NBPCA Awards Second Terrence P. Maher Prepaid Influencer Award to Marilyn Bochicchio

Brad Fauss, NPBCA; Marilyn Bochicchio, Hidden Brain; and daughter Krista Bochicchio.

At the opening day of the Power of Prepaid in Washington, D.C., the NBPCA recognized Marilyn Bochicchio as the recipient of the second annual Terrence P. Maher Prepaid Influencer Award. The former Paybefore CEO, now founder and CEO of communications firm Hidden Brain, is an industry veteran and a founding member of the NBPCA.

“Marilyn has spent more than a decade bringing constituents together, building the greater prepaid community, guiding industry messaging and publishing the foremost content about prepaid and emerging payments,” Brad Fauss, president and CEO, NBPCA, tells Paybefore. “She took the helm of the NBPCA near its infancy and helped forge it into an influential advocacy organization that not only promotes the industry to lawmakers, regulators and consumer groups, but also ensures that its members uphold the highest standards of excellence. When she moved to Paybefore, she continued to have a seat on the NBPCA board, where she remains today, bringing her unwavering commitment and years of payments experience to bear on the challenges and opportunities facing the industry.”

The award was created in honor of Terry Maher, who passed away in 2014, and who was a renowned industry expert in electronic financial services. Maher was an active member of the prepaid industry, serving as counsel to the NBPCA and partner with law firm Baird Holm LLP. The award recognizes one individual for dedication and passion in driving the prepaid industry forward.

“It is quite fitting that this year’s Terry Maher Prepaid Influencer Award should go to one of Terry’s long-time collaborators and friends,” Fauss says. “Like Terry, Marilyn has tirelessly worked to advance the industry by bringing the industry together, promoting accurate stories about prepaid to a wider audience, and helping educate regulators and lawmakers in the process. Without her significant contributions, I don’t believe that prepaid cards would have become the mainstream financial products that they are today.”

The recognition took Bochicchio by surprise because she was asked to speak about Terry before she was revealed as the winner. “Terry had an attitude toward the industry that his job was to provide service … and all of us benefited tremendously from that,” Bochicchio said. “I’m a better person because I knew Terry Maher, and the person who gets this award has very big shoes to fill—not only Terry’s but also the shoes of the first winner of the award John Hagy.”

When she accepted the honor, Bochicchio added: “I do share Terry’s love for this industry. This is so meaningful. Thank you.”

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M&A Update: Affirm Will Buy Sweep, mPOS Firms Merge, Global Closes Heartland Deal

Payments M&A activity is continuing apace. Affirm, an online lending company that enables shoppers to make monthly payments for purchases, is buying Sweep, a 2-year-old company that operates a personal finance management app. Affirm did not say how much it will pay for Sweep.

Affirm says the deal will enable it to expand beyond “point-of-sale financing.” Sweep co-founders Jackson Gates and Asi Behar and most of the company’s engineers will join Affirm after the deal closes. Sweep will close down its app on May 26 in advance of a launch under the Affirm brand.

In other M&A news, m-POS firms Payleven and SumUP have inked a merger agreement. Both companies launched in Europe in 2012 and will, after the merger, operate as SumUP. The combined companies will have customers from 15 counties and annual revenue of approximately $1.13 billion, they said. The two firms sell gear and technology that enable contactless and card payments via smartphones. The deal comes shortly after Payleven raised $10 million in new funding. Last year, SumUp raised about $11.3 million in capital.

And finally, Global Payments this week says it has completed its $4.3 billion merger of Heartland Payment Systems. The merchant acquirer processing company, which post-merger is called Global Payments, employs some 8,500 workers around the world and serves 2.5 million merchants. The deal gives Global Payments access to such verticals as fuel retailers, colleges and hospitality. Less than 5 percent of payments volume in Global Payments’ integrated payments division comes from those verticals, Global Payments’ management said late last year.

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China’s Mobile Payments Market Heats up as Xiaomi Preps New Service

Chinese smartphone maker Xiaomi is planning to launch an NFC mobile payments service in the country, leveraging its position as China’s largest phone manufacturer to compete in an increasingly crowded mobile payments market. Xiaomi is collaborating with China UnionPay to launch the service, which will incorporate payment cards from UnionPay, the country’s largest payment network, according to a report from the South China Morning Post. No release date has been revealed for the service, which will be available on Xiaomi’s flagship Mi 5 handset model, the report said. Earlier this year, Xiaomi acquired a majority stake in Jiefu Ruitong, a Chinese Internet payments company that is licensed by the country’s government to provide mobile payments.

