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Blog & Hot Topics

Double Diamond Group’s groundbreaking insights do more than help our clients make the right decisions at the right time.
They inform an industry, spark debate and define direction isn’t just covered by the news, but is the news.

Double Diamond Group and Rich Consulting Expand Team – For Immediate Release

Double Diamond Group and Rich Consulting Expand Team – For Immediate Release

Double Diamond Group and Rich Consulting Launch Strategic Partnership with ControlScan to Help PFs Easily Tackle PCI

Payment Facilitators Have Reduced PCI Scope by as Much as 96%

DENVER (August 21, 2018) – Double Diamond Group and Rich Consulting announce a strategic partnership with ControlScan to help ensure data security within the payment facilitator ecosystem.

Double Diamond Group and Rich Consulting help to simplify the process of becoming a payment facilitator, which often involves implementing strong risk management, compliance, and underwriting policies and procedures. As the safety and security of the entire payments system is of vital importance, offering trusted guidance for PCI compliance has never been more important.

ControlScan, a leader in managed security and compliance solutions that help secure networks and protect payment card data, will offer a complementary PCI DSS consultation to Double Diamond Group and Rich Consulting clients. In the payment facilitator ecosystem, compliance with the Payment Card Industry Data Security Standard (PCI DSS) is required of the payment facilitator as well as their sub-merchants.

During the ControlScan consultation, clients will talk with a PCI Qualified Security Assessor (QSA) to understand their business’s unique scope of compliance as well as ways they can more quickly and easily achieve compliance. ControlScan will also provide guidance on the risk associated with the unique processing environment(s) being implemented (or contemplated) by the payment facilitator.

ControlScan notes that identifying payment facilitators’ potential for PCI scope reduction up-front helps demystify the compliance process as well as reduce fear and uncertainty surrounding payment security in general. In recent consulting engagements, ControlScan has helped payment facilitators achieve a PCI scope reduction of as much as 96%.

In addition to the consultation, Double Diamond Group and Rich Consulting clients can leverage the ControlScan partnership to become a Level 1 PCI Compliant Service Provider, implement a PCI program across their sub-merchant base, and more. Payment facilitators can also choose a combination program of PCI and security best practices, or just security best practices, based on their risk environment.

“The payment facilitator ecosystem continues to grow exponentially. It is estimated that payment facilitators will generate more than half a trillion dollars in gross payment volume (GPV) by 2021, representing $4.4 billion in their net revenue,” said Todd Ablowitz, Chief Executive Officer and Founder of Double Diamond Group. “Having a strategic partnership with ControlScan and being able to offer their world-class PCI compliance services to our client base is a huge win and will be an incredible value for our clients.”

“Protecting the payment facilitator ecosystem from the bad guys is all of our responsibility especially protecting credit and debit card information, and PCI compliance is a big component of that protection,” said Deana Rich, Chief Executive Officer and Founder of Rich Consulting.

“PCI compliance is a necessity, but it’s not always straightforward for payment facilitators and their sub-merchants,” said Chris Bucolo, Vice President of Market Strategy for ControlScan. “This strategic partnership is an excellent match, because it helps put PayFac businesses on a well-informed path to data security success.”

Double Diamond Group and Rich Consulting have partnered since 2012 to offer a full suite of consulting services to companies interested in the payment facilitator model. The advisory firms offer powerful insights into risk management, underwriting and compliance, as well as deep business knowledge and operational execution for SaaS-based companies, ISOs, acquirers, banks, regulators and other payment organizations around the world. The companies were founded by payments industry veterans, Todd Ablowitz and Deana Rich, who have unparalleled knowledge and experience working with this revolutionary payments strategy that is rapidly changing the payments landscape. Rich Consulting and Double Diamond Group are wholly owned brands of DoubleRich, Inc.

ControlScan managed security and compliance solutions help secure networks and protect payment card data. Our “We’ve Got Your Back” promise supports thousands of companies by combining deep-seated expertise with superior technologies for services such as managed UTM firewall, network log monitoring and management, and advanced endpoint security. Processors, acquirers, ISOs and payment facilitators also utilize our strategic PCI compliance programs to reduce portfolio risk and strengthen merchant relationships. Headquartered in Atlanta, ControlScan is globally connected through a worldwide base of customers, partners and strategic alliances. Our team has over 25 industry certifications, and ControlScan is a certified Level 1 compliant PCI-DSS Service Provider. For more information about our company and its solutions, please visit ControlScan.com.


Greg Myers
+1 (214) 738-0406

ControlScan Contact here:
Stacey Holleran
+1 (678) 279-2645

Todd Ablowitz Payments Industry Expert Double Diamond Group Payment Facilitator Videos

Todd Ablowitz Payments Industry Expert Double Diamond Group Payment Facilitator Videos

Todd Ablowitz Payments Industry Expert Double Diamond Group Payment Facilitator Videos

Payment facilitator expert Todd Ablowitz speaking at a recent conference on one of the reasons the payment facilitator model is so successful – software companies know their customers! Discover…

Verticals Where the PF Model is Seeing Success

How Does the PF Model Affect the Payment Brands?

Does the PF Model Require an ISV to be a Certain Size?

What the Future of the Payment Facilitator Ecosystem Look Like?


Visit us at https://doublediamondgroup.com/




Fast, easy set-up. Designed to work right “out-of-the-box”

DENVER – April 16, 2018 – Infinicept, creators of the innovative, turnkey payments platform Payment Facilitator in a Box™, launches unprecedented underwriting on demand (UWoD) functionality, extending frictionless underwriting pioneered in the Payment Facilitator model to the entire merchant acquiring market.

