Monday, November 14, 2011

VeriFone to Acquire Point to Build out Alternative Payments Infrastructure


November 14, 2011 12:07 AM Eastern Time 
Accelerates Transformation to Managed Services Revenue Model
SAN JOSE, Calif.--()--VeriFone Systems, Inc. (NYSE: PAY), today announced it has signed a definitive agreement with Nordic Capital Fund V (“Nordic Capital”) to acquire Point, Northern Europe’s largest provider of payment and gateway services and solutions for retailers. VeriFone intends to extend the Point platform throughout the region and beyond, with the aim of creating the world’s largest infrastructure for rapid deployment of alternative payments.
“We are committed to maintaining the high growth and entrepreneurial culture that has driven our success over the past two decades. We have known and worked with VeriFone for 20 years and their fast-paced culture is the Point culture.”
VeriFone will pay approximately €600 million to acquire all of the equity of Point and will also retire at closing existing Point debt of approximately €170 million. The acquisition is expected to close by the end of 2011, and is subject to customary closing conditions. The transaction is expected to be accretive to non-GAAP earnings by $0.08 to $0.10 per fully diluted share in fiscal 2012 and $0.30 to $0.35 in fiscal 2013.
Point, based in Stockholm, has operations in 11 Northern European countries and serves a captive network encompassing almost 475,000 merchant contracts. Through this network, Point offers retailers a full range of services and solutions, including point-of-sale technology and support, gateway services, card encryption services, and multi-channel e-commerce processing. Point's recurring subscription services model ensures its customers always have the latest security, compliance and technological capabilities as well as uninterrupted and secure access to a broad range of mission critical services. Point efficiently passes transactions along from its network of gateways to a broad range of acquiring banks and processing entities.
Douglas G. Bergeron, VeriFone CEO, said: "We are delighted to welcome Point customers and Point employees to VeriFone. They have built a phenomenal business and we believe that the best is yet to come."
Bergeron added: “For the past two years, we have been transforming our business to respond to the rapidly evolving needs of consumers, retailers, and payment innovators worldwide. Our vision is to offer retailers everywhere a managed service to easily accept all existing payment types, including the evolving alternative and mobile payment methods being offered by Google, PayPal, Groupon, Isis, Visa, MasterCard, and American Express. At the same time, we can increasingly offer the new payment entrants easy and accelerated access to our worldwide installation of more than 20 million merchant lanes.”
Johan Tjärnberg, Point CEO, said: "We are committed to maintaining the high growth and entrepreneurial culture that has driven our success over the past two decades. We have known and worked with VeriFone for 20 years and their fast-paced culture is the Point culture." Point, established in 1988, has enjoyed nearly a decade of consistent double-digit revenue growth, expanding margins, and impressive product innovation.
Since Nordic Capital acquired Point in 2004, the company has been transformed to be Europe’s leading provider of electronic payment solutions. The 125 software developers at Point have built unique European multi-country payment software that works seamlessly for traditional electronic payments and Internet payments.
“Under Nordic Capital’s ownership, Point has had fantastic growth, with sales close to five times higher than at the time of acquisition and taken the position as the leader in advanced payment services in Europe. Nordic Capital has supported the management to make significant R&D investments and do strategic add-on acquisitions, in order to create value and sustainable growth opportunities, and thereby make sure that Point remains a European leader in a field that has a tremendous growth potential,” said Fredrik Näslund, Partner, NC Advisory AB, advisor to the Nordic Capital Funds.
During the first 12 months, VeriFone expects the acquisition to add approximately $260 million in sales. The acquisition is also expected to be immediately accretive to VeriFone's gross margins, operating margins and growth rates. VeriFone expects total services revenue to exceed 30 percent of sales in fiscal year 2012, and 50 percent of revenue by fiscal year 2015. Detailed guidance will be provided at the VeriFone year-end conference call on December 14, 2011.
VeriFone was advised by Credit Suisse, KPMG, Gernandt & Danielsson, and Sullivan & Cromwell; Barclays Capital provided strategic advice to the company. J.P. Morgan, Bank of America Merrill Lynch, Wells Fargo Bank, Barclays Capital, and RBC Capital Markets have committed $1.6 billion to finance the acquisition, refinance VeriFone existing debt of $0.5 billion, and enable the company to maintain ample liquidity post transaction. Point and Nordic Capital were advised by J.P. Morgan, Seb Enskilda and White & Case.
Webcast Information
VeriFone will conduct a conference call to discuss the announcement with its shareholders today, Monday, November 14, at 6:00 AM Pacific. To access the audio webcast with slides, please go to VeriFone’s website (http://ir.verifone.com) at least ten minutes prior to the call to register.
To access the live conference call by phone, please dial the following numbers:
Domestic callers: 866-730-5766
International callers: +1-857-350-1590
Passcode: 6299 2650
The recorded audio webcast will be available on VeriFone’s website until November 21, 2011.
A replay of the conference call, which can be accessed by dialing toll-free 888-286-8010, and outside the U.S. by dialing +1-617-801-6888, will be available until November 21, 2011. The access code for the replay is 8334 3026.
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Oberthur Technologies and AuthenTec Team Up to Demonstrate Fingerprint-enabled Access to SIM-based NFC Services


