumer purchasing patterns. Investors in
this round provided $7.0 million in Series A funding. Earlier
injections raise the company’s total outside funding to $11.0 million.
First Data Transaction
Wireless, Inc.
Digital gift card platform Almost on the eve of its $3.0 billion IPO, First Data doubles down on
the gift card sector by acquiring cloud-based solutions provider,
Transaction Wireless. Looks like First Data is moving to corner the
market and will use TWI in conjunction with its recent Gyft
acquisition to provide both closed and open loop gift, incentive, and
rebate solutions. The TWI addition gives First Data the ability to
deliver prepaid solutions via email, mobile, social media, and digital
wallets. First Data is also a player in payroll card scheme
management and distribution through its Money Network solution.
Terms were not disclosed. Interesting niche strategy; ten or twelve
more of these might enable FD to service its $22.0 billion in debt.

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M&A/Alliance Activity - Continued
Sequoia Capital,
Visa,
American Express
Stripe Online payments Stripe, the five-year old startup that a number of more established players
would like to see crash and burn, attracts some very heavy investors in
another round characterized as “less than $100 million” by its CEO.
Valuation of private companies is always dicey but those in the know say
that Stripe is now worth far more than the $3.5 billion benchmark set in Q1
when $70 million strolled through the door. Stripe has been busy building its
online support persona and has rolled out one-click and buy buttons for its
clientele. Elon Musk and Peter Thiel are investors, making Stripe a celebrity
worth watching.
TBD Quicken Personal and business
financial management
Established virtually on the heels of the PC explosion in 1984, Intuit is
trimming its sails and heading off in another direction. It has announced its
intent to sell its Quicken, QuickBase and Demandforce software tools. Users
will continue to be supported during the buyer search. Intuit generates $4
billion in sales annually and is valued at $20 billion. TurboTax and Mint, the
PFM platform, are not part of the deal. Some folks might recall that Quicken
won a knock-out of its primary competitor when Microsoft Money was
shuttered about a decade ago. Ideally, the thousands of banks that support
download feeds to Quicken users will be unaffected by the sale.
FTV Capital, Mosaik
Partners, Passport
Capital, Intel Capital,
North Hill Ventures
CashStar Prepaid cards CashStar, the enablement engine behind prepaid cards issued by QVC,
Starbucks and Home Depot, among others, raises another $15.0 million from
new and returning investors. Total raised capital for CashStar now stands at
$50.0 million. The transaction adds long-term industry player and investor
Miles Kilburn to the CashStar Board of Directors as an observer. Funds will
be earmarked for expansion of the engineering and project management
teams.

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15
Buyer/Investor Target Payments
Emphasis
Possible Strategy
EVO Payments
International
Citibank
Mexico
merchant
services
business
Merchant services Citibank pulls the plug on its Banamex subsidiary’s merchant services business in
Mexico. The unit is the second largest acquiring competitor in the country,
providing merchant services in nearly 100,000 locations. The parties signed a ten-
year marketing alliance for referral business and on-going services. EVO started
in 1989 as an ISO and has grown continuously through the acquisition of merchant
portfolios including those of big bank players in Spain (Banco Popular) and
Germany (Deutsche).
Unnamed investors Abra P2P payments Abra, based in northern California, has raised $14.0 million in VC money to
“disrupt the payments industry.” The Abra solution is blockchain-based and
utilizes a network of “human ATMs” that earn arbitrage monies by buying and
transferring digital cash among consumers equipped with the Abra app. The
target market is China and southeast Asia. Confused yet? Let’s see, I’ve got a
smartphone app, its uses blockchain technology, I want to move money to Fred
but there’s a human in the middle? Please call back when the cake is fully baked.
Dead Pool Quirky Invention platform Quirky, the invention platform that responded to customer inputs on which
inventions to promote, has tanked. After burning through $170 million in funding
and the departure of its CEO, the company flat ran out of money and closed down.
Its storybook success, Wink, was immediately sold for $15.0 million to
Flextronics to partially satisfy outstanding obligations. Quirky and Wink may be
the first casualties of the pall mall rush to nesting the “smart home,” a subset of the
Internet of Things. Ideally, Flextronics will continue to support and expand the
Wink Hub which brings interoperability to the smart home. Otherwise, consumers
with smart homes which rely on the hub interconnectivity between Nest, Schlage,
Phillips, Chamberlain and other Internet-enabled home conveniences are going to
be, well, inconvenienced. There’s a message here somewhere, IoT fan boys.

