Dorado trend watch q2 2013

TrendWatch 2.0
Q2 2013
Payments System Industry
Synopsis
Notice: Materials contained in this document are drawn from several media sources, and Dorado Industries is not responsible for their accuracy. Opinions expressed
herein are presented without warranty. Brand names are the trademarks of their respective service offerors.
Hey! We were
here first!

Dorado Industries
655 Deep Valley Drive, Suite 125-P
Rolling Hills Estates, CA 90274
(310) 544-1316
jmacallister@doradoindustries.com
www.doradoindustries.com
Random Thoughts
Bitcoin: Ignore at Your Own Peril.
Thirty years ago, a California gasoline retailer revolutionized
the payments industry by introducing a plan to allow fuel
purchases with ATM cards. Bankers hated it; consumers
loved it, and today PIN debit is an integral thread in the
payments fabric. Fifteen years ago, cybercurrencies such as
CyberCash, Beenz, and Flooz sprouted, wilted, and died,
victims of (a) the dot-com bubble burst, and (b) fatal hubris.
All is quiet until 2009 when a cloak-and-dagger developer
using the handle “Satoshi Nakamoto” writes the core
algorithms for Bitcoin, kicks off the first Bitcoin server, and
open-sources the code. Unlike the early attempts to
circumvent traditional currency, Bitcoin adherents don’t
appear to be in the game to reap huge rewards and, despite the
few successful efforts by VCs to wedge themselves into the
play, raising capital isn’t a top priority either. No, Bitcoin
(and apparently its “we’re better than you” challenger
BitMint) is bootstrapping itself into the payments lexicon.
And quite a set of references it has.
In the UK, we have TheBitcoinCard, a MasterCard branded
prepaid card that holds Euros and is funded with Bitcoins. Mt.
Gox is (was) a Bitcoin exchange shut down by regulators
(FinCEN) because of non-compliance with money transfer
service laws. There have been two value crashes since
Bitcoin’s launch and the little-engine-that-could has survived
them both. There’s even a Bitcoin ATM in the works.
2
For its faults, Bitcoin has a lot going for it. First, its value is
determined entirely by the “market.” Who doesn’t like a good
roll of the dice every once in a while? Second, most folks
think it’s anonymous – which of course it isn’t, but Ruth’s
Chris does well selling sizzle instead of beef, so what the
heck? Third, it’s cheap and virtually instantaneous for
merchants, and there’s the kicker. Retailers were the key to
success for PIN debit, and we’re betting that, at least for a
segment of the purchasing population that want to use
cybercurrencies, Bitcoin’s fortunes will rise and fall with
retailer acceptance. For now, the biggest Bitcoin merchants
are web-based and include Wordpress, The Pirate Bay, and
Reddit; the list of others is growing daily and attracting brick-
and-mortar sites.
We’re certainly not going to see Bitcoins taking over for
greenbacks or Euros anytime soon, but it’s not likely they’re
going away either. Younger consumers (the target for most
issuer-side payments gurus) are driving the demand (and
value) side while the aforementioned merchants will do just
about anything to avoid paying excessive acceptance fees
(witness MCX and the new spate of litigation).
There’s no need to make Bitcoin a focal point of just about
anyone’s payments strategy, but those choosing to ignore it
entirely may get caught short one day.
Until next time.

Dorado Industries
(310) 544-1316
3
Table of Contents
2013 Predictions 4
TrendWatch Scorecard/Summary 5
2013 Payments Industry Yields 6
Interesting Quarterly News That Got No Respect 7
Q1 M&A/Investor Activity 13
Useful Links for More Information 21
Back in the Day 22

Dorado Industries
(310) 544-1316
2013 Predictions
4
• One cloud-centric mobile payments player other than PayPal will have a break-out year; the payments industry will declare NFC DOA and
move on.
Mar: Since Google is re-gearing mobile yet again, it’s not likely to be the one.
Jun: Indeed, it looks like the wheels have come off the Google Wallet juggernaut.
• One or more of the non-traditional dongle-centric merchant services providers will be acquired by a mainstream POS terminal industry
leader.
Mar: Verifone’s Sail is gone, so it’s off the table. Someone else will cave.
Jun: Perhaps “acquire” is premature. “Strategic partnering” comes closer, i.e., NCR’s new relationships.
• Despite the fact that there are already laws preventing abusive use of electronic benefits transfer cards, the CFPB or Congress will
intervene to provide more protection.
Mar: Still waiting to see if CFPB wants to double down on casinos, strip clubs, and liquor stores.
Jun: Tick, tick, tick.
• One of the remaining EFT networks will change ownership.
Mar: The search for a common AID for mobile (more accurately, reaction by V/MA) will likely propel things.
Jun: New common AID, new Durbin compliance requirements, mounting merchant pressure; someone’s going to throw in the towel.
• American Express will prevail in its Department of Justice litigation.
Mar: Time remains an ally for American Express. DOJ litigation didn’t impair its efforts to gain FDIC access for its prepaid product –
Bluebird.
Jun: Supreme Court sides with AMEX and against merchants in AMEX v. Italian Colors Restaurant. Not directly related but tangential at
least.
• The US Postal Service will declare its pilot in gift card sales a failure and shut the program down.
Mar: After all, who buys gift cards on Saturday when USPS is delivering mail. Oh, right.
Jun: Oops. Back to Saturday delivery, so maybe dumping gift cards is the next money saver?
• Emboldened by the success of PayNet (FIS) and clearXchange (BofA, Chase, Wells), two new real-time payments networks will emerge.
Mar: Nothing yet, but the Italian banks are pushing their own version in-country and pan-Europe. Time will tell.
Jun: Could MCX be thinking that a shift to real-time is a good way to avoid V/MC rails and fees?