November 14, 2011 08:15 AM Eastern Time 
CARTES & IDentification 2011
NANTERRE, France & MELBOURNE, Fla.--()--
“Combining AuthenTec’s fingerprint authentication with the security features of Oberthur Technologies’ SIM-based design extends trust beyond the SIM and the mobile device to establish confidence that only an authorized user is presenting a smartphone for mobile payment”
  • Companies Develop a New SIM-based NFC Mobile Services Platform for Fingerprint-enabled Android Smartphones
  • Will Demonstrate Strong but Effortless Security that Enhances the Mobile Payment Experience at CARTES & IDentification 2011
Oberthur Technologies, a world leader in the field of secure technologies, and AuthenTec (NASDAQ: AUTH), a leading provider of security and identity management solutions, have joined forces to create SIM / Universal Integrated Circuit Card (UICC) based designs that make NFC mobile payment via smartphones faster and more secure. The companies will combine their expertise in SIM/UICC security and fingerprint identity to jointly create easy-to-integrate solutions that enhance the speed and security of mobile payment transactions.
The companies’ first fingerprint/NFC demonstration combines Oberthur Technologies’ NFC FlyBuy SIM card with NFC SIM Adaptor coupled with AuthenTec’s fingerprint scanner in the Motorola Atrix to enable single-gesture, biometrically secured access to mobile contactless services, such as mobile payment, mobile ID, and physical access control.
Oberthur Technologies and AuthenTec worked with INSIDE Secure, a leading provider of NFC technology, to implement control of NFC functions using the fingerprint solution on a FlyBuy NFC SIM card. This easy-to-add yet secure solution will be demonstrated over a mobile payment scenario at the Oberthur Technologies and INSIDE Secure booths at the upcoming CARTES & IDentification 2011 in Paris from November 15-17, 2011.
“Combining AuthenTec’s fingerprint authentication with the security features of Oberthur Technologies’ SIM-based design extends trust beyond the SIM and the mobile device to establish confidence that only an authorized user is presenting a smartphone for mobile payment,” said Cédric Collomb, Cards & Services General Manager, Card Systems Division at Oberthur Technologies. “The AuthenTec-Oberthur Technologies solution, which incorporates INSIDE Secure’s NFC chipset, can easily be inserted into smartphones such as the Atrix to quickly add NFC capability. We look forward to bringing similar SIM-based, fingerprint-enabled NFC solutions to market, since we believe they will be key to the broad adoption of NFC around the world.”
“Our collaboration with Oberthur Technologies and INSIDE Secure paves the way for match-on-SIM solutions for smartphones that give greater confidence in the security and protection of NFC mobile payments/applications,” said AuthenTec CEO Larry Ciaccia. “Fingerprint has a well established track record as a reliable, easy-to-use form of biometric authentication with over 10 million fingerprint-enabled NFC mobile wallets already in use since 2004. By combining our expertise in fingerprint security with Oberthur Technologies’ and INSIDE Secure’s expertise in SIM-based and NFC designs, we will give operators and users the option of easy-to-add yet highly secure NFC solutions for smartphones.”
“INSIDE Secure views the security and convenience illustrated by the Oberthur Technologies -AuthenTec design as important enablers of widespread adoption for NFC applications,” said Didier Serra,Executive Vice President and General Manager for the United States at INSIDE Secure. “We look forward to our continued collaboration with Oberthur Technologies and AuthenTec on fast and secure add-on solutions for NFC mobile payments.”
The demonstration at CARTES will illustrate how quickly yet securely users can make a mobile payment by simply swiping a finger over AuthenTec’s smart sensor on a fingerprint-enabled phone such as Motorola’s ATRIX. Smartphone users can easily access a credit or debit card of their choice by associating different payment methods with different fingers. This allows them to choose a payment method, authenticate, and activate the desired payment card with a single swipe of a finger, then tap the phone on a terminal to complete the NFC transaction. The Oberthur Technologies-AuthenTec solution helps enable single-gesture payments, making NFC applications more convenient and secure.
Security, speed and convenience are often cited as key adoption criteria for consumer adoption of NFC-capable smartphones, which are forecast to grow to nearly 300 million units worldwide by 2014 according to Juniper Research.
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FinTech 2011 Announced by TAG


