FOR 46 YEARS, THE LEADING PUBLICATION COVERING PAYMENT SYSTEMS WORLDWIDE FEBRUARY 2017 / ISSUE 1103

Mastercard and Visa — U.S. 2016 Mastercard and Visa credit, debit, and prepaid cards issued in the U.S. General Purpose rands U.S. generated $4.326 trillion in purchase volume (spending at merchants) in 2016, an increase of 9.5% over 2015. All consumer Purchase Volume in 2016 (Tril.) and commercial card products are included in that amount. > see p. 9 with Change vs. 2015 Alipay QR Code Payments to the U.S./Canada up $1.549 Visa Alipay, the largest processor of online and mobile payments in 15% Credit China, is building brick and mortar merchant acceptance networks for its mobile wallet product in the U.S. and Canada to serve up Visa $1.465 visiting Chinese consumers. The company says that more than Debit 7% > see p. 5

Sionic Mobile’s Rewards Marketplace down American $0.695 Airlines, hotels, car manufacturers, mobile network operators, 3% Express large retailers, and other enterprises that offer mobile apps for customer loyalty see opportunities to “earn and burn” rewards Mastercard up $0.693 points at each other’s locations. One example of earn and burn Credit 6% > see p. 12

Overdraft Credit for Millennials up $0.619 Mastercard Debit The Consumer Financial Protection Bureau says that revenues to 7% financial institutions in the U.S. from overdrafts consumers made from their demand deposit accounts (DDA), commonly known up Discover $0.121 as checking accounts, totaled $17 billion in 2016. The typical 3% > see p. 7 ID Insight Fights Account Takeover Fraud © 2017 The Nilson Report When ID Insight started offering products in 2003 to combat takeover of an existing account as well as fraud tied to opening a new account in the name of an unsuspecting existing cardholder, General Purpose Cards — U.S. 2016 a hot fraud trend was criminals trying to change the address of a Credit, debit, and prepaid consumer and commercial cards > see p. 6 issued in the U.S. for use on the Visa, Mastercard, American Express, and Discover networks generated Equinox Payments Luxe 6000m Terminal $5.143 trillion in purchase volume (spending at merchants) The modularly manufactured Luxe 6000m from Equinox in 2016, up 7.4% over 2015. Payments supports stand-alone, mobile, integrated, and semi- Included in that general purpose card purchase volume integrated point-of-sale interfaces with communication options are PIN-based debit card figures for Visa (Interlink) and that include multiport cable, Bluetooth BLE, Wi-Fi, 4G LTE, Mastercard. Not included are PIN-based cash withdrawals > see p. 5 > see p. 7

INSIDE 2 – 3 Fast Facts CHARTS 4 Investments & Acquisitions — Jan. 9 Visa vs. Mastercard Purchase Vol. 4 Investments & Acquisitions — 7 U.S. Credit Card Outstandings 10-11 U.S. Cards — Credit, Debit, & Pre- January 2017 8 Market Shares of Purchase Vol. paid Visa, Mastercard, American 8 U.S. General Purpose Cards Express, and Discover Cards

© 2017 HSN Consultants, Inc. THE NILSON REPORT VISIT US ONLINE AT WWW.NILSONREPORT.COM KEYBANK has entered into a long-term revenue-sharing FTSI, an independent provider of technology services to 150 partnership with First Data for the bank’s merchant credit unions and community banks, mostly in the western acquiring business. Key Merchant Services is the 32nd U.S., has signed an exclusive agreement to offer Vantiv’s largest acquiring business in the U.S. It has been in a joint debit, credit, and ATM processing services and related venture with Elavon, a unit of U.S. Bancorp. Key will now support to its clients. Daniel Valdez is President at FTSI, use First Data processing and related support services (818) 241-9571, [email protected], www.ftsius.com. exclusively. Chris Foskett is EVP and Head of Corporate Bill Hampton is SVP and GM of Financial Institution Services Development at First Data, (212) 515-0232, christopher. at Vantiv, (913) 254-7781, [email protected], [email protected], www.firstdata.com. www.vantiv.com.

FAST PLANET PAYMENT’S dynamic currency conversion (DCC) UNIRUSH and MASTERCARD must pay restitution in the service will be offered at 70,000 ATMs in the U.S. operated $10-million range to consumers who were denied access

FACTS by Worldpay. DCC at ATMs enables international travelers to their prepaid funds or the ability to make payments to the U.S. to withdraw U.S. currency from an ATM while with those funds when Mastercard Payment Transaction seeing the amount debited from their account in their Services, payment processor for the RushCard, experienced FEBRUARY 2017 own currency. Melissa Jones is SVP North America Sales technical problems with account management. The com- ISSUE 1103 & Acquirer Relations at Planet Payment, (516) 670-3200, panies will also pay a civil penalty totaling $3 million. The [email protected], www.planetpayment.com. Consumer Financial Protection Bureau took the action. About No paid Mike Cowart is VP & GM, ATM & MSP ISO at Worldpay 45,000 of the 650,000 active RushCards were affected in the advertising. U.S., (678) 587-1330, [email protected], 2015 problem. www.worldpay.us. No sponsored MASTERCARD’S Masterpass digital payment service is ZIPLINE, provider of mobile and card-based private now accepted at 10,000+ small and medium-sized merchant content of label debit payment products, has received U.S. patent customers of Sage Payment Solutions. Paul Bridgewater is any kind. Ever. #9,489,673 covering use of a digital token to facilitate an CEO at Sage Payment Solutions, (703) 269-9154, ACH payment transaction. Danito Portal is CIO at ZipLine, [email protected], www.sage.com. It is never (954) 449-9540, [email protected], www.zipline.biz. Linda Kirkpatrick is EVP Merchants & Acceptance at permissible for Mastercard, (914) 249-2000, linda_kirkpatrick@ PIGGY, a coupon and cashback rewards service, enables subscribers to mastercard.com, www.mastercard.com. consumers to search for available discounts and coupons forward or print from more than 2,000 retailers before making online CITI credit card customers in the U.S. can scan their cards this issue. Doing so purchases. The company offers a free, 5 star-rated browser using their mobile device’s camera when activating the Citi violates copyright add-on that works on Google Chrome, Safari, and Firefox Mobile App. Once the card account number is scanned, they to scour the internet for the best deals. It automatically only need to input their CVV, date of birth, and last four laws. adds discounts at checkout and gives customers cashback digits of their Social Security number to activate their card. rewards on their purchases. John Anderson is CEO, They do not have to input the 16-digit card account number. (407) 310-5883, [email protected], Pam Kornfeld is SVP, Head of Cards Servicing Journeys, www.joinpiggy.com. (718) 248-7525, [email protected], www.citi.com.