Dorado Industries
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16
Iconiq Adyen Payments processing Iconiq, an investment fund backed by Mark Zuckerberg, Reid Hoffman,
Jack Dorsey and others, invests in Adyen, raising the valuation level to
$2.3 billion. This, less than nine months after General Atlantic opened its
wallet for $250 million. Adyen processes payments for Spotify, Facebook,
and Netflix plus other notables. $25 billion in payments passed through its
hands in 2014. See, Abra? Simple. No attempt to disrupt the payments
industry; just a straight-forward, get it done right the first time, strategy.
Bialla Ventures,
Naveen Jain
(InfoSpace), and
others
Safe.Cash Digital asset vault Not that digital currency or blockchains are going away soon, it seems.
Investors have raised $1.2 million to help launch Safe.Cash, a vaulting
scheme which allows U.S. dollars to be traded with member banks for
digital tokens. Essentially, Safe.Cash is creating a cash-collateralized
digital token. Clever idea; wonder if it will fly. Probably not, since banks
won’t honor a check until its physically in hand and won’t disburse funds
until they’re collected. Just saying. So far, Safe.Cash member banks are
not named and the promoted smartphone apps haven’t shown up for iOS
or Android yet.
Newtek Premier Payments Merchant services Newtek (NASDAQ:NEWT) pays $16.5 million for Premier Payments, an
Elavon ISO with 2,500 merchant accounts. Premier was founded by
Jeffrey Rubin, who also founded Newtek and who has rejoined the (now)
parent company. Newtek is a business services management company that
offers insurance, cloud, payroll, and small business lending services. The
ISO roll-up continues; courtesy of EMV, we suspect.
Investors like us CPI Card Group Card production and
payments
CPI Card Group announces plans to raise at least $100 million in an IPO.
CPI offers card production and personalization services, payments
acceptance, mobile technologies and fulfillment (card side). A bit of a late
bloomer in the IPO world (CPI is 30 years old), it should do well. Hope so.

Dorado Industries
(310) 544-1316
17
Envestnet Yodlee Cloud services (among
other things)
Yodlee, the company synonymous with “screen scraping” from long ago, has
been acquired by Envestnet for $660 million. Older readers will recall that
Yodlee led the charge in account data accumulation and PFM platforms.
Envestnet is a wealth management technology provider which will benefit
from reining in Yodlee’s 20 million paid users and 850 FIs. Makes sense to
us but hate to see an industry veteran toss in the independence towel.
Activant Capital ShopKeep Merchant services ShopKeep allows smaller merchants and independent retailers to remain
competitive with their bigger brethren by offering cloud-based POS solutions
coupled with inventory and staff management tools, a customer marketing
platform, and backend reporting and analytics. The company raises $60
million in Series D funding, upping its total outside capital to $97.2 million.
Nice to see the bigger terminal vendors forced into innovation by ShopKeep
and other up-starts.
Heartland Payment
Systems
TouchNet
Information
Systems
Campus solutions Heartland continues to build its strength in carefully selected vertical markets.
It pays $375 million for TouchNet, a dominant player in higher education.
TouchNet solutions run the gamut of payments from tuition to parking to
alumni donations to special on-campus events. TouchNet will be combined
with the existing Heartland Campus Solutions business unit for integration.
Aequitas Capital
Management, others
Mogl Network Offline commerce There’s yet another new e-commerce approach in town and its name is Mogl.
The offline commerce platform works with offline merchants who create an
offer that is displayed on the Mogl Network. Consumers seeing the offer
enroll their card and make the purchase. Merchants pay Mogl based on each
sale delivered. In theory, merchants can avoid the cost of maintaining their
own online presence and handling Internet payments. Investors paid $8
million to see if the premise is correct. So, who isn’t selling online these
days?