November 14, 2011 07:00 AM Eastern Time 
Second Annual Symposium Includes Discussions on Monetizing Financial Data and Recognizes Peter J. Kight for contributions to Financial Technology
--()--TAG FinTech: 
WHAT:
  FinTech Georgia 2011 is an annual symposium that will showcase some of the leading financial and payment industry executives discussing the future of technology, emerging trends in payments and factors shaping the industry, such as the Dodd Frank/Durbin Amendment.
 
Peter J. Kight, founder and former chairman of CheckFree Corporation (now Fiserv), will provide this year’s keynote address as he accepts FinTech Georgia’s Lifetime Achievement Award.
.
 
WHO:
TAG FinTech, a society of Technology Association of Georgia (TAG)
 
 
WHEN:
Nov. 16, 10 a.m. to 5 p.m. at the Ritz-Carlton, Buckhead
 
 
CONTACT:
Media contact: Scott Mills at 678.781.7201 or scott@williammills.com
To register visit: http://tiny.cc/18es9
About The Technology Association of Georgia (TAG)
The Technology Association of Georgia (TAG) is the leading technology industry association in the state, serving more than 13,000 members and hosting over 170 events each year. TAG serves as an umbrella organization for 30 industry societies, each of which provides rich content for TAG constituents. TAG’s mission is to educate, promote, and unite Georgia’s technology community to foster an innovative and connected marketplace that stimulates and enhances a tech-based economy. The association provides members with access to networking and educational programs; recognizes and promotes Georgia’s technology leaders and companies; and advocates for legislative action that enhances the state’s economic climate for technology. Additionally, the TAG Education Collaborative (TAG’s charitable arm) focuses on helping science, technology, engineering and math (STEM) education initiatives thrive. For more information visit the TAG website at www.tagonline.org or TAG’s community website at www.TAGthink.com. To learn about the TAG-Ed Collaborative visithttp://www.tagedonline.org/.
About TAG FinTech
TAG FinTech was founded in 2010 to address the specific needs of companies, individuals and investors serving the financial industry both domestically and abroad. Financial technology or FinTech encompasses products, solutions, services and information providers, which drive decisions, process payments and facilitate transactions for financial institutions. Georgia FinTech company revenues are more than $34 billion annually, which places it third in the nation behind New York and California. Together, the banking, insurance and capital markets consistently spend more on technology than any other industry. For more information about FinTech, seehttp://www.tagonline.org/TAG-FinTech.php.
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HID Global and Sony Announce NFC Enabled Smart Card Reader Global Platform for Laptops/Mobile Device Market


November 14, 2011 03:01 AM Eastern Time 
Companies Will Demonstrate Jointly Developed Solution at CARTES & IDentification 2011
Just tap for an easier life.

