Chase Net 2017

Its tough to find time to Blog as a CEO…. Most of you my blogs are sometimes snarky and tactless (making NOT offending someone a new consideration).

I was taking a look at JPMC’s latest investor presentation and noticed that ChaseNet is gone.. Why? I’ve written on JPMC and ChaseNet a number of times over last 6 yrs. Today I’ll cover my views on the latest developments and my views on JPMC’s ChaseNet strategy. Lets recap first: Continue reading “Chase Net 2017”

PIN Debit at the POS

Most of you have read that Walmart, Home Depot and Kroger have launched new litigation against Visa for “PIN” and Debit.  This issue is so complex it makes my head spin… For those unfamiliar with some of the basics see this article, my prior blog on PIN debit consolidation,  AT Kearney, Digital Transactions: PIN Debit Claw Back and Pinless PIN Debit. Continue reading “PIN Debit at the POS”

Browser Tokens – Payments in OS Part 4

My last articles on this topic were
I’ll forgive you if you didn’t see the big news out of Google I/O. There is a MUST READ article in Android Police that is spot on. Summary? Google (Chrome/Android) and Apple (Safari) are ready to integrate payment tokens in the browser.. Buy buttons will be integrated into ads, product listings, or a single “pay” button with no subsequent user information to fill out “quasi one-click”. From Android Police

Continue reading “Browser Tokens – Payments in OS Part 4”

“One Click” for Ads

I was hoping to see rollout of a long rumored payment innovation at Facebook. All I can gather is that they must still be in testing.. but the idea is just brilliant.

Facebook has a tremendous advantage over just about every other advertiser.. its consumers log in before use. Facebook is rumored to be in the midst of  integrating payment tokens into advertising. This means when you click on that beautiful North Face Jacket, or those Climbing shoes that the payment instrument (and even the authorization) is integrated. The only thing that the consumer would need to do is confirm shipping address. Wow.. talk about end running the payment specialists.. this is “one click” for ads.

The very idea that there is a “payment specialist” needed between the ad and the seller is going away.. payments are becoming a generic infrastructure services that no one cares about. See Payments in the OS. In this case IDENTITY TRUMPS everything.. if I know who you are.. everything else is just accounting. Someone should go out and write a patent on a similar flow using blockchain.

My guess is that Facebook would be the beta launch for VBV/MSC and the new 3DS 2.0 spec. So not only would this be a great experience, merchants using this would have a liability shift onto the bank and a 20-30bps rate advantage over traditional eCommerce payment acceptance.  (see my blog on Civil War). This flow would hold on both mobile and desktop.

The other implication here is for the banks using TCH token vault.. sure you can vault your own tokens.. but this also means that you must keep up with the fast changing specs in EMVCo and the other users of the specs in MasterPass and Visa Checkout.. doing your own vaulting may mean that consumers can’t do some of this other really cool stuff.

ApplePay in Browser – March 2016

News today from Jason at Re/Code – ApplePay in Browser this Year

OK.. so I was a year off! (see Blog ApplePay in Browser by Summer 2015).

Not much surprise here.. as I outlined in my January blog on topic ApplePay in browser has been for over a year. I don’t have time for a long blog so will make bullets on what I think are latest “big items” Continue reading “ApplePay in Browser – March 2016”

Changing Economics of Payments

2 Dec 2015

Happy ‘After’ Thanksgiving everyone, I’m coming out of my tryptophan coma and thought I would go for a mental stretch. This is a pretty big topic, and I won’t do it justice. Thanks in advance for your comments and perspective. [Note I’m not naming the titles of my reference blogs and used only URLs.] Continue reading “Changing Economics of Payments”

2015 End of Summer Payments Update

15 September 2015

Well kids are back in school and Europe is tan. 6 weeks left till Money 2020.. and I just completed our Series A here at Commerce Signals.. wow what a summer!!

This blog is a little bit more of an inventory of things going on.. mixed with some views and general rumblings.

EMV. Its going to happen in October and the big merchants are ready. Two top processors told me that small merchants are in big trouble, particularly as the issuers will be pushing back all fraud to non-EMV merchants VERY aggressively. Think of it this way. EMV does NOTHING to help the small merchant.. currently no business bares cost of fraud in card acceptance. In October merchants must change to accept EMV or they will have the risk of fraud on their business. ISOs to the rescue? This will be a great opportunity for Poynt, Square and other merchant friendly POS/Payment providers.