The product functionality serves the entire merchant acquiring marketplace from merchant acquirers to financial institutions to marketplaces, payment facilitators, aggregators and ISOs. Organizations requiring instant automated merchant underwriting will enjoy the fast, easy set-up that works right out-of-the-box with minimal customization needed. This solution has been pre-configured and is backed by the payment industry’s best and most talented underwriting experts that collectively have over 75 years of experience. Leveraging this experience allows Infinicept customers to be set up for success with minimal effort.

Configurability Without Complexity

For those organizations that require more customized merchant underwriting, the UWoD functionality provides the ability to configure underwriting triggers that best serve their business model and risk appetite. Once the underwriting services are selected for each trigger, the user can set the result for each attribute based on their risk profile.

Any organization that underwrites merchants can leverage the full set of APIs and web hooks to integrate the underwriting on demand functionality directly into their own solution. The functionality is supported by an easy to use, all-inclusive dashboard as well as an intuitive manual review dashboard for those instances where human input is needed.

UWoD can be used alone or as part of the full suite of Infinicept solutions. The Infinicept platform is an artful technology solution that fully supports frictionless merchant acceptance, underwriting, boarding and back office operations with a series of automated modules that can be adapted to any vertical market. Its unique, agnostic framework allows organizations that support Payment Facilitators to easily integrate their platform with any sponsor, processor, gateway and/or CRM without starting from scratch.

Underwriting on Demand is a true differentiator in the industry,” said Todd Ablowitz, Co-Founder and chief executive officer of Infinicept and payments consultancy Double Diamond Group. “The Payment Facilitator ecosystem is a $4.4 billion opportunity by 2021, and it is completely disrupting traditional ISOs and acquirers. PFs know that rapid onboarding is crucial for growth, yet underwriting is one of the functions you must get right. Underwriting on Demand provides that rare combination of a beautiful system out-of-the-box, while allowing just about anything to be configured. It really is the best of both worlds and best of all it is backed by the industry’s premier risk and compliance experts.”

“We started this for Payment Facilitators. We designed underwriting for the PFs that had triggers, meaning, at different processing levels or events, the PF was supposed to take different actions,” said Deana Rich, Infinicept co-founder and chief executive officer of Rich Consulting. “Infinicept mirrors that process. Once complete, what we realized was, EVERYONE needs triggered underwriting!”

About Infinicept
Infinicept, is a robust suite of automated services that collectively perform as an operational backbone for Payment Facilitators. Whether used as a fully integrated package, or a la carte, Infinicept makes it possible for Payment Facilitators to get up and running in weeks, not years. For more information visit www.infinicept.com.

Visit https://doublediamondgroup.com

Media Contact:
Greg Myers
Chief Marketing Office
(214) 738-0406

Double Diamond Group Leverages Decades of Experience and Best Practices to Simplify the Complex Process of Becoming a Payment Facilitator

Double Diamond Group Leverages Decades of Experience and Best Practices to Simplify the Complex Process of Becoming a Payment Facilitator

Double Diamond Group leverages decades of experience and best practices to simplify the complex process of becoming a payment facilitator.

“The DDG consulting team not only had the specialized experience we needed, they also quickly understood our business and had an appreciation for our customer base.” – Russ Jones, CFO for Shopify.

Todd Ablowitz is a respected industry leader with nearly 20 years of experience working with the payments industry’s top brands, as well as up-and-coming technology innovators. Ablowitz established Double Diamond Group in 2008, and he has a unique blend of experience, connections and know-how to help clients solve their most critical business challenges.

Double Diamond Group will provide a thorough understanding of the Payment Facilitator space, industry best practices, and background knowledge of the payment facilitator market.

For More Info https://doublediamondgroup.com


Payment Facilitator Payments Industry Research Insights Testimonials – Double Diamond Group

Payment Facilitator Payments Industry Research Insights Testimonials – Double Diamond Group

At Double Diamond Group, we start with you: your perceptions, your questions, your challenges. We understand that you make decisions involving millions of dollars every day, and we respect your priorities, your timeline and your budget.


*“Double Diamond was essential in helping refine our portfolio company’s strategy and prioritizing its resources. Then, Todd and his team worked side by side with the management team to manage implementation and execution. The entire board was very pleased with the process and the results of our collaboration.” – Carty Chock, Co-Founder and Partner, ClearPoint Investment Partners (Worked with Double Diamond Group in a prior private equity firm)


*“I have had the pleasure of working with Todd Ablowitz in a variety of capacities during the past fifteen years, and in every instance he has demonstrated his professionalism, his leadership, and his ability to deliver actionable insights and strategic direction. Whether we were working together at the same company, or I referred Double Diamond Group to other businesses, Todd has always exceeded expectations and made a measurable difference.” – Diane Vogt Faro, President, National Benefit Programs


“We appreciated how professionally the Double Diamond Group and Rich Consulting team managed the project. They were genuinely interested in our success, and worked as partners throughout the entire process by continually looking for ways to provide value.” – Russ Jones, CFO, Shopify

See more about our story: Aggregation Solutions.


“Working with Double Diamond Group and Rich Consulting definitely expedited our process of having a final set of policies by months if not years.” –
Daniel Wacker, Club Ready

Read our case study: Payments Facilitation.


“I’ve known Todd for many years and he has an exceptional reputation for grasping the big picture, and following through with quality results. Double Diamond Group not only understands our business as well as we do, Todd and his team have innovative ideas about how we can open new market segments.” – Bill Clark, General Manager, Secure Payments Division, Apriva


“Double Diamond Group hit a home run. Their information was transformative in nature as far as educating us on what’s happening in the marketplace. It allowed the organization to rally behind the investments needed to pursue the opportunities uncovered through our work together.” – Marianne Johnson, Executive Vice President, Global Product & Innovation, Elavon

See more about our story: Payment Consulting Success.