Competition in China’s mobile payments market is heating up. Along with homegrown providers including payments giants Alipay and Tencent, Apple Pay and Samsung Pay also have recently launched in China. And state-run UnionPay—which also partnered with Apple Pay and Samsung Pay—unveiled a mobile payments service of its own late last year. But Xiaomi’s large presence as a handset manufacturer could serve as an effective beachhead from which to launch its mobile payment service. The company was the largest smartphone vendor in China last year, according to market research firm IDC, shipping nearly 65 million units, slightly ahead of Apple and Huawei. Meanwhile, the sheer size of the Chinese market could mean there’s room for a number of players; mobile payments volume exceeded $3.5 trillion in the country last year, according to China’s central bank.

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Money20/20 Europe Recap: No More ‘Us Vs. Them’

boxinggloves_nofight_393150004By Loraine DeBonis, Editor-in-Chief

When more than 3,700 people gather in one place to talk about payments, you never know what you’re going to get. But the inaugural Money20/20 Europe conference in Copenhagen earlier this month left me with one major theme—partnership. There seemed to be a marked shift in the way banks and other payments incumbents are talking and thinking about fintech startups and vice versa. For the most part, both sides seem to have come to the realization that the key to success is to put rivalries aside and join forces.

Banks definitely have taken notice of what’s happening in the fintech space, said Matt Harris, managing director, Bain Capital, during an introduction of the three StartupPitch competition winners at the show. He likened the state of the fintech industry to the second movie in the original Star Wars trilogy—The Empire Strikes Back.

“Banks are getting frisky,” he said, pointing to aggressive investments and product launches to fend off would-be disruptors. At the same time, many banks and startups have realized that the road to success is one in which the two sides come together in partnership, he noted.

Partners Wanted

During a fireside chat with Liz Lumley, director, global ecosystem development Startupbootcamp FinTech & InsurTech, HSBC’s Group Chief Operating Officer Andy Maguire said: “For everyone who’s trying to eat our lunch, there’s something to learn.” But he was skeptical about the prospects of traditional banks being displaced, largely because they have an infrastructure that “nobody could or would want to build today. Where people want to partner with us, that’s where it gets very interesting.”

The bar for uptime, security and compliance is higher for those partnering with financial institutions than other industries. Algorithms that are usually correct, aren’t good enough, Maguire noted. Banks have to be right and the system has to be reliable. “Just because something works for streaming music, doesn’t mean it will work for money,” he said. In addition, Maguire said global banks don’t want partial solutions or solutions that only work in one market. “I need whole answers, not bits of answers,” he said, adding that stitching multiple solutions together from a variety of providers is more challenging. But he insisted that HSBC provides “the largest sandbox in the world.”

PayPal Europe CEO Rupert Keeley echoed the call for partners. “We have a vision to provide a much broader range of payments,” he said, pointing to cash, direct deposit, credit, checks, P2P, bill pay, in-store payments and international remittances. “In some areas we could go it alone, but it just makes more sense to partner,” Keeley said. Although he touted several of PayPal’s acquisitions, including Braintree, he suggested PayPal is looking to partner with large companies with large scale and great brands rather than smaller startups. However, Keeley also touched on EU regulation, including the Second Payment Services Directive (PSD2) and a recent green paper that he says will open up the market to more players of all sizes.

European Advantage: PSD2


PrePay Solutions CEO Ray Brash speaking with Paybefore Editor-in-Chief Loraine DeBonis at Money20/20 Europe.

“All of our customers use open integration and see [PSD2] as an opportunity.”

—Ray Brash, PrePay Solutions

Keeley wasn’t the only one excited about the possibilities around PSD2. Many experts believe the regulation may serve its intended purpose to level the playing field for smaller payments companies and technology providers. One of PSD2’s requirement is to open banking architecture to developers and other nonbanks via APIs.

“We see it as a huge opportunity,” Ray Brash, CEO and chairman of PrePay Solutions, says of PSD2. “All of our customers use open integration and see it as an opportunity.” PPS, which has been in the market since 2000, has established itself as a processing and issuing powerhouse that has long since achieved profitability and scale. To achieve this, PPS has worked with large corporates, telcos and retailers to build its payments business. Now, it’s also working with some so-called challenger banks and is looking for promising fintech partners in Europe. While Brash doesn’t foresee a lot of big banks knocking on his door for partnerships, he is excited about what’s still ahead in the digitalization of payments and PPS’s role in that shift.

“We’re focused on what we do really well,” Brash says, pointing to processing, issuing and some value-added services. “We see a role for different players in the space. Our mission is to find those companies that are totally focused on the end user and have exactly the right proposition, and we at PPS will provide all of the backbone.”

One of the areas that excites Brash is new approaches to lending. For example, one partner is working with employers to offer employees credit at a lower interest rate, which is convenient and cost-effective for the employee and provides the lender with assurance that the funds will be repaid through payroll deductions.

“The big question for me is the bubble,” Brash added. “Is there a bubble? No one is really making any money. There is some opportunity to challenge the banks but it’s not a straightforward process.”