CARTES & IDentification 2011
IRVINE, Calif. & TOKYO--()--HID Global, trusted leader in solutions for the delivery of secure identity, and Sony Corporation today announced a jointly developed contactless smart card reader platform that embeds secure access control capabilities and Near Field Communication (NFC) functionality into laptops and other mobile devices. The platform holds a secure element that stores cryptographic keys which secure the authenticity and integrity of user credentials. It supports widely used contactless technologies for applications ranging from physical access control and identity assurance at the desktop to transit-fare, point-of-sale collection and loyalty programs.
“We are very pleased with this first solution from our strategic partnership with HID Global”
The jointly developed NFC global reader platform is the result of a strategic partnership that Sony and HID Global announced last year. Both companies will be demonstrating the platform November 15-17, 2011, at the CARTES & IDentification 2011 conference in Paris, where it will be shown reading a variety of card technologies using NFC, a short-range wireless technology that is now fueling a wide range of new mobile access control applications. The HID Global demonstration can be seen in Stand F002, Hall 3 in the Paris Nord Villepinte Exhibition Center, while the Sony demonstration will be located in Stand 4L051, Hall 4.
In continuing to work closely with the NFC Forum in support of market-driven compliance and interoperability goals, the reader platform has been provided to the NFC Forum Certification Program as a reference sample to assist in the validation of the Digital Protocol test tools. The reader platform will also be submitted for certification.
“HID Global and Sony have delivered an exciting new embedded reader platform that will be offered to all manufacturers of laptops and other mobile devices,” said Debra Spitler, vice president of mobile access solutions with HID Global. “HID Global continues to expand our access control system and card services businesses while bringing our partners and customers new products and deployment models that improve user security, flexibility and convenience.”
“We are very pleased with this first solution from our strategic partnership with HID Global,” said Yoshihiko Kawakami, general manager of sales with Sony’s FeliCa Business Division. “This is an important milestone that moves our FeliCa contactless card technology and NFC solutions into the global market. By releasing the new reader platform, we will play a role in providing a part of the NFC infrastructure in the global NFC era.”
The jointly developed platform supports Sony’s FeliCaTM technology, HID Global’s iCLASS® and iCLASS SETMcredentials, MIFARE® DESFire EV1 credentials, and other broadly adopted technologies supporting the ISO/IEC 14443 Type A/B contactless smart card standard using the T=CL contactless transmission protocol. The solution also supports the industry-standard PC/SC Version 2.0 specification for the programming interfaces between PC applications, the operating system and smart cards. It is also prepared to further support the proximity features of the next major release of the Microsoft® Windows® operating system which enable communication between NFC tags and devices (mobile phones or computers) using a tap gesture, as well as the Android operating system for tablet products.
Availability
Sony and HID Global have released a complete reference design for the jointly developed embedded NFC module, and will also provide comprehensive developer support to minimize product development requirements and speed time-to-market schedules for PC OEMs. During CARTES & IDentification 2011, the two companies will show laptop computers running HID Global’s naviGO™ credential management software and a number of Sony FeliCa applications, including the Sony FeliCa Launcher platform service as well as the company’s e-Money Viewer widget. The companies will also show the platform operating with Sony’s NFC Dynamic Tag, a FeliCa wireless module with a cable interface that enables data transmission between NFC reader/writers and other electronic equipment and devices.
About HID Global
HID Global is the trusted source for secure identity solutions for millions of customers around the world. Recognized for robust quality, innovative designs and industry leadership, HID Global is the supplier of choice for OEMs, system integrators, and application developers serving a variety of markets. These markets include physical and logical access control, including strong authentication and credential management; card printing and personalization; highly secure government ID; and identification technologies used in animal ID and industry and logistics applications. The company's primary brands include HID®, ActivIdentity™, FARGO®, and LaserCard®. Headquartered in Irvine, California, HID Global has over 2,100 employees worldwide and operates international offices that support more than 100 countries. HID Global is an ASSA ABLOY Group brand. For more information, visit www.hidglobal.com.
About Sony Corporation
Sony Corporation is a leading manufacturer of audio, video, game, communications, key device and information technology products for the consumer and professional markets. With its music, pictures, computer entertainment and online businesses, Sony is uniquely positioned to be the leading electronics and entertainment company in the world. Sony recorded consolidated annual sales of approximately $87 billion for the fiscal year ended March 31, 2011.
Sony Global Web Site: http://www.sony.net/
Sony FeliCa Web Site: http://www.sony.net/Products/felica/
® HID and the HID logo are trademarks or registered trademarks of HID Global in the U.S. and/or other countries.
FeliCa is a trademark of Sony Corporation. All other trademarks, service marks, and product or service names are trademarks or registered trademarks of their respective owners.
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INSIDE Secure Teams with IDT to Offer USB Security Token Solution