Dorado Industries
(310) 544-1316
5
TrendWatch Scorecard/Summary – Q2 2013
Market & Industry Situation
1 – Lots of new uses of QR, and sonic applications are coming around
again.
2 – Do we really need a Bitcoin ATM? Or a mobile accessed kiosk?
Perhaps.
3 – Big volume growth helping post-Durbin somewhat. Square et al.
providing new e-payments venues.
4 – CFPB behaving as expected. Prepaid in the cross-hairs.
5 – Some big money is starting to enter the game; $1 billion for Intuit
Financial Services is a good kickstart.
6 – Record bank profits. Enough said.
7 – Big Data is getting the lion’s share, but payments isn’t far behind.
Analytics on a par with payments. (Both covered in TW Q3.)
Industry Players To Watch
Judge Gleeson: Certify the V/MA settlement or not?
GoBank/Green Dot: GoBank now available to the mass market. Will it
change the way we bank?
WalMart: Says no to PayPal in-store acceptance. Got something better?
Prepaid Processors: If Aite is right and there’s too much supply, which
one(s) will be the first to find a partner?
Australia: Visa and MasterCard are duking it out for mobile wallet
supremacy. Early results may be telling in the US.
MCX: Processor in place, wallet platform in place, whatcha got next?
5. New Venture Growth
4. Legal/Regulatory Issues
1. New Payment Forms
2. ATM Restructuring
3. POS Volume Trend
High
Med
Med
Med
High
Med
High
Positive
Mixed
Negative
6. Earnings Announcements
7. Industry Investments

Dorado Industries
(310) 544-1316
6
2013 Payments Industry YTD Yields
Sources: Company releases, Morningstar.com, Bloomberg.com
2013 YTD yield excludes dividends; based on 12/31/12 and 6/28/13 closing prices
We lost NetSpend through acquisition by Total Systems. No matter, the payments basket of
equities averaged 23.3 percent in capital appreciation through the first half of the year, while the
Dow and S&P posted gains of 13.8 and 15.0 percent, respectively. Blackhawk IPO performing like
Facebook.
Industry Player 12/31/2012 6/28/2013 Price  Cap Value  YTD 2013 Yield
Alliance Data Systems 144.76$ 181.03$ 36.27$ 2,158.1$ 25.1%
Blackhawk Network Holdings 25.10$ 23.20$ (1.90)$ (99.4)$ -7.6%
Cardtronics 23.74$ 27.60$ 3.86$ 157.1$ 16.3%
Discover Financial Services 38.55$ 47.64$ 9.09$ 4,371.4$ 23.6%
Euronet Worldwide 23.60$ 33.80$ 10.20$ 514.1$ 43.2%
Fidelity National Information Services 34.81$ 42.84$ 8.03$ 1,532.1$ 23.1%
First Data (Future Use)
Fiserv Inc. 79.03$ 87.41$ 8.38$ 1,306.4$ 10.6%
Global Cash Access Holdings 7.84$ 6.26$ (1.58)$ (121.8)$ -20.2%
Green Dot (M&A-ed Out) 12.20$ 19.95$ 7.75$ 315.8$ 63.5%
Heartland Payment Systems 30.23$ 37.25$ 7.02$ 262.5$ 23.2%
Jack Henry & Associates 39.26$ 48.43$ 9.17$ 769.4$ 23.4%
MasterCard Worldwide 491.28$ 574.50$ 83.22$ 10,768.7$ 16.9%
MoneyGram International 13.29$ 22.65$ 9.36$ 541.6$ 70.4%
NetSpend (M&A-ed Out)
Total System Services 21.42$ 24.48$ 3.06$ 604.0$ 14.3%
Western Union 13.61$ 17.11$ 3.50$ 1,990.7$ 25.7%
Visa 151.58$ 182.75$ 31.17$ 26,366.7$ 20.6%

