4 Investments & Acquisitions — December 2016

7 Market Shares of Global Brand Purchase Transactions Worldwide

10, 11 Investments & Acquisitions: Merchant Acquiring & Related Processing Companies — 2016

12 Credit Card Portfolio Deals — 2016

2 – 4 Fast Facts 4 Investments & Acquisitions

— December 2016 5 New POS Technology Terminal

INSIDE CHARTS

PayPal Adds Citi, FIS, and DiscoverAmazon.com, the largest U.S.-based ecommerce retailer, obtained a U.S. (but not European Union) patent for “1-click” checkout in 1997 for payments connected to remotely stored

Purchase Transactions by Global Brand Cards — Projected through 2025General purpose payment cards with global brands — Visa, Mastercard, American Express, Discover, JCB, Diners Club, and UnionPay — collectively generated 227.05 billion purchase transactions in 2015. They are projected to generate 604.10 billion purchase transactions in 2025. These card-present and card-not-present payments for goods and services are generated by credit, debit, and prepaid cards.

There are also domestic-market-only general purpose cards. They are not counted here. Worldwide there are more than 60 domestic-market-only brands. They include Star, Pulse, Interac, RuPay, Elo, Shetab, Girocard, Carte Bancaire, BC Card, Mada, Accel, Hipercard, Banricompras,

Boloro Multifactor AuthenticationPatents granted to Boloro in 49 countries including the U.S., Canada, and Russia, and pending in 38 additional jurisdictions including the European Union and China, cover multifactor

Lloyds Buys MBNA Credit CardsThe second largest credit card issuer in the U.K. based on outstandings has purchased the fourth largest issuer in that country. Lloyds Banking Group will pay a premium of $2.35 billion

Acquisitions/Investments in Merchant Acquiring ‘16There were 53 acquisition and another 59 investment transactions on the merchant acceptance side of the card payment business in 28 countries last year. This does not include acquisitions and

Walmart’s Prepaid Card “Prize Savings” ProgramWalmart’s Prize Savings program is available to its MoneyCard prepaid Mastercard and Visa cardholders. It is the first U.S. retailer to offer a prize-linked savings (PLS) program. PLS programs have

Guaranteeing Online Payments Against FraudRetailers and supermarkets in the U.S. have been able to buy guarantees against fraud losses from payments made by paper checks since the 1970s. Companies including First

Card Industry Litigation UpdatesThe U.S. Supreme Court heard arguments this month on litigation concerning a New York state law that prohibits merchants from adding a surcharge to any payment made using a credit card.

LATINAMER.

EUROPE ASIA-PACIFIC

MIDDLEEAST/

AFRICA

U.S. CANADA

Purchase TransactionsWorldwide 2015 vs. 2025 (Bil.)

© 2017 The Nilson Report

239

61

412

57

140

17

39

5 8

83

167

> see p. 8

> see p. 5

> see p. 7

> see p. 9

> see p. 12

> see p. 6

> see p. 10

> see p. 8

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FOR 46 YEARS, THE LEADING PUBLICATION COVERING PAYMENT SYSTEMS WORLDWIDE JANUARY 2017 / ISSUE 1101

© 2017 HSN Consultants, Inc. THE NILSON REPORT

Conferences & Seminars

Seamless Middle East 2017: May 1-2, 2017. The Dubai International Convention & Exhibition Centre, Dubai, UAE. Estimated attendance: 10,000+. Cost for the two-day conference is $1,995 until February 24. Sub-scribers to The Nilson Report will receive a 20% discount. Contact James Inston at Terrapinn, 971 (4) 440-2535, james.inston@terrapinn.com. Register at www.terrapinn.com/exhibition/seamless-middle-east/.

Card Forum 2017: May 8-10, 2017. The Hilton Austin, Austin, Texas. Estimated attendance: 600. Cost for the three-day conference is $1,195. Subscribers to The Nilson Report will receive a 20% discount. (Use code NILSON.) Contact Ingrid Olsen at SourceMedia, (212) 803-8456, ingrid.olsen@sourcemedia.com. Register at http://conference.paymentssource.com/conferences/cfe/.

BARCLAYCARD US is offering the AAdvantage Aviator Red World Elite Mastercard to applicants in airports and exclusively on board American Airlines flights. New cardholders earn 40,000 bonus miles if they make their first purchase within 90 days. The card has a $95 annual fee. Catherine Nieburg is Director, Airline Partnerships at Barclaycard US, (302) 255-8993, cnieburg@ barclaycardus.com, www.barclaycardus.com.

COMPILATION OF STATE AND FEDERAL PRIVACY LAWS — 2016 CONSOLIDATED EDITION is an ebook from Privacy Journal that describes more than 700 state and federal laws affecting the confidentiality of personal information and electronic surveillance. The laws are listed by state and grouped in categories including medical, credit, financial, security breaches, tracking technologies, employ-ment, government, social media, school records, Social Security numbers, and many more. Canadian laws are also covered. The price is $14 for a pdf file by email: orders@privacyjournal.net.

TRANSUNION and EQUIFAX must pay restitution to consumers and fines to the Consumer Financial Protection Bureau (CFPB) for allegedly deceiving consumers about the usefulness and actual cost of credit scores they sold. Neither credit bureau admitted or denied any wrongdoing. TransUnion will pay a total of $16.9 million and Equifax a total of $6.3 million. The CFPB says the companies used false promises to lure consumers into recurring payments for credit score-related products. The CFPB also ordered TransUnion and Equifax to truthfully represent the value of the credit scores they provide and the cost of obtaining those credit scores and other services.

U.S. DISTRICT COURT for the Eastern District of Pennsylvania granted final approval on November 22 of a $37.5-million class-action settlement. The case, Reyes v. Zions First National, alleged that Zions and a former pay-ment processing subsidiary knowingly processed payments for fraudulent telemarketers. Judge Timothy Rice also awarded class counsel, Langer Grogan & Diver, $12.5 mil-lion in attorneys’ fees. The settlement amount recovered nearly 90% of the damages incurred by each victim.

