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Worldpay IPO on London Stock ExchangeWorldpay sold 900 million shares of common stock at $3.71 (£2.40) on October 16, 2015. The stock began trading on the London Stock Exchange (LSE) under the symbol WPG. The
First Data IPO on NYSEFirst Data sold 160 million shares of Class A common stock at $16 per share in an initial public offering on October 15, 2015. The stock began trading on the New York Stock Exchange (NYSE)
All U.S. Payment Cards ProjectedGeneral purpose and private label consumer and commercial credit, debit, and prepaid cards generated purchase volume for goods and services of $5.401 trillion in 2014. Credit cards accounted for 53.37% of that spending compared to 46.63% for debit cards. In 2013, credit cards accounted for 52.76% and debit cards 47.24% of $4.996 trillion in purchase volume. In 2019, when purchase volume is projected to reach $7.866 trillion, 54.58% is expected to be from credit cards and 45.42% from debit cards.
U.S. Debit Cards ProjectedPurchase volume on U.S. issued general purpose and private label debit and prepaid cards is projected to reach $3.573 trillion in 2019, up 41.9% over $2.519 trillion in 2014.
U.S. Credit Cards ProjectedConsumer and commercial general purpose and private label credit cards in circulation in the U.S. at year-end 2014 totaled 1.05 billion, up 2.8% from 2013. Credit cards in circulation are projected to
Trustev eCommerce Fraud FightingThe rules-based ecommerce fraud fighting technologies most widely used by online sellers “red flag” transactions that might be fraudulent. However, they can’t definitively identify those initiated
Visa/MasterCard Cybersecurity InitiativesMasterCard has made Safety Net available globally. The service identifies anomalies in signature (dual message) and PIN (single message) transactions that indicate fraud resulting from the
USAA Moves Credit/Debit Cards to VisaUSAA, MasterCard’s top debit card issuer and fourth largest credit card issuer in the U.S., will convert both portfolios to the Visa brand. Last year, USAA MasterCard cards generated
Visa46%
Master-Card21%
Amex13%
EFT9%
Prepaid4%
Store3%
Discover2%
Other2%
1,647
2,485
3,970
804
420
238 471 587
163
228 274
132
184 283
127
100 142
684 9161,144 1,594
Visa Master-Card
Amex EFT Prepaid Store Discover
Payment Cards in the U.S.Purchase Volume 2009–2019
Market Sharesin 2014
Purchase Volume ($Bil.)in 2009, 2014, 2019
© 2015 The Nilson Report
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7 Market Capitalization of Publicly Traded Processors
8 U.S. Credit & Debit Card Purchase Volume & Transactions Projected
9 U.S. Credit Card Outstandings 10 U.S. Payment Cards Projected —
Cardholders, Cards, Accounts, Total Volume, and Total Transactions
2 – 4 Fast Facts 5 U.S. Bank and AAA Credit
Card
INSIDE CHARTS
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FOR 45 YEARS, THE LEADING PUBLICATION COVERING PAYMENT SYSTEMS WORLDWIDE OCTOBER 2015 / ISSUE 1074
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FREEDOMPAY’S Commerce Platform has been certified as an EMV payment gateway on First Data’s network. The gateway is offered in combination with FreedomPay’s PCI validated point-to-point encryption and tokenization service. Retail, restaurant, lodging, ecommerce, and MOTO merchants receive reductions in scope for PCI compliance from approximately 300 controls to 30. Chris Kronenthal is CTO at FreedomPay, (610) 902-9012, chris.kronenthal@ freedompay.com, www.freedompay.com.
SPLITIT is the new name of PayItSimple, marketer of patented technology that enables merchants to offer their customers the ability to pay for purchases with monthly pay-ments on their existing Visa and MasterCard credit cards. Alon Feit is CEO, (646) 838-1013, [email protected], www.splitit.com.
NMI offers ISOs, VARs, and ISVs payment gateway services they can sell under their own brand. Network Merchants LLC is the trade name of NMI. Roy Banks is CEO at NMI, (847) 352-4850 x132, [email protected], www.nmi.com.
CHASE CARD SERVICES is leveraging its Marriott Hotel and United Airlines co-branded credit card partnerships. Between November 1 and November 30, 2015, Marriott Rewards Premier cardholders will earn double points on purchases with United while eligible United MileagePlus Explorer, Club, and Presidential Plus cardholders will earn double miles on purchases at Marriott properties. No additional enrollment is required. Richard Quigley is President, Partner Business at Chase, (302) 282-2496, [email protected], www.chase.com.
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JPMORGAN CHASE will pay $50 million in restitution to U.S. cardholders, including an estimated $10 million to card-holders in California and another $50 million in penalties and other payments to California, as part of a settlement negotiated with the Office of the Attorney General in that state. The settlement, which is subject to court approval, also incudes injunctive terms that change Chase’s credit card debt collection practices.
BERKSHIRE HATHAWAY TRAVEL PROTECTION (BHTP) now uses MasterCard Send to facilitate pay-ments of travel insurance claims directly to almost any personal bank account through a debit card issued in the U.S., typically within seconds. Travelers can use the BHTP mobile app. Barbara King is Group Head, Personal Payment Solutions at MasterCard, (914) 249-2000, [email protected], www.mastercard.com.
BARCLAYCARD US AND PRICELINE.COM have ex-tended their co-branded Visa credit card agreement. Ann-Marie Archino is Director of Travel and Entertainment Partnerships at Barclaycard US, (302) 255-8031, [email protected], www.barclaycardus.com.
ELAVON, the 6th largest U.S. acquirer, has received a contract extension from Costco to continue providing payment processing services to the retailer’s small and midsized business customers. Guy Harris is President, North America at Elavon, (678) 731-5070, [email protected], www.elavon.com. Jay Smith is Director of Business and Financial Services at Costco, (425) 313-2902, [email protected], www.costco.com.
Conferences & Seminars
Engagement & Experience Expo 2015: November 9-11, 2015. The Hilton Dallas Lincoln Centre, Dallas, Texas. Estimated attendance: 300. Cost for the three-day conference ranges from $599 to $1,499. Sub-scribers to The Nilson Report will receive a 20% discount. (Use code TNR20.) Contact Liz Woofter, Marketing Coordina-tor at Loyalty360, (513) 800-0360 x 131, [email protected]. Register at http://www.engage-mentexpo.com/Registration.