“It’s rare to find a consulting firm that moves beyond validating strategies and assumptions to actually delivering new information that is surprising and insightful. Double Diamond Group gets to the heart of the issues and clearly answers the questions that a CEO or operational leader needs to know.” – Nina Vellayan, President & CEO, Frontstream Payments

See more about our story: Payment Research Success.


“When it comes to the Payment Facilitator model, very few people have the depth and breadth of knowledge and expertise as Double Diamond Group” – Chris Rhode, memberplanet


“The DDG consulting team not only had the specialized experience we needed, they also quickly understood our business and had an appreciation for our customer base.” – Russ Jones, CFO for Shopify.


“Lori has been my trusted financial industry consultant for years. Top tier lawyers apparently agree, as I often receive requests for her services as an expert.” – IMS Expert Services, Recruiter


When electronic payments and mobile payments companies turn to Double Diamond Group, their high expectations are met with fresh ideas, actionable recommendations, quality execution and measurable results.

For more information, contact:

Todd Ablowitz, President
Double Diamond Group, LLC
Tel: +1 (303) 916-9997

Call us to create big results today!

Double Diamond Payments Research Latest Reports On Major Trends In Payments Industry

Double Diamond Payments Research

Double Diamond Payments Research performs ongoing, independent research on major trends in payments and regularly publishes reports to support our clients’ strategic planning efforts.

We also engage in customized payments research efforts either as stand-alone projects, in conjunction with consulting engagements, or as part of our Custom Research Subscription service.

Learn about our latest report… We are sure that you will find it to be interesting and informative….

More info click https://doublediamondgroup.com



Why Software Vendors Should Be Payment Facilitators


Hooked on Card-Linked Offers

Hooked on Card-Linked Offers

Card-linked offers and loyalty programs are clearly an effective way for merchants to engage consumers and generate business.

Such is the conclusion that can be drawn from the CardLinx Association’s 2016 Card-Linking Industry Survey, the results of which have recently been released. More than 92 percent of participants in the survey said they have seen an increased number of their customers leveraging card-linked offers over the past 12 months. More than 60 percent of respondents also said card-linking will develop into a $10 billion industry.

Under a card-linking umbrella, consumers can link their existing credit cards, debit cards, or mobile wallets to loyalty program or discount coupon offers, and then see the loyalty benefit or discount automatically applied without using a digital coupon, paper coupon, or QR code. According to CardLinx, more than half of survey respondents reported having seen their volume from “card-linking” transactions increase by at least 50 percent over the past year. This is a marked difference from last year’s survey, in which only 10 percent of respondents cited increases in card-linking transactions that exceeded 50 percent.

Meanwhile, nearly one-third of respondents reported that their card-linked offers are growing at over 30 percent annually, and 95 percent stated that the number of merchants that utilize card-linked offers has increased over the past 12 months. An excess of 40 percent pegged conversion rates for card-linked marketing campaigns at higher than 10 percent.

Restaurants, department stores and clothing/apparel companies were the early adopters of card-linking, the study found. In a statement issued when the study results were announced, CardLinx President and CEO, Silvio Tavares said the findings show that card-linking has a network effect and it is accelerating.

“Merchants and brands have poured more money into marketing and social media campaigns for card-linking, attracting more consumers. This in turn is bringing more payments and fintech companies into the industry that are developing new, innovative platforms to widen card-linking’s appeal to even more consumers,” Tavares asserted.

The uptick in merchants’ use of card-linked offers makes sense given the benefits, which many are finally recognizing. For one thing, merchants that participate in card-linked offers enjoy the same “perks” consumers do—e.g., no hassles at the checkout counter when it comes to deal details, and no confusion about coupon exclusions.

But there’s more to it than meets the eye. With card-linked offers, the need to train staff is non-existent and there’s only one party to pay– the card-linked service provider, and even then, not until the sale is completed. Merchants that introduce card-linked offers also benefit from receiving big data, which can be used to see when, how, and what consumers are buying in real time. This means they can see who is buying and whether any redeemed offers turn into repeat business. That’s just not so with “daily deals,” where it’s impossible to effectively track whether an offer turn into customer loyalty or are being purchased by someone who simply wants a one-shot offer.

Seems like with card-linked, it’s a win-win to be hooked, from the standpoint of merchants and consumers alike.

PayPal’s Major Mobile Milestone

PayPal’s Major Mobile Milestone

PayPal has reached a major milestone: It’s been 10 years since the company rolled out its first mobile payments service—a service that gave users the ability to send money via text. And over the past decade, PayPal’s mobile payments volume has grown remarkably, from under $50 million at the outset, to a whopping $66 billion in 2015.

A PayPal blog written by Bill Ready, PayPal’s senior vice president of global product and engineering, includes a chart that demonstrates how rapidly the company’s mobile payments have spread in the U.S. since the initial mobile payments service made its debut in 2006. According to the chart, PayPal’s mobile payments volume hit the $1 billion mark in 2011 and reached $10 billion the following year. Of the 4.6 billion payments processed using PayPal last year, nearly one-third were initiated on a mobile device.

In the blog, Ready attributed the mobile payments explosion that has occurred over the past decade in large part to the release of Apple’s iPhone in 2007, followed by the advent of the App Store in 2008 and of Google Play in 2012.  More recently, Ready wrote, the rise of “next-gen” mobile apps like Uber and Airbnb have altered the way consumers utilize their smartphones on the transportation and accommodations front.

