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Payments? Nah, We’re a Tech Company

At The Electronic Transactions Association’s October 2014 Strategic Leadership Forum, I moderated a panel on the changing acquiring landscape, and how technology and technology solutions and services are permeating payments through­ out the various channels and verticals. What really struck me was that none of the companies on the panel would admit they were a payment company. All four companies said they were tech companies, despite some of them originating from payments. Global investments in financial services technology (fintech) ventures have more than tripled during the last five years – from under $930 million in 2008 to more than $2.97 billion in 2013. This shows that value is being placed on technology in the financial services industry by the market and by the investor community. We are in a time of opportunity with disruptions in commerce never imagined when the mag stripe was introduced more than 50 years ago.

The rise of the marketplace model

There is a rapid emergence of the marketplace model, proliferating through many industries. Companies like Uber, AirBnB, and are marketplaces disrupting their vertical markets, while companies like Wepay are focused on providing payments through slick APIs leveraging a full-service Payment Facilitator model for those marketplaces.

What is most interesting is that technology companies are starting to enter the payments industry, and companies that were historically payment companies are evolving to become technology companies as well as some becoming full-service marketplaces, and the payoff can be huge, with multi-billion dollar valuations for some of these players.

For years, legacy business models, inertia, and the complexity of payments restricted growth in the payments industry, allowing, at most, a slow evolution. With today’s foundation of the internet, mobility, cloud computing, and new business models, we see a much more rapid convergence of technology, payments and services that puts FinTech on a path of revolutionary change, or at least hyper-evolution. I think we can all agree, it will be fun to watch.

The Green Sheet, December 22, 2014

Think Apple Pay is the Biggest Thing in Payments? You’re Missing the Poynt

Apple Pay was the talk of the Money20/20 trade show last month, but should it have been? Before Apple Pay can become a dominant payment vehicle, merchants need the ability to accept it (only about 2% of merchant locations can do so today), so it’s far more important to complete that prerequisite.

Why is this transformational? Innovators of any type (payment networks, payment facilitators, digital-wallet providers, loyalty providers, solutions for the automated clearing house, etc.) could obtain instant acceptance at a wide variety of POS locations. It also removes massive barriers to entry, which will create competition across the board.

Under this model, app-store providers can monetize their technology solutions and merchant footprint through a much broader set of software solutions that they would not be able to create on their own. The same is true of software developers. They can monetize their ideas and code in ways that were never before possible.

Last but not least, acquirers and independent sales organizations can monetize their distribution channels across an entirely new set of services (not just payment and POS), without needing to become experts in how merchants run their businesses. And, by creating a wide set of new, marketable services, app stores also reduce the dependency these providers have on the payment networks. The payment networks could soon be just another app within a store that includes thousands of apps. For example, banks or groups of banks could offer payment services directly to merchants via the app stores, cutting out the payment networks altogether.

Apple has proven the app-store model via its consumer app store and devices. Android/Google/Amazon have continued that model and have shown that it is truly scalable. Now merchant app stores are next, and if this takes off everything we know about the payments business could change.

Enablement of NFC payments to accept network-sanctioned solutions such as Apple Pay may cost a merchant from a few hundred to a few million dollars. For the same price, however, merchants could eliminate the need for networks altogether, and that could be priceless.

Digital Transaction, December 8, 2014

Apple Pay Accounts for 1% of Whole Foods’ Transactions

It’s been four weeks since Apple Inc.’s mobile payments system Apple Pay Oct. 20 debut, and most of Apple’s merchant partners are keeping mum about early results.

But one merchant, grocery chain Whole Foods Market Inc., says it completed 150,000 Apple Pay transactions in the first 17 days following the launch of the payment method that enables consumers to use their iPhone 6 or iPhone 6 Plus smartphones to pay in a store with one touch. That puts Apple Pay transactions at 0.91% of total sales during the period, experts say. The Apple Pay “experience at checkout has been very fast, convenient and secure,” says a Whole Foods spokesman.