Dorado Industries
(310) 544-1316
7
Interesting News This Quarter
Subject Source/Date Substance
UK Payments Roadmap UK Payments Council Now here’s a clever thought. Get all the parties associated with payments together for a three-
year effort to build a payments roadmap covering the full range of tender options, their underlying
technologies, varying token types, security disciplines, and consumer experience needs in the
hope that putting everyone on the same path might avoid redundant expenditures, absurd pricing,
and customer confusion. The initial report is out and describes the journey undertaken by the
Payments Council (we don’t have one of those), the players involved (not likely we could fit
everyone’s egos in the same room), and the timeframes planned (altogether too long in our view,
but plausible). If it works, the benefits could be significant; if not, well, they tried. Recall that the
same council was going to toss checks over the side by 2018. Isn’t going to happen. This just in:
a roadmap might not matter to British citizens, it seems. Eleven percent of 1,600 Brits
interviewed recently didn’t know what an ATM was, and 32 percent couldn’t explain the
difference between a credit and debit card. Wonder what a similar U.S. survey might reveal?
Starbucks PYMNTS.com
June
Coffee giant Starbucks announces that 30 percent of its in-store purchases occur through either
its proprietary stored value card or mobile. Ten percent of all transactions now occur on mobile
phones using 2D bar code technology. Moreover, 25 percent of SBUX transactions involve the
company’s loyalty program launched three years ago. Wonder why a loyalty program is needed
when caffeine works so well?
Wendy’s International PaymentsSource
June
Cheeseburger merchant Wendy’s launched a mobile app last summer allowing customers to tailor
their meals based on calorie count. The application has gradually morphed into something much
richer and now has payments and value reload features built in. So long as you live in New
Mexico, Portland, or Austin. The app creates a unique and time-sensitive purchasingnumber
which is given to a cashier at checkout. Seems a bit klugey for now, but you’ve got to applaud
Wendy’s for moving ahead with mobile while the MCX mobile wallet system is being hammered
out.
McDonald’s Paybefore.com
June
Keeping the hospitality/fast food thread alive, McDonald’s has added Kuwait to its growing list of
test markets for mobile payments. Kuwait International Bank, a local kingpin in prepaid card
issuance, will partner with McD and Seamless, the Stockholm-based software outfit, to get the job
done. The pilot will utilize quick response (QR) technology rather than NFC in a fashion similar
to the 220 store roll-out test launched by McDonald’s in Sweden last quarter.

Dorado Industries
(310) 544-1316
8
Interesting News This Quarter – Continued
iZettle TechCrunch
June
Launched in Europe in February, iZettle is expanding to the UK and Mexico following a $6.6 million
investment in the mobile payments startup by Spain’s Banco Santander. The UK expansion involves
sales of small business readers to local merchants at very low prices. The effort in Mexico includes
dongles for iOS and Android phones and tablets. Porous as the US-Mexico border stands today, it’s
likely that we’ll see iZettle terminalsin local stores soon.
Check Presser
June
Check used to be known as PageOnce (good re-branding move) and started life as a PFM application
that tracked when bills were due. Since its launch, Check has added payment processing using stored
bank account and credit card information. This month Check added an expedited payment function for
bills that may have slipped through the cracks or arisen suddenly. Pricing is about 1/3 cheaper than
other offerings at $14.99 flat per transaction.
Square and Google Pressers
May
Interestingthat Square and Google would launch email cash transfer options one week apart. Square
Cash works with most email clients and requires a “To:” designation, a “CC:” reference to
pay@square.com, and a dollar amount in the subject field. Pricing is probably high at $0.50 per
transaction, but market pressures will likely shrinkit some. The Google solution is either more or less
elegant depending on your point of view and requires that funds be “attached” using the application’s
icon. Transfers made from linked deposit accounts using the ACH are free to the sender and receiver,
while card based transactions involve ad valorem pricing of 2.9 percent with a $0.30 minimum. While
launched at virtually the same time, these apps represent different strategies. For Square, the Cash
product represents yet another effort to broaden the utility of the mainstream application. For Google it
appears to be a desperate attempt to salvage Google Wallet.
Safeway Bizjournal
May
Safeway’s CEO touts the company’s “new” Fast Forward payment program during a shareholders
meeting. This decoupled debit program currently is being tested in Sacramento, California, and won’t
be available to all shoppers for several months. Wizened payments veterans might be wondering “why
all the fuss” because Safeway’s subsidiary, Von’s Grocery, has offered SmartCheck as part of its Club
Card loyalty program since the late 1980s. We’re not sure if this is a re-branding ploy or something
new. If it’s the former, why bother testing something that has worked for nearly thirtyyears? If it’s the
latter, how much different can it be? Something to ponder for next quarter. Truly aged readers will
recall that SmartCheck emerged out of the quagmire known as the check guarantee card. Younger
readers should Google it.