November 14, 2011 06:00 AM Eastern Time 

INSIDE Secure and IDT To Offer Easy-to-Design USB Security Token Solution

Versatile, Secure Microcontroller and Low-Power, Stable 48-MHz CMOS Oscillator in a Single Package
CARTES & IDentification 2011
PARIS--()--CARTES & IDentification 2011 – INSIDE Secure and Integrated Device Technology (NASDAQ: IDTI) today announced that the two companies have collaborated to bring to market a compact, single-package secure microcontroller and oscillator solution that significantly reduces the bill of materials when designing USB tokens for authentication and digital signatures. Available now in either an SOIC8 or QFN20 package, the INSIDE/IDT offering combines the security, cryptography and connectivity features of the high-performance, low-power INSIDE Secure AT90SO72 secure microcontroller with the stability of the ultra-low power IDT 3MN11G CrystalFree™ CMOS oscillator to create the perfect solution for applications where low cost and reduced size are most critical.
“We are pleased that INSIDE Secure selected IDT’s CMOS oscillator for USB token solutions where low power and small package size are crucial.”
“Based on customer feedback, INSIDE has optimized the size and cost of the AT90SO72 to make it particularly well-suited as a secure microcontroller to drive USB authentication and signature tokens,” said Christian Fleutelot, general manager, VaultIC SAS business unit and executive vice president for digital security at INSIDE Secure. “Guided by the same strategy, we have now partnered with IDT to provide a very compact solution that makes the design of USB secure smart objects much easier and cost effective.”
The INSIDE AT90SO72 is based on a high-performance, low-power, 8/16-bit enhanced RISC CPU and is Common Criteria EAL5+ ready. It features a hardware random number generator, hardware AES (128-, 192- and 256-bit key supported), DES and triple DES. The AT90SO72 also includes the exclusive INSIDE Ad-X™2 advanced hardware crypto accelerator, which supports RSA up to 4096 bits, DSA, Diffie-Hellman and all FIPS-recommended elliptic curves up to 1024 bits. Key generation also is supported for both RSA and ECC.
The AT90SO72 offers a USB 2.0 interface with six software-configurable data transfer endpoints with in-or-out directions for bulk, interrupt or isochronous transfers. The flexible I/O options also include a master/slave SPI controller, I2C (two-wire) controller, up to seven GPIO lines and an ISO 7816 interface. The AT90SO72 features 288K bytes of ROM and 72K bytes of high-density EEPROM, which can be mapped as part of the program memory to provide a highly flexible and cost-effective solution for many applications.
“As the recognized leader in silicon timing, IDT is constantly expanding its product and technology portfolio. The CrystalFree CMOS oscillators are an ideal example of a compelling customer timing solution," said Scott Hills, marketing director of the Silicon Frequency Control Product Line at IDT. "We are pleased that INSIDE Secure selected IDT’s CMOS oscillator for USB token solutions where low power and small package size are crucial."
The IDT 3MN-series belongs to a revolutionary product family of ultra-low power monolithic CMOS ICs that replaces quartz crystal-based resonators and oscillators at the thinnest possible form factors without the use of any mechanical frequency source or PLL. These innovative devices empower system designers to integrate bare-dice into thin multi-die packages, or chip-on-board multi-die solutions. The IDT 3MN-series is optimized to work with USB 2.0 full/low speed and USB-InterChip (USB-IC) interface controller ICs, and high-density SIM and smart cards. It features a total frequency accuracy of 2000 ppm over the industrial temperature range with an active-mode supply current of about 2 mA.
Availability and Pricing
The INSIDE AT90SO72 is available now with the IDT 3MN11G oscillator in standard, RoHS-compliant SOIC-8 (5x5 mm) and QFN-20 (4x4 mm) packages. Please contact INSIDE Secure for configuration and pricing information.
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iPayment Reports Results for the Third Quarter and First Nine Months of 2011


