This document provides an overview of the future of payments and retail technology, known as "Retail 2.0". It discusses the transition from traditional retail systems that are hardware-focused and separated online and offline, to new omnichannel solutions built in the cloud. These new solutions aim to provide a unified experience across channels using modular systems. The document also summarizes investment trends, M&A activity, and key players in this emerging space. Finally, it outlines Mooreland Partners' perspective that complete omnichannel platforms will emerge as leaders by enabling both online and offline commerce.

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The Future of Payments
Retail 2.0 … an Omni-Channel Future
Converged, eCommerce and Retail Systems
Payments Monitor, Part 2
May 2014

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Contents
 Introduction: Mobile Payments Ecosystem
 Retail 2.0 Landscape and Ecosystem
 Mooreland’s Perspective on Omni-Channel Retail Systems
 Retail 2.0 Investment Activity
 Retail 2.0 M&A Transactions
 Mooreland Partners: Firm Profile
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 Payments involve consumers making payments,
retailers accepting payments, and balances being
transferred between banks
 When considering mobile payments we need to
examine the following three segments to form a
complete picture of the ecosystem
– mPayment: Solutions that enable the consumer to
transact and make payments using their mobile device
– Retail 2.0: Solutions, sold to Merchants, that enable new
ways to accept payments and manage their business,
increasingly enabling the convergence of online and offline
commerce towards an “Omni-channel” commerce
paradigm
– Digital Banking: Solutions, sold to banks, that enhance the
“anywhere, anytime” consumer banking experience
(includes online and mobile banking)
Introduction: The Mobile Payments Ecosystem
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Retail 2.0
mPayment
Digital
Banking
• Mobile Wallet
• Merchant
Payment Apps
• Mobile Banking
• Internet Banking
• Mobile Money
Transfer
• Remote deposit
capture
• Mobile POS Terminals
• eCommerce Platforms
• Cloud/Tablet-based
POS Solutions
• Omni-channel
commerce
Three Interconnected Segments

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Retail 1.0: Legacy Retail . . . Separate Systems & Inflexible Architectures
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Retail systems, grouped into three major segments, are typically complex, difficult to manage and configure, and not
readily adaptable to a converged online/offline environment
eCommerce Platforms:
• An eCommerce platform is a complete online store
application that includes navigation, search, user
accounts, shopping cart, and ordering capabilities.
POS Software Systems:
• Point of Sales systems are computerized systems
incorporating cash registers, computers and
peripherals.
• These systems keep track of sales, labor and
payroll, and can generate records used for
accounting, ERP, and inventory.
Payment Acceptance:
• A stand-alone piece of equipment that
allows a merchant to process card
transactions
• Market dominated by Verifone and
Ingenico, with ~60% market share globally
Off-Line Commerce
(In-store retail)
On-Line Commerce
*Excluding back-office systems such as inventory, order management, logistics, payment gateways, etc.
Challenges:
1) Off-line and on-line platforms have been run entirely separately, thus far
2) The legacy architectures are frequently inflexible and would be difficult to evolve to fit with modern approaches
The market needs new solutions, build from the ground up, to be more flexible, modular, and seamless across channels
*

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Off-Line Commerce: Moving from Hardware to Software Systems
New Requirements Retail 2.0
Software-focused
solution, leveraging
consumer hardware
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Retail 1.0
Payment Acceptance:
Hardware-Centric Solution
Expensiveandclunky
Address the Micro-Merchant
Casual merchants can now accept cards
On-the-go payments
Facilitating mobile bus. (i.e. taxis and taco trucks)
Consumer Hardware
Savings for merchants via low-cost consumer HW
Cloud-based solutions
delivered via a tablet
interface
POS Software:
Integrated with proprietary
hardware
Agile Systems
Can be customized + integrated w/ 3rd Party Apps
Interactive Experience
Social integration, reshaping customer experience
Accelerated by Windows XP
XP “End-of-Life” makes POS non-PCI Compliant
Difficulttoadaptto
customer-specificneeds

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Online Retail: Moving towards Scalable, SaaS Platforms
eCommerce
Platform
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Build a custom
website
+
Integrate a
Shopping Cart
Notabletoadapt/staycurrent
Multi-Channel
Online, Offline, & Mobile
Global Reach
N. America, Europe, and Beyond
Ability to Scale
to millions of customers
Technology Innovation
Stay at the Leading Edge
20122008
Other, In-House
Major eCommerce
Platform
New Requirements Retail 2.0Retail 1.0
Growth in % of global top 500
internet retailers using SaaS
eCommerce Platforms
74%
26%
63%
37%

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Traditional boundaries are blurring and Omni-Channel is the new focus
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Retail technology vendors are driving towards “Omni-Channel” solutions
Customer Frustration Lost Revenue
50% 59% $338 Billion
Percentage of customers
dissatisfied with cross-channel
experience
Percentage of multi-channel
customers that switch vendors
after a single bad experience
Revenue lost by enterprises in 16 key global
economies due to customer defections and
abandoned purchases
Customers are Already Shopping Across Channels
51%
Research online and visit
store to purchase
32%
Research online, visit
store to view product, then
return online to purchase
17%
Visit a store first, and
then purchase online
Source: Oracle