DIGITAL RIVER WORLD PAYMENTS is now an acquirer for cards used on the Discover Global Network including Discover, Diners Club, BCcard, Elo, and other alliance partners. Hayden Reed is SVP & GM at Digital River World Payments, (952) 253-1234, hreed@digitalriver.com, www.digitalriver.com. Ricardo Leite is VP, Global Network at Discover, (224) 405-4573, ricardoleite@discover.com, www.discover.com.

CARDLINX ASSOCIATION, a global organization promot-ing online-to-offline commerce through card-linked offers, has added Sumitomo Mitsui Card, Mitsubishi UFJ Nicos, DNP, and T Point as members. The CardLinx Asia Internet & Mobile Commerce Forum will be held February 7, 2017, in Tokyo. Silvio Tavares is CEO at CardLinx, (202) 549-4397, silvio@cardlinx.org, www.cardlinx.org

MASTERCARD has filed four applications with the U.S. Patent and Trademark Office focused on methods and systems for authorizing, processing, and securing block-chain-based transactions.

FIS will offer Early Warning’s Zelle Network for person-to-person payments to its financial institution customers. Lou Anne Alexander is Group President, Payments at Early Warning, (480) 656-6880, louanne.alexander@ earlywarning.com, www.earlywarning.com. Scott Coffing is Division Executive, Corporate and Digital at FIS, (904) 438-6000, scott.coffing@fisglobal.com, www.fisglobal.com.

UATP, a global payment management company owned and operated by the world’s airlines, has partnered with Paymagnet to supply airlines with the capability to accept contactless card payments within their mobile app on any NFC-enabled smartphone. Any transaction that can be processed on a POS terminal can be completed on a smartphone. Clients tap a payment card on the smartphone’s NFC sensor, and Paymagnet scans the card, validates it, and instantly processes the transaction. Ralph Kaiser is CEO at UATP, (202) 774-5065, kaiser@uatp.com, www.uatp.com. Martin Glettler is Executive Director at Paymagnet, (702) 602-6262, martin.glettler@paymagnet.com, www.paymagnet.com.

FAST

FACT

S

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JANUARY 2017 ISSUE 1101

No paid advertising.

No sponsored content of any kind. Ever.

It is never permissible for subscribers to forward or print this issue. Doing so violates copyright laws.

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SPAREBANK 1 ALLIANCE, a group of 16 independent savings banks in Norway, will offer its cardholders 3D Secure risk-based authentication in combination with legacy BankID and BankID mobile fraud fighting services. Nets provides the 3D secure service. Oystein Lysvik is General Manager, Cards at SpareBank 1, 47 (9) 150-9020, oystein.lysvik@sparebank1.no, www.sparebank1.no. Jorgen Stratveit is SVP, Financial & Network Services at Nets, 47 (9) 174-4907, jstra@nets.eu, www.nets.eu.

WIRECARD has opened a merchant acquiring services business in Australia with Cuscal, a provider of payment processing services to more than 80 financial institutions. Cuscal will be the Visa and Mastercard BIN sponsor. Colin Sultana is Acting General Manager Product & Service at Cuscal, 61 (2) 8299-9412, csultana@cuscal.com, www.cuscal.com.au. Grigoriy Kuznetsov is EVP Global Financial Services at Wirecard, (65) 9833-8968, grigoriy.kuznetsov@wirecard.com, www.wirecard.com.

CHINA UNION PAY MERCHANT SERVICES (UMS) has selected Pax Global Technology as one of its main suppliers of payment devices to over 6 million merchants in 2017. UMS is the 18th largest merchant acquirer in the world. Pax will provide its A920 Android terminal, countertop models, contactless PIN pads, mobile terminals, smart PIN pads, self-serve desktop payment terminals, and its ECR device. Youngqiang Qi is VP for China Sales at Pax, 86 (21) 6212-3528, qiyq@paxsz.com, www.pax.com.cn. Hang Xu is Senior Manager of Terminal Management Department at UMS, 86 (21) 6108-8195, hangxu@chinaums.com, www.chinaums.com.

BLUETEAM SECURITY provides elearning programs for organizations that want to educate employees about cyberattacks. Its Ultimate Security Aware-ness Course is delivered as a module weekly over 10 weeks. Employees learn about suspicious phishing links, opening malicious email attachments, and more. The company serves customers in the U.K., the U.S., and Australia. Mike Carthy is CEO, 44 (741) 587-8103, mike@blueteamsec.com, www.ultimatesecuritycourse.com.

TIETO will provide PCI DSS certified, end-to-end payment card management services to Marginalen Bank in Sweden. Vahid Zohali is VP Financial Services at Tieto, 46 (73) 725-2200, vahid.zohali@tieto.com, www.tieto.com. Bo Andersson is CIO at Marginalen Bank, 46 (70) 615-3865, bo.andersson@marginalen.se, www.marginalen.se.

THE INITIATIVES GROUP (TIG) is the new name of RFi Consulting based in Australia. The company’s work includes profit improvement programs, new product development, process improvements, risk management, loyalty programs, and strategic planning for clients in the Asia-Pacific region. Lance Blockley is Managing Director, 61 (2) 8035-8413, lblockley@ initiatives.com.au, www.initiatives.com.au.

LIQUID PAY, a QR code-based mobile payment platform that integrates pay-ments with price information and discounts at the point of sale, has launched in Singapore. The open platform’s pricing engine gives consumers access to targeted bank, merchant, and program discounts and benefits. Liquid Pay operates among mobile apps, merchant enterprise systems, and banking platforms. Jeremy Tan is CEO, (65) 6272-5115, jeremy.tan@liquidpay.com, www.liquidpay.com.