Mobile Money & Digital Payments Global: December 1-3, 2015. The Wyndham Grand Istanbul Levent, Istanbul, Turkey. Estimated attendance: 500+. International rate: $2,314 (two-day conference only); $2,700 (two-day conference with NeoPay workshop). Local rate: $1,670 (two-day conference only); $2,083 (two-day conference with NeoPay workshop). Subscribers to The Nilson Report will receive a 20% discount. (Use code TNR20). Contact Claire Edwards at Clarion, 44 (207) 384 7904, [email protected]. Register at www.mobile-money-global.com.
8th Central European Electronic Card 2015 (CEEC 2015): December 3-4, 2015. The Novotel Centrum Hotel, Warsaw, Poland. Estimated attendance: 350. Cost for the two-day conference is $355. Contact Kama Milewska at Medien Service, 48 (22) 7173-795 or 48 (507) 199-793, [email protected]. Register at www.conkarta.pl.
Payments Innovation Summit 2015: December 10-11, 2015. The Steigenberger Hotel, Berlin, Germany. Estimated attendance: 70. Cost for the two-day conference is $1,595. Subscribers to The Nilson Report will receive a 25% discount. (Mention The Nil-son Report to receive discount.) Contact Catherine Fisher at Luxatia, 420 (777) 929-068, catherine.fisher@ luxatiainternational.com. Register at www.luxatiainternational.com/Events/payments-innova-tion-summit/.
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WALLABY FINANCIAL’S iPhone application (version 4.1) uses geolocation, financial data, time of day, and other factors to determine when to alert people to savings opportunities - and when not to - before they check out. Customers are alerted to which credit card will save them the most money. Matthew Goldman is CEO, (626) 219-7071, [email protected], www.walla.by.
FLYWIRE is the new name for peerTransfer, a cross-border payment special-ist serving over 750 educational institutions in the U.S., Europe, and Asia. Their students make payments from over 200 different countries. Flywire is on track to process over $2 billion this academic year. Mike Massaro is CEO, (617) 207-7076, [email protected], www.peertransfer.com.
VERIFI AND PEGASYSTEMS have formed a partnership. Their combined service automates the way credit card issuers manage chargeback cases by directly connecting them with merchants. Issuers reduce the time needed to resolve cardholder disputes, which improves customer satisfaction. They can also lower their costs. Matthew Katz is CEO at Verifi, (323) 655-5789, [email protected], www.verifi.com. Scott Andrick is Director, Retail Banking and Cards at Pegasystems, (408) 813-5889, [email protected], www.pega.com.
WORLD WIDE WEB CONSORTIUM (W3C) has launched its first Web Payments Working Group to develop global standard application programming interfaces to support existing and future payment methods, including cards, mobile, escrow, as well as bitcoin and other distributed ledger technologies. Ian Jacobs is Web Payments Activity Lead, (718) 260-9447, [email protected], www.w3.org.
MONEY SERVICES BUSINESS ASSOCIATION (MSBA) is a newly formed trade group focused on the nonbank money services industry, includ-ing licensed money transmitters and their agents, payment card issuers and distributors, and international remittance companies. MSBA has 25 founding members. Kathy Tomasofsky is Acting Director, (201) 781-2590, [email protected], www.msbassociation.org.
CAPGEMINI and RBS have released their annual report on the global payments market. World Payments Report focuses on noncash payment volumes including the increase in mobile payments. Download at https://www.worldpaymentsreport.com/download.
CARDFLIGHT’S encrypting card reader for iOS and Android devices as well as its SwipeSimple mobile payments application have been certified by First Data. Derek Webster is CEO at CardFlight, (908) 347-2169, derek@ cardflight.com, www.cardflight.com.
WEX will provide virtual MasterCard credit cards to Grasp Technologies for that company’s travel management and other customers. Jim Pratt is SVP, General Manager of Virtual at WEX, (207) 523-7530, james.pratt@ wexinc.com, www.wexinc.com.
NACHA’S Payments Innovation Alliance has produced a white paper - “Real Time in Real Life: The Impact of a Real-Time Payments System on its Users.” Download at www.nacha.org.
FINANCIAL TECHNOLOGY PARTNERS has published “Transaction Security at the Nexus of E-Commerce, Payment Market Structure Complexity and Fraud,” a free report. Downloaded at www.ftpartners.com/docs/FTPart-nersResearch-TransactionSecurity.pdf.
ALLIANCE DATA SYSTEMS now issues a co-branded MasterCard credit card with Univision, the top media company focused on the Hispanic com-munity in the U.S. Melisa Miller is President of Card Services Business at Alliance Data, (614) 729-4900, [email protected], www.alliancedata.com. Kevin Conroy is President Digital Enterprise Develop-ment at Univision, (212) 455-5200, [email protected], www.univision.net.
THE TRANSACTION GROUP, provider of payment card and other noncash payment processing services to 2,000+ merchants in the U.S., is providing free EMV-compliant terminals and PIN pads to select customers. Michael Rupkalvis is President, (312) 218-4347, michael@ thetransactiongroup.com, www.thetransactiongroup.com.
CHARGE ANYWHERE, a provider in the U.S. of services to merchants including a payment gateway, mobile payment applications, POS software, end-to-end encryption, and more, now offers Miura’s Shuttle POS hardware. Jim Dugan is CFO at Charge Anywhere, (732) 417-4447 x116, [email protected], www.chargeanywhere.com.
© HSN Consultants, Inc. 2015 THE NILSON REPORT 2OCTOBER 2015 / ISSUE 1074 / THE NILSON REPORT
Seventh Edition
a 2015 Nilson Report PublicationWorldwide
Largest
© HSN Consultants Inc. 2015 THE NILSON REPORT, www.nilsonreport.com/specialreport. Reproducing or allowing reproduction
or dissemination of any portion of this document in any manner is a copyright violation subject to substantial fines.
Card Issuers
Merchant Acquirersand
in
Asia/Pacific, United States, Europe, Latin America, Middle East/Africa, and Canada
Over 1,000* Card Issuersfrom 115 countries in all world regions*includes over 700 outside the U.S.
7th Edition
275* Merchant Acquirersfrom 65 countries in all world regions
*includes over 190 outside the U.S.