PayPal has expanded its mobile footprint in keeping with the developments Ready cited. Case in point: In 2013, it acquired Braintree, a payment processor with a mobile focus. This move brought Venmo, the popular P2P money transfer service, into the PayPal fold. In January of 2015, Venmo processed a record $1 billion in payments, 250 percent more than in the comparable period in 2014.

But this is just the tip of the iceberg. PayPal has also added to its “stable” mobile payments service Paydiant, remittance provider Xoom, and contextual commerce specialist Modest. In addition, the company continues to move on its own in-house mobile initiatives. One example here is One Touch, which helps to speed up the checkout process for consumers who are making mobile purchases.

Ready noted in the blog that despite the rapid growth of mobile, it remains just a “tiny fraction” of all commerce. He believes there is ample potential for more mobile payments growth—especially in financially underserved markets. “Mobile is breaking down barriers and has the power to help drive financial inclusion globally,” he wrote. “Mobile will lead to more change in commerce over the next decade than we’ve seen in the last hundred years and PayPal will continue to lead this revolution.”

Whether PayPal will indeed lead the revolution, it’s too early to tell—although the company has more than a fighting chance at it. However, what we do know for certain is that there will be lot more to mobile payments in the short- and long terms than there is now. Industry players and merchants that refuse to acknowledge the change have a  very short-sighted view, indeed.

FinCEN on Prepaid Cards and the Patriot Act: Let’s Be Clear

FinCEN on Prepaid Cards and the Patriot Act: Let’s Be Clear

FinCEN (the Financial Crimes Enforcement Network) and four other federal banking agencies want to make things perfectly clear when it comes to how requirements set forth in the USA Patriot Act are to be applied to prepaid cards. In response to what they called continuing concerns about the vulnerability of prepaid cards to criminal and terrorist abuse, FinCEN and the Federal Reserve Board, Federal Deposit Insurance Corporation (FDIC), National Credit Union Administration, and Office of the Comptroller of the Currency last week issued interagency joint guidance clarifying bank obligations to identify prepaid card account-holders in line with “Customer Requirement Program” (CIP) mandates contained in the Act.


The guidance, according to FinCEN, is intended to remind banks that money laundering and other criminal risks related to prepaid cards “require the implementation of strong and effective mitigating controls.” Under its umbrella, banks “have a CIP obligation” with respect to their handling of individual cardholders who possess general-purpose prepaid cards with features that resemble a deposit account, regardless of whether the funds are held in a pooled account and whether funds are held in the bank or by a third-party acting on its behalf.


Additionally, the guidance stipulates that general-purpose prepaid cards be treated as accounts subject to the CIP requirements, provided that customers have the ability to reload funds or can access credit or overdraft features. According to the guidance, an account is not considered established until the feature is activated by cardholder registration. The guidance does not apply to non-reloadable prepaid cards, or to government benefit or payroll cards that cannot be reloaded by other sources. However, the guidance also holds that banks should still conduct CIP on program managers or other business entities that offer non-reloadable prepaid access to end-users; employees, except where the intermediary is a government agency, constitute an example.


Also included in the guidance is a specification of important provisions banks are advised to incorporate in their contracts with third-party prepaid program managers. Contracts should be configured to ensure that banks have access to CIP information collected by program managers, and to give banks and the financial agencies that created the guidance the right to audit these program managers.


The importance of drafting prepaid program agreements that clearly delineate each party’s obligations when it comes to anti-money laundering controls is yet another item highlighted in the guidance. So, too, is the critical need to avoid future compliance problems by specifying in detail banks’ and program managers’ obligations at the outset of their relationships, as well as by providing for audit rights to verify that such obligations are being performed.


Collecting identifying information through CIP is said to by the agencies to facilitate other applicable money-laundering controls. Whatever these applicable money-laundering controls may be, and whatever the contents of the guidance, the latter was a long time coming and should have an impact on curbing the use of prepaid cards for nefarious purposes.

Goodbye, Google Wallet Card, Hello Incentives

Goodbye, Google Wallet Card, Hello Incentives

Rumors about the death of the Google Wallet Card have been confirmed, but there’s light at the end of the tunnel for consumers who keep the plastic card in their wallets.

Google has teamed up with American Express Serve and Simple to offer a bonus to owners of the Google Wallet Card, which will stop working on June 30. Those who switch to a Serve account will receive a $20 reward after a third direct deposit of $500 or more onto a Serve prepaid card. Google Wallet Card owners who opt to go with a account Simple, meanwhile, automatically receive $20 for doing so.

The Google Wallet card was an extension of the Google Wallet payment app, which was supplanted by Android’s Apple Pay last year. Prior to the announcement of the Google Wallet Card’s end earlier this week, the product allowed users to make purchases in stores that could only accept magnetic stripe-based cards and had no capability to process payments on a contactless NFC platform. Google Wallet accounts will not be eliminated, but after June 30, consumers will only be able to use it to make Google Play purchases and as a peer-to-peer payment service. Individuals who created a Google Wallet account solely to use a wallet card can transfer their account balances to their bank accounts at any time. Those who set up Android Pay with a Google Wallet Card will need another card to pay before June 30.

Industry observers note that although plastic card users may be straddling two worlds, American Express and Simple were intended to work well in that niche. “The consumers who signed up for Google’s plastic card are the sort of people who were much more interested in Google’s software than in the hardware wizardry involved in making contactless payments from a phone,” Paymentssource said in quoting a statement from Simple.

