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Special: ETA Strategic Leadership Forum PreviewThe Official Publication of the Electronic Transactions Association | September 2012TransactiontrendsTerminalmanufacturersdiscuss demandfor compliantPOS hardwareand moreEMVin the Cards —FINALLYALSO INSIDE:The Value of ETA’s CPPCan Interchange RecordsReveal Fraud?

The Official Publication of the Electronic Transactions Association Vol. 17 | No. 9Transactiontrendscover story12 EMV in the Cards—FinallyBy Julie Ritzer RossWith deadlines from the major cardbrands requiring processors to supportEMV chip-based contact, contactless, andmobile transactions quickly approaching,terminal manufacturers are reportingincreased demand for POS hardware thataccommodates EMV cards.FEATURES1216 2012 ETA StrategicLeadership Forum PreviewBy Adam StoneThis year’s premier event for executivelevelpayments professionals will takeplace next month in Florida. Attendeeswill cover new ground by examiningchanges at the merchant andcustomer levels and exploring newtechnologies and payments models.20 SPECIAL SERIESStartup Stories:Culture at the CruxBy John ManassoThe five founders of Priority PaymentSystems have incorporated charitablegiving into their business strategy,allowing merchants to designate acharity to receive a portion of revenue.24 The Value of ETA’s CPPBy John ManassoISOs reap the rewards ofparticipating in ETA’s CertifiedPayments Professional program.8departmentS4 President’s MessageInsights from ETA’s electedleader6 Industry NewsTrends, strategies, and news inthe payments business8 Risk in ReviewInterchange records can serveas a warning mechanism forfraudulent behavior26 Ad Index28 Industry InsiderZenius offers an end-to-endtransaction system focusing onNFC middleware and applicationssoftwareTransaction trends | September 2012 3

President’s MessageIt’s Time To Get InvolvedETA’s Strategic Leadership Forumis just a few weeks away. All ofus at ETA are looking forwardto being part of an event that thisyear—even more so than usual—promises to be both informativeand exciting. Everyone around thepayments business recognizes thatthe business models that have servedthe industry well for two decades ormore are evolving in response to newtechnologies and under the pressureto grow by reaching out to new kindsof customers with innovative newproducts. Fortunately, that is exactlythe environment that the Forum wasdesigned to address, by bringing youinformation from a high-level, strategicperspective. The Forum is unique inthat respect.What makes this event especially exciting,however, is that the first fruit of ETA’sefforts to “enlarge the tent” and bring tothe table new members who are at theleading edge of payments innovation, willbe on display when we gather October16 at The Breakers. Over the course of thisyear, the ranks of ETA’s membership havegrown significantly, with the addition of allfour major wireless carriers, several mobiletechnology companies, the leading mobilewallet ventures, and other companies thatare driving advances in the non-mobile endof the business, as well. For many of theexecutives of these companies, the Forumwill be their first opportunity to interactin a deep way with the payments industryand ETA’s long-time members. It’s also anopportunity for you to get to know someof ETA’s newest members, so if you haven’tdone so yet, make plans to join us in PalmBeach. (You can find out more at www.electran.org/slf12.)The Strategic Leadership Forum isn’tthe only thing in the works at ETA, ofcourse. There is another exam for ETA CertifiedPayments Professional program comingup and the application for that exam isOctober 1. The exam will take place, as itdid last year, in November.I am extremely proud of ETA’s CPPprogram, as is everyone in ETA’s leadership.But what is really impressive is thatthe companies that got behind ETA’s CPPdesignation in a big way are beginning tosee a return on the investment they madein the program. We at ETA always had faiththat certification would create a competitiveadvantage in the marketplace, but it’sgratifying to see that borne out. You canread more about the companies’ experienceson page 24.If you are thinking about certificationfor yourself or for those in your company,this is a great time to take the first stepand apply. You can find out how at www.electran.org/cpp.Finally, you will soon see ETA’s annualcall for committee volunteers. The processfor 2013’s committees is going to be moreopen and inclusive than ever before, so ifyou’ve thought about volunteering for anETA committee, there’s never been a bettertime to do so. I can say without reservationthat the benefits of being an ETA volunteerfar exceed the investment you make.Give some serious thought to joining thehundreds of current ETA volunteers. You’llbe happy that you did.Regards,Eddie MyersEddie Myers is president of ETAand president & COO of PayProsEditorial Policy:The Electronic Transactions Association,founded in 1990, is a not-for-profitorganization representing entities whoprovide transaction services betweenmerchants and settlement banks and others involved in theelectronic transactions industry. Our purpose is to provide leadershipin the industry through education, advocacy, and the exchange ofinformation.The magazine acts as a moderator without approving,disapproving, or guaranteeing the validity or accuracy of anydata, claim, or opinion appearing under a byline or obtained orquoted from an acknowledged source. The opinions expresseddo not necessarily reflect the official view of the ElectronicTransactions Association. Also, appearance of advertisementsand new product or service information does not constitute anendorsement of products or services featured by the Association.This publication is designed to provide accurate and authoritativeinformation in regard to the subject matter covered. It is providedand disseminated with the understanding that the publisher is notengaged in rendering legal or other professional services. If legaladvice and other expert assistance are required, the services of acompetent professional should be sought.Transaction Trends (ISSN 1939-1595) is the officialpublication, published monthly, of the Electronic TransactionsAssociation, 1101 16th St. N.W., Suite 402, Washington, DC20036; 800/695-5509 or 202/828-2635; 202/828-2639 fax.Postage paid at Pittsburgh, Pennsylvania, and additional mailingoffices. POSTMASTER: Send address changes to the addressnoted above.Copyright © 2012 The Electronic Transactions Association. AllRights Reserved, including World Rights and Electronic Rights.No part of this publication may be reproduced without permissionfrom the publisher, nor may any part of this publication bereproduced, stored in a retrieval system, or copied by mechanicalphotocopying, recording, or other means, now or hereafterinvented, without permission of the publisher.Electronic Transactions Association1101 16th Street NW, Suite 402Washington, DC 20036202/828.2635www.electran.orgETA CEO Jason OxmanDeputy Director/COO Pamela FurneauxDirector, Communications & PRThomas GoldsmithDirector, Education andProfessional Development Rori FerensicDirector, Governmentand Industry Relations Mary Weaver BennettDirector, Membershipand Marketing Del Baker RobertsonTransaction TrendsPublishing office:Stratton Publishing & Marketing Inc.5285 Shawnee Road, Suite 510Alexandria, VA 22312703/914.9200Publisher Debra StrattonAssociate Publisher & EditorJosephine RossiContributing Editor Angela Hickman BradyEditorial/Production AssociateChristine UmbrellArt Director Janelle WelchContributing WritersLia Dangelico, John Manasso,Bryan Ochalla, Julie Ritzer Ross, Adam Stone,and Melissa SutherlandAdvertising SalesSteve Schwanz or Fox Associates(800/440.0232; adinfo.eta@foxrep.com)Fox Associates OfficesChicago 312/644.3888New York 212/725.2106Detroit 248/626.0511Phoenix 480/538.5021Los Angeles 805/522.0501Atlanta 800/440.02314 September 2012 | Transaction trends

SecureNet.Everyone Else.Which payment system would you rely on todeliver increased revenue to your merchants?With over $12 billion in annual transactions and more than 14,000 merchantsnationwide, SecureNet Payment Systems offers everything from traditionalpayment processing to the most cost-effective eCommerce solutions available.Welcome to your ultimate all-in-one payment platform. Welcome to SecureNet.Learn more about our affordable, full-service products at SecureNet.com©2012 SecureNet. All rights reserved.