November 14, 2011 06:40 AM Eastern Time 
NASHVILLE, Tenn.--()--iPayment Holdings, Inc. (“Holdings”) and iPayment, Inc. (“iPayment” or the “Company”) today announced financial results for the three months ended September 30, 2011. All operations are conducted through iPayment and its subsidiaries. Holdings is a holding company that does not have any operations or material assets other than its ownership of iPayment and its subsidiaries. The financial results of Holdings are identical to those of iPayment with the exception of interest expense, tax provision (benefit) and net income (loss). The financial results discussed below represent those of iPayment and its consolidated subsidiaries, except where otherwise noted.
Revenues increased 3.4% to $181.0 million for the third quarter of 2011 from $175.1 million for the third quarter of 2010. Revenues, net of interchange, were $80.6 million for the third quarter of 2011, up 3.5% compared to $77.9 million for the third quarter of 2010. Net loss was approximately $3.6 million for iPayment and its consolidated subsidiaries and $7.5 million for Holdings and its consolidated subsidiaries for the third quarter of 2011, in each case, compared to net income of $5.2 million for the same period last year. Net loss in the third quarter of 2011 was attributable to higher depreciation and amortization expense and higher interest expense as a result of the refinancing and equity redemption (collectively, the “Refinancing”) that we completed in May of this year. The Company had approximately 135,000 active merchants at September 30, 2011, compared to approximately 130,000 at September 30, 2010. For the third quarter of 2011, the Company processed $5.9 billion of total transaction volume, a 2.7% increase from the same period in 2010.
For the nine months ended September 30, 2011, revenues increased to $535.2 million from $518.6 million for the first nine months of 2010. Revenues, net of interchange, increased to $244.8 million for the first nine months of 2011 compared to $231.8 million for the same period in 2010. Net loss for the first nine months of 2011 was $4.8 million for iPayment and its consolidated subsidiaries and $11.0 million for Holdings and its consolidated subsidiaries, in each case, compared to net income of $15.7 million for the first nine months of 2010. Net loss for the nine months ended September 30, 2011 was attributable to costs associated with the Refinancing, which totaled $18.7 million or $12.4 million after tax. In addition, the Company incurred higher interest and amortization expenses as a result of the Refinancing and increased compensation expense. For the nine months ended September 30, 2011, the Company processed $17.1 billion of total transaction volume, which was approximately the same as the comparable period in 2010.
We filed our Quarterly Report on Form 10-Q for the three months ended September 30, 2011 with the Securities and Exchange Commission (the “SEC”) today.
Conference Call
Management will hold a conference call on Monday, November 14, 2011 at 10:00 a.m. (Eastern Time) to discuss its 2011 third quarter results. Participants should dial 913-312-0406 approximately 10 minutes prior to the start of the call. A telephonic replay will become available after 12:00 p.m. (Eastern Time) on November 14, 2011 and will continue to be available through November 22, 2011. You can access the replay by dialing 719-457-0820 and entering Confirmation Code 2474109.
The live broadcast of our quarterly conference call will be available online at www.ipaymentinc.com orhttp://www.videonewswire.com/event.asp?id=83504 on November 14, 2011 beginning at 10:00 a.m. (Eastern Time). The online replay will be available at approximately 12:00 p.m. (Eastern Time) on November 14, 2011 and will continue to be available for one week.
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Restaurant and Lodging Merchants Receive More Than $7 Million in Debit Swipe Fee Reductions