Dorado Industries
(310) 544-1316
9
VocaLink Finextra
June
UK payments network VocaLink has launched Zapp, a consumer-to-business payments company and mobile
application. Consumers link their deposit accounts to the Zapp app (clever alliteration) for use while making
mobile handset purchases at participating merchants. Retailers receive instant settlement and reduced
acceptance cost because Zapp circumvents the card brands at the point of sale. VocaLink has invested £1.6
million but needs a bit more; efforts are underway to raise £100 million from – wait for it – retailers and
telcos. Remember the old adage, “new payments take twice as long and cost twice as much as planned.”
Smartphone Shopping Mobilecommerce
Daily
June
Meanwhile, a new study by Skava (a solutions vendor) indicates that 88 percent of the survey sample
(unspecified) have had negative experiences while shopping via their smartphones. One third of the sample
said they would defect to another merchant as a result of their experience. Even if the numbers are off by
half, the message to networks and system designers trying to make a go of it in mobile payments is clear:
blow the customer experience side of the equation and risk losing a large chunk of your market.
Slyce PaymentsSource
May
Canada-based Slyce takes showrooming a step farther by enabling consumers to snap a photo of real life
merchandise or print/TVads to source a Slyce merchant or other retailer to complete the purchase. The
startup recently closed a $3.75 million round of funding to finish off the one-click application and is now is
testing with a group of bloggers and small merchants. Ambitions are small, with a 1,000 user beta planned
soon and hopes of 10,000 using the app by yearend. Mega retailer Amazon has had the skills to perform the
same service since 2009 when it acquired ShopTell, but has not aggressively promoted it to consumers.
Wells Fargo Bank Presser
June
Wells Fargo continues its string of innovation in remote access banking by launchinga new service for
ATMs, online, and mobile banking. The bank has hoisted the “green” flag once more and now provides its
customers with the option of receiving receipts via text message to their mobile phones. Sounds very
environmental until you consider the cost transfer involved. In lieu of incurringthe cost of paper, ink, and
machine duty cycles to print receipts, Wells Fargo now allows us to opt into a service where the proviso of
“Your mobile carrier’s text messaging and web access charges may apply” should be taken quite seriously.
The catchphrase “two for me, one for you” comes to mind.

Dorado Industries
(310) 544-1316
10
Punchey Payments Journal
June
Square, GoPayment, and PayPal have a new competitor for merchant services. Boston-based startup
Punchey joins the ranks of the pay-as-you-go processors focused on small and middle sized retailers. Pricing
with Punchey is a bit different in that the firm charges 75 bp over the interchange rate to accommodate
Durbin-regulated cards. There’s a dime tossed on top of the ad valorem fee as well. Unlike others, though,
Punchey charges $19.95 for its reader (the terminal is generally free elsewhere). According to the source, the
Punchey option works out best for merchants with debit transactions over $18.00 and credit sales over $67.00.
We’ll see how this plays out.
GoBank Bank Innovation
June
Green Dot’s mobile bank, GoBank, breaks out of limited audience mode and heads for the mass market – so
long as you own an iPhone; the Android version arrives shortly. New retail account opening partners include
Barnes & Noble and Rite Aid. Initial observers are a bit miffed over GoBank’s ten-day hold on checks
deposited via its mobile access service, but we’re confident that market pressure will quickly knock over this
obstacle.
Washington Nationals PaymentsSource
June
Season ticket holders for MLB’s Washington Nationals (woo hoo, baby, second place in the NL East) will
soon be able to leave their wallets at home (assuming they’re taking public transportation to the games). The
team will issue the “Ultimate Ballpark Access” card that will serve as both a season pass and a payments
token. The card will use RFID technology to provide contactless access through unattended turnstiles and for
concession stand purchases. It is anticipated that single game attendees will be given the same opportunity.
Looks like decoupled debit has made it to the big leagues. Rumors that cellar-dwellers in Miami, Milwaukee,
and San Diego are pursuing the same strategy are unfounded.
Barclays Finextra
June
UK customers of banking giant Barclays are this close to having their anonymized data sold to other
companies unless local regulators derail the effort. Other UK players, including Vodafone, EE, and O2 have
already announced similar intentions. The new Barclay customer terms enable the bank to hold, anonymize,
and sell not only directly observed accountholder transaction data but mobile location information and social
media contact details, including Facebook and Twitter. Similar announcements in the Netherlands resulted in
sufficient backlash to scuttle the effort within 24 hours of the announcement. Perhaps the Brits are more
sanguine about privacy?