Conferences & Seminars

Seamless Payments Africa 2017: March 14- SCA 2017 Payments Summit: March 27-30, Seamless Payments Asia 2017: April 19-20, 15, 2017. The Cape Town International 2017. The Renaissance Orlando at Seaworld, 2017. The Suntec Singapore International Convention Centre, Cape Town, South Africa. Orlando, Florida. Estimated attendance: 900. Exhibition & Convention Centre, Singapore. Estimated attendance: 2,000. Cost for the Cost for the four-day conference is $1,245 until Estimated attendance: 8,000. Cost for the two- two-day conference is $1,046 until February 24 March 3 and $1,495 after that. Subscribers to day conference is $896 (group rates available). (group rates available). Subscribers to The The Nilson Report will receive a 20% Subscribers to The Nilson Report will Nilson Report will receive a 10% discount. discount. (Use code NILSDISC.) Contact receive a 15% discount. (Use code JWQE.) Contact Ashleigh Hunt at Terrapinn, Bryan Ichikawa at Smart Card Alliance, Contact Jancis Yap at Terrapinn, (65) 6322-2708, 27 (11) 516-4030, [email protected]. (703) 582-7862, bichikawa@smartcardalliance. [email protected]. Register at Register at www.terrapinn.com/exhibition/ org. Register at www.scapayments.com. www.seamless-expo.com. seamless-africa.

2 VISIT US ONLINE AT WWW.NILSONREPORT.COM Order Back Issues / Preview Upcoming Conferences / View Newsletter Archive 1 VISIT US ONLINE AT WWW.NILSONREPORT.COM Order Back Issues / Preview Upcoming Conferences / View Newsletter Archive ACI WORLDWIDE will offer merchants worldwide chargeback compliance, KAZKOMMERTSBANK, the largest bank in Kazakhstan based on assets, risk mitigation, and fraud management services from Chargebacks911 to has started JCB card acceptance. The merchants are already linked to the fight illegitimate chargebacks. Monica Eaton-Cardone is CIO at Global Risk Discover Global Network (DGN). JCB has a partnership with DGN. Technologies (parent company of Chargebacks911), (727) 461-1089, Takashi Suetsugu is General Director, Eurasia at JCB International, [email protected], www.chargebacks911.com. Jackie Barwell is 7 (495) 647-1036, [email protected], www.global.jcb/en/. Director of Fraud Product Management at ACI, 44 (148) 379-4984, Nurlan Zhagiparov is Managing Director at Kazkommertsbank, [email protected], www.aciworldwide.com. 7 (727) 258-5145, [email protected], www.kkb.kz.

PAYMENT CLOUD TECHNOLOGIES (PCT) has launched the No.1 VTEX, which provides a digital commerce platform to companies including Currency Prepaid Mastercard Travel Card in partnership with Fexco. PCT Walmart, Danone, Whirlpool, Electrolux, Pandora, Avon, and Lego, will offer is a prepaid card program manager and account processor. Fexco provides its customers Adyen’s payment gateway and risk management support. dynamic currency conversion and multicurrency pricing to customers in 29 Jean Christian Mies is SVP at Adyen, 55 (11) 4130-2505, jean.mies@ countries. Through its No.1 Currency brand, Fexco provides foreign exchange adyen.com, www.adyen.com. Mariano Gomide de Faria is co-CEO at Vtex, services online and in more than 100 branches in the U.K. Ian Clowes is CEO 44 (741) 312-8811, [email protected], http://en.vtex.com. at PCT, 44 (777) 495-6574, [email protected], www.paymentct.com. INCOMM, a prepaid product and transaction services company operating Denis Cleary is Managing Director at Fexco, 353 (66) 976-1258, dcleary@ in 30+ countries, has signed a five-year exclusive partnership with Ipiranga fexco.com, www.fexcoms.com. in Brazil to sell prepaid cards at 2,000+ convenience stores. Frank Monaco is SPIRE PAYMENTS has signed a five-year contract with Nets Merchant EVP at InComm Int’l, (905) 286-5558, [email protected], Services to supply its full range of POS devices and related support services. www.incomm.com. Kazem Aminaee is CEO at Spire Payments, 44 (787) 688-3730, AEVI has added Appointedd’s booking system app to its Global Marketplace [email protected], www.spirepayments.com. Asger Hattel store for merchants and acquirers. Appointedd’s online scheduling solution is Group Executive VP, Merchant Services at Nets, 45 (2) 948-2646, provides merchants with a fully integrated online booking suite that enables [email protected], www.nets.eu. 24/7 bookings, instant online payments, as well as a range of employee WIRECARD is issuing the pay2d Visa card, the first virtual prepaid card for management tools. Leah Hutcheon CEO at Appointedd, 44 (131) 557-0857, online payments in the Netherlands, in partnership with prepaid program [email protected], www.appointedd.com . Mike Camerling is manager 3V Beneleux. Consumers can top up their accounts online through Chief Product Officer at AEVI, 44 (134) 438-4800, [email protected], iDeal or by bank transfer. They get a free IBAN and can do card-to-card www.aevi.com. transfers. Jack Harris is VP Financial Institutions & Fintech at Wirecard, RS2 SOFTWARE, a provider to issuers and acquirers of card management 44 (780) 188-5417, [email protected], www.wirecard.com. software, has a partnership with Alpha Payments Cloud to give banks in Angelique Brussel is Managing Director at 3V Benelux, 31 (6) 5421-2108, Thailand a one-stop-shop for omnichannel payment processing. Banks [email protected], www.pay2d.nl. receive access to multiple financial and nonfinancial services through a single integration. Oliver Rajic is CEO at Alpha Payments Cloud, (65) 8660-0335, Featured Conference [email protected], www.alphapaymentscloud.com. Radi Abd El Haj is CEO at RS2, 49 (6102) 730-030, [email protected], TRANSACT 17 — POWERED BY ETA www.rs2.com.