But experts say Whole Foods’ numbers likely aren’t typical. “1% is a very big number this early on which could well relate to a higher than average overlap between the Apple/Whole Foods customer bases, Whole Foods’ proactive approach to mobile payments in general, and perhaps some incremental marketing activities,” says Rick Oglesby, a senior analyst at Double Diamond Group LLC.

Internet Retailer, November 14, 2014

CurrentC, an Apple Pay Rival, Gets Hit by Hackers

A worker uses Apple Pay inside a mobile kiosk sponsored by Visa and Wells Fargo set up to demonstrate the new Apple Inc. mobile payment system in San Francisco.

CurrentC, the retailer-backed mobile-payment system touted as an alternative to Apple Inc. (AAPL)’s platform, was hacked during a test of the technology, resulting in some e-mail addresses being stolen over the past 36 hours.

The attack represents a black eye for a coalition that’s working to win the trust of consumers and gain an edge over the Apple Pay system. CVS Health Corp. (CVS) and Rite Aid Corp. (RAD), part of the MCX group, stopped accepting Apple Pay last week, putting a spotlight on their support for CurrentC.

CurrentC is slated to debut early next year and won’t be delayed by the security issue, Davidson said. The system will let customers buy items with their phones by scanning QR codes.

The breach itself appears to be small, but there’s a risk that consumers weary of data hacking will be turned off before the new platform goes live, said Todd Ablowitz, president of Double Diamond Group in Centennial, Colorado.

“If you’re launching a new payment system, you have to project a sense of security and gain confidence,” Ablowitz said in an interview. “If I was in charge of MCX, I’d be worried about how it appears to the typical consumer.”

Bloomberg, October 29, 2014

What the Mainstream Media Got Wrong About Apple Pay and CVS

Mobile payments is such a new concept that many in the media continue to inaccurately report what happened this week between Apple Pay and CVS. Here’s what really happened, and why, no matter what, Apple wins, some experts say.

There have been some reports that cite sources close to MCX who describe a mobile payments checkout process that requires several steps and two bar code scans. But MCX has not released a final product and has been hush-hush, so only time will tell. Apple Pay requires only one touch of an iPhone’s home button.

“MCX could streamline its payment system by leveraging the Apple Passbook mobile wallet and the development tools that are available through Passbook,” says Rick Oglesby, senior analyst at Double Diamond Group, a payments consulting firm whose specialties include mobile payments. Passbook is Apple’s mobile wallet app, which retailers and other organizations can integrate with to store loyalty cards, event tickets and other “passes.” Passbook is also the hub of Apple Pay, storing credit and debit cards.

Apple Pay and NFC represent just one component part of Passbook. Those that wish to compete with Apple Pay will have to do so through Passbook; stand-alone apps won’t be good enough, Oglesby says. So Apple wins either way because it brings consumers and capabilities that can’t be accessed anywhere else.

“This isn’t about retailers versus Apple, it’s about retailers versus payment networks fighting over how they will access Apple’s customers. If you think about it that way, it’s pretty clear that Apple is in the best position. These retailers consider the payment networks to be unnecessary and expensive middlemen.”

Internet Retailer, October 28, 2014

Apple Embeds NFC in Its New iPad Air 2, Stirring Speculation About Its Mobile POS Plans

ipad 2When Apple Inc. officially launched its Apple Pay mobile-payments service on Monday, all eyes were on the new iPhone 6 and 6 Plus, the smart phones that carry the near-field communication (NFC) technology that makes Apple Pay work in stores. But now it turns out Apple has also embedded an NFC chip in its new iPad Air 2, the updated tablet it introduced earlier this week.

“As tablets go out with NFC chips, you’re putting out an acceptance device. There’s nothing that has to happen but a software update,” says Todd Ablowitz, president of Double Diamond Payments Research, Centennial, Colo.

To the extent the new tablets are ready for contactless EMV cards, they will also be enabled to accept NFC-based mobile wallets ranging from Apple Pay to Google Wallet to Softcard. But many experts expect Apple Pay to be the dominant wallet. Even before its launch, it had already enlisted enough cards to account for more than 80% of U.S. credit card dollar volume.

