Innovalue #payments

INSIGHT | OPINION

Vol 5 • Q4 2013 Quo Vadis Acquiring in Germany

Jan Lettow, Associate, Innovalue

Acquirers in the German payment market are currently confronted with a set of challenges.­ These are partly due to a ­historically challenging business environment and partly due to new developments within the market. The market for acquirers in Germany has always been under pressure­ due to 1. a strong position of payment methods­ not relying on a 4-party scheme, 2. a fragmented market with many small acquirers and hence missing ­economies of scale, 3. low customer loyalty and a perception­ of acquiring as a commodity which is ­Interchange Fee) Regulation proposed by the Accordingly, major acquirers are already only differentiated through the price European Commission in July 2013. Especially considering ways to bypass the regulation, and the questionable market intervention­ to cap e.g. through foreign subsidiaries in order to 4. a low level of innovation and the MIF of cross-border acquirers at 0.2% for be able to offer the reduced MSC as well ­investments into new products by the debit and 0.3% for transactions (cf. Der Handel, 03.10.2013). The discussions­ incumbent acquirers. bears the potential to disrupt the acquirer and consultations with regard to the The already strained market environment will landscape. If the regulation is adopted in ­regulatory package are currently ongoing­ in become even more burdened as existing its current form, foreign­ acquirers will have Brussels. According to market opinions, this challenges continue to intensify and new the opportunity to profit from a temporary arbitrary market intervention will not be present­ challenges will materialize in the near future. regulatory arbitrage­ and will be able to in the final form of ­legislation. In this case The first upcoming challenge will be the offer a MSC (Merchant Service Charge) defensive actions would not immediately­ be regulatory package of the PSD2 (Payment which is up to 70% lower than that of required by the domestic acquirers. The outlook Service Directive 2) and MIF (Multilateral domestic acquirers. would on the contrary be rather optimistic­

TABLE OF CONTENTS

Quo Vadis Acquiring in Germany M&A Activity The German acquiring market is currently in a state of change, confronting new and M&A Activity – What are the key drivers of M&A activity? Which transactions established market players with a set of challenges and opportunities. Jan Lettow made headlines in the 4th Quarter of 2013? What are major trends for 2014? will present an overview of the major drivers leading to a new market reality. p1 Andreas Habersetzer and Robert Kayser answer these questions. p4

20 years of Bluetooth - VC Activity Will Bluetooth experience a second spring in mobile commerce? Once again Niels Denefleh reviews the latest startup funding activity; deriving Beacon, Bluetooth low energy and Bluetooth Smart – Mirko Krauel and Kalle global investment trends within the payments industry. Which payment startups Dunkel will discuss why the newest incarnation of Bluetooth has what it takes to be received funding in Q4 2013? What are current product or service innovations for the next big thing for mobile commerce. p2 investors? p6 Innovalue #payments Insight|Opinion 2

as the regulation bears the potential for competition, acquirers will also be confronted consumer is carried out via direct debit, credit additional customers and transaction volume with changing payment behaviour of transfers or operator billing. Acquirers can still in the medium to long term as the attractiveness ­consumers. The classical duo of cash and play a role in the context of POS mobile pay- of 4-party credit card payments­ in particular card at the physical POS will prospectively be ment if these are based on 4-party schemes. increases. supplemented by M-payments. Currently, the They have, however, not clearly positioned themselves yet in this respect and are endan- gered of not being part of the solution that "The search for economies of scale will be taken to the next finally sets the standard. level and a process of market consolidation on a European These remarks also apply to E-Commerce level will eventually unfold, ultimately establishing a truly payments as the borders between E- and cer- European acquiring market." tain types of M-payments are vanishing. In an E-Commerce context, the danger of losing market shares to substitute products has his- The regulatory changes in the context­ of the market is observing many different ideas to torically been high and will continue to PSD2 and the MIF Regulation will ­nevertheless achieve this vision and users can almost increase. Payment methods like PayPal, further fuel pan-European ­competition with exclusively be found in form of technology direct debit and credit transfer are common the creation of a level ­playing field for acquirers affine early adopters. However, as soon as in an E-Commerce environment and have in the EU. The search for economies of scale viable business models are identified, it will always put pressure on the share of 4-party will be taken to the next level and a process of change the payment behaviour of payment methods. market consolidation on a European level will ­consumers. At this point it will be crucial for All of these movements within the market ­eventually unfold, ultimately­ establishing a truly acquirers to still be part of the value chain of confront German acquirers with challenges European acquiring market. This process will these new payment methods. and opportunities. The new market reality will force German acquirers to further broaden Mobile POS payment solutions without the be a fast-paced pan-European market with their current market scope and consider explicit need for acquiring solutions can be multiple payment methods. Acquirers will entering acquiring markets in other European found, for instance, in PayPal QRShopping, need to actively shape the market in order to countries. Yapital, paij and closed-loop solutions like net- remain part of it. Apart from the depicted challenges from toApp. An acquirer is usually not required for the side of regulators and pan-European these methods as the final settlement with the

20 years of Bluetooth - Will Bluetooth experience a second spring in mobile commerce?

Mirko Krauel, In the 2000s Bluetooth was not ready for Principal, Innovalue mCommerce In the late 2000s the idea was to use Bluetooth to Kalle Dunkel, push marketing measures to the consumer, such Associate, Innovalue as simple information, coupons or even small sound clips. This idea was strong but the technology could not deliver. Bluetooth 3.0, the current This Year Bluetooth will celebrate standard at that time, had two significant its 20th birthday drawbacks: power consumption and need for Since its original development as a cable activity by the user. The marketers had to pester replacement technology in 1994 by Ericsson the consumer to activate his Bluetooth connection in Sweden Bluetooth has gone through many every time. This was often seen as intrusive iteration, changes and use cases. and was not well received by the consumer.