The incentives sound like a good idea to us. Great job, American Express and Simple. You’ve found another viable niche.

Putting the Finishing Touches on PAR

Putting the Finishing Touches on PAR

EMVCo is getting formal about tokenization.


The chip card standards body, which manages the Europay/MasterCard/Visa (EMV) payment technology standard, this week officially updated its tokenization specification to include the new Payment Account Reference (PAR) data element. In keeping with the formalized specification, token service providers (TSPs)—at present, payment card networks—will generate these PARs, with the data field of each PAR consisting of 29 upper-case alpha-numeric characters. The first four characters will essentially identify the card issuer, and the remaining 25 will assign a unique value to the underlying payment account number (PAN).  PAR data must be included in payment-token response messages; its incorporation into authorization, clearing, and chargeback messages is optional.


According to EMVCo, the presence of PAR fulfills “a fundamental need” to link together PAN- and token-based transactions. Moreover, PAR is seen as enabling the industry to move away from dependence on the PAN as the primary linkage, as it reduces the exposure of PANs to hackers by matching tokens connected with the underlying PAN of a credit or debit card. PAR data cannot, a statement from EMVCo stipulates, be reverse-engineered to reveal the PAN or EMV payment token, nor can it be used on its own to initiate transactions—e.g. such as authorization, capture, clearing, or chargeback. Parties that use PAR data are required to safeguard it in accordance with national, regional, or local laws and regulations.


Beyond the above-mentioned basics, EMVCo perceives PAR as bringing to the table a multitude of benefits. In a statement issued when the update to the tokenization specification was announced, EMVCo Executive Committee Chair Mike Matan noted that while tokenization enhances digital payment security by “limiting the risks associated with the compromise or unauthorized use of PANs,” the standards body wants to do more than that. “We want to ensure the payment acceptance community can continue to deliver associated payment processing and value-added services…currently enabled by PAN.  PAR addresses this by enabling all payment transactions—regardless of how they are initiated—to be processed in a consistent manner.”
Elsewhere in the statement, EMVCo directors observed that the use of PAR allows for a consolidated view of transactions on payment accounts—a view that is needed for security and regulatory purposes, such as risk analysis and anti-money laundering measures. “It is also important for value-added services, as these often leverage historical transactional data to derive analytics and measurements to support customer programs such as loyalty,” the statement reads.

According to Digital Transactions, payment executives and security researchers agree that the PAR concept is sound, but believe its implementation could take years to complete and prove expensive for merchant acquirers to achieve. We have no quarrel with that, but feel PAR is a must-have in an increasingly complex and ever-changing data security landscape.

A Slow Year for Tax Returns Processing

A Slow Year for Tax Returns Processing

Uncle Sam doesn’t accept excuses for late tax returns,and neither do state governments. However, it seems both entities are going to be late with tax returns processing—and hence, the issuance of refunds—this year, data security specialist Brian Krebs reported in his Krebs on Security blog. The delays, Krebs said, stem from “more stringent controls enacted by Uncle Sam and the states to block fraudulent tax refund requests filed by identity thieves.” Complicating matters are the aftermath of a spate of corporate data breaches involving “phished” W-2 information and increased use of professional services to process large numbers of phony tax returns.


Krebs said the above-mentioned problems are spurring the IRS to take up to three times longer to review 2015 tax returns compared to past years. Meanwhile, he quoted Julie Magee, commissioner of Alabama’s Department of Revenue, as attributing much of this year’s delay at the state level to new “fraud filters” put in place with Gentax, a return processing and auditing system used by about half of U.S. state revenue departments. If the states cannot outright deny a suspicious refund request, Magee told Krebs, they will very often deny the requested electronic bank deposit and issue a paper check to the taxpayer’s known address instead.


“Many states decided they weren’t going to start paying refunds until March 1, and on our side we’ve been using all our internal fraud resources and tools to analyze the tax return(s),” Magee said.

The fraud filters work by seeking out patterns known to be associated with phony refund requests. Such patterns are related to the speed with which a given return was filed, or whether the same Internet address was seen completing multiple returns. Some states have reportedly been adding new fraud filters nearly every time they hear about another significant breach involving large numbers of stolen or phished employee W2 data. The theft of employee W2 data through phishing and other methods, Krebs wrote, has been a persistent problem this tax season, with myriad companies of all sizes forced to disclose data breaches in recent weeks.

As a result of the different breaches, individual states and the IRS alike have also been taking extreme measures to repeatedly filter tax returns. Whenever there is news of an additional breach, they begin the process anew, re-programming fraud filters as well as re-assessing tax returns that have yet to be fully processed and those that have not been processed at all. 

It looks like it’s going to be a very interesting remainder of the tax season—and beyond. Stay tuned.

Knowing Your Third-Party Vendors A Must in Prepaid

Knowing Your Third-Party Vendors A Must in Prepaid

In the prepaid arena, financial institutions hold the important responsibility of managing and training 4th-party “downstream” vendors, but there is much to be done for third-party vendors if those responsibilities are to be fulfilled. This is the topic we’ll be talking up next week as we participate in “Prepaid Off The Record Session: Know Your Third Party Vendors,” a round-table discussion to be held during the APEX: ALL PAYMENTS EXPO slated for The Hyatt Regency, New Orleans, from March 20 through March 23. The session will be held on Monday, March 21, from 1:15 to 2:15 pm.


Our key message is, it’s very clear that financial institutions—as well as the vendors that serve them and are charged with managing “downstream” fourth-party crucial vendors—must focus heavily on communication with third-party vendors. Third-party vendors that do not fall into the financial services category require information and training. Otherwise, it will be impossible for the oversight process to be of maximum efficiency and effectiveness.