November 14, 2011 08:05 AM Eastern Time
Heartland Payment Systems® Releases Latest Data about Durbin Amendment’s Actual Effects on Business Owners as Durbin Dollar Savings near $20 Million Mark
IHMRS 2011
NEW YORK--()--Restaurant and lodging merchants have received $7,017,876 in savings from Heartland Payment Systems (NYSE: HPY), one of the nation’s largest payments processors, as a result of the Durbin Amendment swipe fee reform. In total from October 1 to November 9, 2011, Heartland has credited its merchants with an estimated $19,529,794 in signature debit interchange reductions. Of these Durbin Dollars, restaurant merchants received $6,171,195, lodging merchants received $846,681 and retail merchants received $2,560,608.
“As our economy recovers, this nearly $20 million capital infusion is a much-needed adrenaline boost for main street merchants”
“As our economy recovers, this nearly $20 million capital infusion is a much-needed adrenaline boost for main street merchants,” said Bob Baldwin, Heartland’s president. “These are real savings that business owners are free to manage as they see fit, whether it’s passing discounts down to their customers or reinvesting in their operations.”
An estimate of total savings distributed by state can be found in the table below:
State
Total Estimated Visa/MasterCard
Signature Debit Savings From
October 1-November 9, 2011
State
Total Estimated Visa/MasterCard
Signature Debit Savings From
October 1-November 9, 2011
Alabama$270,251.13Nebraska$101,320.39
Alaska$43,153.65Nevada$193,299.28
Arizona$298,487.43New Hampshire$162,138.15
Arkansas$153,617.43New Jersey$801,954.82
California$2,174,550.02New Mexico$98,745.10
Colorado$638,297.92New York$1,175,583.86
Connecticut$304,729.68North Carolina$794,957.46
Delaware$84,102.49North Dakota$87,459.13
Florida$1,338,012.73Ohio$1,129,979.96
Georgia$479,735.83Oklahoma$268,973.07
Hawaii$225,127.74Oregon$92,657.51
Idaho$92,218.02Pennsylvania$656,235.73
Illinois$638,798.31Rhode Island$61,147.00
Indiana$396,591.93South Carolina$292,055.13
Iowa$147,306.99South Dakota$31,356.26
Kansas$134,860.72Tennessee$257,827.30
Kentucky$230,371.38Texas$987,636.15
Louisiana$275,940.78Utah$242,480.01
Maine$72,897.39Vermont$36,960.86
Maryland$455,386.09Virginia$719,844.73
Massachusetts$489,061.62Washington$351,993.74
Michigan$578,120.76Washington DC$55,027.86
Minnesota$530,157.46West Virginia$34,099.49
Mississippi$127,022.41Wisconsin$183,082.65
Missouri$451,385.44Wyoming$23,328.02
Montana$59,464.77
Heartland also found:
  • 64% of its signature debit sales volume qualified as regulated
  • On average, there is a savings of $0.20 per transaction for regulated (vs. non-regulated)
    • The average signature debit non-regulated interchange fee per transaction is $0.43
    • The average signature debit regulated interchange fee per transaction is $0.23
  • On average, there is a savings of 74 basis points for regulated (vs. non-regulated)
    • The average signature debit non-regulated effective rate is 1.56%
    • The average signature debit regulated effective rate is 0.82%
For more information on the Durbin Amendment, visit Heartland in Booth 1763 at IHMRS or go to GetYourDurbinDollars.com.
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Saturday, November 12, 2011