Rick Oglesby, a senior analyst at Double Diamond, figures Apple may have left the NFC capability inactive for now because of a plan it’s following that may be even broader than the EMV rollout. “Apple has its own internal agenda as to how NFC should develop,” he says. “They’re staging things, and have a reason for staging them in that way.”

Digital Transactions, October 24, 2014

COMMENTARY: How Passbook Positions Apple to Command—Not Just Align With—the Payments Industry


Image Credit: Apple – The key to Apple Pay’s power lies in Passbook

With Apple Pay now confirmed to launch on Monday, we are closer to seeing the impact it will have on mobile-payments acceptance, technologies, and standards.

In the meantime, much of the debate concerning Apple Inc.’s payments venture has missed a crucial point. While the discussion has centered on whether Apple Pay will energize mobile payments and the ecosystem for near-field communication (NFC), it is far more important to consider that Apple Pay is merely a component of Apple’s Passbook app, and then to evaluate what the Apple Pay/Passbook combination could mean for the future of payments.

At first glance, it appears that Apple has positioned itself in alignment with the rest of the payments ecosystem to reinvigorate mobile payments. However, in the greater Passbook context you can see that, by positioning itself alongside the payments ecosystem, Apple has greatly bolstered its potential as a payments disruptor.

The key is Passbook. Through Apple Pay, Apple has incorporated the major payment brands and the largest issuers into Passbook, thereby legitimizing Passbook as a wallet. Apple and its payments-network and financial-institution partners have already begun to aggressively promote Apple Pay in an effort to make Passbook a central payments decision point for consumers.

Digital Transactions, October 16, 2014

Apple Pay Launch Day: My First Transaction

Apple Pay TransactionMonday morning on my early flight to NYC, I have to admit I was anxious. My plan was to download iOS 8.1 with Apple Pay on landing, and I was pumped to see it in action. I had waited patiently since September 19 when Apple Pay was announced, and finally launch day had arrived.

The topic of mobile payments is not new. Business models, technologies and standards have consumed conversations related to the future of commerce since the early 2000’s. However, after these many, many years, I was finally able to give it a spin and see if my thoughts and predictions had any real world merit.

Did Apple Pay meet my expectations, and live up to my predictions from years ago? It really was very cool. My first transaction was easy, convenient, and with my consumer hat on, it definitely was secure. 

After I landed, I installed iOS 8.1 and loaded Apple Pay with two credit cards and one debit card, I jumped in a taxi to Manhattan. I did not have to type in a PIN to access my mobile wallet or close any apps that were open, all I had to do was wave my phone near the reader, and it automatically opened my wallet. I provided my Touch ID to verify it was me, and just like that, it was done. It took about one second to complete, and my default card was automatically charged – the transaction appearing in Passbook.  So cool!

For years, I have felt that the only way to consumer adoption is simplicity, ease and speed. To achieve those things, it’s imperative that you don’t have to think about it, press buttons, enter codes or any other silliness. Consumers want to pay – simple. With their card, they just swipe – super easy – but definitely not easy for mobile payments to compete with. So, what does that mean? As I’ve said for years, it’s crucial that the simple act of tapping “pulls” your card out, regardless of what screen you are on – even if it’s locked, with the screen off. Apple accomplished exactly this, and it’s the “killer app” that crushes the alternatives.  ONLY Apple and Google, who control the operating system, can control the phone to this degree. It will definitely put pressure on Paypal, MCX and the other contenders – and i just don’t know how they could overcome it. Is this Checkmate?

This all reminded me of a video interview I did on NFC versus Cloud-based payments about a year ago. In the video I talk about this very thing; how tapping for in-person mobile wins, and why the very act of using a mobile device has to behave just as I mentioned above – it has to make it easy by not requiring the consumer to do anything other than tap and verify themselves.

I am not sure when my excitement will start to fade, but I will definitely be using it again soon, and I can’t wait to see what this does for the industry.

Apple Pay: Is It Enough?

Apple Pay: Is It Enough?

With the launch of Apple Pay, Apple and its partners took the single largest step toward mobile payments enablement that the payments industry has seen, but it’s still probably not enough to move the needle for offline mobile payments.