Financial institutions and vendors with fourth-party vendor management responsibilities must educate downstream vendors about why the oversight process is necessary, the information needed for it to occur, and how the information should be provided it. Third-party vendors must be told, in the most articulate and crystal-clear manner possible, what is required from them in order to achieve these efficiency and effectiveness goals.


To be more specific, financial institutions are in the midst of configuring robust vendor management programs. However, they are probably exerting more effort than necessary as they do so, and would experience fewer difficulties along the way if the third-party vendors that are actually doing the program creation work had an understanding of what information is needed for the review process to occur and how to provide it. Maybe employee training records would be of help. Perhaps an employee risk management program, including background check, or a compliance program for risks associated with UDAPP (Unfair Deceptive or Abusive Acts or Practices), or a written vendor management program for fourth-party vendors. Compliance team qualifications and ongoing training information may belong on the list as well.


We will explore all of this—and more—in the session. And if you’re at APEX, we would love to meet you. Get in touch by texting us at (678) 333-3254, or through the APEX app.

Going to Legal Bat(tle) Over EMV

Going to Legal Bat(tle) Over EMV

We knew this was going to happen. It was just a matter of when a merchant or merchants would take legal action pertaining to the EMV liability shift, where it would happen, and what the claim would be.


Last week was the “when.” Now here’s the “who” and the “what” of the “this”: Two South Florida retailers—B&R Supermarket, Inc. (d/b/a Milam’s Market) and Grove Liquors, LLC have filed an antitrust lawsuit in U.S. District Court for the Northern District of California, seeking treble damages for what they allege to be chargebacks and chargeback fees that add up to more than $10,000. The damages pertain to 88 chargebacks that occurred between October 1, 2015, when the EMV liability shift went into force, and February 15, 2016. The merchants, which are not EMV-ready, say the entire class of merchants in the class-action suit totals several hundred thousand members that have incurred “billions of dollars” worth of chargebacks and fees beginning on the date the shift became effective.


Eighteen defendants are named in the suit, among them seven networks, 10 financial institutions, and EMVCo, the network-controlled standards body that created the EMV specification. In addition to Visa, Inc.; MasterCard, Inc.; American Express Co.; and Discover Financial Services, Inc., network defendants include two payment systems based abroad—UnionPay (China) and JCB Co. Ltd. (Japan). The plaintiffs claim these defendants, in a move to quickly transfer to them losses stemming from counterfeit and in some cases, lost-and-stolen card usage, participated in a “conspiracy” to set a liability shift deadline they were aware that merchants would be unable to meet. They also allege that a significant portion of their difficulty in meeting the deadline stemmed from EMV certification backlogs being experienced by vendors and other complications, all of which they say were beyond their control.


Moreover, Digital Transactions reported, “the lawsuit goes on to paint the EMV migration as a process imposed on merchants without their consent.” The plaintiffs say they were neither consulted about the liability shift, nor permitted to opt out of the process, and that they were offered no compensation by the card networks in return for costs incurred in migrating to an EMV-compliant payment acceptance platform. A reduction in interchange costs was cited in the lawsuit as one form of compensation that could have been offered, and was offered in other markets that shifted to EMV.

Few defendants in the case have commented publicly about the lawsuit. However,  a MasterCard spokesperson told Digital Transactions via email that there has been no pressure on merchants to board the EMV train. “We’re aware of the filing and are currently reviewing the claims,” the spokesperson said in the email. “There was never a requirement for any party—issuer or merchant—to move to EMV. Using insights from merchants, issuers, and others, our [EMV] roadmap and the related liability shift provided incentives to prompt for the most secure ways to pay. We have and continue to work with parties across the industry—merchants, issuers, processors, manufacturers—to assist in this migration.”


Just as we weren’t surprised about this initial lawsuit given the large numbers of merchants we hear have been inundated with chargeback losses following the liability, we won’t be shocked when there are more. In fact, we think this is the first of many trips to the legal well set off by EMV.


Why? The liability shift for ATMs doesn’t take hold until later this year, and petroleum retailers have until October of 2017 to get their acts in gear. Very few restaurants have deployed EMV-compliant pay-at-the-table solutions. Many players to which the 2016 or 2017 deadlines apply will not be ready in time for D-Day (or EMV Day, if you must) and will look to the lawsuit as a model for their own litigation. So, too, will other retailers that didn’t join the class formed by the B&R Supermarket and Grove Liquors.


 To those who thought the conversion process was going to be smooth, we don’t want to say we told you so, but we did. Lawsuits or not, there’s still a lot of bumpy road ahead.

EMV: Merchants’ Newest Gift Card Wrinkle

EMV: Merchants’ Newest Gift Card Wrinkle

The EMV liability shift has laid an unwanted “present” at the gift card industry’s feet.

Now on the hook for fraudulent card-present transactions under the liability shift umbrella, merchants that haven’t upgraded to EMV-compliant point-of-sale technology are putting restrictions on the sale of gift cards in-store to quash increasingly common moves by fraudsters to buy these products with counterfeit magnetic stripe cards and use them in their schemes. Some retailers and restaurant operators, according to The Wall Street Journal, will now accept only cash for gift card purchases, and some have eliminated cards in larger denominations from their gift card assortments. Others, the newspaper reported this week, have begun to impose limits on buying multiple cards—and then, there are those that have stopped selling gift cards altogether.