Figures include cardsin circulationand spending for
credit & debit card issuers
Order Todaywww.nilsonreport.com/specialreport
© 2015 HSN Consultants, Inc. THE NILSON REPORT 3OCTOBER 2015 / ISSUE 1074 / THE NILSON REPORT
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CRYPTOMATHIC’S EMV data preparation platform, CardInk, will be integrated with SPEC personalization software from ICPayment to be used pri-marily for chip-enabled Visa and MasterCard payment cards issued by Banco Santander in Uruguay. Guillaume Forget is SVP at Cryptomathic, 49 (162) 294-6885, [email protected], www.cryptomathic.com. Mirko Koscina is Director at ICPayment, 56 (2) 3213-9906, [email protected], www.icpayment.cl.
VERIFONE has updated POS terminals at all 371 pharmacies in the Apoteket pharmacy chain in Sweden. Jonas Rorsgard is General Manager at Verifone Sweden, 46 (725) 612-122, [email protected], www.verifone.com.
SEAMLESS has expanded its mobile payment service from the point-of-sale to international money transfers. Users of its SEQR app can send and receive remittances at no charge. Money is delivered in the receiver’s bank account in local currency. Peter Fredell is CEO, 46 (8) 5648-7800, peter.fredell@ seamless.se, www.seamless.se.
BELL ID’S Token Service Provider platform will be integrated in Australia to the eftpos switch. Eftpos is a PIN-based domestic payment card network. Bell ID’s technology will support mobile payments. Bruce Mansfield is Managing Director at eftpos, 61 (2) 8270-1828, bmansfield@ eftposaustralia.com, www.eftposaustralia.com.au. Pat Curran is Executive Chairman at Bell ID, 31 (10) 885-1010, [email protected], www.bellid.com.
CT-PAYMENT, Canada’s largest nonbank merchant acquirer, will offer its ISO and software developer customers Powa Technologies’ iPad-based hard-ware platform. Denis Robert is CEO at CT-Payment, (514) 316-8293 x718, [email protected], www.ct-payment.com. Jeff Dumbrell is CEO at PowaPOS, (404) 428-7848, [email protected], www.powapos.com.
MOVIDA INDIA, a mobile payment services joint venture in India between Visa and Monitise, has been shut down. India’s top mobile network operators declined to work with Movida India.
ORANGE, France’s largest mobile network operator, and prepaid card issuer/processor Wirecard, have been testing OrangeCash mobile payments since 2013. The partners are now rolling out that service nationwide. Thierry Millet is SVP Mobile Financial and NFC Services at Orange, 33 (1) 5548-7685, [email protected], www.orange.com. Christian von Hammel Bonten is EVP of Telecommunications at Wirecard, 49 (89) 4424-1405, [email protected], www.wirecard.com.
AMERICAN EXPRESS and PAYLEVEN are offering small and midsized businesses in Germany a free payleven chip & PIN card reader when they apply for an Amex Business Gold Card at the payleven website. Konstantin Wolff is Managing Director at payleven, 49 (30) 809-5201, [email protected], www.payleven.com. Sonja Scott is VP Corporate Payments at American Express Germany, 49 (69) 7576-3571, [email protected], www.americanexpress.de.
AYEYARWADY BANK (AYA BANK) in Myanmar will use CR2’s BankWorld self-service integrated platform to manage its ATM, online banking, and POS channels. AYA Bank ranks 2nd largest among Myanmar’s banks with 90 branches, 200 ATMs, and over 200 merchant outlets accepting payment cards. Mike Brady is COO at CR2, 353 (1) 433-9100, [email protected], www.cr2.com. Minn Wint Oo is Deputy Managing Director, Operations at AYA Bank, (959) 503-5959, [email protected], www.ayabank.com.
PREPAID FINANCIAL SERVICES has issued its 1.3 millionth prepaid card, a DB Card Prepaid MasterCard, in the Netherlands. The DB Card is euro-de-nominated. Prepaid DB Card Service is the program manager and distributor. Dirk Braaf is CEO at DB Card Service, 31 (20) 416-1813, dirk@ dbcardservice.com, www.dbcardservice.com. Noel Moran is CEO at Prepaid Financial Services, 44 (207) 534-8040, noel.moran@ prepaidfinancialservices.com, www.prepaidfinancialservices.com.
CITIBANK INDIA will offer MasterCard’s MasterPass online payment services to its merchants and cardholders. Vikas Varma is Executive Director, South Asia at MasterCard, 91 (124) 483-6006, [email protected], www.mastercard.com. Arjun Chowdhry is Head of Credit Cards and Unsecured Lending at Citibank India, 91 (22) 6175-9999, www.citibank.co.in.
SAFECHARGE is program manager for the PokerStars-branded prepaid StarsCard MasterCard that allows poker players in the U.K. to make with-drawals and deposits directly from/to their bank account. PokerStars is one of the world’s largest gambling sites. StarsCard is issued by IDT Financial Servic-es in Gibraltar. David Avgi is CEO at SafeCharge, 44 (203) 051-3031, [email protected], www.safecharge.com. Daniel Spier is Managing Director at IDT, (350) 2007-9616, [email protected], www.idtfinance.com.
Pierre-Antoine Vacheron has been appointed EVP ePayments at Ingenico, 33 (1) 5801-9197, [email protected]. Todd Bradley has been appointed CEO at Mozido, (512) 518-2200, [email protected]. Amedeo D’Angelo has been appointed Chief Executive Officer at Inside Secure, 33 (4) 4290-5905, [email protected]. Shlomi Cohen, formerly at RayV, has been appointed CEO at Oti (On Track Innovations), 972 (4) 686-8008, [email protected]. Frank Landen has been appointed General Manager, U.K. at Payworks, 49 (89) 4161-58400, [email protected]. Matt Weinsieder has been appointed Director of Marketing at Alpha Card Services, (215) 494-0200, [email protected]. Jeff Lipa has been appointed Vice President of Business Development at Arroweye Solutions, (312) 253-9400, jeff.lipa@ arroweyesolutions.com. Rob Freedman, formerly at Worldpay, has been appointed Business Development Director at Emergent Payments, (650) 320-9300, rfreedman@ emergentpayments.net. George Wilcox, formerly at Chase Paymentech, has been appointed Executive Director, Product Development at Sterling Payment Technologies, (813) 371-8237, [email protected]. Betty Mitchell has been appointed Vice President of Client Engagement at Arroweye Solutions, (312) 253-9428, [email protected].