Three-Day Conference Management Changes May 10-12, 2017 Mandalay Bay Convention Center Paul Marcantonio has been appointed Head of U.K. and Western Las Vegas, Nevada Europe at ECommPay, 44 (203) 036-0043, pmarcantonio@ ecommpay.com. Janet Johnston has been appointed Head of Topics include: 22nd century payments, security technologies, border- Payment Services at Raphaels Bank, 44 (203) 751-1600, less commerce, and politics and policy. Speakers represent: Google, [email protected]. Anita Boomstein, formerly at Amazon, Nordstrom, Samsung, Dunkin’ Donuts, Walmart, and many more. Cost is $1,545 nonmembers. (Use code NIL250 for a $250 Hughes Hubbard and Reed, has been appointed Chair of the discount off the nonmember rate.) Contact Del Baker Robertson at Global Payments Practice at Manatt, Phelps & Phillips, ETA, (202) 828-2635 x204, [email protected]. (212) 790-4580, [email protected]. Jay Meyers has been appointed Chief Information Officer at ZipLine, (954) 449-9540, Register at www.etatransact.com. SAVE [email protected]. Cristina Astore has been appointed Subscribers to The Nilson Report Director, International Division at SIA, 39 (02) 6084-2720, will receive a $250 discount. $250 [email protected].

© 2017 HSN Consultants, Inc. THE NILSON REPORT FEBRUARY 2017 / ISSUE 1103 / THE NILSON REPORT 3 © HSN Consultants, Inc. 2015 THE NILSON REPORT FEBRUARY 2017 / ISSUE 1103 / THE NILSON REPORT 2 Investments & Acquisitions — January 2017

Below is a list of 18 acquisitions payments, loyalty programs, cryptocurrency. The monetary and 39 angel, seed, venture, and money transfers, payment value of 27 of those 57 total strategic investment transactions processing, prepaid cards, security transactions were not disclosed. that occurred in 15 countries in technology, merchant acquiring, The disclosed values totaled January 2017. The U.S. led with ecommerce platforms, business- $1.85 billion. Ant Financial’s 29 deals, followed by Europe to-business payment platforms, $880-million deal for MoneyGram with 19, Asia-Pacific with 8, ATM processing, foreign was the largest. and Africa with 1. Those deals exchange, alternative lending, involved credit cards, mobile hardware manufacturers, and Prior issues: 1101, 1100

Investments & Acquisitions January 2017

Amount Amount Company Buyer/Investor (mil.) Country Company Buyer/Investor (mil.) Country ATM PROCESSING Ipsidy debt fi nancing20 $3.0 U.S. Avery Scott PAI 1 * U.S. Ipsidy debt-to-equity swap21 $5.5 U.S. QikServe undisclosed round 2 $3.4 U.K. iyzico Series C 22 $13.0 Turkey Spark ATM Systems Cardtronics 1 * South Africa iZettle debt fi nancing 23 $48.2 Sweden B2B PAYMENTS iZettle Series D 14 $16.1 Sweden Tradeshift Wipro * U.S. Kashing angel funding 24 $0.2 U.K. CREDIT CARDS Latipay Series A25 $3.0 New Zealand Union Tank Eckstein (UTA) Edenred 3 $88.8 Germany No. American Merch. Serv. Clarus Merchant Services 1 * U.S. CRYPTOCURRENCY PAI Merchant Serv. Div. Clearent 1 * U.S. BitFury Credit China 4 $30.0 China ParentPay Schoolcomms 26 * U.K. Blockstack Series A 5 $4.0 U.S. PayCash Daimler Financial 1 * Luxembourg Ripio Series A 6 $1.9 U.S. Sterling Payment Technol. EVO Payments 1 * U.S. SatoshiPay undisclosed round 7 $0.9 U.K. TechProcess Ingenico 1 * India ECOMMERCE United Payment Services Direct Connect 1 * U.S. FreeCharge Series D 8 $56.6 India MOBILE PAYMENTS Magento undisclosed round 9 $250.0 U.S. Button Series B 27 $20.0 U.S. FOREIGN EXCHANGE Qvivr Series A 28 $5.0 U.S. Q Money FairFX 1 * U.K. MONEY TRANSFERS HARDWARE MoneyGram Ant Financial 1 $880.0 U.S. Advanced Card Systems HNA EcoTech 10 $67.0 Hong Kong TransferWise Seedcamp 29 * U.K. LOC Pay Systems Intellitix 1 * Netherlands PREPAID CARDS LENDING UniRush Green Dot 1 $147.0 U.S. Activehours Series A 11 $22.0 U.S. PROCESSING Funding Circle debt fi nancing 12 $40.0 U.K. ClassWallet Brentwood Associates 30 * U.S. Funding Circle Series F 13 $100.0 U.K. Doshii seed funding 31 * Australia Zenbanx SoFi 1 * U.S. Dwolla Series E 5 $6.9 U.S. LOYALTY SECURITY Buzz Points undisclosed round 14 $1.9 U.S. Fraugster undisclosed round 32 $5.0 Germany Cartera Commerce Ebates 1 * U.S. Payfone Series E 33 $23.5 U.S. Clutch undisclosed round 14 $5.3 U.S. WISeKey seed funding 14 $1.3 India Edo Interactive Augeo 1 * U.S. *Terms not disclosed. 1Acquisition. 2Led by Maven Capital Partners. 3Purchased fl ok Wix.com 1 * U.S. another 17% of the company’s equity. 4Established a joint venture. 5Led by Union Loyalty Prime Series A 15 $1.1 Germany Square Ventures. 6Led by Huiyin Blockchain Venture. 7Led by Blue Star Capital. 8 9 10 11 MERCHANT ACQUIRING From Snapdeal. Led by Hillhouse. Purchased majority of the equity. Led by 12 13 14 Anaraq Clarus Merchant Services 1 * U.S. Matrix Partners. From British Business Bank. Led by Accel Partners. Investors not disclosed. 15Including Senovo. 16From BlueSquare Resolutions. 17Purchased Applied Merchant Systems undisclosed round 16 * U.S. 60% of the equity. 18From Luminate Capital Partners. 19Purchased controlling BC Technologies Clarus Merchant Services 1 * U.S. interest. 20By existing investors. 21From Stern Trust. 22Led by Vostok Emerging 17 Centro Servizi Consortili PAX Global * Italy Finance. 23From Victory Park Capital. 24From Startup Funding Club. 25Led by Jubilee 1 Concardis Advent/Bain * Germany Capital. 26Merged. 27Led by Norwest Venture Partners. 28Led by Khosla Ventures. Fintech undisclosed round 18 * U.S. 29Sold undisclosed equity stake in a private placement. 30Purchased minority stake. Genesis Payment Solutions MC Payments 19 * Singapore 31From Reinventure. 32Led by Earlybird Venture Capital. 33Led by BlueCross Heidelpay AnaCap 1 * Germany BlueShield Venture Partners. © 2017 The Nilson Report