Page1 ALTERNATIVE 3

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Bluetooth 4.0: The advent of Bluetooth Low way it can be used to replace current ­fallback Fig. 1 shows a snapshot of the database at Energy and beacons technologies such as QR-codes, alpha-numeric the beginning of 2014. We clearly see that This weakness was addressed in 2010 through codes, sound based systems etc. from a quantitative standpoint Bluetooth has the Bluetooth 4.0 standard. This standard split not gained a significant market share yet. the Bluetooth technology into three parts. Bluetooth’s market penetration as a Classic Bluetooth, Bluetooth High Speed and technology for mobile commerce "Bluetooth in its newest Bluetooth Low Energy (BLE), which is also To answer our initial question, whether Blue- ­marketed as Bluetooth smart. BLE reduces tooth will have a second spring in mobile standard excels as a stimulus. power consumption and production costs commerce, we will look at the market as it is As opposed to other ­significantly and retains a similar communication today. At Innovalue we use a database to technologies such as NFC range compared to classic Bluetooth. This track initiatives from Europe and the U.S. and QR codes BLE does not enables BLE-capable smartphones to remain which are active in mobile proximity-based need active initiation by the active without noticeably draining battery commerce, such as loyalty, couponing, power. In addition standalone Bluetooth ­tickets etc. One factor we analyze for each consumer." micro transmitters have become more initiative is the technologies used, to let the affordable. smartphone of the user interact with the But our continuing evaluation of the Such small “beacons” can locate other system of the merchant. market shows that from a qualitative stand- Bluetooth devices around them and send point ­Bluetooth is on the rise. PayPal is offering ­relevant location-specific information. BLE as its Beacon product. Apple supports BLE Figure 1: Mobile commerce technologies Jan. 2014 - Market survey with 255 initiatives through iBeacon. There is no NFC capability Bluetooth’s place in the consumer’s mobile for iPhones so far, but BLE has been integrated 0 10 20 30 40 50 60 commerce path 3% as of the iPhone 4S. In general all major To understand how BLE can help consumers 6% ­smartphones produced since the end of 2012

Barcodeand / QR Codemerchants alike, we will look at60% the path are BLE-capable, be it iOS-, Android- or 9% Alpha-Numerica consumer Code takes from wandering12% into a ­Windows-based. Another early adopter of Geolocation 10% NFC shopping mall, to his purchase and beyond.9% BLE is the startup shopkick. They added … Bluetooth Bluetooth in its newest standard3% clearly 10% ­iBeacon under the synonym shopBeacon to excels as a stimulus. As opposed to other their product offering in November 2013. technologies such as NFC and QR codes BLE In addition to these players the first two does not need active initiation by the con- 12% weeks in January 2014 alone have shown the 60% sumer. Being able to push information to the number of announced BLE mobile commerce­ user, without him initiating the interaction, is initiatives to rise steeply. Furthermore market highly valuable to the merchant. For the cus- insights tell of multiple companies having tomer this stimulus can add value such as unannounced products in their pipelines, discounts, special offers or other information. Barcode / QR Code which will use BLE for mobile commerce. During the payment interaction BLE will Alpha-Numeric Code have to be complemented by additional Geolocation 2014 will be the year of Bluetooth Low Energy methods such as card or cash payments or NFC in mobile commerce further enhancing technologies like cloud Other In conclusion we see BLE not primarily as accounts or NFC with secure elements. In this Bluetooth replacement for NFC during the payment transaction, but as an enrichment of the whole commerce ecosystem. The high potential for added value can be leveraged best in combination with other technologies to create the most satisfying experience for the consumer and merchant alike. Thus in the end we believe that Bluetooth will experience its second spring. The technological­ capabilities are there and the dynamism in the market is showing clear signs of adoption.

Page1 Innovalue #payments Insight|Opinion 4 M&A Activity

Andreas Habersetzer, trend of more disclosed financial details has payment sector with 71 per cent of purchasers Partner, Innovalue been fortified. Thus several multiples have coming from there. However, viewed over a been reported which also reflect different longer period, North America’s location Robert Kayser, maturities in the industry. Open Text’s attractiveness is little by little decreasing. Still ¾ Associate, Innovalue ­acquisition of GXS equates to a multiple of of the capital is provided from the Anglo- 7.8x EBITDA or 2.4x revenue. Italian government- American investors but exciting investment owned Fondo Strategico Italiano acquired a opportunities are incrementally coming from 2013 will go down in history as a record year majority stake in the card processing and Europe and Asia. This observation is for example for dealmakers in the international financial SIA for USD 618 million reflected in the increased amount of cross-border technology industry. A total of 146 transactions which equates to a multiple of 8.5x EBITDA. deals. US-based MasterCard bought Turkish (Q4: 48) has been reported with a total volume of USD 15.7 billion (Q4: USD 5.6 billion) being "2013 became a record year in terms of the total transaction disclosed. Industry consolidation emerges as number as well as deal volume." the driving reason particularly in merchant acquiring as well as online and mobile ­payments. International expansion and PT Aprisma Indonesia’s acquisition by processor Provus. Indian ­channel diversification remain crucial for USD 98 million had a valuation of 11.1x solution provider Qubecell was sold to Boku in ­additional deal rationales. Benign equity EBITDA. The respective EV/EBITDA multiple for the USA in order to enhance the portfolio of ­capital markets could make 2014 the year of the Digital Insight transaction was 15.7x. mobile payment solutions and also expand IPOs in the payment industry. Swedish-based paid 34.1x EBITDA of the geographical presence in Asia and the Sofort AG, a young but high-growth start-up Middle East. The German payment provider M&A activity and deal characteristics from Germany providing online payment Wirecard continued its striking shopping tour As assumed in our last issue, 2013 became a solutions. this year and enlarged again its engagement record year in terms of the total transaction Geographically, 48 per cent of the targets in Asia with the purchase of PT Aprisma in number as well as deal volume. A total of 48 were based in North America (Q4/2012: 58%), Indonesia. Moreover, I Love Velvet, a US M&A transactions were announced in the followed by 40 per cent in Europe (Q4/2012: mobile point-of-sale hardware and software fourth quarter of 2013, which represents a 100 21%) and 8 per cent in Asia. The rest of the innovator, took the chance to expand its per cent increase over the 24 deals world accounts for the remainder. Moreover, ­position as the international market leader in announced in the same period in 2012. This North America strengthens its position as the the fast growing prepaid payment industry raised the total number of transactions in 2013 most important centre of deal activity in the with the acquisition of WeXpay in France. to 146 with a disclosed deal volume of USD 15.7 billion. The financial terms of 18 transactions, with a total volume of USD 5.6 billion, were ­disclosed. Two of these transactions stand out in terms of size. NCR’s acquisition of US-based Digital Insight for USD 1.65 billion became the largest disclosed transaction in the fourth quarter of 2013 and in 2013 overall. The ­acquisition enables NCR to broaden its ­consumer transaction technologies as ­customers seek new options for commerce via mobile phones and other devices. The transaction is followed by Canadian software company Open Text’s acquisition of US-based B2B e-commerce specialist GXS. The ­transaction, with a value of USD 1.2 billion is in with Open Text’s current growth strategy to become the leading B2B integration service leader and thus enhances GXS’s information exchange and cloud service offerings. The relatively high number of deals ­confirms that in general the financial technology sector seems to attract a lot of attention. The