INDuSTRY newsETA Launches Mobile Payments CommitteeThe ETA has launched a new Mobile PaymentsCommittee, an industry-wide taskforce of representatives from top mobilepayments companies, including all fourmajor mobile network operators—AT&T,Sprint, T-Mobile, and Verizon. The committeewill develop and implement industrywidesolutions to the complex policy andbusiness issues surrounding the emergenceof mobile payments around the world.“Mobile payments represent a gamechangingbusiness opportunity for ourindustry, and ETA’s mission is to help ourmember companies succeed in this business,”says ETA CEO Jason Oxman. “Ourindustry must work collaboratively toensure that the regulatory and businessenvironment promotes innovation andcooperation. ETA is the hub of activityin mobile payments, and our Mobile PaymentsCommittee will help ensure thatconsumers and merchants have access toan efficient, reliable, and secure mobilepayments system.”Chaired by Jackie Moran, executive directorof federal relations for Verizon, thecommittee is made up of representativesfrom ETA member companies, includingGoogle, Isis, Capital One, American Express,Discover, MasterCard, Visa, PayPal, VeriFone,Intuit, First Data, Panasonic, and Neustar.The group will address several issues facingthe future of mobile payments, including:n the business relationships needed tofoster innovation and achieve networkinteroperability among merchants, creditcard companies, mobile networks, equipmentoperators, equipment manufacturers,and financial institutionsn the necessity of best practices that ensuremerchants and consumers have accessto the most innovative and effectivemobile payments solutionsn the education of legislators and regulatorsdeveloping public policy around mobilepaymentsn the education of merchants and consumersabout the potential of mobile paymentsto provide a more efficient, reliable, and secureexperience at the point of purchase.The committee meets monthly and willmeet in person at ETA’s Strategic LeadershipForum in October. For more information,contact ETA’s Professional DevelopmentDirector Rori Ferensic at rferensic@electran.org.AROUND THE HORNBank of America began its rollout of chipcredit cards to consumers to increase cardacceptance during international travel. ElectronicMerchant Systems and JetPay LLCwere acquired by Universal Business PaymentSolutions Acquisition Corp. Element has extendedits partnership with Marathon DataSystems to provide PCI DSS compliant processingsolutions to ServiceCEO customers. FirstAmerican Payment Systems released itsm+Terminal mobile application for on-thegobusinesses. Harbortouch released a freeonline reservations module through its HarbortouchHospitality POS system. PayscapeAdvisors District Sales Manager Seth Resnickcompleted ETA’s Certified Payments Professionalprogram. Plastic Jungle, InComm, andZeevex have announced a strategic partnershipthat will allow consumers to exchange giftcards for Zeevex shopping power. VeriCheckannounced its Check 21 processing capabilityusing the USA ePay payment gateway.fast FACTThe iPad is the most popularmobile device for onlinepayments, according to Adyen Inc.The device accounted for 8.4 percentof all payments to online merchantsglobally in June 2012. Consumersspent on average 20 percentmore on transactions via iPadsthan they did on any othermobile device.6 September 2012 | Transaction trendsinfo GRAPHHow Small Businesses Reduce Their RiskRestrict employee access to sensitive data53 %Shred and securely dispose of customer, patient, or employee data48 %Use password protection and data encryption48 %Lock and secure sensitive customer, patient, or employee dataUse firewalls to control access and lock out hackersUpdate systems and software on a regular basis48 %47 %44 %Have a privacy policy41 %Ensure that remote access to the company’s network is secure79 %Source: The Hartford Financial Services Group Inc.

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ISO RISK Corner IN REVIEWSound the AlarmUse interchange records as an early warning tool for fraudBy Melissa SutherlandIn the early 1990s, only a few dozen interchange rates existed;today, we have hundreds of categories. And whilethe system is highly complex, it helps offset risk to theissuer from delinquent customers, accommodates emergingbusinesses/operations (for example, schools, utilities, and government/entitlement),and covers a portion of the costs formarketing campaigns to acquire new credit customers. Eachinterchange rate and category has a list of merchant typesand credit card behavioral/transactional expectations. If thetransactions don’t meet the required expectations, the interchangecategory will increase in cost. This increase in cost isusually accompanied by an increase in risk to the acquiringbank and its registered ISOs.Knowing the difference between interchange rates couldhelp stop a fraud loss. Interchange records can serve as anearly warning mechanism for abnormal behavior, providingthe risk team with critical information to identify a true financialrisk scenario in time to mitigate damages.Example: The New RestaurantSusan, a seasoned risk analyst working for an ISO, begins hermorning review of transaction queues. (Let’s assume the ISOhas limited access to an automated pre-interchange suite oftools for risk management.) Susan takes a look at the firstbatch queue for new merchants and sees a new restaurant inInterchange can serve as anearly warning mechanism forabnormal behavior, providingthe team with criticalinformation to identify riskand mitigate damages.Manhattan. The underwriting file shows it’s been in businessfor three years, has an expected monthly volume of $50,000,has an average ticket of $75, and has no previous processingsubmitted from sales. All of the sales are swiped, tickets typicallyrange between $50 and $69, and the sales Susan reviewswere batched on the same day they were authorized. There isno indication of forced (manual) approvals, the BINs are notsequential, the tickets are within expected dollar volumes,no cardholders have been duplicated, and the authorizationmaximum count for the day and week has not been exceeded.All appears to be in order, and no further action is taken.While Susan is working on the merchant’s file, Ken, a customerservice representative at the same large ISO, takes acall from the merchant. The merchant is very agitated, askingquestions about settlement times, how much money he shouldsee in his bank account, will they be settled gross or net, andcould he move his account to monthly billing. Ken answersthe merchant’s questions and then properly escalates the requestfor monthly billing over to the risk team. Dean, anotherrisk analyst, accepts the task of reviewing the merchant formonthly billing; he reviews the credit, the length of time inbusiness, and the business type. Dean concludes that monthlybilling would be fine and approves the request.The ISO for which these fictional characters work will takea $30,000 fraud loss on this account.When the retrievals and chargebacks start to hit the accounton day 18 of processing, the risk department immediatelyplaces the merchant’s funding on hold and begins reviewingthe account more closely. But by this time the merchant hasstopped processing, and the damage is done.Had Susan known to review the card type qualificationsduring her daily review, she would have discovered that thecards being swiped were only triggering two interchange categories:Commercial Card Standard and World Restaurant.8 September 2012 | Transaction trends