Acquirers. First Data is moving toward IPO. This is a very tough business.. but as I’ve said before my bets are around companies that can be merchant friendly.. Acquirers are the entity that own the merchant relationship in a 4 party network.. so it is theirs to lose. Nothing has really taken off (incrementally here), Clovr, Card Spring, First Data’s Palantir. Why?? Acquirers have largely been put into a pricing box at the top 500 merchants with a well defined service (not much room for incremental services), and have had their reputation impugned through the ISO channels at the low end (5-7% cost of acceptance). For any Acquiring CEO reading this blog.. my action for you today is to take a look at the invoice you send to a merchant. 2-4 pages of fees that are indecipherable.. When merchants don’t trust you they don’t buy more from you. This is why I would not invest in this space without a clear understanding of the disruption.

Private Label. Rumor is that both Amex and Paypal are looking at M&A here. Makes sense for Amex particularly given need for transaction volume, 3 party model and their state of the art infrastructure. Merchants love Amex customers.. and Amex does the best job in the industry of proving the value that they bring (justifying their hefty cost).

MCX. They are set with payment infrastructure from FIS and First Data. The payment capability is there, and it takes time to build a highly scalable payments company. I just don’t see the need for stand alone app. My guess is that there will be an MCX payment instrument that sits in Apple/Google wallet… just silly to compete on “presentment”. Is the alliance fracturing? I think all participants would love to have a payment instrument that they could own and control. The issue is that there is no agreement on anything beyond payment. Mobile is too important a channel to delegate to a consortium. Also, these are fierce competitors.. The real challenge? Creating a great consumer experience, quite frankly their product team was one of the worst I’ve ever met in any company. No wonder they were considering paydiant.. one of the only options out of the DIY.

Poynt and Square. This seems to fit right in to the flow..  I love both of these companies. Why? As described above the payment industry has been VERY unkind to retailers. Poynt and Square give retailers a greatly simplified hardware, software, and acquiring solution. As a small merchant moving from 5-7% acquiring to 2.75% is a rather simple value proposition. I believe Poynt has several significant advantages over Square: 1) Square has a 6month+ certification process on Apple devices. Whenever it changes anything in its app… it has to go through recertification by Apple. Poynt is the ANDROID of Point of Sale solutions 2) By staying off of Apple AND adding a separate stand alone processor for non-payment applications, Poynt can deploy more applications more quickly and act as a platform for other services. 3) Poynt has a powerful data solution that puts merchants back in control of their data, 4) Ergonomics/Design. Just beautiful. Chip/DIP, Chip Contactless, QR, BLE, customer facing touch screen (not a swivel stand) all work seamlessly without having to pick up the terminal and try to stick your card into a slot. Well done Osama and team.

Paypal? Not much of a stock pop.. I’m very high on the Dan and Bill. But their core asset (eCommerce risk management) is being rendered moot by great mobile auth. When Microsoft (OnePay), Google (Wallet), Visa (Checkout), Apple (ApplePay) all moving into eCommerce they also risk loosing consumers. One of my biggest beefs is their treatment of Venmo volume in TPV (it is 0bps). Rumors are also that they will lose Uber within next 6 months.. and worked a special deal to keep them with take rate below 90bps (perhaps a driver of their margin drop). Merchants are a natural ally here, but Don K really mucked things up with their POS try. It will take 2 years to get things in shape here.

Visa/MA.. They are my biggest holdings.. no change in my views here. VDEP and MDES have positioned both with new power to tokenize and own the rules on mobile. I expect to see a new CNP rate for tokens within next 9 months.

Google. Big news 9/10 (See Blog). Google wallet now on all phones KitKat 4.4 and above (50-60M in US). I love it.. This is the PLATFORM FOR PAYMENT INNOVATION. The user experience is not on par with Apple (or even Samsung Pay).. but Android users are more technical (only 6% of iPhone owners have ever used ApplePay). There are some BIG pluses over Apple, I love that it shows the ereciept and location of purchase for instance (most issuers). Very surprised that Google is still looking for bi-lateral deals from issuers (in order of $10M with no bps). This is why we don’t see many issuers at launch.  What is funny is that there is a “free path” to issuers as well. If they don’t want their card art.. issuers can still just “turn it on” via the V/MA intranet tokenization route (register BINs). Funny that the big hold out is JPM.. given its data play.

Apple. I wouldn’t be surprised to see an ApplePay product announcement in October at Money 2020. Note that my track record is near perfect here so I don’t want to mess up 2 years of predictions. I know that Apple has ApplePay working in Safari, don’t know if they will roll this out our not. I also know that Apple went back to issuers asking for an “Amex like experience with eReciepts”. The issuers said “sure we can do that.. lets first tear up that 15 bps contract and talk about what you will pay me”. My sources say that beacons are a part of the next launch.. they could be just feeding me *&^*(&.  My guess on new release? 1) New Developer Support Program and rollout of Private Label/ Synchrony, ADS and Citi. 2) Improved “eReciept” process (like Amex) in order to compete with Google. 3) ApplePay in Safari (60% chance.. it is working but don’t know if they want to push yet before new token CNP rate tier). 4) Beacons at POS. Improve retail experience with beacons (40%.. again working in lab but don’t know of readiness).