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Key drivers and rationale of M&A activity two companies. Together, they are expected whereas in Q4/2013 they have made up Consolidation, international expansion and to increase their market share up to 10 per already one of the biggest share by a single channel diversification remain the major cent in greater Europe’s USD 100 billion sector (15% of all transactions). Worldwide ­drivers for current M&A activities as already e-commerce market. Their network will cover operating and prepaid card issuer observed throughout our last issues. This is 14 countries in the region and 43,000 Blackhawk Network pushed its international ­particularly the case for acquirers and digital ­merchants. In terms of diversification Wonga’s expansion and channel diversification with payment providers. acquisition of German Billpay attracts two acquisitions. The first acquisition, German- For the European acquiring landscape ­attention. Terms of the deal were not based gift card distributor Retailo AG, added the PayLife acquisition by SIX has set the ball ­disclosed. Investors in Billpay included Rocket over 40,000 new distribution locations, rolling. EVO Payments International went into Internet, AB Kinnevik and Holzbrinck. Through ­bringing Blackhawk’s total EMEA retail the same direction and acquired a majority the acquisition, Wonga will be able to ­distribution network to approximately 70,000. stake (66%) in eServices, headquartered in broaden its services and develop itself as a The deal is part of Blackhawk’s strategy to Poland, for USD 114 million. The transaction fully international, digital finance business. serve consumers’ demand for gift cards and allows EVO to form a long-term strategic alliance A considerable increase in share of deals prepaid solutions across Europe, including took place within the mobile payment sector. Germany where Blackhawk has had limited "2014 could become the year In particular market heavyweights such as presence to date. In addition Blackhawk of IPOs in the payment industry." Amazon and PayPal promoted their efforts to strengthened its domestic market position go mobile. Amazon bought the technology with the takeover of InteliSpend. New market and the engineering/product team of entrants such as Spindle and Coupon.com in the payment processing industry with GoPago whereas DoubleBeam bought also upgraded their portfolios with the Poland’s largest bank PKO BP. Moreover, EVO GoPagos’s POS business. The acquisition is ­acquisitions of mobile couponing provider added the merchant acquiring business from assumed to be one of Amazon’s crucial Yowza and loyalty provider Yub, respectively. Banco Popolare in Spain to its portfolio and pieces that point to Amazon’s ambitions to thus enhanced its service offerings in Europe. make payments for goods more seamless, Preview Following its growth strategy, EVO captured a mobile-friendly, offline at the point-of-sale. Deal activity has maintained its momentum third acquisition and bought Encore Payment PayPal continued its growth strategy, too, as it from 2013 to 2014 as some transactions have Systems. The transaction, of which no details has been already working hard to muscle in already been announced. Furthermore, capital have been disclosed, is thought to enable on the potentially massive mobile commerce markets are predicted to remain benign. M&A deal activity in the payment industry should remain strong in 2014. In addition, there is currently a positive environment for IPOs in the technology sector (e.g. Twitter, ) and an increasing investor risk appetite due to missing investment alternatives. For that reasons 2014 could become the year of IPOs in the payment industry. A number of candidates have already publicly announced plans or are rumoured to consider a potential public offering. Candidates include Square, Mercury Payments, Atos Worldline and MOL. First Data is also a possible IPO candidate as KKR is ­seeking an exit from its 2007 investment and EVO to leverage Encore’s proven North market. After the acquisitions of and the company is aiming at a capital structure American sales distribution strategies to drive the payment provider now bought change. However, the company is currently further growth. StackMob, a service provider of mobile not profitable. Focus and concentration on Regarding the online payment market, ­applications. The deal will help PayPal to core business areas will gain in importance, Klarna’s acquisition of Sofort AG from their faster create, test and deploy products that too. Especially banks will dispose of non-core majority shareholder Reimann Investors is aim at transforming payments for customers. payments. Nets for example hired JP Morgan ­particularly striking. No details were shared However, smaller market players such as already last summer in order to evaluate a about how the acquisition was structured, but Square do not need to hide. Square for sale in total (estimated value varies between sources say that the price was around USD ­example reacted and took over Evenly and USD 1 to 2 billion) or in parts. Consolidation 150 million. In preparation Klarna has raised in viewpoint. It is a move to boost especially and standardization, particularly in the mobile its last financing round more than USD 160 Square Cash which will bring Square in the payments sector, will remain a key driver and ­million alone from top-tier investors like front line together with PayPal, Amazon and primarily triggered by the need to support Sequoia Capital or Atomico. The acquisition is Google Wallet. merchant and consumer acceptance. complimentary to both parties’ line of online Furthermore, M&A activity in the couponing Potential consolidators are currently not payment business – especially with regard to and loyalty segment has been significant. apparent but will make 2014 hopefully an the existing geographical coverage of the There were no transactions in Q4/2012 exciting year again.