Management Changes
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U.S. Bank and Auto Club Trust FSB (ACT), a subsidiary of The Auto Club Group (ACG), have signed a long-term credit card card-issuing partnership. U.S. Bank is the fifth largest issuer of Visa and MasterCard credit cards in the U.S. ACG provides
a range of financial and other products to more than 9 million AAA (American Automobile Association) members in the region it serves. The partners have created two new MasterCard
co-branded credit cards, which they will jointly market.
U.S. Bank will also purchase the $500+ million ACT-owned credit card portfolio.
ACT is a federally chartered savings association headquartered in Dearborn,
Michigan. ACG is the second largest AAA club in North America. ACG and its affiliates provide
membership, travel, insurance, and financial services to more than 9 million members in Florida, Georgia, Iowa, Michigan, Nebraska, North Dakota, Tennessee, Wisconsin, Puerto
Rico, and the U.S. Virgin Islands; most of Illinois and Minnesota; and a portion of Indiana.
Bank of America issues a co-branded MasterCard card to AAA members in other states.Robert Goeller is Senior VP, Co-
Brand Partnerships at U.S. Bank in
Salt Lake City, Utah, (801) 649-5406,
www.usbank.com.
by a criminal. As a result, too many valid transactions with suspicious elements are declined. They include shoppers operating behind a proxy, on private
networks, or on virtual machines, ordering from a particular country, or those that ask merchants to ship to a new address. This costs sellers revenue as well as the expense of a manual review of up to 10% of those declines to try to save the sale. An ever larger number of transactions are conducted online. It is too expensive to increase manual reviews commensurate with the growth in Web sales.
Machine learning-based fraud fighting technologies now on the market offer a fully automated answer to fraud fighting and are better able to meet larger transaction volumes. Their origins are in Silicon Valley’s development of big data analysis using open source software. Combined with lower computing costs, data analysts can now examine thousands of signals within their risk models to find patterns among all of that data that separates fraudulent
from valid transactions. By comparison, rules-based models analyze only dozens of signals to compute their scores. And subsequent manual reviews only incorporate a few hundred more signals.
Trustev ecommerce fraud fighting technology is a hybrid of machine learning and a fraud matrix (which is similar to rules) that looks at all of the traffic at a merchant’s website and analyzes more than 3,000 signals simultaneously. It delivers a score that large ecommerce sellers can use to reduce transactions they manually review from 10% to 1%. Trustev offers a merchant’s fraud fighters a single screen to manage reviews versus as many as five or more screens currently required.
Trustev says it can reduce chargeback rates to 0.1% of total sales from the current range of 0.7% to
1.5% depending on merchant and category. It claims that clients see revenues increase by 1% to 2% because they can approve more orders.
Trustev is headquartered in Cork, Ireland. Investors include TransUnion, which integrates credit bureau files into Trustev’s platform. The companies have a joint marketing agreement covering Brazil. Rurik Bradbury is CMO at Trustev in New York,
(646) 360-0197, [email protected],
www.trustev.com.
Will also purchase the existing $500+ mil. credit card portfolio.
...analyzes more than 3,000 signals simultaneously.
U.S. Bank and AAA Credit Card
Trustev eCommerce Fraud Fightingfrom page 1...
© 2015 HSN Consultants, Inc. THE NILSON REPORT 5OCTOBER 2015 / ISSUE 1074 / THE NILSON REPORT
sale raised $3.33 billion (£2.16 bil.). The IPO was the largest in U.K. history. Of that amount, 55.6% went to Boston-based private equity firms Advent
International and Bain Capital. Worldpay was a unit of the Royal Bank of Scotland when those private equity firms paid $1.07 billion in loans and cash for it in 2010.
Worldpay provides payment card acceptance services to merchants around the world. It processes about 31 million mobile, online, and in-store transactions daily. Revenues in 2014 grew 7.8% to $1.33 billion (£863.4 mil.). Worldpay is Europe’s largest merchant acquirer and the fifth largest worldwide based on 9.73 billion transactions handled in 2014. Among all processors in the payment card industry, it ranks ninth based on market capitalization and fifth based on annual revenue.
Advent and Bain invested $1.69 billion (£1.10 bil.) in Worldpay over the last five years. They received $610.0 million (£400 mil.) from the company as a dividend in 2013. In the IPO they sold $1.85 billion (£1.20 bil.) of their stock. Between them they retain stakes in Worldpay worth approximately $3.54 billion (£2.30 bil.).
In June 2015, Advent, Bain, and Italian private equity firm Clessidra acquired ICBPI—Istituto Centrale delle Banche Populari Italiane—for $3.33 billion (£2.15 bil.). ICBPI provides issuing and acquiring processing services. Advent and Bain also
own Nets, the largest card processor in the Nordic countries. Advent owns Oberthur Technologies, which is expected to make an IPO next year.Philip Jansen is CEO at Worldpay in London, U.K.,
44 (20) 3598-9239, [email protected],
www.worldpay.com.
cyberhacking of issuers or their processors. Safety Net is a second line of defense behind systems that issuers and processors deploy. It intervenes on behalf of participating customers to shut down all card authorization requests tied to an account or to specific channels such as ATM or ecommerce. Issuers are then alerted. Safety Net has been under development since 2012 when hackers compromised a processor in the Middle East. They used malicious software to continuously add funds to 19 accounts while 300 counterfeit cards in 26 countries were used to make cash withdrawals at ATMs. The coordinated attack netted $6 million. A similar attack netted hackers $5 million in 4 minutes and a total of $40 million.
By 2013, MasterCard had implemented Safety Net in several regions and was able to stop three coordinated attacks, limiting total losses to under $100,000. Similar attacks occurred in 2014 and this year.
Johan Gerber heads Fraud
Management Solutions at
MasterCard in O’Fallon,
Missouri, (636) 722-2366,
www.mastercard.com.
Visa Inc. identified a 23% increase in cyberattacks in 2014 over 2013. Almost all of that activity involved attempts to steal data from merchants and their processors.
Visa and cybersecurity specialist FireEye have created a platform that merchants and processors can use to educate themselves about threats to card data from hackers.
The platform is called Visa Threat Intelligence, Powered by FireEye. Merchants can
learn to identify threats and then speak with an analyst about the best ways to mount a defense. Intelligence from the platform can be integrated with fraud fighting software from any vendor. Jason Meller is Chief Security
Strategist at FireEye in New York,
(212) 764-0435, jason.meller@
fireeye.com, www.fireeye.com.