This is, without a doubt, the single biggest move towards the creation of a broad-based mobile payments infrastructure since mobile payments were first conceptualized. However, we also must look at what was not accomplished.

So those of us that were watching the Apple event and expecting payments disruption were left with a case of disruptus interruptus. For now, Apple has chosen to play within the payments system to launch a starter product for offline payments. But this starter product is not enough. Payments companies know it, consumers know it, merchants know it, and Apple knows it. There is much more to come.

Mobile Payments Today, September 15, 2014

Apple Poised to Supercharge Mobile Payments

A mobile wallet from Apple could make all the difference in the world to the mobile payments market, says Rick Oglesby, a long-time mobile payments and mobile wallets industry observer and senior analyst at Double Diamond Group, a payments consulting firm.

“With every new iPhone, Apple sells millions of units within just days of launch, and those users want to test drive all of the new features pretty fast,” Oglesby says. “If Apple is truly making a big bet on payments and has the major card companies involved, there is no other provider that can make a bigger difference. And as for NFC, merchants may not need much in the way of new hardware if Apple does this right. Apple has a long history of reinventing things, and when you are talking about computer-to-computer communication, like an iPhone to a POS system, a terminal really shouldn’t be necessary. NFC is likely a part of Apple’s solution, but it could well be a solution that does not use an NFC terminal.”

Internet Retailer, September 3, 2014

Will Apple Touch ID-Enabled Mobile Payments Reduce Interchange Rates?

Apple and Visa were rumored to be in discussions about an enhanced mobile payments system that could be announced when the tech giant introduces the new iPhone Sept. 9.

“I’m sure that this (cheaper interchange rates) has come up in those discussions,” Rick Oglesby, a senior analyst and consultant for Double Diamond Group, wrote to Mobile Payments Today in an email.

But Ogelsby said not to expect interchange reduction on Touch ID transactions any time soon.

While Visa and MasterCard set the interchange rates, the banks who issue payment cards are the ones who benefit from those fees.

Mobile Payments Today, August 28, 2014

Keep Top Agents or Perish, Report Warns

As the acquiring business becomes increasingly complex, it’s more important than ever for ISOs to recruit, nurture and retain the best independent sales agents, a new study shows.

“That’s how ISOs can see success,” said Rick Oglesby, who conducted the study as head of Double Diamond Payments Research LLC, a new enterprise that’s associated with the established Double Diamond Group consulting firm. “The ones that don’t figure that out are going to be left holding the bag.”

The “Agents of Change” survey—which centered on independent agents who run their own businesses and do not work as regular ISO employees—indicated ISOs can’t afford to squander time on nonperforming salespeople, Oglesby said.

“If you go with the basic mass-market strategy—come one, come all—you’ll end up with a lot of nonperforming agents,” he maintained. “A lot of effort goes into recruiting agents, and often there’s not much return on it.”

ISO & Agent, August 26, 2014


Major research from Double Diamond Payments Research claims that the channel is not dead or dying, but does need to transform itself in order to accommodate a technology-based ecosystem and rapid growth in the ISV distribution channel.

Learn more about the research:


Agent Channel Chart

ISO & Agent, May 23, 2014
Acquirers Should Learn POS And Software, Report Urges

Change Is Coming for Agents as Merchants’ Payment Products Evolve

Sales agents as a way to sell payment-processing services to merchants aren’t going away, but they aren’t staying the same. That’s according to a new research report from Double Diamond Group LLC, a Centennial, Colo.-based payments-advisory firm.

“This is a period of significant change in acquiring,” says Rick Oglesby, senior analyst at Double Diamond.

Despite all of this change, Oglesby dispels the notion that the agent channel will die. “There’s always a drastic reaction when people see a new change,” Oglesby says.

Indeed, in the report, “Agents of Change: The Next Agent Channel and Why You Need It,” 33% of the 21 merchant-acquiring executives interviewed believe the agent channel is increasing in importance, while 38% said it is staying the same and 29% said it was decreasing in importance.

Digital Transactions, August 14, 2014

Square Buys Restaurant Delivery Startup Caviar

Square, the mobile payments company led by Twitter co-founder Jack Dorsey, is hoping to grow in new directions by acquiring Caviar, a Bay Area startup that delivers meals from restaurants that don’t have their own couriers.