ISO RISK Corner IN REVIEWMonitoring the Toll RoadsThe functional act of a payment is defined as the transactionand the hardware, software, and networks these paymentsrun on. The easiest way to understand the interchange networkis to think of it like a toll road. Just as the state controlstoll rates as an underlying factor of driving on toll roads, thecredit card networks control the interchange rates to offsetthe expense of the infrastructure. The toll roads analogyworks surprisingly well. A car is a transaction, able to choosethe toll ways best suited for the destination. The ISO’s job isto ensure the transaction follows the proper route.If any of the fictitious agents mentioned in the examplehad checked how the transactions were behaving on theinterchange toll way, they would have seen some odd patterns.Multiple interchange categories occurring in a restaurantmerchant is expected, because the merchant will have awide variety of consumers using a wide variety of card products—personalrewards cards, business cards, internationalcards if the location is in a larger city or near a tourist spot,etc. But in the example, only two categories were triggeredon $30,000 worth of transactions. If Susan had reviewed howthe transactions were behaving on the interchange toll road,she would have seen only two categories—a highly improbablescenario at a restaurant.Interchange is relatively predictable per merchant type.For example, it’s very likely that a retail location will have asignificant number of its sales occur at the qualified rate ofCPS Retail. To achieve this rate, the transaction must meetseveral criteria:• settlement (toll way permit for the car) expires within twodays• valid electronic authorization• valid transaction ID• card present (swiped or contactless)• one day between transaction date and authorization date• authorized and settlement amount match consumer card.The interchange toll booth operator may penalize a CPSRetail transaction while exiting the toll way, at a more expensiverate, depending on what credentials are present inthe car’s glove box at the time (the more missing credentials,the higher the rate). Late settlement is one example ofa behavior that would bump a CPS Retail transaction into amore expensive and sometimes riskier category. Transactionssettled within three days will downgrade to EIRF rates; beyondthree days, rates drop further to Standard. This behaviorcould indicate that the merchant needs to be retrained onthe terminal’s functionality or has a forgetful staff member,ProcessingNetworkThe everywhereProcessingNetwork SM10 September 2012 | Transaction trends

or that something more sinister is afoot.In fact, if Susan reviews the interchange qualificationson a daily basis, she may find that the downgraded and nontypicalinterchange rates at a retail location are becausethe retailer is running stolen cards.Becoming More VigilantAlthough most agents are trained and systems are designedto target predictable violations as an early indicator of possiblefraud (excessive keyed, average monthly spikes, negativebatches, foreign cards, excessive declines, etc.), fewuse interchange records as an early warning mechanism.So how does an ISO or acquiring bank become morevigilant?Pay close attention to your transaction data, and be ableto track and trace these variables by merchant: card types,amounts (averages and per transaction), POS indicators(swiped v. keyed, authorization and settlement timing, transactiontime of day, frequency, and velocity), changes to historicbehavior, and more. Filter and compare the data against ISOpolicies, industry norms, past behavior, and card scheme rules.Know your interchange rules. Transaction data can’t beproperly policed if the rules aren’t clear. Keep up withthe latest rate tables, and the underlying boundaries andrequirements to qualify at a given rate.Train your staff. Make sure the risk and underwritingstaff all understand the data and the rules, and are preparedto execute your policies. Don’t become complacent. Riskschemes change. Ongoing education is mandatory.Enable your staff, but don’t over-empower them. Networkand security personnel call it dual-custodianship.What that means is simple: Don’t give any one employeetoo much control. Critical, risk-related decisions shouldalways require multiple approvals to keep everybody onthe same page.Leverage technology. Develop reports, database queries,and other automated investigative tools that spotlightproblems in seconds, rather than hours or days. Don’t underestimatethe obscure; a report that rarely returns datamay be the report that saves you tens of thousands of dollarsfor a small “time price.”Fraudulent transactions are ever-occurring; interceptingthem before real money is moved is the key to not takinga loss. Enhancing the knowledge tools in your risk agents’arsenal will help them spot the anomalous sales buried ina batch of seemingly typical sales, and it could save youmoney. TTMelissa Sutherland is SVP, risk and underwriting,for CardReady and a member of the ETA Risk &Fraud Committee. Reach her at melissa.sutherland@cardready.com.Transaction trends | September 2012 11

[ COVER STORY ]EMVin theRecent developments point to morewidespread adoption in the next several yearsKEY NOTES8 While they can’t agree on a timetablefor full-on deployment, terminalmanufacturers are reporting increaseddemand for POS hardware thataccommodates EMV cards.8 Large retailers may perceive thefinancial savings from eliminating annualPCI DSS assessment and validationexpenditures as more than justifying thecost to upgrade to EMV equipment.8 Moves by big banks and others intoEMV may propel smaller operations intothe space.8 The newly formed EMV MigrationForum is already addressing mattersthat require collaboration within thepayments industry.12 September 2012 | Transaction trends

Cards — FinallyIn early July 2012, American Express revealed its “network roadmap” for advancingEMV chip-based contact, contactless, and mobile payments for all merchants, processors,and issuers of AmEx-branded cards in the United States. Like Visa and MasterCard,AmEx noted that processors, by April 2013, must be able to support EMV chip-basedcontact, contactless, and mobile transactions. And, in October 2013, merchants becomeeligible for relief from PCI DSS reporting requirements if 75 percent of AmericanExpress transactions executed at their POS acceptance locations are of the EMVchip-based contact and contactless varieties. EMV-compliant cards are expected tostart landing in consumers’ wallets by late 2012.Additionally, in October 2015, American Express will institute a Fraud LiabilityShift (FLS) policy that will transfer liability for certain types of fraudulenttransactions away from the party that has the most secure form of EMV technology.U.S. fuel merchants will have an extra two years, until October 2017, before theFLS takes effect for transactions generated from automated fuel dispensers.Meanwhile, in late June 2012, JPMorgan Chase & Co. began distributing to merchantsdevices that accept payments from chip-embedded cards as well as frommobile phone signals and traditional magnetic stripes. Named “Future Proof” toreflect their ability to be adapted to payment technology advances, the terminalsBy Julie Ritzer Rossrepresent a key initiative by Chase to avoid losing business to institutions that arealready charting EMV and other advanced payment waters. “We, and our customers,are not going to be put in the position of playing catch-up,” Bob Nadeau, groupexecutive for product development at Chase Paymentech, the bank’s Dallas-basedmerchant acquiring and processing subsidiary, told Reuters shortly after the announcementwas made.Does this mean EMV finally has some U.S. momentum?While they can’t agree on a timetable for full-on deployment, terminal manufacturersare reporting increased demand for POS hardware that accommodates EMVcards. That includes EMV-capable versions of POS devices already available, plusthose that can be upgraded to handle EMV transactions with dual-interface PIN padsthat can read chip cards and conform to new card-issuer requirements.Powerful Motivators“We’re seeing interest from merchants in all tiers, and while EMV probably accountsfor no more than about 5 percent of transactions now, we expect the majority oftransactions to be completed using EMV-capable equipment by the ‘liability shift’in 2015,” says Erik Vlught, vice president, product marketing, integrated systems,for VeriFone.For merchants as a whole, “the liability shift itself is a powerful motivator,” hecontinues. “As an example, according to Visa, under the umbrella of the shift, theparty that is the cause of a chip-on-chip transaction not occurring—either the issueror the merchant’s acquirer—will be financially liable for any resulting card-presentcounterfeit fraud losses. In all likelihood, acquirers will pass the cost of that liabilitydown to nonconforming retailers.”Transaction trends | September 2012 13