Page1 Innovalue #payments Insight|Opinion 6 VC Activity

Niels Denefleh, Senior Associate, Innovalue

Funding Activity Funding activity in the last quarter of 2013 has been again very active compared to the rest of the year 2013 - with a total of 63 funding rounds with a total (disclosed) volume of over USD 420m in equity and less than USD 1m in debt financing. Average funding volume per round was on average USD 9.04m – a decrease to the previous quarter of approxi- mately 25%.

Funding Activity by Region Funding Activity by Segment 63 funding rounds 63 funding rounds

2% 3% 14,3% 1,5% 14% 25,4% 4,8% 4,8% 19% 9,5% 62% 15,9%

11,1% Hitchen. As only African12,7% startup Kopo Kopo over USD 72m. The significance in this funding was able to attract financing in the form of a round is not its mere volume but also the con- series A round of USD 2.6m from Accion. Kopo tribution of the strategic partners AmEx and North America Asia Kopo is offeringMobile a Payment mobile business / mCommerce solution for BofA, who are pushing the cloud-based ser- Europe merchantsOnline to accept Payments M-PESA payments from vice that enables SMBs to automate the time Australia their customers.POS / mPOS consuming bill payment workflow, while Africa The largestCouponing funding / inLoyalty Q4 was announced keeping all information synchronized with the by Aria Systems,Money the Transfer US-based provider of sub- accounting programmes that are in place. It comes as no surprise that the North scription managementRisk Management and billing services for American and especially US-based startups recurring Bigrevenue Data models./ Payment Bain Analytics Capital Ven- Investment Trends have again, as for every issue of this newslet- tures togetherOthers with Hummer Winblad Venture The first investment trend to mention, yet ter thus far, collected most venture capital, Partners, InterWest Partners, Tugboat Ventures, again, builds up around the segment of constituting over 75% of the worldwide total Venrock and VMware invested USD 40m in a mobile payments and mCommerce – namely equity funding volume. Q4 was the first quar- series D financing round into the startup that startups that are tackling the use cases of ter where Asian-based startups were first was founded in 2003. In total Auria Systems smartphone-enabled POS payments or runners up, showing 14 funding rounds, has attracted over USD 80m and has recently adding services to the consumer’s shopping thereby accounting for approx. 10% of world- announced high profile brands as its custom- experience, such as location-based or in- wide total equity funding volume. Second ers including Experian, Telekom Danmark, store coupons (mCommerce). This segment runner up was Europe which attracted 9 ven- Blackberry, Red Hat and Verizon. was able to attract 10 funding rounds with a ture rounds in Q4, thereby constituting 13% of The second largest funding in Q4 was total disclosed volume of over USD 56m in the worldwide total equity funding volume. Two announced by US based Bill.com. The USD last quarter. Interesting within this segment is, additional funding rounds were announced 38m series E financing round was led by that the industry seems to have found in Australia; both from Melbourne-based Bit- August Capital and included several other common grounds on the use cases that are coin exchange and service provider CoinJar, venture capitalists as well as most relevant for the user (e.g. payment, cou- which collected two separate Seed invest- and . This funding round poning, loyalty, searching) but the industry ments from Blackbird Ventures and Chris brings Bill.com’s total venture funding up to has not yet decided on the one and only

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technology to be used for transferring trans- in the market valuation of BTC throughout the Recap 2013 and Outlook action data from the smartphone to the POS. quarter and the ongoing regulatory uncer- We are looking back on a very vibrant The battle of technologies is well reflected tainties (e.g. People’s Bank of China to ban and exciting year of venture capital funding in the recorded funding rounds. Examples are financial companies from BTC transactions in in the Payments and Financial Technology the NFC-focused SimplyTap that received a early December). sector throughout 2013. With some late series A for its technology services that use announcements and captures, we have in cloud-basedFunding tokens Activity to bystore Region the user’s cre- Funding Activity by Segment total recorded 215 venture capital funding dentials, as 63well funding as the rounds startups Swirl and 63 funding rounds rounds with a total disclosed financing volume Estimote that in total collected USD 11.1m in of close to USD 1.6bn in equity and over USD Q4 and are using BLE2% (Bluetooth Low Energy) 270m in debt capital. technology for transmitting3% data and to track 14,3% Looking forward to 2014, we do not yet the user’s location inside a retailer’s store. But 1,5% expect the level of activity to decrease signifi- 14% 25,4% NFC and BLE are not the only technologies cantly. We rather expect European and 4,8% that are seen in the market – in addition to the Asian-based startups to pick up additional 4,8% aforementioned,19% Finland-based Walkbase pace again, going back to the activity of that is using WiFi technology to track users and more than 10 funding rounds per quarter as 9,5% send mCommerce notifications62% as well as the 15,9% recorded in Q2 or Q3 of 2013. This is based on US-based LoopPay that is emulating payment the assumption that historically innovation in 11,1% cards’ mag stripes via a magnetic induction 12,7% Financial Technology has mostly emerged in field were also able to attract VC funding North America and was then adapted to the north of USD 10m. Last but not least, the still in local market specifics in Europe. Yet we do stealth modeNorth operating America US-based Clinkle Financial Services not expect that either of these regions will received USDAsia 0.5m debt facility in Q4 – and is Mobile Payment / mCommerce take North America’s role as most active area still rumouredEurope to be building a mobile wallet Online Payments for venture capital funding in this sector. application Australiausing high frequency sounds as POS / mPOS Expected investment areas that are to be transmissionAfrica technology. So far, no winner in Couponing / Loyalty seen are for example alternative providers of regards to transmission technology can be Money Transfer financial services both to consumers and busi- identified and we expect additional venture Risk Management nesses, domestic personal financial capital to flow into the range of different Big Data / Payment Analytics management tools and payment intelligence technologies throughout the next quarters. Others providers making use of transaction data for The second remarkable investment trend credit/risk scoring or for advertising. All in all, is the venture funding that went into trading Additional investment trends could be there are numerous niches and market seg- and exchange platforms for crypto currency recorded around traditional financial ser- ments that are to be disrupted or have room Bitcoin (BTC). Three venture rounds were regis- vices; for example in consumer-oriented for additional players and we are looking for- tered into the East-Asian-based startups itBit comparison platforms for financial products in ward to an exciting year 2014. (Singapore), BTC China (China) and Coinplug the Asian markets (91JinRong, iMoneyGroup) (Korea) which are all offering wallet and or for providers of consumer finance products exchange services to trade fiat currencies either via web-based issuing of instant loans into BTC. It remains to be seen whether this (LendUp) or as deferred payment option at investment trends will last, due to the volatility the offline POS (FinanceIT).