4 VISIT US ONLINE AT WWW.NILSONREPORT.COM Order Back Issues / Preview Upcoming Conferences / View Newsletter Archive Equinox Payments Luxe 6000m Terminal from page 1... and combinations of each. The device’s software and handles passive pen and finger-based signature architecture combines capture. The smartphone-sized (5.3 in. x 2.6 in. x 0.6 standard Linux/HTML in.) 6000m supports magnetic-stripe, contact chip, with a proprietary operating and contactless chip technology. Use cases include system and enough memory countertop, mobile POS, pay-at-the-table, line- to handle a suite of payment busting, and in-the-field payments. and value-added applications. Equinox Payments is owned by NBS Payment Four available configurations Solutions, which is a wholly owned subsidiary of of power modules provide Brookfield Asset Management, a company with over either attachable wired or battery-charged power ...combines standard Linux/HTML and are available with with a proprietary OS. or without an integrated receipt printer. The Luxe 6000m $225 billion of assets under management. Brookfield meets PCI PTS 5.0 Equinox LLC (dba Equinox Payments) was formed security standards in 2014 after the acquisition of assets from Equinox and supports all major Payments, LLC. Last year the company shipped more point-to-point encryption than 200,000 POS terminals. technologies. The EMV card Rob Hayhow is Vice President at Equinox Payments reader is Level 1 and 2 approved. in Phoenix, Arizona, (480) 551-7857, rhayhow@ The device’s multimedia touch screen, equinoxpayments.com, www.equinoxpayments.com. which is protected by Corning Gorilla Glass, measures 2.4 inches (diagonally) Prior issues: 1101, 1095, 1094, 1086, 1082, 1079, 1034

Alipay QR Code Payments to the U.S./Canada from page 1... three million Chinese travelers will At the point of sale, Alipay manufacturer Verifone. Alipay be in the U.S. and Canada in 2017. mobile wallet transactions are QR is working with independent Alipay is owned by Ant Financial code-based payments. Consumers sales organizations that provide Services Group, which is an either use their smartphone’s card payment processing to affiliate of Alibaba, China’s largest camera to scan a QR code on Chinese restaurants and other ecommerce establishments where tourists marketplace will frequent, particularly in operator. California, Florida, New York, Unlike all and Nevada. Alipay QR code top acquirers acceptance is live in airport shops. of payments There are more than 80 apps from merchants, available for the Alipay mobile Alipay does wallet including ordering a taxi, not own the payment processing the merchant’s countertop or sharing a restaurant bill, receiving contracts with merchants it present a QR code on their phone’s offers from merchants, and wealth serves. It operates as a third-party screen to be scanned by a seller’s management. The Alipay customer provider. However, if it did own barcode scanner. demographic differs from top card the acquiring contracts, Alipay Alipay has established network competitor UnionPay in would rank as the 8th largest partnerships with First Data to its focus on younger consumers. In acquirer in the world based on help it grow merchant acceptance addition to lifestyle apps, Alipay the amount of purchase volume in the U.S. and Canada, and it offers millennials a revolving (spending) handled for merchants. will work with others. It also has credit product. partnerships with POS terminal > see p. 6

© 2017 HSN Consultants, Inc. THE NILSON REPORT FEBRUARY 2017 / ISSUE 1103 / THE NILSON REPORT 5 Alipay QR Code Payments to the U.S./Canada from page 5 More than 450 million active customers (those The company’s top competitor in China is who have made at least one payment in the last year) WeChat, another QR code-based payment system. have access to Alipay QR code payments at 1 million Though smaller than Alipay in number of payment taxis and 2 million restaurants, supermarkets, transactions generated, WeChat has more active convenience stores, and retailers in China, in addition users (820 million) for its core business, which is a to the 3 retail (Taobao, Tmall, and Juhuasuan) messaging app. UnionPay, China’s top card brand, ecommerce sites of Alibaba. has 800 million credit and debit cardholders and a In 2016, Alipay wallets generated $17.80 billion in merchant network of 21 million locations. purchase volume from 1 billion purchase transactions Alipay has been expanding outside China for two on “Singles Day” (November 11) in China, the busiest years. It has nearly 100,000 acceptance locations in shopping day of the year 26 countries in Western in that country. When Wallets generated $17.80 bil. in Europe and Asia-Pacific Alipay customers make as well as the U.S. and purchase volume on “Singles Day.” online purchases, they can Canada. Both Alibaba and use their phone to scan Ant Financial have equity a QR code at the merchant’s checkout page or use a stakes in Paytm in India. Paytm has 190 million users PIN. Alipay can make direct settlement with more in India for its QR code-based payment service, which than 200 Chinese banks. is available at 350,000 small businesses. Consumers move money into their Alipay wallets Souheil Badran is President, North America at Ant from bank deposit accounts, person-to-person money Financial Services Group in San Mateo, California, (414) transfers, UnionPay debit cards, or Yué Bao money 801-5219, [email protected], https://antgroup.com. market fund accounts, which are jointly owned by Ant Financial and Tianhong Asset Management. Prior issues: 1100, 1096, 1090, 1085, 1084, 1078, 1065

ID Insight Fights Account Takeover Fraud from page 1... cardholder they were targeting so phone numbers is now a hot sent by the financial institution, it that credit card statements with tactic in account takeover, and the is the criminal, not the legitimate problem is worsening. customer, who responds. Criminals recognize ID Insight’s new product that when they helps financial institution fraud initiate fraudulent investigators prioritize their money transfers workflow and handle the most or some other activity not found suspicious phone number change fraudulent transactions would not in a consumer’s prior behavior, requests first. Research findings be discovered for a few months. financial institutions are likely built into ID Insight’s algorithm ID Insight developed a predictive include: the model built with change-of- ...scores the likelihood that a greater the address requests received by geographic banks and credit unions. Every request was made by a criminal. distance night ID Insight analyzed those between a new requests and created a score on to call or text their customer phone number and the old phone the likelihood that the request was to confirm the transaction. number, the larger the risk; there made by a criminal. Anticipating this defense, is a larger risk when the new area More than a decade later, ID criminals use hacked personal code is located a long distance Insight has created a predictive data to pose as the legitimate from the customer’s current model for financial institutions account holder and change the mailing address; changing from that provides a risk score for customer’s phone number. Then a landline to a mobile number, or change-of-phone number when transaction verification vice versa, indicates higher risk requests received. Changing phone calls or text messages are than going from a mobile number