[ COVER STORY ]VeriFone also is basing its predictionon the belief that large retailers, in particular,will perceive the financial savingsfrom eliminating annual PCI DSSassessment and validation expendituresas more than justifying the cost to upgradeto EMV equipment. The opportunityto re-invest these savings intoadditional payment technology infrastructureto support dynamic data processingalso will support EMV adoption.By the same token, smaller merchantswill embrace EMV before 2015 endsonce they see proof that although theyaren’t required to conduct annual audits,acquirers can order even Level 4 merchantsto do so, adds Vlught. “As thoseacquirers invest in the EMV infrastructure,it’s difficult to envision that theywon’t force their smaller merchants togo along for the ride. In addition, smallermerchants without EMV will see thatthey could face potentially overwhelminglosses from the liability shift.”Greg Boardman, senior vice president,product and software, at IngenicoNorth America, also expects adoption ofEMV-capable payment acceptance devicesto happen gradually over the nextthree years. A desire among merchantsto catch up to, and establish or maintaina competitive edge against, such big-boxearly adopters as Walmart is influencing,and should continue to influence, Level1 and Level 2 merchants, he says.Like Vlught and his colleagues atVeriFone, Boardman and other Ingenicoexecutives also consider the threat offinancial repercussions stemming from14 September 2012 | Transaction trendsIs Your Company Prepared for EMV Migration?Join fellow ISOs and acquirers on September 13 at 2pm ET for“EMV for Acquirers: Seven Guiding Principles for EMV Readiness.”Led by Phillip Miller, global head, Acquiring Knowledge Center for Master-Card Worldwide, this one-hour webinar will provide guidance for acquirersto support EMV implementation in the United States and will discuss howthey can use EMV as an opportunity to attain new customers and establishhigh customer satisfaction ratings. The discussion will highlight “Seven GuidingPrinciples for EMV Readiness” based on challenges, opportunities, andlessons learned from EMV migration in other markets around the world.The webinar is complimentary for ETA members and $99 for nonmembers.For more information and to register, visit www.electran.org/webinars.“Unlike some preceding regionalrollouts, there is an abundance ofwarnings around procrastination.We’re seeing the big players takeEMV migration as a primary andvery serious initiative.”—Greg Boardman, Ingenico North Americaliability a key motivator. “Unlike somepreceding regional rollouts, there is anabundance of warnings around procrastination,”Boardman says. “We’re seeingthe big players take EMV migration as aprimary and very serious initiative.”The inclusion of contactless technologyin most EMV-enabled POS equipmentis another reason for merchants to convert.The technology paves the way foraccepting contactless and mobile payments,including those made from mobilewallets. It’s convenient for customersand speeds up check-out time, and ithelps merchants capture market share byproviding consumers the wide range ofalternative payment options they want.Some new chip-enabled POS devicesalso are gaining ground with merchants—evensmaller ones—becausethey can drive loyalty and repeat businessby pushing coupons and specialoffers to mobile phones.But not everyone is optimistic. “Weare going to be ready, but uplift is happeningnow only in merchant ‘pockets,’and 2017 is probably the earliest thingswill really be happening as far as merchantdeployment of the technology isconcerned,” says David Hogan, executivedirector, major accounts, for HeartlandPayment Systems.For one thing, Hogan explains, the lifespanof many merchants’ POS equipmentwon’t run out by the 2015 time framepinpointed by Vlught and Boardman. POSdevices typically last for nine to 12 yearsbefore replacements are necessary, Hoganmaintains. Many merchants upgradedequipment in 1998 or 1999 in preparationfor Y2K, and again in 2008 or early 2009.“Smaller merchants with a few POSlanes may be able to swing a refreshnow or in two or three years, but for aretailer that has 1,000 stores with three,four, five, or more POS lanes apiece, it’sa huge investment they can’t make now,”Hogan says. He points to a Heartlandcustomer with 1,200 stores and annualsales of $2 to $2.5 billion. The merchantdeployed entirely new POS hardwareand software in 2009 and intends toleave it in place until 2016 or 2017.Moving Things AlongThough most issuers, banks, and industryobservers are unwilling to predictwhen the issuance of chip-enabled cardswill reach mass proportions, some say

the timetable will have a bearing onmerchants’ plans to embrace EMVtechnology.“My spin on it is, there remain thoseretailers that are asking, ‘Where arethe cards?’ and are telling themselvesit makes little or no sense for them tomove over to EMV until the vast majorityof cards issued have chips in them,”Hogan says.Yet the general consensus also holdsthat recent developments could, asVlught put it, “move things along, interms of card issuance and retail adoption”somewhat faster than originallyanticipated. Consider these issues:In late July 2012, Bank of Americaannounced plans to roll out chip technologyon many of its consumer creditcards, among them all newly issued MerrillLynch credit cards, U.S. Trust Accolades,BankAmericard Travel Rewards,BankAmericard Privileges, and VirginAtlantic travel credit cards. The bankis issuing chip-enabled cards to existingcustomers in these card programswho are frequent international travelers.Participants in Bank of America’s BankAmericard Cash Rewards, BankAmericardPower Rewards, BankAmericard,AAA Members Rewards, NEA, Asiana Airlines,Alaska Airlines, Hawaiian Airlines,Royal Caribbean, and Norwegian CruiseLines credit card programs can requestEMV-enabled replacement cards. AllEMV cardholders will still have to signfor transactions, and the new cards stillinclude magnetic stripes.“We are going to be ready, but upliftis happening now only in merchant‘pockets,’ and 2017 is probably theearliest things will really behappening as far as merchantdeployment of the technology isconcerned.”—David Hogan, Heartland Payment SystemsEarlier this year, the bank started issuingchip-and-PIN credit cards to corporateand commercial clients in the UnitedStates. The move followed last year’s releaseof chip-and-PIN cards to corporateand commercial clients in Europe.In summer 2012, PCSU, a St. Petersburg,Florida-based credit union serviceorganization that serves more than1,500 financial institutions nationwide,launched the first Visa-branded prepaidEMV cards available in the UnitedStates. “We’re on a mission to keep creditunions in front of the demand curve,”says CEO/President Michael Kelly. “Thatmeans decisively seizing emerging technologyopportunities to give our creditunions a leading role in the paymentsmarket, and empowering credit unionsto attract more members and reach consumersegments that need both domesticand international spending power.”One industry analyst, who requestedanonymity, says he believes “moves intothe EMV space by the likes of such apowerhouse as Bank of America couldvery well push banks of various sizesoff the edge and into the waters.” Seeingcredit unions do the same should likelyhave a similar effect in that financial sector,he predicts.In February 2012, digital securitytechnology provider Gemalto introducedDexxis EMV, an in-branch EMVcard issuance solution for U.S. banksthat lets banks immediately issue andactivate initial and replacement cards atphysical branch locations. It performschip encoding as an adjunct to magneticstripe encoding and plastic card printingor embossing, adding the requireddata processing and key managementcomponents.The Smart Card Alliance formed theEMV Migration Forum, an independent,cross-industry organization to supportthe alignment of critical EMV implementationstrategies by global paymentnetworks, regional payment networks,issuers, processors, merchants, and consumers.Although part of the Smart CardAlliance corporate organization, thegroup will have a separate membershipand will be open to representatives fromfinancial card issuers, payments processors,merchants, acquirers, paymentnetworks, industry suppliers, and otherconstituent groups, including paymentsindustry associations.The Forum will address matters thatrequire some level of inter-industry collaborationand/or cooperation if massU.S. migration to EMV technology is tobecome a reality, says Smart Card AllianceExecutive Director Randy Vanderhoof.This includes providing guidanceon technical issues, consumer awareness,and other nonproprietary issues relatingto industry-wide EMV adoption; developingbest practices and educationalmaterials; coordinating process-relatedelements of the payments infrastructurenecessary to introduce an EMV-enabledpayment system; discussing/engagingin projects to facilitate consumer adoptionand allow for a more consistentconsumer experience with chip cards;and reporting on EMV implementationas it progresses.Executives of the Smart Card Alliance,along with the analyst and terminal providers,have no doubt that although nobodyknows for certain when merchantswill accept EMV as the de facto paymentstandard and issuers continue to keepfurther plans to roll out EMV cards closeto the vest, progress is the watchword.As the analyst sums it up, “In the end,however much time it takes, it will beworth the wait.” TTJulie Ritzer Ross is a contributingwriter to Transaction Trends. Reach herat jritzerross@gmail.com.Transaction trends | September 2012 15