... speak with an analyst about the best ways to mount a defense.
Advent and Bain retain stakes worth approximately $3.54 bil.
Visa/MasterCard Cybersecurity Initiatives from page 1...
Worldpay IPO on London Stock Exchange from page 1...
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under the symbol FDC. The sale raised $2.60 billion, making it the largest IPO in the U.S. this year. First Data received approximately
$2.50 billion. It will use $2.10 billion of that money to reduce its debt load, and the remainder for general corporate purposes. First Data has $20.00 billion in debt on its books. Last year it paid $1.70 billion in interest expense even as it became profitable for the first time in seven years.
First Data had a market capitalization on NYSE of $27.71 billion in 2007 when private equity firm KKR & Co. took it private in a highly leveraged buyout. First Data’s market capitalization on NYSE was $13.63 two weeks after its recent IPO. KKR and its affiliates, which own 74% of First Data, did not sell any stock in the IPO.
Last year, First Data raised $3.50 billion in a private
placement including $1.20 billion from KKR. Another investor was Lehman Brothers, the investment bank that went out of business in 2008. Its bankruptcy estate manages more than $10 billion in assets. The portfolio invested $151 million in First Data.
First Data provides payment card acceptance services at approximately 6.2 million merchant locations, and card issuer account processing and related services to 4,000 financial institutions in 118 countries. It processes more than 2,300 transactions per second valued at $1.900 trillion per year.
First Data is the largest card payment processor in the world when measuring annual revenues. It ranks fifth by market
capitalization among publicly traded processors.
Global Business Solutions (GBS) is the largest unit within First Data. It accounts for 58% of the company’s revenues and 60% of earnings. GBS is comprised of merchant acquiring, marketing and loyalty, software, Clover, and ecommerce support. Merchant acquiring includes First Data ownership in joint ventures with Bank of America (51.0%), Wells Fargo (40.0%), and PNC (40.0%) in the U.S., Lloyd’s Bank in the U.K. (49.9%), Allied Irish Banks in Ireland (50.1%), ABN Amro in the Netherlands and Belgium (51.0%), BNP Paribas in Italy (49.0%), and ICICI Bank in India (81.0%). In addition,
it has revenue sharing merchant acquiring alliances with more than 80
banks worldwide including Citibank and SunTrust in the U.S. and Scotiabank in Mexico.
Network & Security Solutions, a unit whose businesses include the Star EFT network, TeleCheck check authorization unit, Money Network, Gyft, ValueLink prepaid cards, and more, accounts for 20% of First Data revenues and 21% of earnings.
Global Financial Services, which includes general purpose and private label credit card account processing and card management software sales, accounts for 22% of revenues and 19% of earnings. Guy Chiarello is COO at First Data
in Greenwood Village, Colorado,
(212) 515-3171, guy.chiarello@
firstdata.com, www.firstdata.com.
KKR and its affiliates did not sell any stock in the IPO.
PayPal U.S. $44.13 $8.03 Fiserv U.S. $22.43 $4.74 FIS Global U.S. $20.50 $6.40 Cielo Brazil $18.30 $7.73 U.S. $13.63 $11.10 TSYS U.S. $10.07 $2.40 Vantiv U.S. $8.89 $2.58 Global Payments U.S. $8.51 $2.55 U.K. $8.40 $5.50 Jack Henry U.S. $6.07 $1.21 Wirecard Germany $5.74 $0.71 Euronet U.S. $4.19 $1.66 Worldline Belgium $2.89 $1.38 Heartland U.S. $2.59 $3.05 Optimal Payments U.K. $1.64 $0.37 Cardtronics U.S. $1.48 $1.00 Evertec Puerto Rico $1.43 $0.87 QiWi Russia $1.07 $0.44 Pushpay New Zealand $0.44 $0.01 SafeCharge U.K. $0.41 $0.08 GHL Sys. Malaysia $0.17 $0.34 Planet Payment U.S. $0.15 $0.05 Eckoh U.K. $0.10 $0.03 MOL Malaysia $0.04 $0.02 JetPay U.S. $0.04 $0.03Market capitalization is the market value of a com-pany’s outstanding shares. Figures above are in U.S. dollars as of October 28, 2015.Revenue in $U.S. is for the most recent fiscal year.Privately held processors include: NETS (Denmark), SIX (Switzerland), SIBS (Portugal), Equens (Netherlands), ICBPI (Italy), SIA-SSB (Italy), Valitor (Iceland), Pay.On (Germany), EVO (U.S.), TransFirst (U.S.), Kalixa Payments (U.K.), Adyen (Netherlands), iZettle (Sweden), Fexco (Ireland), SumUp (U.K.), Square (U.S.), Priority Payment Systems (U.S.), Total Merchant Services (U.S.), Merchants’ Choice Payment Solutions (U.S.), Clearent (U.S.), BluePay (U.S.), iPayment (U.S.), North American Bancard (U.S.), Sage Payment Solutions (U.S.), First American Payment Systems (U.S.), Harbortouch (U.S.), Gravity Payments (U.S.). © 2015 The Nilson Report
Market Revenue Company Cap. (bil.) (bil.)
Market Capitalization ofPublicly Traded Processors
First Data IPO on NYSEfrom page 1...
© 2015 HSN Consultants, Inc. THE NILSON REPORT 7OCTOBER 2015 / ISSUE 1074 / THE NILSON REPORT
Visa debit cards had the highest market share in 2014 with 23.56% when comparing purchase volume for all credit and debit products, Visa credit cards were second with a 22.45% share. American Express credit cards (12.67%), MasterCard credit cards
(11.24%), and MasterCard debit cards (9.93%) followed.
In 2019, Visa credit cards are projected to have a greater share of purchase volume at 26.16% than Visa debit cards at 24.31%. The market share for American Express credit cards is projected to be 11.65%. MasterCard’s
credit card share is expected to be 10.45%, and its debit card share is expected to be 9.81%.
Since 2009, purchase volume on credit cards has increased by $938.88 billion compared to $906.69 billion for debit cards. Credit card purchase volume per cardholder per month has increased from $1,038 in 2009 to $1,397 in 2014. It is expected to reach $1,966 by 2019. Debit card purchase volume per cardholder per month has increased from $734 in 2009 to $1,064 in 2014. It is expected to reach $1,393 by 2019.