Deal Activity M&A

Date Transaction Announced Target Company (Country) TC Industry Buyer(s) (Country) value (USDm) 1 10/1/2013 The 41st Parameter (IRL) Provides internet fraud detection and prevention Experian (IRL) 324 solutions

2 10/10/2013 Provus (TUR) Provides credit card services MasterCard (USA) N/D

3 10/11/2013 Tian Hong Asset Management (CHN) Engages in fund management and related Zhejiang Alibaba E-Commerce (CHN) 193 investing activities

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Date Transaction Announced Target Company (Country) TC Industry Buyer(s) (Country) value (USDm) 4 10/17/2013 Monitise Asia Pacific (UK) Provides online banking services Monitise (UK) 17.9

5 10/18/2013 SMS Masterminds (USA) Provides SMS-based mobile loyalty solutions to Spendsmart (USA) N/D small and medium sized businesses

6 10/18/2013 Billpay (DEU) Offers online retailers seamless payment options Wonga (USA) N/D

7 10/18/2013 ImpulseSave (USA) Provides mobile application service Betterment (USA) N/D

8 10/22/2013 InteliSpend (USA) Provides intelligent prepaid solutions Blackhawk Network (USA) N/D

9 10/22/2013 FLASHiZ (LUX) Develops mobile phone payments software BNP Paribas / Fexco (IRL) N/D

10 10/23/2013 Level Up Analytics (USA) Provides data science, big data and analytics (USA) N/D services

11 10/25/2013 BitX (ZAF) Local bitcoin exchange Switchless (ZAF) N/D

12 10/29/2013 Perka (USA) Operates digital loyalty marketing platform First Data (USA) N/D

13 10/29/2013 Victrio (USA) Provides fraud and risk management Verint Systems (USA) N/D technologies

14 11/4/2013 Threshold Financial Technologies (CAN) Provides transaction processing and ATM solutions DirectCash Payments (CAN) 47.9

15 11/4/2013 Sold (USA) Develops mobile applications Dropbox (USA) 1.2

16 11/5/2013 Banco Popular Espanol Engages in merchant acquiring business EVO Payments International (USA) N/D (Merchant Acquiring Business) (ESP)

17 11/6/2013 GXS (CAN) Provides e-commerce platform and other related Open Text (CAN) 1165 cloud computing services to businesses

18 11/7/2013 Brand Loyalty International (NLD) Develops brand loyalty programs Alliance Data Systems (USA) 359

19 11/7/2013 eService (POL) Provides payment processing services EVO Payments International (USA) 113.5

20 11/11/2013 Sincerly (USA) Develops smartphone applications for sending Provide Commerce (USA) N/D greeting cards (mobile gifting)

21 11/11/2013 Sedoc (FRA) Provides automobile management services WEX Europe Services (USA) N/D through the issuance of fuel cards

22 11/19/2013 Encore Payment Systems (USA) Provides payment processing solutions EVO Payments International (USA) N/D

23 11/21/2013 Spunk Media (Qubecell) (IDN) Leading direct carrier billers / mobile payment Boku (USA) N/D solutions

24 11/27/2013 Prizm Payment Services (IDN) Provides payment processing services Hitachi (JPN) N/D

25 11/28/2013 WorldPay (UK) Provides online payment processing solutions Advent International / Bain Capital (UK) 260

26 12/3/2013 Digital Insight (USA) Provides real time Internet banking services NCR (USA) 1,650

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Date Transaction Announced Target Company (Country) TC Industry Buyer(s) (Country) value (USDm) 27 12/3/2013 Prolexic Technologies (USA) Provides information technology security services Akamai Technologies (USA) 370

28 12/3/2013 Softputer Technologies (UK) Designs and develops business software SunGard (USA) N/D

29 12/4/2013 Retailo (DEU) Distributes prepaid and gift cards Blackhawk Network Holdings (USA) N/D

30 12/4/2013 Viewfinder (USA) Develops online photo sharing mobile Square (USA) N/D applications

31 12/6/2013 SIA (ITA) Provides credit and processing and SIA (Fondo Strategico Italiano) (ITA) 617.7 payment services

32 12/6/2013 Viewpointe (USA) Provides check and document images store and Western Payments Alliance (USA) N/D access services

33 12/10/2013 PaySquare (NLD) Provides payment processing services montrada (DEU) N/D

34 12/11/2013 PT Aprisma Indonesia (IDN) Payment service provider Wirecard (EU) 118.3

35 12/11/2013 Yowza (USA) Provides paperless location based mobile Spindle (USA) N/D couponing applications

36 12/12/2013 Evenly (USA) P2P mobile payments Square (USA) N/D

37 12/12/2013 Lemon (USA) Provides payment network technology for LifeLock (USA) 42.6 financial institutions

38 12/13/2013 WeXpay (FRA) Refillable virtual prepaid credit card I Love Velvet (USA) N/D

39 12/16/2013 Kontagent (USA) Provides mobile customer intelligence solutions PlayHaven (USA) N/D for business enterprises, application developers, marketers and producers

40 12/17/2013 GoPago (USA) Provides cloud based commerce solutions to DoubleBeam (USA) N/D merchants and mobile payments