[ FEATURE ]2012ETA StrategicLeadershipForumPREVIEWBy Adam StoneFrom payments technologies to economic trendsto consumer behavior, the premier event forleading payments pros covers it allRegister Today!October 16-18, 2012The Breakers, Palm Beach, FLConference Registration:www.electran.org/slf12Hotel Reservations:https://resweb.passkey.com/go/ETA12This year’s showcase event for executive-level payments professionals is gearingup to break new ground, with industry leaders primed to share best practicesand lay out changes in this ever-evolving landscape. ETA’s Strategic LeadershipForum (SLF), October 16-18 at The Breakers in Palm Beach, Florida, brings togethertop thought-leaders from across the industry, along with formal networking eventsthat offer the opportunity to refresh old ties and make new contacts.Standout sessions will include a look at emerging industry trends; an explorationof new technologies; and an in-depth look at new payment models.Key Trends: For the first time, the SLF will examine changes at the merchantand customer levels. As customers adopt a range of new payment options, merchantswill be making new demands. How will the payments industry respond?Technology: Urgent issues will include the U.S. migration to EMV, with all its attendant16 September 2012 | Transaction trends

guidelines and standards. Encryption and securityalso promise to take center stage.Exploring New Payments Models:Formerly the Critical Business Issues session,this discussion will look at new paymentsmodels and the impact these willhave on the way we all do business. Attendeeswill get up to speed on the newmodels before going out to address themerchant community.Here’s a closer look at what to expectwhen the top thought-leaders inthe payments industry gather to sharetheir insights.Payments Trends• Economic evaluation. In exploringthe latest payments evolutions, expertswill dive into a range of powerfultrends. They’ll look at the recession andthe overall health of the economy. Willthe U.S. economy continue to providegrowth opportunities for payment productsand volume? Surely regulation andlegislation will factor in, but how? Whatwill be their impact on the industry? Inlight of all this, will the investment communityremain bullish on payments?• Consumer-centric. Another key trendinvolves the customers themselves, anincreasing focus of attention. Consumerbehavior is changing. The economy,technology, instant access to productinformation, and the shopping habits ofdiverse demographics—the post BabyBoomer generations X&Y—are impactinghow customers shop. Those changeswill impact merchants’ sales opportunities,and that will mean further transformationsacross the landscape. Highlyregarded researchers will talk about consumerconfidence, spending habits, andhow it all affects our businesses.• Merchant motions. Then there are themerchants themselves, your customers.Which consumer and product trendsare they watching, and why? Merchantswill discuss their priorities for technologychanges and acceptance infrastructurefor 2013, what their sales projectionsare, which merchant categories aregrowing, and why.Payments. Technology. Innovation.With a wide-ranging set of topics to explore,this session’s multifaceted panelwill take on the multidimensional realmof technology development.• EMV will play a leading role in the discussion,as panelists explore its adoptionin the rest of the world and what thatmeans for the U.S. payments community.Recent announcements by the networkswill mean big changes for the industry,but how will those pan out? How willEMV change POS, and what impact willit have on operations throughout the industry?This is a chance to learn aboutthe coming challenges to issuers, processors,and merchants. What does all thismean for “re-terminalization” and compliancecosts?• Tokenization and encryption will likewisecome under scrutiny. Amidst theproliferation of third-party providers,card brands now are offering merchants,processors, and issuers the opportunityto “tokenize” all POS and ecommercetransactions to reduce fraud. The prospectsare exciting, but the outcomes arestill unclear. How much liability is removedfrom Level 1-4 merchants? Howwill the processors support it all?• And then there’s the issue of theTransaction trends | September 2012 17

[ FEATURE ]Silberman To Address SLF Attendees on October 18David Silberman, associate director of markets, research and regulationsat the Consumer Financial Protection Bureau (CFPB), will be afeatured speaker at this year’s SLF.Silberman originally joined the CFPB as the assistant director forcard markets. His involvement with consumer financial services began when, asdeputy general counsel of the AFL-CIO, he created an organization to providefinancial services to union members and negotiated the first AFL-CIO credit cardprogram. He went on to serve as president and CEO of Union Privilege and later asdirector of the AFL-CIO Task Force on Labor Law. He also served as general counseland executive vice president of Kessler Financial Services, a privately held companyfocused on creating and supporting credit card and other financial servicesto membership organizations.“ETA is extremely pleased to have David Silberman join us for the StrategicLeadership Forum,” says ETA CEO Jason Oxman. “ETA members attending the SLFevent will have the unique opportunity to hear insight from a top governmentofficial responsible for payments industry regulation. Silberman’s analysis of thecurrent and future legal and regulatory landscape will be of vital importance toETA members’ business operations.”18 September 2012 | Transaction trendsCloud, the trend we cannot escapeand yet few have fully grasped. A distinguishedpanel will bring some orderto the big questions here, includingthe present scope and future impactof Cloud computing, especially as itimpacts the payments realm. Forresterprojects that the Cloud computing marketwill be $241 billion by 2020. Thiswill mean big changes among data-center-basedpayment processors, but howwill those changes be manifest? Whatwill be the long-term impact of thispowerful new approach?• Smart phoning, which is tops on everyone’smind, has raised more questionsthan it has answered, and leadingthinkers will tackle the biggest trends inthis fast-changing environment. In just afew years, the cell phone has morphedin to a multi-use hand-held device. Today’ssmartphone is a Swiss Army knifeof functionality that has created a paradigmshift away from the role of thetraditional phone. Consumers seemready to accept the notion that they canmake face-to-face purchases with theirsmartphones, but what about the downstream—allof the adjacent products andservices that are triggered as a result ofa smartphone payment? And how willmobile commerce factor in: all of thecoupons, targeted promotions, and relevantoffers? It seems inevitable that thistechnology will change the way peopleshop and pay. Is the payments industryready to participate?Exploring New Payments ModelsWill emerging payments models disrupt,disintermediate, or create new opportunitiesfor all? This is your chance to hearthe top minds in the field weigh in onthe opportunities and challenges.A range of new concepts and capabilitieshas emerged on the landscape inrecent years, and the payments industrystill has much to learn. Virtual currency,incentives, loyalty, couponing: Whyshould you care?• Keeping current. There’s a fundamentalshift happening in the very meaningof currency. Coupons, for instance, canNetworking Eventsbe shared with friends, social influenceis helping drive business, and buyingcertain items can earn hidden rewards.This session will delve into vital aspectsof the new milieu: How merchants arebecoming empowered to compete withbig-box stores, and why the paymentsindustry needs to start paying attentionto these trends.• The new tradition. Underlying all ofthese topics is a larger global concern.Simply put: What will be the impact ofthe new entrants on the traditional acquirers?From mobile payment devicesto creative alternative electronic paymentchoices, it’s becoming possiblefor almost anyone to present or accepta payment. Inevitably, these new solutions,together with increasing pressureon merchant service charges, are pushingmerchant acquirers to re-evaluateand re-invent their business models. Thetime has come for them to rethink theirpositions in the payments industry.Our panel, representing both traditionalplayers and new entrants, will explorethe changing payments landscapeand discuss how traditional players willwork alongside the new entrants. Whatunexpected partnerships will arise inthe coming 24 months? Will only traditionalISOs require massive scale inorder to survive? Are new entrants subjectto the same compliance, risk management,and underwriting standards astraditional merchant account providers,or do they have an unfair advantage? Isthere room for everyone to win? TTAdam Stone is a contributing writerto Transaction Trends. Reach him atadam.stone@newsroom42.com.In addition to the major sessions covering economic, technology, and broad businesstrends, SLF will offer a number of formal networking events.• A member of the Palm Beach Historical Society will lead a leisurely island bike tour.• A rum-tasting session will introduce participants to the history, geography, andtastes of rum regions throughout the Caribbean and Central and South America.• A catamaran cruise will sail the Intracoastal Waterway, taking in the historicalsights of Palm Beach and the renowned mansions of the rich and famous.• A golf tournament will weave through the sandy hazards of The Breaker’s OceanCourse on 140 acres overlooking the Atlantic.