Joe Mach has been appointed President, North America at Verifone, (770) 410-0890, joe_m5@verifone.com. EJ Jackson has been appointed Senior Vice President, Integrated Solutions at First Data, (650) 864-1077, edward.jackson@firstdata.com. Philip Ragona has been appointed Executive Vice President and General Counsel at iPayment, (617) 681-6413, philr@ ipaymentinc.com. Alex Bogachek has been appointed Chief Development Officer at Harbortouch Payments, (610) 596-4234, abogachek@harbortouch.com. Dermot Meehan has been appointed Business Development Manager for EMEA at Travel Tags, 353 (86) 024-7162, dmeehan@traveltags.com. Bohdan Myroniw has been appointed Head of Strategic Alliances at Equinox Payments, (480) 551-7955, bmyroniw@ equinoxpayments.com. Neil Delaney has been appointed Chief Commercial Officer at Contis Group, 44 (175) 669-3245, neil.delaney@contisgroup.com. Devin McGranahan has been appointed President, Billing and Payments Group at Fiserv, (262) 879-5000, devin.mcgranahan@fiserv.com. Keith Worrall has been appointed CEO at Thames Card Technology, 44 (126) 877-5555, kworrall@thamescardtechnology.com. Michael Collester has been appointed Chief Operating Officer at JetPay, (215) 741-6970, mcollester@jetpay.com.

Management Changes

© HSN Consultants, Inc. 2015 THE NILSON REPORT 2JANUARY 2017 / ISSUE 1101 / THE NILSON REPORT

SCA 2017 PAYMENTS SUMMIT

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© 2017 HSN Consultants, Inc. THE NILSON REPORT 3JANUARY 2017 / ISSUE 1101 / THE NILSON REPORT

Below is a list of 46 mergers, acquisitions, and corporate financing deals that occurred in 18 countries in December

2016. For all 12 months of 2016, we identified 546 transactions in 57 countries.Prior issues: 1100, 1098, 1096, 1094, 1092, 1090, 1088, 1086, 1084

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MAHINDRA COMVIVA’S mobiquity Wallet, a digital wallet platform for financial institutions, leverages key features of Apple’s iOS 10 operating system. Apps powered by mobiquity Wallet can deploy Siri, Apple’s voice-controlled virtual assistant, to send and request payments using only voice commands. The integration of 3D Touch lets users access the frequently used features such as transaction history and current balance without opening the wallet application. Srinivas Nidugondi is SVP and Head, Mobile Financial Solutions at Mahindra Comviva, 91 (80) 4340-1913, srinivas.nidugondi@mahindracomviva.com, www.mahindracomviva.com.

BNL in Italy, part of the BNP Paribas Group, offers a fully electronic PIN code distribution for its cards. The service, called cl SecurPin, is provided by Tas Group. Tas specializes in software for emoney and cashless payments and manages a “dematerialized” PIN code, both at issuance and for replacement. Marco Tarantola is Deputy General Manager and Head of Retail and Private Division at BNL, 39 (06) 4702-7060, marco.tarantola@bnlmail.com, www.bnl.it. Roberto Carlucci is Director of E-Money Business Unit at Tas, 39 (06) 729-7141, roberto.carlucci@tasgroup.it, www.tasgroup.eu.

B2B PAYMENTS

Tradeshift undisclosed round 1 * U.S. BILL PAYMENT

Instantpay Pre-Series A 2 $5.0 India CREDIT CARD

Nubank Series D 3 $80.0 Brazil CRYPTOCURRENCY

Billon undisclosed round 4 $2.0 U.K. eCurrency Mint Series C 4 * Ireland SETL Deloitte 5 * U.K. ECOMMERCE

iPrice Series A 6 $4.0 Malaysia IDENTITY

3M (ID Business) Gemalto 7 $850.0 U.S. LENDING

Kreditech undisclosed round 8 $11.0 Germany OnDeck debt facility 9 $200.0 U.S. Tandem Bank undisclosed round 10 $42.9 U.K. LOYALTY

Bink angel round 4 $2.4 U.K. LogBuy Reward Gateway 7 * U.K. Perk RhythmOne 7 $42.5 U.S. Purchasing Power Flexpoint Ford 7 * U.S. Thanx Series B 11 $17.1 U.S.

MERCHANT ACQUIRING

CardinalCommerce Visa 7 * U.S. Kalixa Senjo 7 $30.5 U.K. LevelUp JPMorgan 12 $10.0 U.S. Nayax SafeCharge 13 * Israel Openpay BBVA Bancomer 7 * Mexico Paystack seed funding 14 $1.3 Nigeria MOBILE PAYMENTS

Dream Payments undisclosed round 15 $1.5 U.S. Firepay Standard Bank 16 * So. Africa Glidera Kraken 7 * U.S. ParkX Passport 7 * U.S. PayPoint Volkswagen Financial 7 $32.5 U.S.

SwissPay seed funding 17 $1.5 Switzerland Walletron undisclosed round 18 * U.S. MONEY TRANSFER

Global CashSpot Trailblazer Resources 7 * U.S. Wyre Series A 19 $5.8 U.S. NETWORK TECHNOLOGY

Solacia Giesecke & Devrient 20 * Korea P2P PAYMENTS

Kyash Series A 21 $8.5 Japan PERSONAL FINANCE

MoneyLion Series A 22 $22.5 U.S. PREPAID CARDS

MaCarteCadeau ifeelgoods 7 * France PROCESSING

Online Banking Solutions Fiserv 7 * U.S. SECURITY

Cyberfend Akamai 7 * U.S. EverCompliant Series A 23 $9.5 Israel InAuth American Express 7 * U.S. Privacy seed funding 24 $2.2 U.S. QuoVadis WISeKey 7 * Bermuda Socure undisclosed round 25 $13.0 U.S. Zighra seed funding 26 $1.0 Canada

SOFTWARE

Appetize undisclosed round 27 $20.1 U.S. LoyalTree SessionM 7 * U.S. Vend Series D 28 $9.1 New Zealand