41 12/17/2013 Entrust (USA) Provides software security solutions Datacard Group (USA) N/D

42 12/18/2013 Sofort (DEU) Provides online payment solutions Klarna (SWR) 206.5

43 12/18/2013 StackMob (USA) Provides back-end technology services for mobile PayPal (USA) N/D applications

44 12/18/2013 Mustard Digital (UK) Provides online automated marketing solutions Ensygnia (UK) N/D

45 12/27/2013 Blestgroup Enterprises (RUS) Provides contract on terminal placement services Qiwi (RUS) N/D

46 12/31/2013 SmartID Operations (ISR) Provides system integration services in the SuperCom (ISR) 22.5 identification segment

47 12/31/2013 Compudata (CHE) Provides B2B supply chain integration and Descartes (CAN) 17.9 e-invoicing solutions

48 12/31/2013 Yub (USA) Promotes in-store sales through online offers Copon.com (USA) 30

Source: Innovalue Research, based on publicly available information

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Venture Capital Activity & Company Profiles Q4 2013

Volume Funding Target (Country) Round (USDm) Investor(s) (USDm) Description 1 Rocketbank (RUS) Seed 2.0 Runa Capital 2.0 Russia based Rocketbank offers a mobile banking application for various banking services incl. acount management, P2P payments, loyalty program and PFM analytics for approx. USD 9 p.m.

2 CardFlight (US) Seed 1.6 ff Venture Capital, Great Oaks Venture 1.6 CardFlight offers a white-labled mobile acceptance (mPOS) Capital, Plug & Play Ventures, Entrepreneurs solution via an audio-jack based device, for developers to Roundtable Accelerator, Apostolos Apostolakis, accept in-app card present transactions. Payment Ventures

3 Jemstep (US) A 4.5 Caleo Capital 15.0 Jemstep takes the personalized investment advisory that is traditionaly reserved for very wealthy individuals to all users via an online service.

4 Tulip Retail (CAN) Seed 2.4 SoftTech VC, BoxGroup, Lerer Ventures, Promus 2.4 Tulip Retail offers a range of products and services to Ventures, Kima Ventures, Founder Collective, enhance the consumers retail experience - incl.tablet based Matt Mullenweg, Greg Kidd, BufferBox, iNovia POS / mPOS hardware and integrated commerce software Capital, Mike McCauley applications.

5 Tabbedout (US) B 7.8 New Enterprise Associates, Morgan Creek 13.5 Tabbedout eases the consumer (mobile) payment process Capital Management, Heartland Payment within bars or restaurants, enabling the user to view and pay Systems his tab through a mobile app.

6 ERN (UK) Seed 1.0 N/D 5.6 ERN offers issuers, acquirers and merchants a payment analytics solution that leverages “big data” to unlock consumer insights and targeted loyalty programs

7 Fastacash (SGP) A 3.0 Jungle Ventures, Spring SEEDS Capital, Spring 4.5 Fastacash provides an international social money transfer Singapore service via desktop or mobile devices, giving users the ability to personalize send and receival requests through attached pictures, audio or video files.

8 Swirl (US) B 8.0 Hearst Ventures, SoftBank Capital, Longworth 14.0 Swirl provides retailers with a location based mobile Venture Partners marketing/commerce solution leveraging the BLE (beacon) technology to target consumers in specific areas of the store.

9 Fenergo (IRL) PE 5.2 Ulster Bank Diageo Venture Fund, Investec 5.2 Fenergo offers consumer lifecycle management software for banks and financial institutions (e.g. for account origination)

10 Level (US) A 5.0 Reed Hundt, Blake Grossman, Sanford Weill, 5.0 Level is a Personal Financial Management (PFM) tool Kleiner Perkins Caufield & Byers consolidating bank and credit card accounts and giving the user the possibility of setting weekly, monthly and daily budgets.

11 Jetpay (US) Venture Round 10.0 Flexpoint Ford 10.0 JetPay is an US based provider of online payment processing and acquiring solutions for e-commerce and other card-not- present marketplaces.

12 Clinkle (US) Debt N/D N/D 25.0 Clinkle is working on a mobile wallet / mobile payment application that will completely replace a consumers physical wallet, initiating transactions anywhere.

13 Nomi (US) A 10.0 Partners, First Round Capital, Greycroft 13.0 Nomi provides retail analytics solutions that allow brick & Partners, Forerunner Ventures mortar merchants to engage with their consumer through an mCommerce application.

14 Payfone (US) PE 10.0 Early Warning Services 40.0 Payfone provides authentication services via a consumers mobile device for banks and/or commerce service providers.

15 Funding (UK) C 37.0 Accel Partners, Union Square Ventures, Ribbit 58.2 Funding Circle operates a marketplace for C2B lending where Capital, Index Ventures consumers can lend their money to multiple SMBs in the UK.

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Volume Funding Target (Country) Round (USDm) Investor(s) (USDm) Description 16 BoostUp (US) Seed 1.0 Detroit Venture Partners, Patrick Sullivan, 1.0 BoostUp, formerly Motozuma, offers consumers a savings IncWell account to save money for large purches (e.g. cards, house) incl. social saving from peers and exlcusive partners that match the user’s goal.

17 iMoney Group (MYS) A 2.0 Jungle Ventures, Econa AG, Rebright Partners, 2.5 iMoney Group operates a financial comparison site for Fenox Venture Capital, 500 Startups, Vogel consumers that are looking for loans or credit cards, working Ventures together with the major banks in Malaysia.

18 Flint Mobile (US) B 6.0 Digicel, True Ventures, Storm Ventures, SVG 9.0 Flint has developed an application for the mobile acceptance Partners (mPOS) of credit cards with no external hardware making use of the digital camera within smartphones.

19 Circle (US) A 9.0 Accel Partners, General Catalyst Partners, Jim 9.0 Circle is building products for online payments with the help of Breyer digital currencies, such as bitcoins.