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» Startup Stories: Priority Payment SystemsCultureat the CruxPriority Payment Systems puts efforts into passions—from charitable giving to emphasizing local talentBy John ManassoPresident and CEO John V. Priore cuts the ribbon atPriority Payment Systems’ Alpharetta offices.Priority Payment SystemsAlpharetta, GAPortfolio size: 42,000 merchantsAnnual processing volume: $7 billion“Our employees like the factthat we give some of ourrevenues back... .”—John Priore, CEOWhen the five founders of Priority Payment Systems elected tocreate their new company in 2005, they left well-paying jobsbehind and then labored for 22 long months before the newcompany became cash positive.During those months, the founders went from no salaries to impairedsalaries and, in time, back to where they once were. Today, Priority PaymentSystems has 42,000 merchants under management and an annualprocessing volume of almost $7 billion. The company started with 7,500square feet and now has more than 52,000 in its Alpharetta, Georgia,headquarters.From those five founders—CEO John V. Priore; COO Richard Harris; CIOSean Kiewiet; Vice President/Merchant Operations Sheila Hernandez; andVice President/ISO/Agent Business Development Duayne Haskett—thecompany has grown to 274 employees.As part of the culture that Priority wanted to create, and also somewhatin paying homage to the sacrifices that the founders made to get the companyoff the ground, Priority has given prominence to charitable giving.Priore and Harris both played college football, at University of RhodeIsland and Furman University, respectively, and believe in the values theylearned from that team sport. In that vein, Priority has served as a title sponsorfor the Black College Football Hall of Fame’s induction ceremonies inboth 2010 and 2011. Other charities Priority has supported—whether itselfor through its 300 re-selling agents across the country—include medicalcharities, hospitals, youth groups, and sporting groups.Priority also has incorporated charitable giving into its business strategy.Through a program called Project Give Back, the company allowsLET US PROFILE YOU Is your company a successful ISO or acquirer? Let us tell your story.Email jrossi@electran.org for more information.20 September 2012 | Transaction trends

merchants to designate a charity and Priority will take a portionof revenue and assign it to that charity. Priore used theexample of having merchants who are alumni of Historic BlackColleges and Universities (HBCUs) designating monies to theiralma maters as a sales tactic.“We all know there’s a 501(c)3 out there, a nonprofit outthere, for any cause,” Priore says. “It’s a matter of how you goabout supporting that. So what we’ve chosen to do is to supportanything from grassroots right up through some of thelargest, Make-A-Wish (Foundation) and American Cancer (Society)and American Lung (Association)… I think it’s a mentalityand it’s definitely a part of our culture.”Priority’s corporate culture also values employees, who areconsidered one of the company’s most important assets, Prioresays.“Our employees like the fact that we give some of our revenuesback in the way of donations and monetary support. Andit’s not just that. We volunteer for a number of Atlanta-basedfunctions, so our folks are very giving,” says Priore.That philosophy is one vital part of Priority’s strategy thathas helped it achieve rapid success, but so was a smart businessplan from the start. The founders all were long-time veteransof the payments industry. In fact, as a younger executive in themid-1990s, Priore served on one of the earliest incarnations ofETA’s Ethics Committee.Local LeverageIn the mid 1990s, Priore and Harris began their friendship thateventually helped to get the company off the ground. PrioreWORDSTOTHEWISEKeep a service model in mind, but know that service alonewon’t help you succeed. “You absolutely have to be focusedon service today and servicing your clients,” saysCEO John Priore. “It doesn’t matter whether it’s a largeclient or a small client or thousands of small clients. Therehas to be a service model and you have to incorporateinto that service model technology. If you don’t, in ourbusiness, you’ll do 500 head count instead of 250 or 275.You have to look at the technology and where it’s goingtoday. Things change very rapidly and I would say youhave to complement that.”Surround yourself with good people who make good decisions.“You don’t necessarily have to do business withyour friends,” says COO Rich Harris. “Do business withpeople who can advance your agenda. John [Priore] setthe culture, set a high bar, and surrounded himself with agroup of people who could buy into that. Once you get agood, educated group to buy in, there’s really no limit towhat you can do. But that’s easier said than done.”Keep your eye on the prize. “You have to decide, if that’swhere you’re going and that’s what you want, you’re goingto have to make some shifts,” says Priore. “There’s goingto be a Plan A, Plan B, and even a Plan C, and what’snice about being a small company is you can make thoseshifts quickly, but you want to keep your eye on thatprize and to really have the drive and dedication andperseverance to go after it. That’s what it takes.”How long will it take forcompetition to burn away anymargin improvements thatresulted from Durbin related re-pricing?There is no question that competitive intensity is on the rise andthat new competitors are emerging from adjacent industries andmarkets, but strategic complacency, not emergingcompetition, is the biggest threat to most acquirers.First Annapolis has been providing management consulting and merger andacquisition advisory focused exclusively on the electronic payments industry forthe last 20 years. The merchant acquiring business is one of our deepestspecialties.U.S. Office +1 (410) 855 8500 l Europe Office +31 (0) 20 530 0360 l info@firstannapolis.com l www.firstannapolis.comTransaction trends | September 2012 21