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Order Management System
Startups will play a significant role in the Omni-Channel solution
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Companies focused on building best-in-class component systems are best positioned for success
UI: Offline Retail
Merchant-specific user
interface, designed for
customer check-out
 Order workflow management
 Inventory management
 Initiate shipment (for online)
Customer
Other Systems
 ERP / Financial
Systems
 Marketing, CRM,
Loyalty
Commerce Platform
 Product Information Mgmt (PIM)
 Uniform pricing & promotions
 Personalized recommendations
and contextualized experiences
UI: Online Retail
Consumer-facing interface,
designed to engage shoppers
and improve conversion
Unified Fulfilment
 Store-based fulfillment
 Drop-ship management
Big Data /
Analytics
Omni-Channel
Retail System

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Mooreland Summary: Omni-Channel Retail Systems are the Future
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The Retail Systems industry is in the early stages of a disruption cycle that will reshape the industry landscape,
threaten legacy vendors, and crown new champions
 The POS landscape is ripe for change
– Legacy POS solutions are expensive, slow-moving, inflexible, and outdated
– New, tablet-based POS solutions hosted in the cloud offer lower costs and higher flexibility
Investment (and M&A) will increase as next-generation solutions gain momentum
 EMV deadlines and the End-of-Life for Windows XP are catalysts for change
– EMV (Oct 2015) is catalyzing a refresh for the hardware terminals
– Windows XP-based POS systems will become non-PCI compliant, forcing retailers to migrate to new systems
Legacy POS will have an unusually high rate of total system replacement in 2014-2017
 eCommerce is moving towards SaaS platforms
– Retailers want low maintenance solutions
– Merchant IT departments will be downsized
eCommerce platform vendors, especially those focusing on the SMB, will grow rapidly
 Merchants will upgrade to seamless “Omni-Channel” solutions
– Unifying the back-end (shipping, order mgmt., etc.) for both online and offline platforms remains a challenge
– Players that establish complete omni-channel solutions in 2014-15 will emerge as the new leaders
It is critical to develop technology leadership early in the cycle
New technologies are
driving POS disruption
… accelerate by EMV and
the XP replacement cycle
Omni-channel Strategy:
the key differentiator
TRENDS MOORELAND PERSPECTIVE
WINNERS:
eCommerce is migrating to
comprehensive platforms
• Cloud Retail Systems that have solutions for both online and offline commerce via a single platform
• Tablet-based POS solutions
• Vendors offering best of breed back-end systems that enable online/offline convergence

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Retail 2.0 Solutions: Company Landscape is Crowded
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Mobile Payment Acceptance POS Software Systems eCommerce Platforms
Outsourced Solutions
On Premises Custom Solutions
SaaS Platforms
Shopping Carts and Mini-Platforms
Clienteling
Restaurant and Hospitality POS
Hardware / Software
Tablet-Based Retail POSPayment Services

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$54
$214
$42
$11
N/A
$19
$56 $54
$131
$51
$113
$144
$298
$333
$265
$103
$200
$100
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Investments >$100M ($ in millions)
Investments <$100M ($ in millions)
Number of Investments
Retail 2.0 Solutions: Investment Activity is Picking Up . . .
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Retail 2.0 1999 – 2013 Financing Activity
Source: Capital IQ, 451 Group, and publicly available information. Note(1): Values based on public disclosed deal values
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
# Investments 7 16 5 3 1 6 12 7 21 17 17 31 66 77 68
Total value ($M)1 $54 $214 $42 $11 N/A $19 $56 $54 $131 $51 $113 $144 $401 $533 $365

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… while M&A activity has focused on filling product / technology gaps
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Acquirer Target Category Date Transaction Size (EV) EV/Revenue
May-2014 $30M Confidential
Jan-2014 NA NA
Jan-2014 $19M NA
Aug-2013 $1.5B 11.0x-13.0x
Jul-2013 NA NA
May-2013 NA NA
May-2013 $28M 8.0x
Mar2013 $56M Confidential
Nov-2012 $124M 8.0x
Nov-2012 $746M 2.0x
Sep - 2012 $15-20M NA
Jul – 2012 $26M NA
May – 2012 $10-20M NM
Apr – 2012 $850 0.7x
Feb – 2012 $100M Confidential
Nov – 2011 Confidential Confidential
Aug – 2011 $2.1B 1.6x
Jun – 2011 $158M ~7.0x
Restaurant POS/Reservations
Cloud POS
Mobile Payment Acceptance
Clienteling Application
eCommerce Platform
eCommerce Platform
Cloud POS
eCommerce Platform
Cloud POS
Mobile Payment Acceptance
Order Management System
Order Management System
Cloud POS
Order Management System
Retail Management System
Retail Management SystemRetail Store
Solution
eCommerce Platform
Order Management System

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Mooreland in Brief
Technology Focused
Digital Media & Internet | Enterprise Software
Communications & Mobility | Industrial Technology
100% Partner
Owned
Founded 2002
One Global P&L
Global Reach
Serving European, North American, and Asian
markets from offices in Silicon Valley,
New York, and London
Team of 40+
13 Nationalities
10 Languages Spoken
53 Deals
Since January 2012,
Ranked #1 in Mid-Market
Technology M&A
Unrivalled Experience
1,000+
Deals Closed by
Senior Bankers
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Mooreland is one of the most active tech focused M&A advisory firms in the world – differentiated by deep
sector knowledge, tier 1 buyer relationships, and a collaborative business model.

14. www.moorelandpartners.com
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