20 Trustev (IRL) Seed 3.0 Greycroft Partners, Mangrove Capital Partners, 3.3 Trustev offers a real-time online identity verification via social ACT Venture Capital, Enterprise Ireland, Wayra, networks and device fingerprinting,to help e-Commerce David Coallier, Kevin Abosch providers reduce fraud and up their risk management.

21 91JinRong (CHN) B 10.0 CBC Capital, Matrix Partners 10.0 91 JinRong operates a financial comparison site for consumers in China for bank and insurance products/services, in cooperation with major banks in China.

22 LoopPay (US) A 10.0 N/D 10.0 Loop provides a mobile wallet application for iOS (plus an additional piece of hardware) with which a consumer can make mobile payments at regular mag reader POS.

23 Malauzai Software (US) B 3.0 N/D 6.6 Malauzai Software has developped a set of iOS and Android whitelable mobile apps for community banks and credit unions to enable them to offer their consumers a mobile service offering.

24 CurrencyFair (IRL) Venture Round 2.5 Ftrontline Ventures 4.8 CrruencyFair provides a simple to use peer-to-peer currency exchange plattform for consumers and businesses.

25 Zoomingo (US) Venture Round 1.3 Benaroya Capital, Naya Ventures, Rudy Gadre 2.5 Zoomingo categorizes and stores coupons and local deals within an mobile application helping the consumer to find the best local offers.

26 Loop Commerce (US) A 7.2 Oren Zeev, Mark Carges, Chuck Geiger, Roy 8.2 Loop Commerce provides e-Commerce merchants a gifting Rubin, Andrew Fine, Don Katz, Michael Scharff, checkout/API for online payments through which any product Mohan Gyani, Barry McCarthy, Oliver Jung, can be bought and sent as a gift. Frederic Court, Harris Barton, Gary Ginsberg, Ori Sasson, Novel TMT Ventures, SG VC 27 CardCash (US) A 6.0 Guggenheim Partners 6.0 CardCash operates a market place for unwanted or unused gift cards in the US where consumers can trade in their gift cards for cash or a gift card of a different store.

28 GoCoin (SGP) Seed 0.6 Prolific Venture Capital, , 0.6 Singapore based GoCoin offers online merchants to accept Andrew Frame, Bit Angels , Mikael Pawlo, bitcoin and litecoin as means for online payments. Jonathan Congdon Ruvento, Ronnie Wee, Gary Stiffelman, David Neuman

29 itBit (SGP) Seed 3.3 Canaan Partners, RRE Ventures, Liberty City 3.3 Singapore based itBit provides a bitcoin exchange platform for Ventures, Jay W. Jordan II, Ben Davenport fiat currentcies into BTC.

30 Bill.com (US) E 38.0 August Capital, Napier Park Global Capital, 72.6 Bill.com offers a cloud-based service to SMBs that automates TTV Capital, Jafco Ventures, Emergence time consuming bill workflow,bill payment and business Capital Partners, DCM, Scale Venture Partners, document filing tasks while keeping all information Commerce Ventures, American Express, Bank synchronized with common accounting programs. of America, Peter Knight, Fifth Third Bancorp 31 LendUp (US) A 14.0 Google Ventures, Data Collective, QED 14.0 LendUp is a consumer finance provider for instant short term Investors lending of up to USD 1,000 to US consumers.

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Volume Funding Target (Country) Round (USDm) Investor(s) (USDm) Description 32 Walkbase (FIN) A 3.9 SBT Venture Capital, Olli-Pekka Kallasvuo 3.9 Walkbase provides WiFi based retail analytics solutions that allow brick & mortar merchants to analyze customer behaviour such as walk by rates or targeted advertising and commerce campaigns.

33 Ripple Labs (US) Seed 3.5 Core Innovation Capital, Venture51, IDG 6.5 Former OpenCoin, now Ripple Labs, develops the peer-to- Ventures, Camp One Ventures peer and virtual currency protocol Ripple that can be used to globally make transactions in any available currency.

34 Kopo Kopo (KEN) A 2.6 Accion 3.7 Kopo Kopo turns smartphones in Kenya into mPOS devices, accepting the popular African mobile payment scheme m-pesa.

35 Moneytree (JPN) Seed 1.6 PayPal, Mastercard, DG Incubation, Morgan 1.6 Moneytree offers Japanese consumers a mobile iOS Stanley application for personal financial managment that aggregates multpiple bank and credit card accounts on their device.

36 PayClip (US) Convertible Note 1.7 Alta Ventures 3.6 PayClip is targeting the Mexican market with a (mobile) acceptance mPOS solution for Android and iOS smartphones.

37 BTC China (CHN) A 5.0 Lightspeed China Partners, Lightspeed Venture 5.0 BTC China is a bitcoin trading platform for Chinese and Asian Partners markets - due to regulatory changes BTC China is currently not processing CNY deposits.

38 Aria Systems (US) D 40.0 Bain Capital Ventures, Hummer Winblad 81.2 Aria Systems provides businesses with subscription Venture Partners, InterWest Partners, Tugboat management and billing services for online payments. Ventures, Venrock, VMware

39 Financeit (CAN) A 13.0 TTV Capital, Inter-Atlantic Group, Second City 21.4 Canada based Financeit offers selected merchants (e.g. retail, Capital vehicles) deffered payment options and consumer financing products at the POS.

40 Index (US) A 7.0 Khosla Ventures, AIMCo, 819 Capital, 7.0 California based provider of mCommerce and retail Innovation Endeavors applications Index offers its clients software based solutions to identify consumers and target them with offers or other relevant information when they are in the store.

41 eGifter (US) Venture Round 0.5 Tyler Roye, David Levinksy, Eric Manno, Mark 0.5 eGifter lets users send personalized gifts alone or together with Manno a group of friends that can be stored in a mobile app or as a digital bar code.

42 Kwanji (UK) Seed N/D Mercia Fund Management, Various Angel N/D Kwanji is aiming to simplify international B2B money transfers, Investors that include FX, for small and medium business in the UK.