In general, according to PYMNTS.com, grocery stores, small businesses, and gas stations have adopted EMV-compliant point-of-sale technology at a slower pace than other merchants (although gas stations do have additional time—until October of 2017–to do so). This has bolstered their vulnerability to gift card fraud. The National Grocers Association (NGA) has seen a marked increase in such fraud, Greg Ferrara, its senior vice president of government relations, told PYMNTS.com. Mallory Duncan, general counsel at the National Retail Federation (NRF), concurred, deeming gift cards “a challenge.”

The Wall Street Journal offered several concrete examples of changes in gift card purchasing policies implemented by merchants in light of the EMV liability shift. Supermarket chain Kroger, which reportedly is in the process of rolling out an EMV-compliant point-of-sale system, has placed a restriction on the number of gift cards any individual customer may buy with a credit card in a 24-hour interval. The Wall Street Journal article quoted Chris Hjelm, Kroger’s chief information officer, as having noted that the chain has “done some different things for non-chip transactions” to ensure that it is “mitigating the risk” they pose.

Meanwhile, the Safeway grocery chain has reportedly begun pulling open-loop gift cards from its gift card menu. Safeway officials declined to discuss gift card restrictions with the Wall Street Journal, but the latter said Safeway customers cited instances of observing associates removing the open-loop cards from register racks, and of being told by employees that gift cards can only be purchased with cash.

On the provider side, spokespersons for Blackhawk Network Holdings Inc. pinned part of the blame for a decline in its revenue on merchants’ changing gift card policies. During a recent call with analysts to discuss quarterly earnings, Talbott Roche, the company’s chief executive officer and director, cited moves to restrict the purchase of higher-denomination open-loop gift cards as being of particular concern.

We can’t really blame merchants for their skittishness surrounding gift cards when we look at the potential losses from the product that have shifted to their shoulders: fraudulent gift card purchases contributed significantly to the $3.89 billion in counterfeit payment card losses incurred by issuers in 2014, when the latter were still responsible for them. But what can be done to change the situation?  Moves by issuers to distribute chip-based gift cards—not that there have been any—wouldn’t help matters at all considering the extra cost to do so ($1 to $1.50 per card, by most estimates) and the low number of transactions per card. No issuer would really make money on gift cards in such a scenario, and we don’t foresee that being any different down the road.

The only way issuers will continue see financial gains from offering gift cards is if merchants no longer fear selling them because of the risk of fraud that’s involved. And the only way smaller merchants will lose their fear is to jump on the EMV bandwagon to protect themselves from the use of counterfeit cards to pay for anything—gift cards and otherwise—in their establishments. Given all this and consumers’ love of buying gift cards—they’re expected to load $651 billion onto prepaid cards this year, a 57 percent increase from six years ago, according to Mercator Advisory Group—migration can only be a good thing.

Cash, Credit, or…Loyalty Points?

Cash, Credit, or…Loyalty Points?

Could American Express be thinking outside the payments box…seemingly, way outside the payments box? It looks like this may be the case.

Cardnotpresent.com reported earlier this week that the U.S. Patent and Trademark Office had recently published a patent application from Amex bearing the title, “Third Party Digital Wallet Pay With Points”—an indication that it could be developing a system that would enable its cardholders to complete purchases at various e-commerce websites with loyalty points earned through participation in its Membership Rewards program. The patent documents, in which it is noted that Amex filed the application in 2014, describe, “a system, method, and computer product for redemptions of reward points to purchase goods and services offered by a third-party digital wallet or merchant aggregator.”

According to an abstract of the patent application published here, the system, method, and computer program covered by the patent “may allow certain transaction account holders to directly pay with their loyalty points in any third-party digital wallet.” Utilizing the system, the abstract indicates, account holders would earn one or more point for every dollar charged on an eligible, enrolled transaction account and then redeem their points for a wide array of rewards, including retail merchandise or travel.

Cardnotpresent.com noted that it is still unclear from the documents whether or not Amex has moved beyond the conceptual stage and has an actual payment acceptance product of this type in the development stages. However, as pointed out on the website, the card network’s unique position as both card issuer and payment network, as well as its partnerships with digital wallet providers like Apple (Apple Pay), mean Amex loyalty points could conceivably be spent online like cash.

Although many (loyalty) programs have been successful in developing customer loyalty and incentivizing customers to act, they have presented participants with limited opportunities to redeem loyalty points for the products of their choice or have provided participants with limited accessibility and control of their loyalty account,” Amex states in the patent application. “Therefore, a need exists in this industry for a program that expands product choice for loyalty program participants.”

Whether Amex will fill that need, or not, remains to be seen. But given consumers’ ever-growing affinity for loyalty programs, there doesn’t seem to be a non-technical reason why the card network’s idea wouldn’t fly.

Stratfor, the Crack Geopolitical Soothsayer, Predicts the Demise of Cash. I predict a Payment Facilitator Boom!

Stratfor, the Crack Geopolitical Soothsayer, Predicts the Demise of Cash. I predict a Payment Facilitator Boom!

Europe is axing the 500 Euro Note. Crosshairs are on the Ben Franklin, and cash looks to be on a long slow death. This spells opportunity for electronic payment, but to get there someone has to enable the hundreds of millions of small merchants globally. This will — in fact it MUST — happen through Payment Facilitators. Click on this article in PaymentFacilitator.com to see why.

Ingo Takes the Check Out of the Mail

Ingo Takes the Check Out of the Mail

While it will never become obsolete, the staple excuse for late payments—i.e.,   “the check is in the mail”—may be on the way to holding a lot less water. Ingo, Inc. has announced a check-splitting service that allows users to cash a check on their smartphone via its Ingo Money App and instantly send the funds to multiple accounts.