» Startup Stories: Priority Payment Systemswas working for First Data and Harris for a large bank. Theylater worked together at NOVA Information Systems (later rebrandedas Elavon).When they decided the time was right to launch theirown company, the pair created a detailed business plan ofmore than 40 pages and then began knocking on the doorsof private equity and venture capital firms, along with angelinvestors. They decided that angel investors represented the“friendliest money” and went that route. They made their pitchto more than 50 firms and individuals.“You’re working just as hard either way,” Harris says offunding choices. “It’s just the best deal you can cut for themanagement team.”Viewing its competition from the beginning as the top 20processors in the country, Priority built its technology fromscratch. When it did so, it had in mind the needs of ISOs, manyof which Priority’s founders had long-standing relationshipswith. They made service an important tenet. Consequently,Priority ensures that phone calls are answered between oneand four rings.“From a servicing perspective and technology perspective,we knew in essence what was lacking by the top, call it topfive processors—maybe not lacking, but they just couldn’tmove as fast as us,” Priore says.Small Business Loansfor your MerchantsTrue business loans -NOT merchant cash advancesMerchants not required tochange processorsSeamlessly offer loans throughyour platformPartner With Us Today!888.269.4246www.ondeckcapital.compartners@ondeckcapital.comOne advantage Priority had as a startup was its location.Being in suburban Atlanta, perhaps the country’s epicenterof the payments industry, has paid off. Priore had workedin the city since 1999 and Harris was that rarity for one ofthe country’s fastest-growing metropolitan areas: a native.“What that’s created is a talent pool that I would tellyou is second to none around the country,” Priore says.“What we’ve been able to do is to grow our companyutilizing the talent that’s here in Atlanta. You don’t haveto go far to find talent, and talent with experience. That’sprobably one of the biggest benefits. We still have somenew folks who work here who are new—new in the sensethat they’re new to bankcard—but we would tell you thatthe majority of employees come to us with years of experienceand that’s a tremendous benefit when you’re growingout a company.”Adds Harris: “What’s neat for us is you can reach out toany executive here and have a meeting with them becausethey’re local, so we’re blessed to be able to get our handson the high-end executives at any processor. We’re able toget a talent pool and we get to mix with them, is anotherway to say it. We’re a part of the community here in thebankcard business.”Top 20 BoundPhase 2 of Priority’s growth plan is to engage in mergersand acquisitions, a strategy it already has employed.Whether it’s a similar-sized company with hundreds orthousands of community banks signed up or a value-addedreseller (VAR) software company, Priority is ready to move.Priore says the company already has looked at POS VARsystems.On its website, Priority touts its MX POS system, whichprovides merchants with a customer database, integratedwith inventory that “lets you keep track of customer preferences,and send out coupons and other targeted promotions.”The system also offers hand-held terminals to letmerchants “process a sale wherever your customers are,with no lines or waiting.”With execution on a plan designed by knowledgeableexecutives, Priority is working toward its goal of becominga top 20 processor. In 2012, the Atlanta Business Chroniclerecognized Priority as one of its 50 fastest-growingprivately held companies. Each month, the companyhandles between 1,300 and 1,500 merchant applications.“We’re five, six, seven years in, but we feel like we’rejust getting started,” Priore says. “We have a great foundationthat’s just been built and now we can take it to thenext level.” TTJohn Manasso is a contributing writer to TransactionTrends. Reach him at john_manasso@yahoo.com.22 September 2012 | Transaction trends

The Value of ETA’s CPPISOs realize the benefits of certificationBy John ManassoWhen Todd Linden servedon the board of the ElectronicTransactions Associationin the early 2000s,board members often discussed ways toimprove ethics in the industry and howto avoid misrepresentation to merchants.Years later, with the advent of ETA’sCertified Payments Professional (CPP)program, Linden, chief operating officerof Merchants’ Choice Payment Solutions(MCPS), believes ETA has addressed theissue in an ideal way.“They have figured out a way to doit—to have a differentiator out there,” saysLinden. “If you really want to run a cleanprogram through the certification process,make them learn the fundamentals,”he adds. ETA’s CPP program does just thatby addressing how sales representativesshould present themselves, the importanceof privacy and confidentiality issues,and the significance of presenting a valueproposition to a merchant.ETA’s CPP Application DeadlineOctober 1, 2012www.electran.org/cppThe objective of the CPP is to “establisha uniform, defined standard of practiceand knowledge for ISOs, sales personnel,and other payments industry professionals.”But it’s also to quantify the expertiseof industry professionals and enhancetheir productivity and the reputation ofcompanies, as well as the industry.The idea is not just to educate professionalsabout sales but also to givethem a mastery of topics that are fundamentalto the industry, such as pricingand interchange, products and solutions,risk, regulatory issues, compliance, andsecurity.Since its launch more than one yearago, a number of executives have takenadvantage of ETA’s CPP program in differentways. All are reaping the benefits oftheir investments.Tangible SuccessWith CertificationAt MCPS, a super-ISO based in The Woodlands,Texas, four “relationship managers”have gone through ETA’s CPP program.Those individuals are tasked with bringingon financial institutions and agent banksor managing the company’s ISO channel.Linden says his method takes it to the“PhD level.”MCPS’s relationship managers havelearned to articulate best practices. Theyalso have learned that, to be successfulin the payments industry, sales reps needto look “at the environment that a merchantis in and what kinds of productsare conducive to making that merchantmore efficient to qualify for more favorableinterchange rates,” Linden notes.Taking a slightly different approach,Henry Helgeson, CEO of Boston-basedMerchant Warehouse, spent roughly$30,000 to send 100 employees throughthe program.“We ended up with a lot more benefitsthan I thought,” Helgeson says.Those benefits have helped improveboth sales and corporate culture. For one,the ISO’s participation in the programhas improved morale. Employees feelmore valued, he says, and appreciate theinvestment.The cost of the CPP program is a smallprice to pay to improve retention, accordingto Helgeson. Training is extensiveat Merchant Warehouse, as employeesare not allowed to speak to a customeruntil they have completed a month ofemployment.“I’d say before you’re really good atyour job here at Merchant Warehouse, itprobably takes a year,” he says. “That firstyearsalary is a big investment, and to justput $325 extra on that is a little bit moreof a guarantee that we’re going to getmore return. It’s a no-brainer.”Although many factors contribute toclosing a sale, Helgeson says evidencesuggests ETA’s CPP program has played afactor.“We thought we’d break even around30 new merchants, and 60 would be a definitewin,” he says. “And across 100 employees,we’re really only asking one-third totwo-thirds of a deal over a two-year periodto get this. We do have anecdotal feedbackfrom our merchants and our agents thatthey really like that, particularly merchants.It’s something salespeople haveto take the initiative to say, ‘We’re all certifiedby ETA.’ It lends credibility—anotherarrow in the quiver when you go to sealthe deal.”Merchant Warehouse incorporates thedesignation into its marketing materials—a tactic used by other ISOs as well.In July, Payscape Advisors, headquarteredin Atlanta, issued a press releaseannouncing that within its managementprogram it will extend involvement in theprogram to every account manager withinthe company this year.“ETA’s CPP [program] sets the standard,”President and Co-Founder JeremyWing said in the release, “and we agreethat it is a symbol of excellence, which iswhy we feel so strongly about Payscape’sparticipation in the program.”John Manasso is a contributing writerto Transaction Trends. Reach him atjohn_manasso@yahoo.com.24 September 2012 | Transaction trends

Why should I do businesswith an ETA CPP?By obtaining your payments processing solution from an ETA CPP, you canbe sure that your representative is knowledgeable about the products andservices he recommends and has the expertise to recommend the best andmost appropriate solution for your business. Your ETA CPP has made a significantpersonal (and financial) commitment to his or her profession and has agreed toadhere to the Electronic Transactions Association (ETA) Code of Conduct.Visit www.electran.org/cpp for more information.