Purchase transactions on consumer and commercial general purpose and private label credit, debit, and prepaid cards issued in the U.S. totaled 96.59 billion in 2014. Debit cards accounted for 68.34% and credit cards 31.66%. In 2019, purchase transactions are projected to reach 133.70 billion, with 66.69% generated by debit cards and 33.31% by credit cards.
Visa debit cards held the highest market share of purchase transactions in 2014 with 35.06%. Visa’s debit share is expected to be 36.15% by 2019, while Visa credit cards, which accounted for 14.92% in 2014, are expected to increase to 17.79%. In 2019, MasterCard debit cards, which had a 14.08% share in 2014, are projected to hold a 13.93% share. MasterCard credit cards had a 6.96% share in 2014, and are expected to hold a 6.72% share in 2019.
In 2014, EFT network debit cards, excluding those claimed by Visa and MasterCard in their debit figures, generated
Millions 2009 Share 2014 Share 2019 Share Chg. 14 vs. 19
CREDIT CARDS 22,168.8 33.56% 30,583.7 31.66% 44,531.5 33.31% 45.6%Visa 9,040.0 13.68% 14,409.0 14.92% 23,786.5 17.79% 65.1%MasterCard 5,911.8 8.95% 6,727.1 6.96% 8,983.0 6.72% 33.5%Amer. Express 2,916.4 4.41% 4,754.2 4.92% 6,271.6 4.69% 31.9%Discover 1,635.1 2.48% 2,172.6 2.25% 2,351.7 1.76% 8.2%Store 1,581.3 2.39% 1,701.1 1.76% 2,298.0 1.72% 35.1%Oil Co. 1,074.1 1.63% 809.7 0.84% 831.3 0.62% 2.7% The Rest 10.2 0.02% 9.9 0.01% 9.6 0.01% –3.4%DEBIT CARDS 43,893.2 66.44% 66,002.1 68.34% 89,171.8 66.69% 35.1%Visa 23,910.6 36.19% 33,859.0 35.06% 48,332.0 36.15% 42.7%MasterCard 8,333.6 12.61% 13,596.0 14.08% 18,628.3 13.93% 37.0%EFT Networks 6,557.0 9.93% 12,084.3 12.51% 14,449.6 10.81% 19.6%Prepaid (1) 5,060.8 7.66% 6,299.2 6.52% 7,481.2 5.60% 18.8%ACH 31.3 0.05% 163.7 0.17% 280.8 0.21% 71.5%TOTAL 66,062.0 100.00% 96,585.8 100.00% 133,703.4 100.00% 38.4%
(1) Private label prepaid. © 2015 The Nilson Report
Purchase Transactions
Billions 2009 Share 2014 Share 2019 Share Chg. 14 vs. 19
CREDIT CARDS $1,944.00 54.67% $2,882.88 53.37% $4,292.88 54.58% 48.9%Visa $764.20 21.49% $1,212.70 22.45% $2,057.93 26.16% 69.7%MasterCard $477.10 13.42% $607.10 11.24% $821.96 10.45% 35.4%Amer. Express $420.03 11.81% $684.38 12.67% $916.38 11.65% 33.9%Discover $100.32 2.82% $127.28 2.36% $141.88 1.80% 11.5%Store $132.38 3.72% $183.67 3.40% $282.60 3.59% 53.9%Oil Co. $44.83 1.26% $61.74 1.14% $64.39 0.82% 4.3% The Rest $5.14 0.15% $6.01 0.11% $7.74 0.10% 28.9%DEBIT CARDS $1,611.92 45.33% $2,518.61 46.63% $3,573.12 45.42% 41.9%Visa $882.60 24.82% $1,272.49 23.56% $1,912.41 24.31% 50.3%MasterCard $326.80 9.19% $536.49 9.93% $771.74 9.81% 43.8%EFT Networks $237.92 6.69% $470.76 8.72% $586.65 7.46% 24.6%Prepaid (1) $162.60 4.57% $227.63 4.21% $274.03 3.48% 20.4%ACH $2.00 0.06% $11.23 0.21% $28.30 0.36% 151.9%TOTAL $3,555.92 100.00% $5,401.49 100.00% $7,866.00 100.00% 45.6%(1) Private label prepaid. © 2015 The Nilson Report
Purchase Volume
All U.S. Payment Cards Projected from page 1
> see p. 12
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reach 1.28 billion by year-end 2019. Purchase volume for goods and services generated by these credit cards reached $2.883 trillion in 2014, an increase of 9.4% over 2013. Credit cards are projected to generate $4.293 trillion in purchase volume in 2019.
Visa credit cards are expected to have the highest percentage increase in purchase volume among all brands between 2014 and 2019 — up 69.7%. This year Visa won contracts to be the exclusive
network for Costco co-branded credit cards, taking business from American Express, and the brand for USAA credit and debit cards, taking business from MasterCard.
The industry’s second largest percentage increase, up 53.9%, is projected for store cards (private label cards for use at retail outlets). Retailers and their third-party issuers are expected to grow the private label card base with aggressive promotion of mobile
apps that link new account openings with immediate access to rewards.
Purchase volume on MasterCard credit cards is projected to grow by 35.4% over the next five years. This year MasterCard gained co-branded card business from Visa, including Target, REI, and American Airlines.
Credit card purchase volume on American Express cards is projected to grow by 33.9%. Growth is expected from its core T&E products and prepaid as well as cards issued by its nine third-party partners.
Discover credit card purchase volume is projected to grow by 11.5% by 2019. In late 2014, third-party issuer Synchrony Financial converted its Discover cards to MasterCard.
General purpose and private label credit card purchase transactions totaled 30.58 billion in 2014, up 8.4%. Credit card purchase transactions are projected to reach 44.53 billion in 2019.
General purpose and private label consumer and commercial credit card outstandings totaled $881.59 billion at year-end 2014, up 4.5%. Outstandings are projected to reach $1.154 trillion at year-end 2019.
Prior issues: 1051, 1028, 1005
... projected to generate $4.293 tril. in purchase volume in 2019.
$50Bil. $100 $150 $200
200920142019
$250 $300 $350
Visa
MasterCard
Store
Amex
Discover
$400 $450
Billions 2014 Share 2019 Chg.