Dorado Industries
(310) 544-1316
11
Square Finextra
June
Square founder Jack Dorsey takes on eBay and Etsy by launchingSquare Market, a no-fee marketplace
where smaller retailers may set up e-tailing operations for free. System attributes enable merchants to display
their wares, manage inventory, publish prices and photos, and, naturally, accept payments. Pricing is set at
2.75 percent of sales made through the store (pretty typical). Jack’s move seems like a logical extension of
his plan to keep a slice of each piece of the smaller retailer value chain. Did we mention that there’s a direct
link between Square Market and Twitter to enable its retailers to post “suggested” Tweets? Not a fan of the
Twitter clutter, but the idea’s good.
City of Oakland, CA Bank Innovation
June
Oakland, CA, made infamous by Gertrude Stein’s “there’s no there there” reference, is the first U.S. city to
issue a municipal identification card for non-drivers using city services that doubles as a prepaid debit card.
MasterCard branded and Arroweye Solutions crafted, the card enables the city to issue funds to its citizens
and to avoid check cashing costs. Despite the well-earned snub, the Oakland idea may gain transaction in the
underserved segment as municipalities add oomph to the fledgling (and often floundering) private sector
efforts to provide access to the financial services industry.
Convenience Payments Source
July
Startup Convenience simultaneously puts a shot across the bows of coin-hording player Coinstar (now called
Outerwall) and coin saving plans from Bank of America (Keep the Change) and Wells Fargo (Way2Save).
This upstart’s program consists of either a prepaid card or a mobile app that enables cashiers to deposit coins
involved in a purchase transaction into either a Dwolla or PayPal account. Details on pricing are still soft
around the edges but Convenience will probably skim a small fee on each transaction; well below Outerwall’s
hefty cut today, we hope. Question: what are those of us with grandkids going to do when they sidle up to us
with their palms up looking for pennies, nickels, and dimes?
LevelUp Payments Source
July
Had to happen. LevelUp CEO Seth Priebatsch is all lathered up about an app the company is testing
internallythat supports payments with Google Glass eyewear. Really, folks. Has it come this?

Dorado Industries
(310) 544-1316
12
Prepaid card industry Various
July
What a difference a couple of hours makes. Earlier in the day PULSE issues a presser covering its 2013
Debit Issuer Study. Speaking about general purpose reloadable prepaid cards, it says “the percentage of GPR
issuers almost doubl[ed] between 2011 and 2012 from 19 to 36 percent.” Apparently growth doubling in
GPR isn’t enough to keep the industryon an even keel. A few hours later Aite Group announced the
conclusion it has drawn from a recent study of the GPR industry. Aite concludes that the industry “must
undergo a significant consolidation in the future because more prepaid card processors exist than are needed.”
Never one to author timid reports, Aite suggests that FIS should acquire TransCard,Green Dot ought to buy
i2c, First Data and Blackhawk make a fine pair, and Fiserv could pull off an M&A trifecta by gobbling up
Ceridian and Galileo. We’ll keep track of these combatants and see what happens. Pass the popcorn, please.
MCX Various MCX is carefully revealing itself through a number of timely press releases and placed commentary. New
adherents include Phillips 66, Circle K, and Kohl’s. Technology partners now include Gemalto and FIS. So,
scale seems to be in place and the technology probably won’t defy the laws of physics. Now, where the heck
are those issuers?
PayPal Various PayPal wins one and loses one. German Apple users can now use PayPal to make purchases through their
Apple.com store. Meanwhile, WalMart says “nein” to accepting the payments giant’s application within its
brick-and-mortarstores, citing the higher costs involved. Odd that both Apple (Airdrop) and WalMart
(MCX) would take different positions, given that both are licking their chops while waiting for the right
moment to entry the payments industry. Or is it?

Dorado Industries
(310) 544-1316
13
M&A/Alliance Activity
Buyer/Investor Target Payments Emphasis Possible Strategy
Andreessen Horowitz,
CollaboFund,
Others
Balanced Merchant services Balanced is a new behind-the-scenes payments processing
platform for web start-ups and entrepreneurs. Its differentiation
point is that Balanced sits in the middle of the payments stream
enabling C2B purchases of end-user product and B2B
remittances to suppliers. An escrow account straddles the two
segments to insure good funds. Investors anted up an additional
$2.0 million to keep this 2012 enterprise in cash and to hire
additional engineers to promote product enhancements.
OpenCoin Simple Honey Shopping application Heard about OpenCoin yet? This as-yet unlaunched startup is
headed by Chris Larsen, co-founder of E-Loan and Prosper, the
peer-to-peer lending network. OpenCoin is developing Ripple,
a global payments system rumored to be based on mathematics
and capable of dealing in multiple currencies – virtual or
otherwise (Bitcoin on steroids, perhaps?) April and May were
good months for the company. First, it acquired Simple Honey,
a consumer wish list shopping system launched in May 2012,
and in May, Google Ventures and IDG Capital Partners (China)
dropped a slug of cash into the venture. Andreessen Horowitz
has also got capital in at an undisclosed amount at risk. This
could be worth the wait.
WalMart Inkiru Predictive intelligence “Every Day Low Prices” maven, WalMart, acquires predictive
intelligence startup Inkiru through its WalMartLabs subsidiary.
Inkiru has developed an active learning system to determine
customer interactions, improve personalization and enhance
customer segmentation/targeting. Odd, we thought low prices
were all WalMart needed. Could there be something else in the
works? Couponing, or payments, perhaps?