The big Apple news that everyone is talking about is their plans to finance phones directly (end running carrier subsidy dependencies). As I’ve stated before, Apple’s phone is already capable of enabling a virtualized SIM. This is the one step needed before Apple enables consumers to “switch” to the lowest cost network every month.. or every day. This obviously has big implications for Gemalto as well. Google is 2-3 years behind, but is making more progress in enabling wi-fi as network option.

Innovation. Chain getting investment from NASDAQ, Visa, Citi.. is big news. I remain very positive on use of bitcoin as a disruption to Payments (see blog structural changes to payments). I also live industry specific solutions where payments are combined with something else to solve a problem. hyperWALLET for global payroll, justpushpay for construction, WEX for fleet/gas. I also love payments and data (hence commerceSignals), in this Klarna and Sofi are just tremendous ideas.

Going South

Samsung Pay. No change in my views here. What is sad is that they didn’t know that their entire application is incompatible with Android M (until they read my blog). Working with a competing app on their own phones with no registration.. just sad.

Card Linked offers. Guys don’t believe the press.. all of these things are dying. Even the most successful (cardlytics). Citibank is rumored to have called EDO to come pick up the pallet of their equipment (after 300M+ spent).  The good news is that their transactional data is in better shape for use.

Gemalto. Stock is at a 5 year low.. I told you guys to be short here. NO MCX, No GSMA NFC SWP… now Apple is pushing the SIM out of the phone altogether (or soon will).

Monitise. I want to end on a humorous note. This company did a great job at enabling online banking 8 years ago.. enabling “check your balance” functionality via a quick integration to the ATM switch. They pivoted in 2006/8 to support development on an array of handsets (Nokia, RIM, Apple, Samsung, …) with their only competition being mFoundry (acquired by FIS). But the phone complexity went away with 2 mobile OS (Android and iOS) and the rapid shift of mobile from the periphery to the center of the customer relationship. No bank will outsource the CENTER.. mobile development was a specialized skill.. now it is mainstream. As if this were not sad enough, they hired a US network exec with no EU experience, no mobile experience and no network of issuers (that liked her). Then she pushed out the founder.. only to quit last week.  Wow .. I hope the BBC can make a Silicon Valley (HBO) equiv.. only make it more of a Shakespearian tragedy.

Payments – June 2015 Current State/Updates

Mobile Payments – 2015 Current State

Lots of stuff going on right now.. hard for me to keep track. Sometimes just writing this silly blog helps me coalesce all the information coming my way.

As I outlined in January’s Structural Changes in Payments, payments and banking are evolving at an amazing pace. Thought I would cover news worthy items that touch on the top areas I outlined:

  1. Risk and Identity
  2. Data/Commerce Value
  3. Consumer Behavior/Trust/Acceptance
  4. Issuance/Customer Acquisition/HCE
  5. Regulatory/Rates/Rules (Fees)
  6. Mobile/Payment in the OS


Top Items

  • Visa and Mastercard have “won” the payment wars. They are in control of mobile payments, EMV, tokenization of cards, new rules (ex VDEP). They are now starting to “tilt” their networks to be more merchant friendly to enable commerce collaboration (see my blog from last week). Even in Europe where interchange will be capped at 30bps for credit and 20bps for debit the networks win (no change in network fees).
  • Visa working to buy Visa Europe.
  • Visa’s VDEP program. A major announcement. VDEP is to Tokens what VisaNet is to Cards. VDEP is the KEY ENABLER of Payments in the OS. Visa has established rules that will greatly accelerate mobile payments. Removing all economic incentives and data from wallet providers and enabling frictionless enrollment/adoption/use that is consistent with how physical cards work today. Wallets must find another way to make money. I am a very very big fan of Visa’s move here and the have greatly expanded their role as the hub of remote payments.
  • After the global adoption of VDEP (ie rollout of ApplePay/Android Pay), I expect to see a new V/MA rate tier for use of tokens in mobile. “Cardholder present” that will mean liability shift to bank and a rate reduction of around 10-25bps (in the US). Timeline is late 2016. Huge implications for paypal here.
  • Google’s Android Pay moves payment out of an APP and into the OS (Android). Not much in new features, but as this is based upon Host Card Emulation.. this has 3 very big implications: 1) Tokens and Proprietary Architectures have beat out the GSMA’s vision for SIM based payment (NFC) and 2) Google has expanded the Android platform to allow any app to take advantage of payment (see Google Creating Platform), and 3) Google has moved payment into Google  Mandatory Services (GMS) like maps, search and mail for Android M. MNOs and OEMs can still choose the free Android, or build their own.. but it comes at a big loss.
  • Plastic cards work REALLY WELL. Consumers just don’t care about mobile payments at the point of sale. Less than 6% of iPhone 6 users use ApplePay (Behavior change requires value)
  • Consumer behavior is continuing a massive shift toward mobile… nothing has ever moved this fast. Important to note that over 65%+ of interaction is within an App. This creates great opportunity for ApplePay/AndroidPay…