6 VISIT US ONLINE AT WWW.NILSONREPORT.COM Order Back Issues / Preview Upcoming Conferences / View Newsletter Archive to another mobile number; prepaid phone numbers Adam Elliott is President at ID Insight in Minneapolis, and voice-over-IP lines are riskier than landlines or Minnesota, (612) 208-1285, [email protected], postpaid mobile phones; a change in phone number www.idinsight.com. from a rural location to an urban area indicates higher risk than rural-to-rural or urban-to-urban changes. Prior issues: 1093, 1087, 1086, 1063, 1060, 1041, 1040

Overdraft Credit for Millennials from page 1... overdraft triggered a $35 charge Within to the consumer. Overdraft fees minutes of particularly plague people who are approval, Float 18 to 34 years old. sends loan Float is a start-up that sees an proceeds directly opportunity to offer open-ended into the consumer’s credit file at the credit bureaus. credit lines that range from $50 DDA through links to Visa Direct, Millennials comprise the majority to $1,000 to help consumers, Star, Nyce, Pulse, and other of the 53 million Americans who particularly the 83 million debit networks. It reaches those have thin or no files at a credit millennials (25 to 34 years old) networks through an application bureau. Only 37% of millennials facing cash flow problems that programming interface (API) have a credit card. trigger overdrafts. It charges a to Payout. Float serves customers in flat 5% fee of the loan amount. Risk management on Float California and Utah directly When billed, the consumer repays loans does not involve checking a through state-chartered consumer FICO score. It finance licenses. It will expand to Risk management does not involve does include an other states using that model and examination of through partnerships with banks. checking a FICO score. the applicant’s The company has received DDA account $3.0 million in angel funding from the full balance of the loan plus behavior as well as recurring bill Camp One Ventures, Funders the 5% fee. Late payments incur payments, including those for Club, and 500 Startups. a $15 fee. Float originated more digital media subscriptions. Float Max Klein is CEO at Float in than $300,000 in loans in 2016 receives that information from an Hollywood, California, (818) 943- during six months of testing its API to Plaid Technologies. 2034, [email protected], risk management platform. The Positive repayment of a www.hellofloat.com. average loan amount was $300. Float loan will help build a

General Purpose Cards — U.S. 2016 from page 1... and advances at ATMs using Mastercard and U.S. Credit Card Outstandings Visa credit, debit, and prepaid cards, as well as transactions from cards using the Cirrus and Plus 2016 2015 BRAND (bil.) SHARE (bil.) SHARE ‘16 vs.‘15 ATM networks. All debit card figures in this article — text and charts — include prepaid. Visa $419.85 48.78% $362.77 45.29% 15.7% For the first time since 2008, Visa credit cards Mastercard $278.12 32.32% $272.40 34.01% 2.1% generated more purchase volume ($1.549 trillion) American Express* $101.11 11.75% $107.85 13.47% –6.3% than Visa debit cards ($1.465 trillion). For the fourth year in a row, Visa credit cards had better year-over- Discover* $61.56 7.15% $57.94 7.23% 6.3% year growth in purchase volume (up 15.3%) than TOTAL $860.64 100.00% $800.96 100.00% 7.5% Visa debit (up 6.5%), Mastercard debit (up 6.5%),

*Includes third-party issuers. © 2017 The Nilson Report > see p. 8

© 2017 HSN Consultants, Inc. THE NILSON REPORT FEBRUARY 2017 / ISSUE 1103 / THE NILSON REPORT 7 General Purpose Cards — U.S. 2016 from page 7... Mastercard credit (up 6.2%), Discover (up 2.5%), and credit cards declined 15 bps to 13.47%. Visa debit American Express (down 3.0%). cards’ share declined 24 bps and accounted for American Express’s purchase volume in 2016 28.49%, while Mastercard debit cards declined 10 bps totaled $695.44 billion, a decline of $21.85 billion. to 12.03%. American Express’s share dropped 146 bps American Express has been the second largest credit to 13.52%. Discover’s share fell 11 bps to 2.36%. When measuring only the $3.059 trillion in Market Shares of Purchase Volume purchase volume generated by credit card spending at merchants, only Visa gained share. This has been on US General Purpose Cards in 201 true for 7 years in a row. Its share increased 320 bps to 50.64% in 2016, while American Express declined Credit Cards 50% 23% 23% 4% 260 bps to 22.73%, Mastercard declined 38 bps to Only 22.65%, and Discover declined 21 bps to 3.97%. American Express, Discover, Mastercard, and Visa Visa American Express Mastercard Discover credit card outstandings reached $860.64 billion in 2016, up $59.68 billion or 7.5%. Credit Credit card outstandings at year-end on Visa & Debit 59% 14% 25% 2% products increased by $57.08 billion over the prior Cards year, and Visa had the highest percentage increase 2017 The Nilson eport in outstandings versus the other brands, up 15.7%. Mastercard issuers added $5.72 billion, up 2.1%. card brand in the U.S. since 2011. Prior to that, it was American Express outstandings fell by $6.74 billion, third largest. Mastercard credit purchase volume a decline of 6.3%, in large part because of the sales of totaled $692.93 billion in 2016, up $40.72 billion. the Costco and JetBlue co-brand portfolios. Discover Mastercard debit purchase volume totaled $618.78 card outstandings were up $3.62 billion or 6.3%. billion, up $37.88 billion. Discover purchase volume Credit card purchase transactions totaled 34.07 totaled $121.47 billion, up $2.98 billion. billion, up 10.7%. Debit card purchase transactions on Visa credit cards added 207 basis points (bps) of the Visa and Mastercard networks increased to 55.47 market share in 2016 and accounted for 30.12% of the billion, up 7.2%. $5.143 trillion in combined credit, debit, and prepaid The market share of debit card transactions purchase volume. The market share of Mastercard as a percent of all credit and debit card purchase U.S. General Purpose Cards 2016 vs. 2015