Dorado Industries
(310) 544-1316
14
M&A/Alliance Activity - Continued
Green Dot Bank GE Capital
Retail Bank
Prepaid card issuance Green Dot takes action to reduce the cost of issuing bank support for the
WalMart MoneyCard prepaid scheme which GDOT has operated since
program inception. GE Capital once was the issuing bank behind the
three-party scheme which now becomes bi-lateral. The 8-K report
discusses unconditional and absolute guarantees, assignments, and
conditions precedent, but no pricing. Giving the program’s success,
“boat load,” might be the appropriate measure.
Redpoint Ventures,
Index Ventures,
500 Startups
Erply Mobile POS Erply increases its funding to $4.2 million through a Series B round of
$2.15 million even though up to $10 million had been offered. Erply is
in the mobile POS and inventory management space and operates in the
black. iPads and PayPal POS play major roles in the New York-based
company’s offerings.
DCM,
Flybridge,
First Round,
IA Ventures,
Others
SavingStar Online/Mobile coupons SavingStar raises $9.0 million in Series C funding to expand its grocery
store couponing system beyond the 25,000 merchant locations already
enrolled. Consumers select the product coupons preferred, use their
store loyalty cards at checkout time, and have the product savings
credited to their SavingStar savings account. Distributions can be made
to a consumer’s bank, PayPal, or Amazon account. The presence, or
absence, of FDIC coverage and the name of the depository are not
disclosed.
First Round,
Greylock,
Index Ventures
Swipely Merchant services/loyalty First reviewed in TW Q2 2010, merchant services provider Swipely has
transformed itself into a combined merchant services, analytics,
marketing, and loyalty company focused on local businesses. Returning
investors added $12.0 million in Series B money, raising total funding to
over $20.0 million. Hospitality purveyors (i.e., upscale bars and
restaurants) are particularly enthralled with the business analytics and
on-board loyalty program.

Dorado Industries
(310) 544-1316
15
Buyer/Investor Target Payments
Emphasis
Possible Strategy
Founders Fund BitPay Bitcoin payments
processor
BitPay receives an offer it can’t refuse from Founders for $2.0 million
in growth capital. BitPay is a payments processor for e-tailers willing
to gamble on Bitcoin settlements for purchases. A relationship with
Amazon enables online product vendors access to the mega retailer for
backend fulfillment. BitPay prices beat current traditional card brand
rates by a ton – but shouldn’t they, since Bitcoin transactions trade at
par?
Union Square,
Others
Coinbase Bitcoin wallet Bitcoin wallet startup (redundant term), Coinbase, raises $5.0 million in
Series A funding to get its Bitcoin based wallet off the ground. Since
its $600K seed round eleven months ago, the company claims to have
enticed $15 million in conversions from greenbacks to cybercurrency.
For background material on Bitcoin and Coinbase (most of it accurate),
check out www.weusecoins.com.
OCA,
Origin,
Firestarter
i2A Fund
Pangea Payments Money transfer service Startup Pangea Payments benefits from an oversubscribed $1.0 million
offering to fund market/platform expansion. Like others, Pangea uses
prepaid card rails to offer global money transfer services. Unlike most,
Pangea pricing is flat-fee based. Online web and mobile channels are
supported with retail purchasing services to be offered in the future.
Peter Thiel (Valar
Ventures)
TransferWise Money transfer service The PayPal co-founder injects $6.0 million into TransferWise, a
London-based MTS dealing in multi-currency settlement. Here, too,
flat fee pricing is practiced, and rates are set to beat out store front
operators. Editorial note: Pangea and TransferWise are two of the
newer entrants to the MTS marketplace that appears to be getting a bit
overcrowded. Watch for some consolidation (or an ugly security
breach) soon.