Consumers may harness the feature—whose introduction makes Ingo Money the first real-time money movement system with a check-splitting capability—to cash checks for up to $5,000 and send the funds to accounts held by multiple recipients of their choice. The app can also be used to send funds directly to banks and private-label issuers for the purpose of making payments to credit card accounts. In all cases, funds are guaranteed, thus protecting issuers and customers from risk and/or liability on returned checks.

Additionally, Ingo Money App users now have the option to leverage it to fund their PayPal accounts.  Once funds have been added to a PayPal account, the money is available to make purchases online with the millions of merchants that accept PayPal. Funds received via the app and subsequently added to a PayPal account can also be spent in stores where PayPal is accepted, either through the PayPal mobile app or the PayPal Business Debit MasterCard(R). This occurs through PayPal’s “send money” feature.

line“We have… replicated on a mobile device the immediate and reliable access to check funds that have traditionally required consumers to visit a retail bank location or check cashing outlet,” Ingo Money CEO Drew Edwards said in a statement when the check-splitting feature and PayPal funding capabilities were announced. “We continue to add services that enable them to move their money any place they need it.”

The premise behind the new features and funding options in the app seems solid given the strength of the target market: the hundreds of millions of consumers and small businesses that are challenged by delayed funds access and default risks associated with the more than $20 trillion in paper checks issued annually. Paper checks remain one of the leading payment methods in the United States for wage and institutional disbursements and person-to-person payments across all income levels, including financially underserved consumers, freelance contract workers, micro-merchants, and small business owners. By most estimates, nearly 73 million people receive paper checks on a recurring basis for the work they perform, while another 40 million receive checks from other people on a regular basis.

“More than 138 million Americans struggle to make ends meet, and check deposit delays and reversals wreak havoc on their finances,” Edwards noted in the statement. “The new features and funding options in the Ingo Money App make it even easier for them to unlock funds safely and quickly and meet their financial obligations without the fear of bounced checks.”

Ingo Money’s offering will never replace checks—that’s for certain. However, it’s entirely conceivable that the app is only the first of its kind to hit the market as payments industry players continue to expand into the alternative payments space, and as mobile becomes an ever-stronger payments force.

Green Dot Charts New Course

Green Dot Charts New Course

Prepaid card services provider Green Dot Corp. is fixing to make its mark all over the payments industry map. Conceding to pressure from major investor Harvest Capital to bolster its bottom line and shore up its flagging stock price, the company announced on Wednesday its plans to roll out several new products and move into the lending business.

Topping the list is a new Walmart MoneyCard, which joins Green Dot’s Green Dot Everyday Visa in the cadre of prepaid products available at WalMart stores. WalMart is Green Dot’s biggest retail partner. Also slated for rollout are prepaid card options to be sold by other Green Dot retail partners. These include the Green Dot Everyday Prepaid Card and the Green Dot 5% Cash Back Visa Debit Card. In a statement issued when the announcement was made, Green Dot management noted that by April, the company expects “substantially all” of its top-selling retail chains nationwide to have these new products in stock. The company also said in the statement that all three products tout “superior features for customers and superior unit economics for Green Dot, compared to all previous Green Dot offerings.”

But there’s more. In April, Green Dot expects to launch a new, reportedly more secure MoneyPak reloadable product. While the original MoneyPak was highly popular, fraudsters’ use of the product for nefarious purposes was such that Green Dot stopped offering it one year ago. All Green Dot prepaid cards will be plugged into the GoBank PTP technology platform in keeping with an objective to offer more features, as well as to heighten operating efficiencies.

green-lineGreen Dot is also moving beyond the prepaid market as a means of generating revenues. In a conference call with analysts, Chairman and Chief Executive Steve Streit said the company intends to expand its ties to the 50 percent of all U.S. households that have annual incomes of less than $50,000. “Green Dot isn’t a prepaid card marketer, nor a prepaid card program manager,” Streit is reported to have observed. “Green Dot is big, growing, ubiquitously distributed, and increasingly famous fin-tech powered branchless bank.”

According to the company, its Green Dot Bank subsidiary has received approval from bank regulators to issue a secured credit card. Additionally, an initiative to roll out Green Dot Money, an online service, is in the early stages. Green Dot hopes to harness Green Dot Money to generate placement fees by connecting lenders with potential unsecured borrowers who use Green Dot prepaid cards.

Finally, in another push to get into new lines of business and generate new revenues, there’s Green Dot’sTPG tax-refund processing service. While this venture will generate most of its revenues during the first half of the year, it should still, in our opinion, help Green Dot attain the goals it has set regarding its cbottom line.

Green Dot has indeed taken a bit of a financial hit lately. The loss of MoneyPak, the transition from older products to newer ones, and higher commissions paid to Wal-Mart had a somewhat negative impact on the company’s key operating and financial metrics, with fourth-quarter cash transfers down by 22.3 percent year-over-year, to $9.71 million, and the active card count down by 4.7 percent, to 4.5 million. Fourth-quarter losses totaled $5.9 billion, compared with a $785,000 loss a year earlier, on revenues of $150.9 million, up by 0.2 percent from $150.6 million. Net income for all of 2015 came to $37.3 million, down by 1.4 percent from $37.9 million in 2014, on revenues of $694.7 million, up 15.5 by from $601.6 million for the same period the previous year.

On a more positive note, gross dollar volume increased by 5.9 percent, to $5.44 billion, and purchase volume, to $3.87 billion. Whether the introduction of entry into new payments waters, will be enough to counter negative trends at Green Dot, remains to be seen. But with so many spots now filled in on the payments map, it doesn’t seem conceivable that there won’t be at least one winner somewhere.

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