43 Coinplug (KOR) Seed 0.4 Silverblue 0.4 South Korea based Coinplug offers services around the crypto currency bitcoin, incl. exchange & wallet service as well as acceptance solutions for Asian merchants to accept BTC payments.

44 Lodo Software (US) Venture Round 3.0 Invest Nebraska, Treetop Ventures 4.7 Lodo Software offers ist main product d3Banking (data driven digital banking) to financial institutions enabling multi device Personal Financial Management services incl. account management, budgeting, transfers, rewards loyalty.

45 SimplyTapp (US) A 1.4 Lightspeed Venture Partners, Blue Sky Capital 1.6 SimplyTapp is a technology provider for NFC based mobile payments, offering financial institutions, retailers as well as mobile wallet providers and developers cloud based tokens, thereby bypassing the MNO SIM.

46 CoinJar (AUS) Seed 0.5 Blackbird Ventures 0.4 Melbourne based CoinJar offers services around the crypto currency bitcoin, e.g. Filler to buy and sell BTC with fiat currencies and Checkout for online merchants to accept BTC as a means fo payments.

47 CoinJar (AUS) Seed 0.5 Blackbird Ventures, Chris Hitchen 0.9 Melbourne based CoinJar offers services around the crypto currency bitcoin, e.g. Filler to buy and sell BTC with fiat currencies and Checkout for online merchants to accept BTC as a means fo payments.

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Volume Funding Target (Country) Round (USDm) Investor(s) (USDm) Description 48 Coda Payments (SGP) A 2.3 GMO Venture Partners, Rakuten, Toivo Annus, 3.2 Singapore based Coda Payments offers consumers with pre- Golden Gate Ventures, CyberAgent and post paid mobile accounts in Indonesia and Malaysia a Mobile Carrier Billing solution for digital online payments.

49 Citrus Payment Solutions B 5.5 Sequoia Capital 5.5 Citrus Payment Solutions offers a payment gateway for online (IND) payments in India including a wallet service for one click payments.

50 Loop Commerce (US) A 5.0 PayPal 13.2 Loop Commerce provides e-Commerce merchants a gifting checkout/API for online payments through which any product can be bought and sent as a gift.

51 Heckyl (IND) B 3.5 IDG Ventures India, SeedFund 4.8 Mumbai based Heckyl is a provider of real time financial markets analytics tools for investors.

52 Estimote (US) Seed 3.1 Innovation Endeavors, betaworks, Bessemer 3.4 Estimote offers merchants / retailers the ability to communicate Venture Partners, Birchmere Ventures, Valiant with their customers through the use of bluetooth low energy Capital Partners (BLE) , e.g. for in-store navigation or advertising.

53 Flint Mobile (US) B 2.0 Verizon Ventures 11.0 Flint has developed an application for the mobile acceptance (mPOS) of credit cards with no external hardware making use of the digital camera within smartphones.

54 Raise (US) A 18.1 N/D 22.6 Raise operates a market place for unwanted or unused gift cards in the US where consumers can trade in their gift cards for cash or a gift card of a different store.

55 MomentFeed (US) A 5.5 Signia Venture Partners, Draper Nexus Ventures, 8.5 MomentFeed provides brick and mortar stores with location- DFJ Frontier, Double M Partners, Daher Capital based marketing and mCommerce services directly integrated into the most relevant social networks.

56 eGifter (US) Angel 1.7 Russ Artzt, Bob Brill, BDS Venture Fund, Wheatley 2.2 eGifter lets users send personalized gifts alone or together with Partners a group of friends that can be stored in a mobile app or as a digital bar code.

57 Coinbase (US) B 25.0 , Union Square Ventures, 31.7 Coinbase operates a bitcoin exchange and wallet Ribbit Capital infrastrucutre for consumers and merchants, through merchants can accept BTC as a means of payment.

58 Crowdtilt (US) B 23.0 SV Angel, Sean Parker, Bank, 37.1 Crowdtilt lets a group of consumers pool money on one Matt Mullenweg, Naval Ravikant, Oliver Jung, central account for online group payments. DCM, Felicis Ventures, Alexis Ohanian, Elad Gil, Andreessen Horowitz

59 Trustev (IRL) Seed 0.5 Notion Capital 3.8 Trustev offers a real-time online identity verification via social networks and device fingerprinting,to help e-Commerce providers reduce fraud and up their risk management.

60 Quickpay (US) Seed 5.5 Fontinalis Partners, Ecomobilité Ventures, 9.0 Quickpay offers integrated mobile payment solutions for IncWell, SNCF parking services using multiple, concurrent and monthly payment options.

61 Robinhood (US) Seed 3.0 Index Ventures, Andreessen Horowitz, 3.0 Robinhood is building a mobile stock trading application Rothenberg Ventures, Howard Lindzon, Tim with 0% fees for transactions by leveraging technology and Draper, IT Ventures reducing overhead.

62 Elephanti (SGP) Seed 4.5 LMJ Holdings 4.5 Singapore based Elephanti brings the benefits from online shopping to offline retail stores, increasing consumerloyalty - users that are connected with their favourite stores can check inventories, prices and receive additional discounts.

63 peerTransfer (US) B 6.2 Spark Capital, QED Investors, Devonshire 21.2 peerTransfer enables secure and ensured money transfers for Investors, Kibo Ventures international students when paying for US school’s tuition fees.

Source: Innovalue Research, based on publicly available information

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Company Info

Innovalue is a leading independent advisory firm with a strong expertise in payments. Our clients range from high-growth mobile payment startups to established fi nancial institutions or telecom companies and from cutting-edge strategic players to high-profile private equity and venture capital investors. We develop and implement tailored solutions on topics of strategic importance – including Growth, Efficiency and M&A – on engagements across Europe and beyond. Our passion for payments helps us to stay on top of the latest innovations of a rapidly changing industry. Our experience and knowledge of the payment markets allows us to provide sustainable benefits to our clients.

Key contact: Andreas Habersetzer, Partner & Managing Director, Innovalue [email protected]

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