Dorado Industries
(310) 544-1316
16
Andreessen
Horowitz,
Others
Dwolla Online payments system Dwolla, the third most famous Iowa export behind Bret Favre(college
ball), and corn cobs, has raised another $16.5 million in capital to
expand its product suite, build its marketing and business development
teams, and expand its employee bases in San Francisco and New York.
Appears that Dwolla doesn’t intend to cater to only heartland denizens;
lessons learned from its recent snafu with Bitcoin exchange Mt. Gox,
notwithstanding.
Allegro,
Swan & Legend,
Western Tech,
Innovation
Endeavors
Tango Card Digital gift cards Tango Card (TW Q4 2010, Q2 2012) intends to leverage its
relationships with Amazon, Target, and iTunes plus another $4.1
million from returning and new investors to expand into the
international gift card marketplace. Since our last Tango Card update,
the company has moved into mobile applications and the aggregator
has lassoed FedEx and Plink as clients, among other notables.
Xseed Capital,
Others
ZooZ Checkout payments platform Now over three years old, ZooZ delivers a consumer checkout
platform to handle merchant services needs. One-time entry of
consumer data enables ZooZ to “learn” how each consumer wishes to
pay, and in what locations. Like others of its ilk, ZooZ emphasizes
merchant analytics and fraud prevention attributes to justify its
merchant services fees. Global reach exists and multiple currencies are
supported.
Square Digital Gift Card Stored value card Not all that glitters is gold at Square, it seems. The uber-acquirer for
micro and small businesses is shuttering its six-month old digital gift
card program that once enabled users to send gift cards to anyone with
an email address. Operational challenges and the specter of fraud
potential are what the pundits are speculating the causes might be.
Cardholders may cash out through transfers to Apple’s Passbook, or
via QR code at merchants.

Dorado Industries
(310) 544-1316
17
Payvia Mogreet Mobile messaging system VC-backed Payvia delivers direct-carrier billing services for the purchase of
digital goods. It has acquired Mogreet, a provider of cloud-based mobile
messaging services, to take a baby step into physical goods purchasing.
Payvia intends to use the messaging company’s talents to deliver targeted
advertising and fulfillment messages to customers of its merchant base. The
combined company is likely to experience the usual digital-to-physical
headwinds associated with direct-carrier billing, buy, if the
telecommunications giants agree to go along for the ride, we may see the
first break-out opportunity.
Accenture Acquity Group eCommerce and digital
marketing
Accenture pays $316 million to gain back a bunch of its alumni and ex-
marchFIRST (Google it) founders/executives. Acquity provides brand
enhancement services through its consulting, technical, and digital marketing
strengths. The move is designed to enhance similar service offerings
provided today by Accenture. Accenture gains 600 Acquity employees and
access to the $141 million in revenues posted by the marketing firm in 2012.
Greylock,
Granite Ventures
Marqeta Gift card management
system
Marqeta delivers the multi-account plastic gift card management services
behind Facebook’s growing gift card suite of services. Returning investors
fund $14.0 million in new capital for market growth and new technology
systems. Online and physical retailers contribute to the Marqeta scheme by
reloading the card with each transaction or applying appropriate user
discounts.

Dorado Industries
(310) 544-1316
18
Cardtronics Aptus Financial ATM fleet The big get bigger, again. Cardtronics pays an undisclosed amount
for the Aptus Financial fleet of 3,300 ATMs, most of which are
owned by merchants. This acquisition involves two old ATM hands
Dave Grano and Rick Holt, founders of Card Capture Services, once
part of E-Trade (seems like only yesterday but it was in 2000 when
that mis-step occurred). Cardtronics purchased CCS in 2004 for
$106 million. Welcome back, Dave and Rick.
Business line shut-
down
IP Commerce Credit card processing Oops. VC-backed IP Commerce announces its plans to shut down
its key business line of credit card acceptance. Those most likely to
be impacted are Jack Dorsey’s Square and Groupon (which can
hardly afford any more bad news). Wind-down time is expected to
be short – June 30, 2013, is the target date. IP Commerce will
concentrate on software development for retailers, sales
management, and software development. Vantiv operates behind
the IP Commerce scenes, and will take over daily operations shortly.
Epic Ventures,
Others
MokiMobility Mobile POS devices Utah-based MokiMobility provides a cloud-based platform to
manage, monitor, and secure tablets and smartphones used to
provide POS acceptance services. The investors laid out $2.0
million for platform enhancements and market expansion. Better
known MokiMobility apps include PayPal Here, Square Register,
and Revel Systems.
Thomas Bravo Intuit Financial
Services
Internet banking platform Intuit digs itself out of a channel conflict hole by selling its financial
services subsidiary including the old Digital Insight holding, mobile
banking, and purchase rewards systems for $1 billion (it paid more
for DI). There’s likely to be a valuation release (which Thomas
Bravo plans to reap when it sells in a couple years), as the subsidiary
will have more cache as a separate company. Good move.