*Terms not disclosed. 1From Santander InnoVentures. 2From RB Investments and Kaleden. 3Led by DST Global. 4Investors not disclosed. 5Undisclosed equity stake. 6Led by Asia Venture Group. 7Acquisition. 8From Rakuten. 9From Credit Suisse. 10From House of Fraser. 11Led by Icon Ventures. 12Investment was made in Septem-ber 2016. 13Purchased minority stake. 14Including Tencent and Comcast Ventures. 15From Connecticut Innovations. 16Purchased majority stake. 17Including Edipresse Groupe. 18From Western Union. 19Led by Amphora Capital. 20Purchased 16.3% of shares. 21Led by Jafco. 22Led by Edison Partners. 23Led by Arbor Ventures. 24Led by Index Ventures. 25Led by Flint Capital. 26Including MaRS and Export Development Canada. 27Led by Shamrock Capital. 28Led by Movac. © 2017 The Nilson Report

AmountCompany Buyer/Investor (mil.) Country

AmountCompany Buyer/Investor (mil.) Country

Investments & Acquisitions December 2016

Investments & Acquisitions — December 2016

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The ninth largest POS terminal manufacturer in the world has shipped more than five million

devices since selling its first device in 2007 in China. Today, New

POS Technology sells terminals in more than 60 countries

through 144 sales agents. Its newest terminal is the

Android 4.4-based 9210, which uses only a single

chip. The 9210 is powered by a

32-bit Cortex-A9 security

processor. Standard memory and storage

configurations for the device are

1GB RAM and 8GB

flash, with larger capacities available. Communication modes include 4G, Wi-Fi, Bluetooth, and GPRS. A built-in 5 million pixel camera handles 1D and 2D scanning. The 9210’s Trusted Execution Environment architecture secures the application and is compatible

with Global Platform client APIs. PTS 4.X PCI compliant model 9210 measures 184 mm x 84 mm x 60 mm and weighs 420 grams.

The 9210 is EMV Contact Level 1 and Level 2 and EMV Contactless Level 1 certified and UnionPay Security certified. New POS is CMMI-Dev Level 3 appraised and RoHS and CE compliant. Jerry Yang is Overseas Manager at New POS Technology

Limited in Shenzhen, China, 86 (755) 8693-8425,

jerry.yang@newpostech.com, www.newpostech.com.

credentials. Over time, Amazon would license its patent to other companies including Apple, and it

would extend 1-click checkout to third-party sellers on the Amazon platform. However, it is PayPal that maintains the largest online merchant acquiring network for what it calls “one-touch” checkout. PayPal had one-touch checkout connections to 5 million online

sellers at year-end 2016. That is more than the number of third-party sellers on Amazon.com and

more than 10 times larger than either Visa or Mastercard through Visa Checkout and Masterpass. Those digital wallets provide one-touch checkout to fewer than 400,000 online sellers. Amazon’s 1-click patent expires this year.

On the payment initiation side, the PayPal wallet is held by nearly 200 million consumers worldwide, the majority in the U.S. Amazon.com had 304 million active accounts worldwide at the end of 2016. Visa Checkout and Masterpass have

fewer than 30 million customers.

PayPal is working

to protect and expand its digital payment market share among digital wallet providers

including Apple, Samsung, Google, Mastercard, and Visa by signing partnership agreements with issuers and card account processors, beginning in the U.S.

Citi has signed an agreement with PayPal to enable its cardmembers to add Citi credit and debit cards to their PayPal wallet for online, in-app, and in-store purchases. It is the

first bank to work with PayPal as a token requester for its customers’ credit and debit cards. Citi previously announced it will work with Mastercard and Visa on tokenized cards for their wallets. Citi, which offers a proprietary Citi Pay mobile wallet for Android smartphone

Devices are sold in more than 60 countries through 144 sales agents.

...had one-touch checkout connections to 5 mil. online sellers at year-end.

New POS Technology Terminal

> see p. 6

PayPal Adds Citi, FIS, and Discover from page 1...

© 2017 HSN Consultants, Inc. THE NILSON REPORT 5JANUARY 2017 / ISSUE 1101 / THE NILSON REPORT

Data (TeleCheck), Equifax, CrossCheck, United TranzActions, and Secure Payment Systems continue to offer check guarantee, even as the number of check payments for goods and services steadily declines.

For most retailers the discount rate for check guarantee is comparable to what they pay for credit card acceptance.

Ecommerce fraud prevention company Signifyd is one of three companies offering online merchants in the U.S. a guarantee against fraud losses from card payments.

Signifyd Guaranteed Payments reimburses merchants for the full face value of approved transactions as well as for all taxes and shipping costs and payment card chargeback fees.

Signifyd’s machine-learning risk management platform reviews thousands of data points in real time

to approve transactions. The discount rate online sellers pay for Signifyd guarantees is comparable to what they pay for credit card acceptance.

Signifyd recently announced it will boost its decision making by adding ThreatMetrix to the list of third-party sources it uses to evaluate risk.

ThreatMetrix verifies more than 20 billion transactions a year for 30,000 websites and applications for more than 4,500 customers. Those customers provide financial, ecommerce, payments,

lending, media, government, and insurance services. They use ThreatMetrix to complement their in-house fraud management or as part of their risk management platforms.

ThreatMetrix holds information on 1.0 billion of the 3.5 billion people in the world who use the

users, also supports Apple Pay, Samsung Pay, and Android Pay. All involve tokenization.

FIS provides online and mobile banking services to 5,000 financial institutions in the U.S. and a total of 80 million consumers. Top financial institution customers include PNC and KeyBank. FIS has signed an agreement with PayPal to link credit or debit cards or checking accounts to new or existing PayPal accounts. The corporate logo of the financial institution card issuer will be what

consumers see when they open their PayPal wallet. FIS clients will promote PayPal during online

and mobile banking sessions. Discover has signed a

token requestor agreement with PayPal. The arrangement

follows similar deals PayPal made in 2016 with Visa and Mastercard. PayPal can request tokens to stand in for Discover card primary account numbers

in PayPal wallets. These tokens would be for cards issued directly

by Discover or any third-party issuer on the Discover Network.