Curve, a U.K.-based startup, is a challenger of sorts but is relying on partnerships with banks and nonbanks to become a conduit for all of a consumer’s financial needs. The company, which placed second in Money20/20 Europe’s startup contest, uses a mobile app and a single card to manage a consumer’s money by layering on top of the existing architecture. Curve, which works with Wirecard and MasterCard, among others, currently is testing its service with business travelers who need to manage personal and corporate spending. The company has big plans to offer a suite of ancillary services within the app, including credit, loyalty and cash back, explained CEO and Co-Founder Shachar Bialick.

But while Curve seeks to challenge banks in terms of providing innovative services, Bialick notes that it’s not displacing the current bank relationships. “Partnerships just reinforce the requirement of the bank. It’s trusted, secured and they are an integral part of the ecosystem,” he said, noting that banks will still hold deposits. “We want to be the gateway to all your financial needs.”

Investment Doesn’t Equal Innovation

The investor appetite for fintech remains strong. Investment bank Financial Technology Partners estimates that investors spent $9 billion on fintech companies in just the first two months of 2016. But dollars don’t necessarily add up to disruption or innovation.

“I think there’s a lot more money poured into fintech than there’s been innovation that’s come out of it,” said Payoneer CEO Scott Galit, in a post-Money20/20 Europe interview. There’s been a lot of ‘me-too’ technology, but I don’t think I’ve seen a lot of sustainable, differentiated innovation,” he contends.

New York City-based Payoneer has come a long way from its startup days. The company now employs more than 650 people from Silicon Valley to Tokyo. Its payments platform enables businesses of all sizes to make payments or receive funds from more than 200 countries. But it didn’t get there by making an enemy of banks.

“We work with banks in every market we’re in and have very good relationships with them,” Galit noted. For the startups of today, he has seen a shift in the rhetoric as companies come to realize that it takes a lot of money and backend infrastructure to manage risk and compliance needed to support cool, customer-facing experiences.

At the same time, there’s so much change and so many new entrants, Galit believes the banks woke up and said: “We’re so far behind in so many areas, we can’t do this organically anymore.”

During an investor panel at the conference, Ramneek Gupta, managing director; Co-head Global Ventures Investing at Citi Ventures, agreed that banks need startups to push innovation, while the startups need banks for compliance. “It takes a long time to build those [compliance] muscles,” he said.

When considering investments, returns are important, but “our aim is largely strategic,” noted Mariano Belinky, managing partner at Santander InnoVentures. “We aim to find companies that can improve the value proposition for our [banking] clients. … There’s a good symbiosis between fintech and banks. They have disruptive ideas and innovation and we have scale and customers.”

“I think there’s a lot of investment in this market because there’s a lot of opportunity and it’s a big market evolving quickly,” Dwolla CEO Ben Milne told Paybefore. “Nonetheless, over the last two or three years those closest to the industry are starting to see that the simpler solutions are the ones that win. Maybe two years ago at this show we were talking about getting bank and national treasuries to change their currencies. That’s not going to happen.  … But there’s still plenty of room in the market for innovation.”

Iowa-based Dwolla was early in the fintech boom with its original plan to remove interchange from e-commerce transactions. The company continues to evolve and its real-time payments platform serves many different types of merchants, banks and businesses. Milne said the company is focusing its innovation efforts on applying technology to risk and compliance to lower overhead costs for customers, while creating net new revenue streams. The company also changed its pricing model—removing transaction fees and charging only for value-added services. “It’s been difficult for us to find that path, but now that we’ve found it it’s certainly where we focus,” he said, noting that since the shift, Dwolla’s revenue growth has grown on average 30 percent month over month.

Amir Wain, CEO of payments processor i2c Inc., told Paybefore that startups often fall into the trap of making promises that they can’t keep either because they never understood the problem fully or they were too keen to sign the contract without thinking through all the implications. The short-term investment horizon of venture capital firms puts pressure on the management teams to deliver results quickly, which, in turn, leads to signing imperfect deals just to show progress. This approach often backfires when there are product and service delivery issues, leading to customer abandonment and further delaying profitability. “Payments is a complex business and it takes more than an idea or a slick user interface to build and scale something sustainable,” notes Wain. As i2c expands its processing platform globally, Wain said he’s always thinking about solving problems for clients and their customers. “Technology by itself is never enough,” he said.

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People on the Move: Jennifer Shasky Calvery, FinCEN

shasky_calvery_jenniferJennifer Shasky Calvery will leave her position as director of the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) at the end of May. Calvery has served as FinCEN director since September 2012, and previously spent more than 15 years at the DOJ, where she focused largely on combating financial crime. Under her leadership, FinCEN has increased its use of technology to leverage data and address threats to the U.S. financial system using targeted regulatory initiatives. Calvery also has led FinCEN’s cooperation with international agencies and governments to combat cross-border financial crimes and has strongly advocated for using the agency’s authority to enhance transparency in the financial system—particularly in the area of identifying true ownership of shell companies, according to the agency.