A Look at the Future of U.S. PIN Debit


We are now in the PD era (post-Durbin) and one of the big questions amidst the new world order of lower debit pricing and merchant routing choice is the future of PIN debit.  As operations teams at the global and regional payment networks prepare for massive change, executives are contemplating strategies to compete for debit maket share.  With Visa controlling the vast majoritiy of the signature debit market today, I am sure they would be happy if PIN debit disappeared completely from the face of the earth.  The other networks see a great opportunity to move share away from Visa onto their own networks.  Issuers are taking note of the myriad of changes as well.  Thanks to the efforts of a certain sentor from Illinois, issuers' profitability on signature debit products was reduced dramatically and financial institutions are rethinking debit strategies to make up for lost profits.  On the other side of the equation, merchants are in a quandary.  In the past, they traditionally preferred PIN debit over credit because transactions were less expensive and fraud rates were significantly lower.  However, in PD world online and offline pricing is the same, although merchants still have the benefit of reduced fraud.  So what will happen to PIN debit and the associated networks and technologies that support it?
Let us understand that consumers are the guiding stakeholder in a transaction.  As always the consumer will dictate how they pay, whether it's by credit, debit, PayPal, check, cash, wampum, etc.  Merchants will need to accept any type of payment consumers want to use so they don't lose sales, but would prefer  steering customers towards payments that create the greatest value or cost the least.  It's the acquirer/ISO's role to help facilitate these various types of payments.  That said, networks, issuers and merchants all have tremendous influence on consumers and the eventual routing of transactions.
The major global networks, Visa in particular, have made some interesting moves in the PD environment.  First, in August Visa announced a plan offering retailers incentives such as a liability shift and relaxation of PCI recertification requirements to drive widespread adoption of contactless EMV.  Many see this as a strategic move to help initiate standards in the mobile arena.  However, others look at widespread adoption of contactless technologies as a way to eliminate "the PIN" and potentially PIN debit altogether.  In a move that may actually lose the Visa volume but protect valuable issuers, the global network eliminated the Small Debit Rate program for regulated transactions potentially shifting small ticket volume away from the network.
The rationale was to protect issuers that were subsidizing lower interchange on small tickets that are now not making enough money on total signature debit volume in the PD environment.  At the time of this article, we have not see a response from the other networks regarding aggresive debit pricing and none have offered pricing lower than the maximum allowed by the new regulation on traditional regulated transactions - which is equivalent to signature debit pricing for regualted transactions.  These networks are in a challenging situation as they balance signing and retaining issuer partners with merchant accpetance.  At first glance, other than fraud being lower with PIN there is not much of a differentiator between PIN and signature costs to merchants and revenue to issuers.
Issuer's activities PD will most likely have the greatest influence on consumers.  Most issuers are removing rewards programs from their signature debit products and some are even charging fees to maintain certain accounts.  It has yet to be seen if any issuers will cap signature transactions due to risk or issue a greater quantity of PIN- only cards, but either of those moves would increase consumer calls for PIN pricing currently equivalent, issuers most certainly will prefer PIN transactions due to decreased fraud levels.  The magnitude of savings will drive issuers to promote one debit scheme over another.  More to come as issuers' long-term strategies play out.
U.S. merchants are trying to determine the future of commerce as well.  As retain, ecommerce and mobile channels converge, many businesses are rethinking their infrastructure.  Retail PIN debit is expensive due to the cost of Pin Pads.  Mobile and eCommerce PIN debit is being made easier by the likes of technology providers such as Acculynk that provide encrypted dynamic pop-up PIN Pads.  As the same time, large merchants are being approached and often incented by networks to route transactions in their direction.  As competition heats up and margins get squeezed, incentives mean more money to a retailer's bottom-line.  Retailers in all channels are evaluating the new playing field looking to enable consumers' payments of choice.
Internationally, PIN debit will continue to thrive. In most countries there is a single debit network that often has tremendous consumer and merchant appeal.  Just look at Canada where Interact accounts for 50% of all transactions and the only way to initiate a transaction today is via PIN.  Similarly, Puerto Rico's ATH network accounts for half of the island's retail transactions.  That said, both of these networks are controlled or heavily influenced by banks and have little or no interchange or similar pricing schemes.  In essence they are virtually free to merchants.
In the U.S., will consumers care about or need to trasact via PIN debit?  And with the price currently equivalent to signature, will merchants?  I wish I had a crystal ball and could tell you.  I do know that changes such as the ones we are dealing with do spur innovation in the way of new producs that increase value for consumers and merchants.  The networks that continue to add value and maintain relevance will thrive while others may die.  We will most likely see some consolidation as certain players may not be able to survive on their own.  We will see networks and schemes that add greater value start to steal market share.  In the end, I don't know who will win or what the future will hold for U.S. PIN debit.  But as acquirers/ISOs it is our responsibility to keep our ears to the ground, help position our organizations for the future and guide our merchants toward prudent decisions.
Transaction World Magazine, by Greg Cohen, November 2011
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