PayPal and Discover are also working together to permit Discover cardholders with CashBack Bonus balances to pay for new online and mobile browser-based purchases using their earned rewards. Cardholders

will be able to use the PayPal app to check their Discover CashBack Bonus status.

Prior issues: 1099, 1094, 1091

Discount rates compare to what merchants pay for credit cards.

CONTACTS

Citi Ralph Andretta is Head of U.S. Branded Cards in Long Island City, New York, (718) 248-1622, ralph.andretta@citi.com, www.citi.com.

Discover Financial Services Diane Offereins is Executive VP and President, Payment Services at Discover Financial Services in Riverwoods, Illinois, (224) 405-3092, dianeoffereins@discover.com, www.discovernetwork.com.

FIS Anthony Jabbour is COO, Banking & Payments at FIS in Jacksonville, Florida, (904) 438-6767, anthony.jabbour@fisglobal.com, www.fisglobal.com.

Guaranteeing Online Payments Against Fraud from page 1...

PayPal Adds Citi, FIS, and Discover from page 5...

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Mir, Redcompra, eftpos, KB Kookmin, Samsung Card, Pagobancontact, Multibanco, and PostFinance.

Cards issued in the United States generated 36.35% of the global brand purchase transaction total in 2015. The U.S. market share is projected to fall to 27.63% by 2025, even as the region is expected to see transactions grow by 8.44 billion annually to reach 166.94 billion in 2025.

In Europe, global brand cards initiated 25.27% of the worldwide total in 2015. Europe’s share is projected to fall to 23.15% by 2025, despite the fact that it is projected to gain 8.25 billion transactions annually to reach 139.84 billion.

Asia–Pacific’s share of 26.95% in 2015 is projected to reach 39.50% by 2025. Purchase transactions totaled 61.19 billion in 2015, and are projected to reach 238.61 billion in 2025.

Latin America’s 7.48% share in 2015 is projected to decline to 6.43% in 2025. However, purchase transactions are projected to reach 38.82 billion by 2025.

Canada’s 2.06% share in 2015 is expected to slip to 1.36% by 2025 when transactions are

projected to reach 8.23 billion.

Middle East-Africa’s 1.89% share at the end of 2015 will be 1.93% by the end of 2025 as transactions are projected to reach 11.66 billion.

Prior issues: 1078, 1055, 1032

internet. With that anonymized identity information, ThreatMetrix analyzes connections between devices and locations, personal information, cybersecurity threats, and prospective buyer or other consumer behavior to protect against fraud. The company earns revenue on a per-transaction basis.

ThreatMetrix will promote Signifyd’s guarantee service to its customers. Smaller merchants will

be able to access ThreatMetrix through the link to Signifyd. Leah Evanski is VP, Strategic Alliances at ThreatMetrix

in San Jose, California, (415) 741-4147, levanski@

threatmetrix.com, www.threatmetrix.com.

Skye Spear is VP, Partnerships at Signifyd in San Jose,

California, (508) 951-4326, skye.spear@signifyd.com,

www.signifyd.com.

Prior issues: 1085, 1073, 1071, 1009

By 2025, transactions for goods and services will reach 604.10 bil.

2025(outside)

2015(inside)

36.3%27.6%

6.4%23.2%

1.9%>2.1%>

1.9%>

1.4%>7.5%

25.3%

26.9% 39.5%

© 2017 The Nilson Report

Market Shares ofPurchase Transactions Worldwide

Asia-Pacific

up1255

U.S.down871

MiddleEast/Africa

up4

LatinAmerica

down106

Canada

down70

Europe

down212

Change in Basis Points

Purchase Transactions by Global Brand Cards — Projected through 2025 from page 1...

© 2017 HSN Consultants, Inc. THE NILSON REPORT 7JANUARY 2017 / ISSUE 1101 / THE NILSON REPORT

been used in other countries to encourage savings among low-income individuals for more than a decade. Walmart MoneyCard prepaid cardholders can transfer funds from their card balance

into MoneyCard Vault, a no-fee savings feature that is part of their prepaid product. For every dollar a cardholder moves into MoneyCard Vault each month, they receive one entry in a monthly nationwide

Prize Savings drawing that awards 500 cash prizes. The grand prize is $1,000. Winnings are added directly into their Walmart prepaid MoneyCard. Walmart

authentication of payments and other transactions using real-time flash messages on the USSD (unstructured supplementary service data) signal channel to request PIN authentication. The signal channel is available on every mobile telephone in the world. Voice and data operate on a telephone’s media channel.

Every phone number in the world is unique. Boloro’s platform adds a self-selected PIN to provide end-to-end transaction validation including a millisecond authentication audit trail. Boloro’s technology does not require a smartphone or internet connection. No cardholder information is ever outside of the card issuer’s control.

In a Boloro-managed authentication, cardholders receive a flash message display on their handset, to which they respond with a PIN. They don’t have to open an app. Flash messages, which are designed to stand out from other text messages

on a mobile phone, are delivered by every mobile network operator (MNO) in the world. In the U.S., Amber Alerts sent by MNOs when a suspected child abduction has occurred are flash messages.

Boloro says that fraud and disputes are eliminated because only the cardholder has the handset and knows their PIN. Its technology is device and operating system agnostic. The cardholder’s handset retains no trace of the transaction authentication process. The PIN is not stored on the handset and disappears as soon as it is entered. Boloro’s technology can be used in combination with information about the handset, billing information, and location, making it even more comprehensive. Flash messages have the added benefit of being

immune to malware that can capture one-time passcodes inputted in an SMS message.

Issuers can integrate card account numbers with phone numbers and host the Boloro authentication

platform on their secure site for direct customer transaction authentication. They can

also choose to switch authorization validations to Boloro on a software-as-a-service basis while retaining all card account data on their site.

Boloro’s platform permits cardholders to initiate card payments

by inputting only their phone numbers at a point-of-sale terminal and then

selecting a button on the terminal that identifies their card issuer.