Dorado Industries
(310) 544-1316
18
Greylock,
Secondary Market,
Wellington
Management, others
Payoneer Money transfer services Payoneer, long a TrendWatch favorite, goes to bat for the eighth time
and comes up aces. Investors pour $50 million into Payoneer, a money
transfer service for small businesses and professionals. Newegg, airbnb,
and fiverr are marquee clients for Payoneer which offers transfers in 150
currencies utilizing a staff of 500 in offices located in Silicon Valley,
Europe, and Asia. When it started in 2005, Payoneer was focused on
providing remittances to ex-pat temporary and contract workers.
They’ve come a long way since.
PayPal Modest Contextual commerce PayPal continues to seek a path to ubiquity and has acquired Modest in
hopes of adding more tuck-in locations for using PayPal’s payment
services. Modest was founded by two ex-Obama campaign techies. The
company delivers customized storefronts, apps and buy buttons for
merchants of all sizes. The company will be combined with Braintree,
another player acquired by PayPal in 2013 for $800 million. Certainly
better than a handful of “hope,” we surmise.
ROTH Capital
Partners, others
Revel POS services Revel jumped on the iPad early in the game and offers a host of POS
solutions for smaller merchants using the technology and uniquely
written retailer apps. MOST and others added $14 million to the
company’s coffers, raising the Series C round to $110 million. The
company, and others like it, continue to see a road to fortune lined with
SMBs seeking new ways to differentiate themselves from big box
merchants at the point of sale and with the customer experience.
FIS SunGard Financial services FIS pays $9.1 billion for SunGard to crack the Wall Street side of
financial services. The new FIS will book $9.2 billion in annual revenue
and service 90 percent of the world’s 50 largest banks. Meanwhile,
there are $200 million in cost “synergies” to be had for FIS. Big
companies bring big challenges. Good luck, FIS.

Dorado Industries
(310) 544-1316
19
Useful Links for More Information
We have changed up this section a bit. Here are some companies that haven’t received
press coverage lately but which are worth a look-see.
Company Role Link
Finanteq Superwallet options and online financing
coupled with cloud services
www.finanteq.com
Soundpays Canadian company with a patent on
payments executed via ultra high
frequency sound. Interesting television
marketing options.
www.soundpays.com
Hedgeable “The Google of investing.” Low barriers
to entry way to attract millennials and
their money as they plan for retirement.
If nothing else, good site to go to school
for youthful marketing techniques.
www.hedgeable.com
Dynamics We’ve snickered at Dynamics in the past
because of their “push-button” cards.
Not any more. Hell, we laughed at
Apple Watch too. If cards are going to
continue to exist (and they will, just like
passbook savings accounts and
pennies), these guys appear to have an
edge on innovative ways to give cards
greater value.
www.dynamicsinc.com

Dorado Industries
(310) 544-1316
Back in the day!
20
Thirty-two years ago, two major U.S. companies (neither of
them banks) announced the launch of a new cable service for,
among other things, home banking. Florida was the
introduction site. Even though the Internet existed in 1983, its
use was limited to government collaboration projects involving
a handful of universities. Private sector players wanting to
create better connectivity and customer convenience had to
forage on their own. Hence, Viewtron, a collaboration of one
telecommunications provider and a print media giant, was
created.
This quarter’s trivia contest asks you to name the two
innovators. Millennials needing an extra hand (or a
participation trophy) can glean the answers at:
https://www.youtube.com/watch?v=sgYkpk9nJnE
By the way, an industry observer wrote this prescient epitaph
for the cable-based videotext industry in 1984:
Tweaked for current times, these success concepts are still
applicable today, we think.
“No matter how many services are attached to systems offered by banks and videotext
providers, the future of home banking depends on factors beyond the control of either. Truly
user-friendly software must be developed, home computer penetration must increase
significantly and adequate transmission links (phone lines or cable) must be in place.”

Dorado Industries TrendWatch Q3 2015

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