DOLLAR VOLUME (bil.) TRANSACTIONS (bil.) CARDS BRAND TOTAL CHG. PURCHASES CHG. CASH CHG. TOTAL CHG. PURCHASES CHG. (mil.) Chg. Visa Credit $1,607.82 15.0% $1,549.09 15.3% $58.72 6.3% 19.19 17.2% 19.12 17.2% 344.7 13.5% Mastercard Credit $724.43 6.4% $692.93 6.2% $31.50 10.9% 7.98 8.1% 7.94 8.1% 199.8 5.2% American Express Credit $700.40 –2.9% $695.44 –3.0% $4.96 33.7% 4.92 –3.7% 4.88 –3.9% 47.5 –17.5% Discover Credit $132.37 3.5% $121.47 2.5% $10.91 16.1% 2.18 4.8% 2.13 4.5% 51.4 –2.5% CREDIT CARD TOTALS $3,165.02 8.1% $3,058.93 8.0% $106.09 9.6% 34.26 10.7% 34.07 10.7% 643.4 6.5% Visa Debit & Prepaid $1,937.99 6.3% $1,464.87 6.5% $473.12 5.6% 43.13 6.6% 39.40 7.1% 493.6 5.6% Mastercard Debit & Prepaid $810.40 5.8% $618.78 6.5% $191.62 3.7% 17.40 7.2% 16.07 7.7% 188.6 3.1% DEBIT CARD TOTALS $2,748.39 6.2% $2,083.65 6.5% $664.74 5.0% 60.53 6.8% 55.47 7.2% 682.2 4.9% CREDIT & DEBIT TOTALS $5,913.41 7.2% $5,142.58 7.4% $770.83 5.6% 94.79 8.2% 89.54 8.5% 1,325.6 5.7% Some prior year fi gures have been restated. Use percent change shown to calculate new 2015 fi gures. American Express and Discover include business from third-party issuers. Figures include PIN-based debit card fi gures for Visa (Interlink) and Mastercard to match their reporting. However, card fi gures for Visa do not include Plus cards that are not Visa cards. © 2017 The Nilson Report

8 VISIT US ONLINE AT WWW.NILSONREPORT.COM Order Back Issues / Preview Upcoming Conferences / View Newsletter Archive transactions combined declined again in 2016, was $81.02, down 1.6% from $82.35. Mastercard’s something that has occurred since 2014. The debit average credit card purchase transaction was $87.23, card share dropped to 61.95% from 62.70%. down 1.8% from $88.78. American Express’s average purchase transaction was $142.51, up 0.9% from Credit card purchase transactions $141.23. Discover’s average purchase transaction was $57.14, down 1.9% from $58.26. increased 10.7% to 34.07 bil. The average amount of a debit card purchase transaction was $37.57, down 0.7%. The average Debit card purchase volume of $2.084 trillion amount of a Visa debit card purchase transaction was accounted for 40.52% of combined credit, debit, and $37.18, down 0.5% from $37.37. The average amount prepaid purchase volume last year, down 34 bps from of a Mastercard debit card purchase transaction was 40.86% in 2015. $38.51, down 1.1% from $38.93. The average amount of a credit card purchase transaction was $89.78, down 2.4% from $92.01. Prior issues: 1080, 1057, 1034, 1011, 988 Visa’s average credit card purchase transaction

Mastercard and Visa — U.S. 2016 from page 1 Purchase volume increased than double that on Mastercard Visa and Mastercard spending, 10.9% on Visa cards. Mastercard credit cards. down from 49.50% in 2015. purchase volume grew by 6.4%. Combined purchase volume This continued a trend. Debit Visa’s market share versus on Mastercard and Visa debit and and prepaid card spending as a Mastercard climbed to 69.68% of prepaid cards reached $2.084 percentage of all card purchase spending at merchants last year, trillion, an up from 68.79% in 2015. increase of 6.5%. Purchase volume for credit cards Combined purchase volume As a percent reached $2.242 tril., up 12.4%. for Mastercard and Visa credit of all Visa and cards reached $2.242 trillion, Mastercard an increase of 12.4%. For the purchase volume (including volume has declined every year third year in a row, credit card credit), debit and prepaid cards since 2011. It peaked that year spending on Visa cards was more generated 48.17% of combined at 52.52%. Visa credit card purchase volume grew 15.3% last year. Visa s Mastercard Purchase Volume (Tril.) Signature and PIN-based Visa 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 debit and prepaid card purchase volume, which includes Interlink, grew 6.5%. Mastercard credit card purchase volume increased 6.2% last year. Signature and PIN-based debit and prepaid purchase volume Credit 0.5 0.8 0.5 0.8 0.5 0.8 0.5 0.8 0.5 0.9 0.5 1.0 0.6 1.1 0.6 1.2 0.7 1.3 0.7 1.5 grew 6.5%. TOTAL 1.50.8 1.60.9 1.60.8 1.90.8 2.00.9 2.11.0 2.31.1 2.51.1 2.71.2 3.01.3 Combined Mastercard and Visa credit card cash advances equaled Debit 0.3 0.7 0.3 0.8 0.3 0.9 0.3 1.1 0.4 1.2 0.4 1.1 0.5 1.2 0.5 1.3 0.6 1.4 0.6 1.5 3.87% of total (purchases and cash) credit card volume, down from 4.02%. This is the lowest share that it has ever been, even Mastercard Credit Debit though the dollar amount has Visa Credit Debit 2017 The Nilson eport been steadily increasing. Visa and > see p. 10

© 2017 HSN Consultants, Inc. THE NILSON REPORT FEBRUARY 2017 / ISSUE 1103 / THE NILSON REPORT 9 Mastercard and Visa — U.S. 2016 from page 9... Mastercard cash advances totaled $90.22 billion in from 3.95%. For Mastercard, cash equaled 4.35% of 2016, up from $83.65 billion in 2015. For Visa, cash total credit card volume, up from 4.17%. Combined accounted for 3.65% of total credit card volume, down Mastercard and Visa credit card outstandings