Allowing merchants to initiate payments is a network “push” model. By comparison, Safaricom’s Mpesa mobile payment program in Kenya, which also uses the flash channel to deliver a PIN, is a network “pull” model. The pull model requires consumers to make as many as five steps before a purchase is completed. The push model requires only one step — respond to the prompt for their PIN.

In addition to payment authorizations, other applications for Boloro’s technology include mass transit (when linked to an NFC application), government benefits, bill payments, as well as mobile banking fraud protection.

Boloro has received more than $7.0 million in funding. Its platform is available for licensing by banks, merchants, and MNOs. The technology does not require an app but can be layered on top of any licensee’s app regardless of operating system.

Boloro has customers in Pakistan, Afghanistan, Jordan, Bahrain, and South Africa and will soon launch programs in India, Nigeria, Zambia, and the United States.Karl Kilb is CEO at Boloro Global Limited in New

York, (917) 854-7121, karl.kilb@boloro.com,

www.boloro.com.

...uses real-time flash messages on the USSD signal channel.

Walmart’s Prepaid Card “Prize Savings” Program from page 1...

Boloro Multifactor Authentication from page 1...

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MoneyCard Mastercard and Visa cards are issued by Green Dot Bank.

Walmart’s program is an effort to broaden prepaid cards beyond their seemingly fixed role as transaction accounts used almost exclusively for retail purchases and bill payments. Walmart Prize Savings, which launched in August 2016, had rewarded 2,000 customers with cash prizes as of November. While the number of winners is small — 500 a month so far — the number of cardholders motivated to use the program is large.

Commonwealth, formerly known as D2D Fund, created the first prize-linked savings

program in the U.S. The company is a 501(c)(3) nonprofit that exists to incubate product and public policy ideas, which can be turned over to for-profit companies and governments to be sustained at scale. Commonwealth’s first PLS program was with eight members of the Michigan Credit Union League in 2009. At that time, Michigan was the only state that allowed savings programs to be linked to the award of cash prizes to consumers. Since then, Commonwealth

has worked to change prohibitions. Prize-linked savings programs can now be offered in 22 states, and banks and credit union leagues in 12 states offer PLS programs. Commonwealth says these programs have generated more than $153 million in savings by more than 75,000 Americans.

Traditional financial institution savings programs are hard to market and generate little enthusiasm. The current low interest rate environment adds a further disincentive. PLS programs can generate consumer interest. Commonwealth can act as a consultant or a partner to companies that want to offer a PLS program.

Tim Flacke is Executive Director at Commonwealth

in Boston, Massachusetts, (617) 541-9066,

tflacke@buildcommonwealth.org,

www.buildcommonwealth.org.

Steve Streit is CEO at Green Dot in Pasadena,

California, (626) 765-2195, sstreit@greendotcorp.com,

www.greendot.com.

Daniel Eckert is Senior VP, Financial Services at Walmart

Stores in Bentonville, Arkansas, (479) 204-2123,

daniel.eckert@wal-mart.com, www.walmart.com.

New York’s law is similar to prohibitions in other states, which collectively account for more

than 50% of the U.S. population. In addition to bans against surcharges, most of those states also prohibit merchants from adding credit card processing fees they pay to the price of goods they sell. These states do permit merchants to offer discounts if people pay with cash instead of a credit card. A surcharge and a discount could be the same amount of money. The National

Retail Federation wants the top court to consider surcharges as a freedom of speech issue

under the First Amendment to the Constitution. One option for the Supreme

Court is to send the case back to New York’s state court system for further clarification.

American Express received a favorable decision from the U.S. Court of Appeals for the Second Circuit in September 2016 when it overturned a lower court decision that had demanded Amex discontinue its practice of forbidding merchants from steering cardholders to

competitors’ products because they were cheaper. The U.S. Department of Justice and multiple U.S. states filed a petition with the Second Circuit in November requesting a review of that decision by all of the court’s judges.

Visa, Mastercard, and a dozen banks in the U.S. filed a petition with the U.S. Supreme Court on December 29, 2016, asking it to overturn a decision of the U.S. Court of Appeals for the Second Circuit, which threw out a $7.25-billion settlement between the card networks, banks, and U.S. merchants.

Prior issues: 1090, 1072, 1069, 1031

Visa and Mastercard filed a writ with the Supreme Court on Dec. 29.

Banks and credit unions in 12 states offer PLS programs.

Card Industry Litigation Updates from page 1

© 2017 HSN Consultants, Inc. THE NILSON REPORT 9JANUARY 2017 / ISSUE 1101 / THE NILSON REPORT

investments in mobile payments, which will be covered in our next issue. Included are sales of portfolios of card processing contracts, payment gateways, payment service providers, and

more, as well as angel, seed, venture, and strategic funding rounds. Combined, the value of the 112 acquisition and investment transactions exceeded $10.00 billion.

The acquisitions, which occurred in 18 countries, were valued at more than $8.30 billion. The exact figure cannot be known because terms were not disclosed on more than half of all sales,

UnionPay Merch. Svcs. undisclosed round1 $295.0 China Payoneer Series E2 $180.0 U.S. Stripe undisclosed round3 $150.0 U.S. PaySimple undisclosed round4 $115.0 U.S. Net1 Int’l Finance5 $107.0 So. Africa Circle Internet Series D6 $60.0 U.S. MC Payment Series B7 $40.0 India Toast Series B8 $30.0 U.S. Transactis Series E9 $30.0 U.S. Elec. Pay. & Svcs. undisclosed round10 $25.0 India Excel loan facility11 $25.0 U.S. Zooz Series C12 $24.0 Israel PayCommerce Series B13 $22.0 U.S. Signifyd undisclosed round14 $20.0 U.S. Simple Series C15 $20.0 Israel Omise Series B16 $17.5 Thailand Inicis NHN Entertainment17 $15.0 Korea Tipalti Series B18 $14.0 U.S. Boku undisclosed round19 $13.8 U.S. AEVI undisclosed round20 $10.0 Germany i3Vertical Series A21 $10.0 U.S. LevelUp undisclosed round22 $10.0 U.S. nanoPay Series A23 $10.0 Canada Payleven Series D24 $10.0 Germany PromisePay Series A25 $10.0 Australia Kyash Series A26 $8.5 Japan Verse Tech. Series A27 $8.3 U.S. CC Avenue NSI Infi nium28 $6.7 India Conekta Series A29 $6.6 Mexico Bluefi n Pay. Sys. undisclosed round30 $6.0 U.S.