ETA 2012 BOARD OF DIRECTORSOFFICERSPRESIDENTEddie MyersPresident & COOPayProsPRESIDENT-ELECTRoy BanksCEOACCELERATED Payment Technologies Inc.TREASURERKim FitzsimmonsCEOCynergy DataSECRETARYDebra RossiExecutive Vice PresidentMerchant Payment SolutionsWells Fargo BankIMMEDIATE PAST-PRESIDENTRick PylantChairman & CEOStrategic Payments Systems Inc.DIRECTORSTodd AblowitzPresidentDouble Diamond GroupRobert BaldwinVice ChairmanHeartland Payment Systems Inc.Gregory CohenSenior Vice President & General ManagerVerifone CommerceGary GoodrichCEOProPay Inc.Chuck HarrisPresidentNetSpendChris HylenGeneral Manager & Vice PresidentIntuitDiana MehochkoPresidentDMM ConsultingMike PassillaPresident & CEOElavonJeff RosenblattPresidentEVO Merchant ServicesKurt StrawheckerManaging DirectorThe Strawhecker GroupADVISORY COUNCILJohn BarrettSVP SalesFirst DataEddie DavisSenior Director, Distribution PartnersPayPalWill GraylinCEOROAM Data Inc.Joan HerbigCEOControlScanKevin JonesPresidentSignaPayTom WimsettWimsett & CompanyEX-OFFICIOJason OxmanCEOElectronic Transactions AssociationJan EstepPresident & CEONACHASteve CarnevaleGroup Head—U.S. Market Development/Emerging Verticals and AcceptanceDevelopmentMasterCard WorldwideSameer GovilHead of Acceptance SolutionsGlobal AcceptanceVisa Inc.Edmond JaySenior Vice President, Small MerchantsAmerican ExpressGerry WagnerVice PresidentDiscover Financial ServicesLEGAL COUNSELDave GochAttorney at LawWebster, Chamberlain & BeanCompany Page Phone WebAuthorize.Net C2 866-437-0491 www.authorize.netElavon 19 678-731-5236 holly.lytle@elavon.comeProcessing Network, LLC 10 800-296-4810 www.eprocessingnetwork.comEVO Merchant Services 2 516-962-7898 jdefilippo@goevo.comFirst American Payment Systems 9 817-317-7243 laura.brooks@first-american.netFirst Annapolis Consulting Services 21 410-855-8500 www.firstannapolis.comMerchant’s Choice Payment Solutions 7 800-327-0093 www.mcpscorp.comOn Deck 22 888-269-4246 www.ondeckcapital.comPax Technology 23 877-859-0099 www.pax.usPlanet Payment C3 800-489-0174 www.planetpayment.comPlant Group, Inc. 1 480-706-0816 www.plantgroupinc.comSecureNet Payment Systems 5 888-231-0060 www.securenet.comTotal Merchant Services, Inc C4 888-84-TOTAL x9411 www.upfrontandresiduals.comUSA ePay 11 866-872-3729 www.usaepay.com26 September 2012 | Transaction trendsAdvertisers index

StrategicLeadershipForum 2012Payments.Technology.Innovation.Engage with the Innovators Capitalize on the knowledge of frontlineleaders, business visionaries and senior level professionals who are advancingthe payments industry—top executives at the nexus of technology, mobile,and e-commerce will be at the Strategic Leadership Forum.October 16-18, 2012 | The Breakers • Palm BeachRegister at www.electran.org/slf12

Industry InsiderFrom A to ZeniusCompany covers all parts of the ecosystem with its end-to-endtransaction systems solutionsBy Bryan OchallaThat Redding, California-based Zenius Inc.’s suite ofend-to-end transaction systems solutions focuseson near-field communication (NFC) middlewareand applications software shouldn’t be much of a surprise.Co-founders John Wiese and Ming-Li Liu have a wealth ofexperience with this set of standards. President/CEO Wiesedealt with NFC technology while working for VeriFoneInc. and ViVOtech, while CTO/VP of Engineering Liu coveredNFC during stints at ViVotech and Visa International.When the pair teamed up to start Zenius in 2008, theirintention wasn’t to create just another set of NFC solutionsfor the payments space.Instead, they wanted to “architectan end-to-end system thatwas designed for commercialuse,” says Wiese.At the time, “there was a lot“We’re aninfrastructuretools provider, so... Rather, we providethe capabilityfor others inthe space to bedisruptive.”—John Wiese,President/CEOof proprietary stuff going onwhere there wasn’t a way formultiple pieces of hardwareto be done across the ecosystem,”he adds. With Zenius, theco-founders wanted to positionthe business “to solve theproblems of fragmentationand some of the other issuesthat hadn’t been addressed” byother companies in the space.Sweet SuiteZenius offers customers—includingfinancial institutions,mobile network operators,system operators, and platformproviders—a suite of solutionsthat’s chock-full of softwareand services that enable end-to-end mobile transactionsfor both open- and closed-loop systems.Specifically, Zenius offers clients solutions like ZeniusWallet, an Android-, iOS-, and RIM-enabled mobile walletthat allows end users to select from a wealth of add-ons,including secure open-loop payment and closed-loop loyalty,tickets, transport, identity, coupons, and access andgift-card applications.Other solutions include M-Transact, which allowscustomers to use NFC-enabled mobile devices forpayment and transaction acceptance, and Transaction-Server, a back-end solution that enables the processingof closed-loop transactions. Zenius’ suite also includesopen-loop apps for each of the leading payment brandsand an array of closed-loop NFC apps for ticketing, loyalty,identity, coupons, and bankcard—all of which canbe rebranded.Cloud’s the LimitZenius will soon bolster its line-up by launching Cloudbasedsystems that not only will exist with its NFC-basedsystems but will integrate into them (and vice versa).“Our system now supports open- and closed-looptransaction instruments in our converged wallet for NFC,where the credentials reside in the NFC Secure Element,”Wiese explains. “Now we’re building a system where thecredentials reside in the Secure Cloud—which allowsfaster time to market due to the current business barrierswith Secure Element access—for all of our closed-looptransaction types,” including coupons, identity, loyalty,payment, and tickets.“The Secure Cloud-based cards, from a consumerwalletperspective, will reside in the same wallet withthe NFC cards,” he adds.Disruptive DestinyWiese expects these soon-to-be-unveiled Cloud-basedsolutions to do more than bolster Zenius’ product suite.“We’re an infrastructure tools provider,” he says, “sowe’re not really a disruptor ourselves. Rather, we providethe capability for others in the space to be disruptive.”That’s not to say that Zenius is going to leave behindthe NFC-based products and services that got the companyto where it is today.“We still view NFC as the best secure solution outthere,” Wiese says. Also, although he believes there aregoing to be a lot of different technologies developed anddeployed by those in the mobile payments space in thecoming years, “we still believe NFC has a shot.” TTBryan Ochalla is a contributing writer to TransactionTrends. Reach him at bochalla@yahoo.com.28 September 2012 | Transaction trends

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