Visa $347.12 39.37% $468.91 35.1%MasterCard $258.23 29.29% $331.41 28.3%Amer. Express $103.35 11.72% $128.56 24.4%Discover $56.16 6.37% $66.44 18.3%Store $107.80 12.23% $149.08 38.3%Oil Co. $6.76 0.78% $7.14 5.6% The Rest $2.17 0.24% $2.24 3.2%CREDIT CARDS $881.59 100.00% $1,153.79 30.9%
© 2015 The Nilson Report
Outstandings
39 42 48
22
21
24
252119
7
6
7
5
4
3
2009
2014
2019
Credit CardPurchase Volume
Market Shares 2009–2019
Visa up 863 basis points; American Express down 26 basis points;
MasterCard down 540 basis points; Store cards down 23 basis points; Discover down 186 basis points.
©2015 The Nilson Report
U.S. Credit Cards Projected from page 1...
© 2015 HSN Consultants, Inc. THE NILSON REPORT 9OCTOBER 2015 / ISSUE 1074 / THE NILSON REPORT
MasterCard and Visa transactions are settled through BankNet and VisaNet. EFT
transactions are settled through Accel, Nyce, Pulse, Star, and other networks. Private label debit cards issued by Target,
Nordstrom, Shell, Circle K, Marathon, and other merchants are settled through the automated clearinghouse network (ACH).
MasterCard debit card purchase volume grew 9.3% in 2014. Visa debit card purchase volume grew by 7.1%. MasterCard and Visa prepaid cards are included with their debit card figures, not in the private label prepaid card category. EFT network debit card purchase volume grew 3.9% in 2014 over 2013. Not included in EFT network figures are PIN-based Interlink volume, which owner Visa reports with its signature-based debit card figures, and PIN-based volume on MasterCard cards settled through MasterCard’s BankNet. Private label debit card (ACH) purchase volume grew 33.0% in 2014. Private label prepaid card purchase volume grew by 3.4%.
By 2019, Visa debit card purchase volume is projected to grow to $1.912 trillion. MasterCard debit purchase volume will grow to $771.74 billion, and EFT network purchase volume is projected to reach $586.65 billion. Private label debit card volume is projected to reach $28.30 billion, and private label prepaid card purchase volume is projected to reach $274.03 billion.
Debit card purchase transactions totaled 66.00 billion in 2014, up 5.9% over 2013. Visa debit cards had the highest increase in number of purchase transactions in 2014 over 2013 (up 2.09 billion), followed by MasterCard debit cards (up 1.09 billion), EFT network debit cards (up 0.29 billion), private label prepaid cards (up 0.18 billion), and ACH debit cards (up 0.02 billion).
The highest percentage growth came from ACH debit cards (up
55 51 54
20
22
21
1519
1610
9
8
2009
2014
2019
Debit Card Purchase VolumeMarket Shares 2009–2019
Debit Card Purchase VolumeMarket Shares 2009–2019
Visa down 123 basis points; MasterCard up 132 basis points; EFT Networks up 166 basis
points; Prepaid down 242 basis points; ACH up 67 basis points.
©2015 The Nilson Report
Millions 2014 Pct. of Adults 2019 Pct. of Adults
CREDIT CARDS 172.0 70.15% 182.0 70.54%Visa 107.6 43.88% 118.8 46.05%MasterCard 80.9 32.99% 85.6 33.18%Amer. Express 38.2 15.58% 39.1 15.14%Discover 42.8 17.46% 45.3 17.55%Store 102.8 41.93% 114.2 44.26%Oil Co. 28.2 11.48% 26.8 10.38% The Rest 14.6 5.94% 15.9 6.15%DEBIT CARDS 197.2 80.42% 213.8 82.88%Visa 167.1 68.15% 170.0 65.88%MasterCard 144.5 58.93% 168.2 65.18%EFT Networks 194.7 79.38% 209.0 81.00%ACH 25.4 10.37% 48.5 18.80%
© 2015 The Nilson Report
Cardholders
Millions 2014 Share 2019 Chg.
CREDIT CARDS 1,047.1 17.07% 1,280.9 22.3%Visa 281.4 4.59% 421.4 49.7%MasterCard 180.0 2.93% 206.8 14.9%Amer. Express 54.9 0.89% 56.7 3.4%Discover 52.0 0.85% 58.4 12.2%Store 344.1 5.61% 426.3 23.9%Oil Co. 32.7 0.53% 33.0 0.7% The Rest 102.0 1.66% 78.3 –23.2%DEBIT CARDS 5,087.5 82.93% 6,039.7 18.7%Visa (1) 465.8 7.59% 564.0 21.1%MasterCard (1) 170.0 2.77% 230.5 35.6%EFT Networks (1) 301.6 4.92% 331.4 9.9%Prepaid (2) 4,390.3 71.57% 5,159.1 17.5%ACH 25.4 0.41% 48.5 90.8%TOTAL 6,134.7 100.00% 7,320.6 19.3%(1) Debit cards carry a Visa or MasterCard logo in addition to EFT system logo(s). Therefore, the debit card total is less than the sum of the fi gures shown. (2) Private label prepaid cards.
© 2015 The Nilson Report
Cards
U.S. Debit Cards Projected from page 1...
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13.9%), followed by MasterCard (up 8.7%), Visa (up 6.6%), private label prepaid (up 3.0%), and EFT networks (up 2.5%).
Debit card purchase transactions are projected to reach 89.17 billion in 2019. ACH debit cards are projected to see the biggest percentage increase in growth, up 71.5%. Purchase transactions on Visa debit cards are projected to reach 48.33 billion in 2019, followed by MasterCard at 18.63 billion, EFT networks with 14.45 billion, private label prepaid cards with 7.48 billion, and ACH debit cards with 0.28 billion.
The average number of purchase transactions per cardholder in 2014 was 335, or 28 per month. That is projected to increase in 2019 to 417 annually, or 35 per month. In 2009, it was 240 purchase transactions per cardholder, or 20 per month.
Debit cards in circulation in 2014 reached 5.09 billion, up 3.7% from 2013. By 2019, it is projected that there will be 6.04 billion. ACH debit cards are expected to increase to
48.5 million. MasterCard debit cards are projected to grow to 230.5 million. Visa debit cards are projected to increase to 564.0 million. Private label prepaid cards are projected to grow to 5.16 billion. EFT network debit cards are projected to increase to 331.4 million.