PayKey Series A31 $6.0 Israel Payworks Series A32 $4.5 Germany Magellan SAS Keyware Technologies33 $4.4 France Payzer Series B34 $4.3 U.S. CFG Merch. Sol. line of credit35 $4.0 U.S. Payby Group seed funding36 $3.4 U.S. Coda Payments Series B37 $2.0 Singapore ePaylater angel funding38 $2.0 India Fattmerchant Series A39 $1.4 U.S. PayCar seed funding40 $1.4 France Paystack seed funding41 $1.3 Nigeria Sezzle seed funding42 $1.3 U.S. StoreHub seed funding43 $0.9 Malaysia Plynk seed funding44 $0.8 Ireland Vindi Series A45 $0.5 Brazil Int’l Pay. Proc. seed funding43 $0.1 U.S. Alpha Pay. Cloud undisclosed round46 * Ireland Ascend undisclosed round47 * Thailand BillingTree undisclosed round48 * U.S. Complete Merch. Serv. undisclosed round49 * U.S. DirectPay undisclosed round10 * Kenya Easy Pymt. Gateway SafeCharge28 * Gibraltar Nayax undisclosed round50 * Israel Paylike undisclosed round43 * Denmark Processing.com undisclosed round43 * U.S. Razorpay undisclosed round43 * India Red Dot undisclosed round51 * Singapore Stripe undisclosed round52 * U.S. TNS undisclosed round43 * U.S.

*Terms not disclosed. See issues 1101, 1100, 1098, 1096, 1094, 1092, 1090, 1088, 1086, 1084, 1082, 1080 for informaiton about the investors in the companies mentioned here. 1From Everbright-IDG.2Led by Tech. Crossover Venture. 3Co-led by CapitalG and General Catalyst. 4From Providence Strategic Growth. 5Purchased 18% interest. 6Led by IDG Capital. 7Led by ESW Manage. 8Led by Aetius Capital. 9Including Capital One. 10From Apis Partners. 11From Great American Capital. 12From Target Global Ventures. 13Led by Tritium Partners. 14Including American Express. 15Led by Social Capital. 16Led by SBI Ventures. 17Purchased 5% stake. 18Led by SG Ventures. 19From existing investors. 20Led by Adveq. 21Including First Tennesee Bank. 22From JPMorgan. 23Led by Goldman Sachs. 24Led by HV Holtzbrinck Ventures. 25Led by Carsales. 26Led by JAFCO Japan. 27Led by Greycroft Partners. 28Purchased minority stake. 29 From Femsa, Jaguar Ventures, and Variv. 30 Including Camden Partners and Napier Park Global. 31Led by e-Ventures. 32Led by Rumford. 33Purchased 40% stake. 34Including IDEA Fund. 35From i2B Capital. 36Led by SparksLab Global. 37Led by IMJ Investment Partners. 38Investors not identifi ed. 39Wet Paint Ventures. 40Led by BNP Paribas. 41 Including Tencent and Comcast Ventures. 42From E-Merge. 43Investors not identifi ed. 44Led by Bank of Ireland. 45 From Bozano Investmentos and Criatec2. 43Investors not identifi ed. 46From First Quay Capital. 47From Ant Financial. 48From Parthenon Capital. 49Led by GCP Capital Part-ners. 50From SafeCharge. 51 Led by MDI Ventures.52From Sumitomo Mitsui Card. © 2017 The Nilson Report

AmountCompany Buyer/Investor (mil.) Country

AmountCompany Buyer/Investor (mil.) Country

Merchant Acquiring and Related Processing Companies 2016Investments

Acquisitions/Investments in Merchant Acquiring ‘16 from page 1...

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including Visa’s acquisition of CardinalCommerce, SumUp’s acquisition of Payleven, and SIA’s acquisition of UniCredit.

The $2.36-billion initial public offering of Denmark-based Nets, which acquires card transactions throughout Scandinavia, was the largest deal in the acquisition category. Second largest was the $2.35-billion purchase in the U.S. of the TransFirst merchant portfolio by TSYS. Advent and Bain, private equity firms that sold shares in Nets in 2016, were the prime movers behind the third largest deal last year, the $1.17-billion purchase of Setefi/Sanpaolo Card in Italy.

Of the 10 largest acquisitions, 4 occurred in the U.S., 3 occurred in Europe, 2 were in Asia, and 1 was in the Middle East.

Investments in merchant acquiring and related processing companies totaled more than $1.34

billion. Of the 59 investment transactions, 13 were announced without financial terms being disclosed. Among those transactions was an investment in U.S.-based Stripe, one of the most successful mobile point-of-sale processors. Among the angel, seed,

venture, and strategic investors were financial services companies — American Express in Signifyd, Sumitomo Mitsui Card in Stripe, Capital One in Transactis, and Bank of Ireland in Plynk.

Prior issues: 1100, 1098, 1096, 1094, 1092, 1090, 1088,

1086, 1084, 1082, 1080

Acquisitions exceeded $8.30 bil. and investments topped $1.34 bil.