  • Real Time Payments in the US… What a mess! This month NACHA agreed to create 3 intraday windows. The Fed working group still pushes a string uphill with token bank support. The Clearing House (TCH) is trying to position itself as both the token utility and the hub for real time (to no avail). On this one the TCH board has asked them to move, but bank operating teams have told them to get lost. The Banks token pilot (3 yrs ago) hasn’t moved an inch.
  • Somewhat related to RT/P2P Payments, Mastercard seems intent on re-invigorating MoneySend as a way to enable a downline (ie disbursement channel) to support commercial business (ex dividend payments, insurance distribution, mobile wallet P2P). If I were Visa I would keep a keen eye on the bilateral debit routing facility established for ApplePay.. particularly transactions from CrossRiver Bank (as a sort of ODFI). Why is this in my “top items”…. ? If Mastercard is indeed doing this, it will set up a new competitive dynamic with issuers and commercial payments companies. Debit card heads don’t exactly like someone using their cards as free P2P platforms (see VMT blog from 5 yrs ago).
  • Microsoft rumored to be working on payments platform for Internet Explorer (as neither one of the Windows Mobile users were interested in using it on their phone). This would be a MAJOR hit to Paypal as Internet Explorer is over 50% of the global user base (all versions). Microsoft hasn’t succeed in its quest for “Live” accounts.
  • MCX has lost its CEO Dekkers Davidson (a good friend) and its platform Paydiant (sold to my good friend Dan at Paypal). My view is that MCX members agreed to collaborate on payments, but due to their competitive nature could not agree to collaborate on marketing/loyalty.  A payments only wallet had no future.  Paypal is a natural alliance partner of MCX and retailers.. but their 325-375 bps take rate must go down to under 50bps for this to ever
  • Trust/Identity. Mobile + Tokens has created the most secure payment method in the world (far better than EMV). While there was some enrollment fraud at Apple, this has now been resolved. For more information see “Stripe of Identity” and, Structural Change in Payments. Google has also added biometrics into the new Android M.
  • JPM’s Payments Enigma (See Blog ChaseNet) is a running industry joke (ex asking Amazon to put a chase wallet button next to one click checkout). Unfortunately JPM pushed out (or moved to mortgage compliance) everyone that knew how to run it. One Card Exec said it this way “Chase is building a F(*(^ing island, the rest of us will be building a continent”. Another example of this is Visa’s support of Citi in winning the Costco deal (Citi is Mastercard’s largest issuer, JPM is Visa’s).
  • Lots of payment M&A Activity… Best source is FT Partner’s analysis here. The data space is even more crazy (ex Oracle on Datalogix/Bluekai, Neilsen, WPP, …)
  • MASSIVE Talent Churn. From the unfortunate death of Ed Gilligan, Amazon’s loss of its top 2 payment execs (Matt Swann to Citi, Mary Kay to Square), Google’s loss of Frank Young (to Global Payments), Bank of America (Jason Blackhurst to Visa), the industry is changing like never before.

Other Items

  • ISIS is dead bought by Google
  • Samsung Pay. Samsung bought loopPay for its MST technology filling the acceptance gap (non-EMV in US and Mexico) only to find out 3 months later that Google did direct MNO deals (in US) to make AndroidPay GMS. Samsung can’t load its own wallet on its own phone.. As of last month they still were telling banks everything is fine. I told the banks to go talk to Verizon
  • Twitter Acquires Cardspring.. I liked this one (Merchant friendly card linked offers). Problem is that Cardspring was built on FirstData’s Offerwise Platform (IBM) not their Unix/Clover stuff
  • Payment Terminals and Points of Sales. Heartland gives up on Leaf, FD is still pushing on Clover, and Verifone is pitching a new data service
  • Payment data is leaking everywhere.. CommerceSignals is working to help bring a little structure here