U.S. General Purpose Credit Cards

Visa Mastercard American Express Discover Category 2016 Chg. 2016 Chg. 2016 Chg. 2016 Chg. ACCEPTANCE LOCATIONS (mil.) 10.7 9.0% 10.7 9.0% 8.5 7.6% 10.4 8.2% CARDHOLDERS (mil.) 123.8 4.6% 91.1 4.3% 35.0 –12.3% 43.1 0.5% CARDS (mil.) 344.7 13.5% 199.8 5.2% 47.5 –17.5% 51.4 –2.5% Per Cardholder 2.78 8.5% 2.19 0.8% 1.36 –6.0% 1.19 –2.9% Per Account 1.22 2.4% 1.20 0.7% 1.27 –1.2% 1.16 –1.5% ACCOUNTS (mil.) 282.0 10.9% 166.0 4.4% 37.4 –16.5% 44.3 –1.0% Per Cardholder 2.28 6.0% 1.82 0.1% 1.07 –4.8% 1.03 –1.4% Active Accounts (mil.) 162.7 9.2% 95.4 2.9% 24.6 –16.3% 20.0 –0.5% Percent Active 57.68% –90 bps 57.48% –85 bps 65.78% 15 bps 45.14% 21 bps TRANSACTIONS (mil.) 19,187.0 17.2% 7,981.0 8.1% 4,917.0 –3.7% 2,175.6 4.8% Per Account 68.0 5.7% 48.1 3.6% 131.5 15.3% 49.1 5.8% Average Amount $84 –1.9% $91 –1.6% $142 0.9% $61 –1.2% Purchases (mil.) 19,120.0 17.2% 7,944.0 8.1% 4,880.0 –3.9% 2,125.6 4.5% Percent of Total 99.65% 5 bps 99.54% –1 bps 99.25% –21 bps 97.70% –26 bps Average Amount $81 –1.6% $87 –1.8% $143 0.9% $57 –1.9% Cash Advances (mil.) 67.0 1.5% 37.0 9.5% 37.0 33.3% 50.0 18.2% Percent of Total 0.35% –5 bps 0.46% 1 bps 0.75% 21 bps 2.30% 26 bps Average Amount $876 4.7% $851 1.3% $134 0.3% $218 –1.7% TOTAL VOLUME (bil.) $1,607.82 15.0% $724.43 6.4% $700.40 –2.9% $132.37 3.5% Per Card $4,664 1.3% $3,626 1.2% $14,745 17.8% $2,577 6.1% Per Account $5,701 3.7% $4,364 1.9% $18,727 16.4% $2,986 4.5% Purchases (bil.) $1,549.09 15.3% $692.93 6.2% $695.44 –3.0% $121.47 2.5% Percent of Total 96.35% 30 bps 95.65% –17 bps 99.29% –19 bps 91.76% –89 bps Cash Advances (bil.) $58.72 6.3% $31.50 10.9% $4.96 33.7% $10.91 16.1% Percent of Total 3.65% –30 bps 4.35% 17 bps 0.71% 19 bps 8.24% 89 bps OUTSTANDINGS (bil.) $419.85 15.7% $278.12 2.1% $101.11 –6.3% $61.56 6.3% Percent of Total Volume 26.11% 17 bps 38.39% –163 bps 14.44% –52 bps 46.51% 120 bps Per Card $1,218 2.0% $1,392 –2.9% $2,129 13.7% $1,198 8.9% Delinquencies (bil.) $9.78 15.2% $6.29 3.0% $1.29 6.2% $1.85 24.5% Pct. of Outstandings 2.33% –1 bps 2.26% 2 bps 1.28% 15 bps 3.00% 44 bps GROSS CHARGE-OFFS (bil.) $16.30 22.0% $12.34 6.3% $2.30 1.0% $1.79 7.6% Pct. of Outstandings 3.88% 20 bps 4.44% 18 bps 2.27% 16 bps 2.90% 4 bps Pct. of Total Volume 1.01% 6 bps 1.70% 0 bps 0.33% 1 bps 1.35% 5 bps Recoveries (bil.) $2.82 13.7% $2.24 1.6% $0.48 3.2% $0.44 0.7% Pct. of Gross Charge-offs 17.30% –126 bps 18.17% –85 bps 20.83% 44 bps 24.80% –170 bps NET CHARGE-OFFS (bil.) $13.48 23.8% $10.10 7.4% $1.82 0.4% $1.34 10.1% Pct. of Outstandings 3.21% 21 bps 3.63% 18 bps 1.80% 12 bps 2.18% 8 bps Pct. of Total Volume 0.84% 6 bps 1.39% 1 bps 0.26% 1 bps 1.01% 6 bps Credit/Nonfraud (bil.) $12.34 24.4% $9.45 7.3% $1.55 0.1% $1.23 10.6% Pct. of Total Volume 0.77% 6 bps 1.30% 1 bps 0.22% 1 bps 0.93% 6 bps Net Fraud Loss (bil.) $1.14 18.3% $0.64 8.9% $0.27 2.5% $0.12 4.9% Pct. of Total Volume 0.071% 0 bps 0.089% 0 bps 0.038% 0 bps 0.089% 0 bps Some prior year fi gures have been restated. Use percent change shown to calculate restated 2015 fi gures. American Express & Discover include third-party issuers. © 2017 The Nilson Report