Nets IPO $2,357.0 Denmark TransFirst TSYS $2,350.0 U.S. Setefi /Sanpaolo Card Advent/Bain/Clessidra $1,170.0 Italy VocaLink Mastercard $920.0 U.K. Moneris Solutions Vantiv $425.0 U.S. CardConnect FinTech Acquisition $350.0 U.S. Emerging Markets Pymts. Network Int’l $340.0 U.A.E. Citrus Pay PayU $130.0 India NWP RealPage $67.9 U.S. Nera Pymt. Solutions Ingenico $64.7 Singapore eWay Global Payments $50.0 Australia Moip Pagamentos Wirecard $40.7 Brazil Provus Group Wirecard $34.9 Romania Kalixa Senjo $30.5 U.K. MeritCard Solutions Paysafe $16.0 U.S. VersaPay BluePay Canada $7.6 Canada C4U - Malta Net1 International $3.9 Malta Bill2Mobile Bango $3.5 U.S. Bluebridge Pushpay $3.1 U.S. AJB Verifone * Canada Axia Payments i3 Verticals * U.S. Bill & Pay i3 Verticals * U.S. Billhighway BluePay * U.S. BlueSquare Applied Merchant Systems * U.S. CardinalCommerce Visa * U.S. CollectorSolutions JetPay * U.S. Currency Select Global Blue * Australia

EFT Canada management buyout * Canada Emvantage Payments Amazon * India Esber Cash i3 Verticals * U.S. Focus Sync Payments * U.S. iCheque CashFlows * U.K. ICP Int’l Concardis * Germany iTransact Payroc * U.S. Lyudia Ingenico * Japan Maas Global Solutions Intrix Technology * U.S. Masterpayment Net1 * Germany Onebip Dimoco * Italy Openpay BBVA Bancomer * Mexico PayVector aiCorp * U.K. PayGate Direct Pay Online * So. Africa Payleven SumUp * Italy Realtime Elec. Payments undisclosed buyer * U.S. Safeguard Bankcard Finical * U.S. ScholarFX Flywire * Canada SmartLink EchoSat * U.S. Sziget Cardnet * Hungary Telekom New Media Dimoco * Hungary Transact24 Net1 * Hong Kong TransCentra SourceHOV * U.S. UniCredit SIA * Italy Vault Payments Electronic Payments * U.S. Zelis (formerly Pay-Plus) Parthenon Capital * U.S.

Amount Company Buyer/Investor (mil.) Country

*Terms not disclosed. © 2017 The Nilson Report

Merchant Acquiring and Related Processing Companies 2016 Amount Company Buyer/Investor (mil.) Country

Acquisitions

© 2017 HSN Consultants, Inc. THE NILSON REPORT 11JANUARY 2017 / ISSUE 1101 / THE NILSON REPORT

(£1.9 billion) above the value of the outstanding receivables for the MBNA portfolio. MBNA, a subsidiary of U.S.-based Bank of America, has about

five million customers and outstandings of around $10.00 billion. When the acquisition is complete, Lloyds’ market share of outstandings in the U.K. is expected to increase from

15% to 26%. Barclays is expected to continue to lead with a 29% share. The MBNA/Lloyds transaction was the largest sale of a credit card portfolio in the world in 2016.

Ranked by 2015 credit card purchase volume, Barclays was also the largest U.K. issuer, followed by HSBC, RBS/NatWest, and then Lloyds. The

combination of Lloyds and MBNA will create the second largest credit card portfolio in the U.K. based on purchase volume, and fifth largest in Europe behind BPCE, BNP Paribas, Barclays, and CartaSi.

When combining credit and debit card purchase volume, Lloyds was already the top payment card issuer in the U.K. as well as in Europe due to its debit card purchase volume, which was $220 billion in 2015.

Lloyds says it expects the MBNA acquisition to increase group revenue by $790.3 million (£650 million) a year. Lloyds brands include Halifax and Bank of Scotland. It intends to keep the MBNA brand, which will be the largest credit card brand in the group.

The sale of the MBNA portfolio marks the termination of Bank of America’s consumer credit card businesses outside the U.S. Previous sales occurred in 2011 and 2012 when portfolios were sold in Canada (to TD Bank), Ireland (to Apollo Capital Management), U.K. (small business cards to Barclays), and Spain (to Apollo Capital Management). Bank of America continues to issue commercial credit card products in Europe through its Global Transaction Services unit. Paul Gordon is Managing Director, Consumer &

Commercial Cards at Lloyds Banking Group in London,

U.K., 44 (1702) 278-272, paul.gordon@lloydsbanking.

com, www.lloydsbank.com.

It was the largest sale of a credit card portfolio in the world in 2016.

MBNA Lloyds $2,350.0 U.K. Samsung Card 2 Samsung Life Insurance $1,290.0 Korea Serv. Tech. Pagamentos 3 FleetCor $1,050.0 Brazil Costco/Amex Co-brand Citi $1,000.0 U.S. Embratec 4 Edenred $253.3 Brazil Cabela’s 5 Capital One $200.0 U.S. Boscov’s 6 Alliance Data * U.S. Bridgewater Bank Nat’l Bank of Canada * Canada Citi Banco Santander * Argentina Citi Itau Unibanco * Brazil Coles 7 Citi * Australia Eurowag undisclosed investor * Czech Rep. Fidelity Investments 8 U.S. Bank * U.S. Intrust 9 U.S. Bank * U.S. JetBlue/Amex Co-brand 10 Barclaycard * U.S. The Children’s Place Alliance Data * U.S. Travelcard FleetCor * Netherlands Williams-Sonoma Alliance Data * U.S.

Premium Portfolio Buyer (mil.) Country

Premium is the amount paid above the value of outstanding receivables. *Terms not disclosed. 1Outstandings of $9.95 billion. Transaction expected to close in the fi rst half of 2017. 2Amount paid for a 37.5% stake in the card issuer. 3Purchase amount. 4Edenred owns 65% and Embratec owns 35% of a fl eet card joint venture. 5Portfolio of $5.20 billion in Visa outstandings, expected to close in the fi rst half of 2017. 6Portfolio of $200 million in private label outstandings. 7Outstandings were $660 million (880 million AUD). 8Portfolio of $1.60 billion in Visa and American Express outstandings. 9Portfolio of $112.3 million in Visa and Mastercard outstandings. 10Portfolio of $1.25 billion in American Express outstandings.

© 2017 The Nilson Report

Credit Card Portfolio Deals 2016

Lloyds Buys MBNA Credit Cards from page 1...

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© 2017 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, PublisherJanuary 17, 2017