Prior issues: 1051, 1028, 1005, 984
Millions 2014 Share 2019 Chg.
CREDIT CARDS 852.9 53.18% 1,036.7 21.5%Visa 234.6 14.63% 350.0 49.2%MasterCard 150.0 9.35% 170.0 13.3%Amer. Express 42.6 2.66% 44.8 5.2%Discover 44.0 2.74% 47.8 8.6%Store 319.0 19.89% 370.4 16.1%Oil Co. 9.1 0.57% 8.8 –3.9% The Rest 53.6 3.34% 45.0 –16.2%DEBIT CARDS 750.9 46.82% 911.5 21.4%Visa 377.6 23.54% 461.6 22.3%MasterCard 163.0 10.16% 213.9 31.2%EFT Networks 196.5 12.25% 212.8 8.3%ACH 13.8 0.86% 23.2 68.4%TOTAL 1,603.9 100.00% 1,948.2 21.5%
© 2015 The Nilson Report
Accounts
Millions 2014 Share 2019 Chg.
CREDIT CARDS 33,098.0 31.83% 46,804.9 41.4%Visa 14,473.0 13.92% 23,863.9 64.9%MasterCard 6,755.1 6.50% 9,024.9 33.6%Amer. Express 4,781.1 4.60% 6,404.5 34.0%Discover 2,217.8 2.13% 2,398.8 8.2%Store 1,701.1 1.64% 2,298.0 35.1%Oil Co. 900.9 0.87% 940.8 4.4% The Rest 2,269.1 2.18% 1,874.1 –17.4%DEBIT CARDS 70,887.2 68.17% 94,811.0 33.7%Visa 37,475.0 36.04% 52,446.6 40.0%MasterCard 14,865.1 14.30% 20,152.9 35.6%EFT Networks 12,084.3 11.62% 14,449.6 19.6%Prepaid (1) 6,299.2 6.06% 7,481.2 18.8%ACH 163.7 0.16% 280.8 71.5%TOTAL 103,985.3 100.00% 141,615.9 36.2%
(1) Private label prepaid. © 2015 The Nilson Report
Total Transactions Billions 2014 Share 2019 Chg.
CREDIT CARDS $2,992.71 48.55% $4,437.64 48.3%Visa $1,264.64 20.52% $2,131.73 68.6%MasterCard $632.61 10.26% $850.39 34.4%Amer. Express $688.10 11.16% $931.49 35.4%Discover $137.00 2.22% $151.61 10.7%Store $183.67 2.98% $282.60 53.9%Oil Co. $72.36 1.17% $75.77 4.7% The Rest $14.33 0.23% $14.05 –2.0%DEBIT CARDS $3,171.66 51.45% $4,442.48 40.1%Visa $1,702.48 27.62% $2,483.93 45.9%MasterCard $711.58 11.54% $1,003.58 41.0%EFT Networks $518.64 8.41% $652.56 25.8%Prepaid (1) $227.63 3.69% $274.03 20.4%ACH $11.32 0.18% $28.39 150.8%TOTAL $6,164.37 100.00% $8,880.12 44.1%
(1) Private label prepaid. © 2015 The Nilson Report
Total Volume
Debit cards in circulation in 2014 reached 5.09 bil., up 3.7%.
© 2015 HSN Consultants, Inc. THE NILSON REPORT 11OCTOBER 2015 / ISSUE 1074 / THE NILSON REPORT
$43.00 billion in debit purchase volume at merchants and $34.13 billion in credit card purchase
volume. The conversion is expected to be completed by the fourth quarter of 2016. USAA will continue to issue American Express cards.
USAA is the eighth largest issuer of MasterCard/Visa credit cards in the U.S. based on outstandings. It issues those cards from a savings bank in Nevada. Customers are current and former U.S. military personnel and their families. USAA debit cards are issued from Texas. The debit card portfolio, which has doubled in purchase volume over the last five years, ranks sixth overall in the U.S. Anne Arvia is Senior VP at USAA
Bank in San Antonio, Texas, (210)
282-4917, [email protected],
www.usaa.com.
In addition to the USAA contract, Visa will become Costco’s exclusive card network for credit products in 2016 after the existing Costco/American Express co-brand partnership expires. Citi, MasterCard’s top credit card issuer, successfully bid to become the exclusive issuer of Costco Visa credit cards.
Combined, USAA and Costco purchase volume was $156.95 billion in 2014. This is equal to 6.3% of Visa’s $2.485 trillion in credit and debit purchase volume generated by cards issued in the U.S. in 2014.
Visa held a 66.64% credit card purchase volume market
share and a 70.34% debit card market share versus MasterCard in 2014. The USAA and Costco cards as well as a conversion from MasterCard of the consumer electronics/hard goods retailer Best Buy’s co-branded product issued by Citi will expand that advantage. This is despite
MasterCard gains versus Visa this year that included conversions to MasterCard from Visa of specialty outdoor retailer REI’s co-branded product issued by U.S. Bank and mass merchandiser Target’s co-branded card issued by TD Bank.
MasterCard also gains the JetBlue Airways co-brand next year. Ownership of the
portfolio will move from American Express to Barclaycard. David Cramer is Head of Super
Regional Accounts at Visa, Inc.
in San Francisco, California, (571)
439-7296, [email protected],
www.visa.com.
12.51% of purchase transactions. These PIN-based transactions are projected to hold a 10.81% share in 2019.
At year-end 2014, there were 6.13 billion credit, debit, and prepaid cards in circulation in the United States, up 3.6% from 2013. The number of cards in
circulation will grow to 7.32 billion by the end of 2019, with debit cards increasing by 952.2 million, led by private label prepaid cards (up 768.8 million). Credit cards are projected to increase by 233.7 million, led by Visa cards (up 140.0 million).
Conversion is expected to be com-pleted by the 4th quarter of 2016.
USAA Moves Credit/Debit Cards to Visa from page 1...
All U.S. Payment Cards Projectedfrom page 8...
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© 2015 HSN Consultants, Inc. THE NILSON REPORT All Rights Reserved. Reproducing or allowing reproduction or dissemination of any portion of this newsletter in any manner for any purpose is strictly prohibited and may violate the intellectual property rights of HSN Consultants, Inc. dba The Nilson Report.
David Robertson, PublisherOctober 30, 2015
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