10 VISIT US ONLINE AT WWW.NILSONREPORT.COM Order Back Issues / Preview Upcoming Conferences / View Newsletter Archive grew 9.9% to $697.97 billion issuers grew 15.7% to $419.85 outstandings increase 2.1% to last year. Outstandings at Visa billion. MasterCard issuers had $278.12 billion. Visa outstandings accounted for 60.15% of combined U.S. Visa and Mastercard Debit & Prepaid Cards Mastercard and Visa outstandings, up from 57.11% the prior year. Visa Mastercard Total Mastercard and Visa credit card Category 2016 Chg. 2016 Chg. 2016 Chg. purchase transactions combined CARDS (mil.) 493.6 5.6% 188.6 3.1% 682.2 4.9% grew 14.4%, reaching 27.06 billion. ACCOUNTS (mil.) 423.0 7.6% 185.0 2.8% 608.0 6.1% Combined Mastercard and Visa Active Accounts (mil.) 249.5 8.0% 105.8 3.6% 355.3 6.7% signature and PIN-based debit and Percent Active 58.98% 22 bps 57.21% 45 bps 58.44% 31 bps prepaid card purchase transactions TRANSACTIONS (mil.) 43,125.0 6.6% 17,400.0 7.2% 60,525.0 6.8% increased 7.2% to 55.47 billion. Per Account 102.0 –1.0% 94.1 4.3% 99.5 0.6% As a percent of combined Visa Average Amount $45 –0.3% $47 –1.3% $45 –0.6% and Mastercard credit, debit, and Purchases (mil.) 39,398.0 7.1% 16,069.0 7.7% 55,467.0 7.2% prepaid purchase transactions, Percent of Total 91.36% 42 bps 92.35% 41 bps 91.64% 42 bps debit and prepaid cards held a Average Amount $37 –0.5% $39 –1.1% $38 –0.7% 67.21% market share versus credit, Cash Withdrawals (mil.) 3,727.0 1.6% 1,331.0 1.8% 5,058.0 1.6% a drop from 68.62% in 2015. Visa’s Percent of Total 8.64% –42 bps 7.65% –41 bps 8.36% –42 bps share of combined Mastercard Average Amount $127 4.0% $144 1.8% $131 3.3% and Visa purchase transactions on TOTAL VOLUME (bil.) $1,937.99 6.3% $810.40 5.8% $2,748.39 6.2% credit, debit, and prepaid cards, at Per Account $4,582 –1.2% $4,381 3.0% $4,520 0.0% Purchases (bil.) $1,464.87 6.5% $618.78 6.5% $2,083.65 6.5% 70.90%, increased from 70.46%. Percent of Total 75.59% 16 bps 76.35% 49 bps 75.81% 26 bps Credit, debit, and prepaid Cash Withdrawals (bil.) $473.12 5.6% $191.62 3.7% $664.74 5.0% cards in circulation with Visa Percent of Total 24.41% –16 bps 23.65% –49 bps 24.19% –26 bps and Mastercard brands increased 7.2% to reach 1.23 billion at Includes PIN-based debit fi gures for Mastercard and Visa (Interlink). © 2017 The Nilson Report year-end 2016. Debit and prepaid cards increased by 31.6 million. U.S. Visa and Mastercard Credit, Debit, & Prepaid Credit cards increased by 50.8 million. Debit and prepaid cards Visa Mastercard Total equaled 55.61% of the total, down Category 2016 Chg. 2016 Chg. 2016 Chg. from 56.85%. CARDS (mil.) 838.3 8.7% 388.4 4.1% 1,226.7 7.2% Visa added 67.0 million cards. ACCOUNTS (mil.) 705.0 8.9% 351.0 3.5% 1,056.0 7.1% Mastercard added 15.4 million Active Accounts (mil.) 412.1 8.5% 201.3 3.3% 613.4 6.7% cards. Visa’s share of credit, debit, Percent Active 58.46% –23 bps 57.34% –16 bps 58.09% –19 bps and prepaid cards in circulation TRANSACTIONS (mil.) 62,312.0 9.6% 25,381.0 7.5% 87,693.0 9.0% was 68.34%, up from 67.40%. Per Account 88.4 0.6% 72.3 3.8% 83.0 1.8% Visa added 41.0 million credit Average Amount $57 0.4% $60 –1.3% $58 –0.1% cards and 26.0 million debit and Purchases (mil.) 58,518.0 10.2% 24,013.0 7.8% 82,531.0 9.5% prepaid cards. Debit and prepaid Percent of Total 93.91% 48 bps 94.61% 29 bps 94.11% 42 bps cards accounted for 58.88% of all Average Amount $52 0.6% $55 –1.4% $52 0.0% Visa cards in circulation in the Cash (mil.) 3,794.0 1.6% 1,368.0 2.0% 5,162.0 1.7% U.S., down from 60.62%. Percent of Total 6.09% –48 bps 5.39% –29 bps 5.89% –42 bps Mastercard added 5.6 million Average Amount $140 4.0% $163 2.6% $146 3.6% debit and prepaid cards and TOTAL VOLUME (bil.) $3,545.81 10.1% $1,534.83 6.1% $5,080.64 8.8% 9.8 million credit cards. Debit Per Account $5,030 1.1% $4,373 2.5% $4,811 1.7% Purchases (bil.) $3,013.96 10.9% $1,311.71 6.4% $4,325.67 9.5% and prepaid cards accounted Percent of Total 85.00% 62 bps 85.46% 21 bps 85.14% 49 bps for 48.56% of all Mastercard Cash (bil.) $531.84 5.7% $223.12 4.6% $754.96 5.4% cards issued in the U.S., down Percent of Total 15.00% –62 bps 14.54% –21 bps 14.86% –49 bps from 49.06%.

© 2017 The Nilson Report Prior issues: 1080, 1057, 1034, 1011

© 2017 HSN Consultants, Inc. THE NILSON REPORT FEBRUARY 2017 / ISSUE 1103 / THE NILSON REPORT 11 © 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.

Sionic Mobile’s Rewards Marketplace from page 1... would be to pay for your mobile programs. Additional POS 100,000 merchants are signed. phone bill using frequent flyer system technology vendors are Larger enterprises include miles. Consortiums of disparate being signed. Lowe’s and Panera. There are no merchants that allow the Enterprise-sized customers exclusivity agreements for the customers they share to redeem gain access to automated data merchants within a particular analysis and vertical market. data-driven ION Commerce Engine dashboards works with Sionic Mobile’s powered GeoSense iBeacon network, which by IBM delivers personalized greetings bonus points earned from other Watson Analytics, allowing to consumers when they walk members already exist. They them to use simple business into a participating marketplace include American Express- rules to deliver individualized member location. The consumer’s operated Plenti in the U.S. and rewards in real time. For phone vibrates and they receive similar Amex-owned programs Mobile Rewards Marketplace a message that reminds them to called Payback in Poland, transactions, enterprises pay pay with the marketplace app. Germany, Mexico, India, and Italy. Sionic Mobile a percentage of the The aim is to create awareness Additionally, there is Air Miles in transaction amount. of the marketplace and generate Canada. All of these programs are For SMBs and consumers, more frequent app usage at all primarily card based. Sionic’s mobile app facilitates participating businesses. The A new competitor is Sionic only mobile- Mobile. It has built a cloud-based to-mobile ...uses simple business rules to web and mobile app consortium payments, deliver rewards in real time. loyalty marketplace that supports which can be mobile payments from most iOS initiated by a and Android devices with links to QR code or a 3-digit code from a consumer can select to pay for the bank-issued credit or debit cards. smartphone. The app designates purchase using a payment card or Every transaction is initiated by a that a participating merchant’s using an existing pool of loyalty mobile app user. reward for the immediate points from any participating Sionic Mobile calls its real- purchase, typically 2% to 10% of merchant. To pay with existing time service Mobile Rewards the checkout amount, be delivered, frequent flyer points at a Marketplace. It connects through for example, in frequent flyer restaurant, the consumer would APIs to the loyalty programs of miles, not as a discount. SMBs pay open the airline’s loyalty app. large enterprises. There are no Sionic Mobile 1% of the checkout Sionic Mobile’s ION Commerce upfront costs, integrations, or amount on top of the fee they pay Engine is part of the General technology upgrades required. to process the card payment. SMB Motors/OnStar connected Small to medium-sized businesses payments are processed by Chase cars initiative that involves (SMBs) participate using Sionic Merchant Services. IBM’s Watson. Mobile’s ION Commerce Engine Sionic is working with Chase, Sionic has received $14.5 (ICE), which works with Verifone, i3 Verticals, and PAI to sign million in investments. Ingenico, Micros, and Aloha/ enterprise and SMB participants Ron Herman is CEO at Sionic Mobile NCR (soon) point-of-sale systems. and is looking for other partners in Atlanta, Georgia, (404) 606- Enterprises and SMBs maintain to help expand the network of 3585, [email protected], their stand-alone rewards participating merchants. So far, www.sionicmobile.com.

David Robertson, Publisher February 15, 2017

12 VISIT US ONLINE AT WWW.NILSONREPORT.COM Order Back Issues / Preview Upcoming Conferences / View Newsletter Archive