Dorado Industries
(310) 544-1316
19
Investors like us RetailMeNot Digital coupon platform WhaleShark Media acquired Australian company RetailMeNot in 2010 and
adopted its name. The RMN platform supports coupons from over 60,000
retailers/others and ginned up $113.4 million in 2012 revenues. Its mobile
coupon app has been downloaded 3.0 million times (reminder: downloads
and users are only loosely correlated). Q1 revenues were on pace to exceed
$150 million for 2013. RetailMeNot has filed for an IPO valued at $230
million and has taken “SALE” as its trading name. Now based in Austin,
the company has been on an acquisition tear since 2011, primarily in
Europe. Worth a look-see for treasure seekers.
Accel,
SV Angel
Endorse Digital coupon platform Oops. Founded in 2010 by several very savvy eCommerce players,
Endorse announces plans to dissolve on June 30, 2013. Endorse operated a
digital couponing scheme similar to others creating a cash savings account
for consumer users. Current Endorse users have been asked to transfer
their cash balances directly or through PayPal. So it goes.
OpenTable JustChalo Mobile payments It was just a matter of time. OpenTable, the dining reservations category
killer, has acquired mobile payments startup JustChalo for $11 million.
Seems that 36 percent of the 34 million diners seated in Q1 2013 initiated
their transactions via a mobile telephone. Braintree, the current payments
processor for OpenTable, might be a bit cheesed at having its client decide
that backend integration will result in higher yields, but savvy readers saw
this coming all along. Right? JustChalo is based in Saratoga, CA and has
operating systems in Mumbai.
Discover Diners Italy Card brand Discover pays an undisclosed amount to purchase the Diners Italy franchise
after the Slovenia central bank ordered the current owner to cease
operations because merchants were not being paid. Discover acted to
preserve the card scheme’s value for the 140,000 cardholders in Italy.
Discover now has its first card issuing business located outside the U.S.
Probably not the last.

Dorado Industries
(310) 544-1316
20
QED Investors,
FIDES,
KIBO Ventures
peerTransfer International tuition
payments
New and existing investors raise another $6.4 million on top of $15
million raised in 2009 to enable peerTransfer to expand its program
of tuition remittance beyond its current markets of North America,
Australia, and Europe. Tuition payments are large by nature and
involve considerable fees (circa 3-6 percent) when wires and MTS
players get involved. peerTransfer works with more than 350
education institutions across existing markets. Beyond tuition
remittance, the company has plans to facilitate other school related
payments – no, homemade beer bongs from Home Depot are not
covered.
Golub Capital Smashburger Better burger operation Denver-based Smashburger raises another $35 million in expansion
capital to fulfill its 250 franchisee pipeline and more than double its
200 site network. Sorry, anything having to do with custom made
cheeseburgers always catches our eye.
Accel,
Andreessen
Horowitz,
Peter Thiel,
Intuit
Clinkle Mobile POS system 2011 startup Clinkle scores big with $25 million in development
capital. Not bad for a company that, heretofore, had not made
public its technology, business strategy, or distribution plans. Now
we know that Clinkle operates at merchant points of interaction
using smartphones/tablets and terminals that can “hear” high-
frequency sounds rather than “see” 2D images or “sense” NFC
radio wave lengths. We’ve seen and written about this concept
before (two years ago, in fact) and can’t help but wonder if Clinkle
is another company wearing different clothes. Otherwise, there’s a
patent troll out there somewhere getting ready to pounce on a big
pot of cash.

Dorado Industries
(310) 544-1316
21
Useful Links for More Information
We threw a lot of new names out again this quarter. Here’s a list of links for you to
learn more.
Company Role Link
iZettle P2P payments system www.izettle.com
Check PFM and payments processor www.check.me
Slyce Showrooming systems www.slycecommerce.com
Punchey Mobile merchant services www.punchey.com
Balanced eCommerce enabling systems www.balancedpayments.com
OpenCoin Cybercurrency www.opencoin.org
Erply Mobile POS systems www.erply.com
BitPay Bitcoin processor www.bitpay.com
Clinkle Sound based authorization systems www.clinkle.com

Dorado Industries
(310) 544-1316
22
Back in the day!
Okay, back to the payments trivia
contest. Who is the network
commando circled here and why
all there coffee cups and not
highball glasses present? Must
have been a WCTU auxiliary
meeting!
Seriously, we’re trying to identify
the event, date and venue that
triggered this round of socializing
among competitors. If can you
fill us in, the usual door prize
awaits.
Drop a line to the email address
and you’ll be handsomely
rewarded.
Suspected source: DoJ files

Dorado trend watch q2 2013

Recommandé

Recommandé

Contenu connexe

Tendances

Tendances (20)

Similaire à Dorado trend watch q2 2013

Similaire à Dorado trend watch q2 2013 (17)

Dernier

Dernier (20)

Dorado trend watch q2 2013