“It’s logical for them to be looking for where they can extend into adjacent businesses,” said Todd Ablowitz, president of Double Diamond Group, a consulting firm that focuses on the mobile payments industry.

Mercury News, August 4, 2014

Square Merges Its Mobile Payments With Food Delivery By Acquiring Caviar

For Todd Ablowitz, senior analyst and consultant at Double Diamond Group, the confidence in Square’s business model has always been there.

Ablowitz identified quality products, high number of accounts, and respectably-priced transaction fees as three key successes at Square, each of which he sees proving themselves with this newest acquisition.

Forbes, August 4, 2014

Blog: Convergence is the Real Non-Payment Payment Story

As an analyst, I earn my living answering the question: “What’s happening in payments?” At risk of destroying my primary source of income, I’m going to tell all of the people asking that question a little secret: “You’re asking the wrong question!” There is, in fact, a much better and more important question you should be asking and that will have a much bigger impact on payments than anything actually happening in payments. That question is: “What is happening outside of payments that will affect the payments industry?”

The answer to this question is convergence. The convergence of communications of all types into online and mobile technologies is the single biggest thing happening in every industry. This trend already has revolutionized many industries and will continue to revolutionize many more, and each revolution will take a little piece of the payments industry along. –

Pay Before, July 24, 2014

Another Zero Option: Cloud-based POS Provider Pose Drops Its Software Fee

Such a move as Pose’s, when there are scores of tablet- and cloud-based POS options, may help it stand out, suggests Rick Oglesby senior analyst at Double Diamond Group, a Centennial, Colo.-based payments consulting firm.

It could be an evolutionary step, he says. “A basic POS system that is good for small-to-medium-size merchants is rapidly becoming a commodity and is generally available as part of a merchant-processing agreement at no additional cost,” Oglesby says.

“Companies that offer these solutions need to either monetize their offering through payments, or they need to push the envelope on features in order to offer a product that stands out from the commoditized solutions to the point that companies will pay for them,” Oglesby says. “There’s a lot of potential value in more advanced POS systems, but those that provide basic electronic cash register and payments capabilities are not attracting much in terms of standalone value.”

Digital Transactions, July 21, 2014

Twitter, Facebook Make Payments Moves, But Do They Threaten Payments Firms?

“I don’t think these are indicative of payments aspirations as much as they are indicative of these companies’ desires to consummate sales,” Rick Oglesby, senior analyst at Centennial, Colo.-based Double Diamond Payments Research, says by email. “One of the major implications of online commerce is that advertising and selling can merge into a single activity. To do this, online advertisers need some payments capability, although the goal isn’t necessarily to monetize payments themselves. Rather the goal is to monetize selling, of which payments is a part.

Payments firms, however, do face some risks as the social networks work to make e-commerce on their sites easier, Oglesby adds. “What they [payments companies] currently sell as a stand-alone solution is being swallowed up by greater solutions that incorporate payments,” he says. “So payments companies need to be rethinking their long-term strategies.”

Digital Transactions, July 18, 2014

How to Choose a Mobile Card Reader for Your Business

Rick Oglesby, senior analyst with Double Diamond Payments Research, says the product features aren’t the largest differentiators, but rather the companies themselves — where they come from and their pre-existing customers.

“For example, PayPal’s legacy stems from eBay and online selling, so PayPal Here users are most likely to be companies with a significant online presence but also some local sales needs,” he says. “An eBay seller who also sells at some local craft fairs would be a good example. It’s easy and convenient for these merchants to just extend their relationship with PayPal to include the card reader.”

He says Square focusses more on small mobile retailers and food service providers such as cafes, food trucks, caterers, pop-up retailers, etc.

“Their offering includes not only payment acceptance, but also a lightweight point of sale system that replaces a cash register with a tablet app.”

GoPayment, Intuit’s product, has its foundation in Quickbooks, an accounting solution with applicability across many industries.

“Their payment product is loosely tied to Quickbooks and is targeted at a broader set of industries with more varying needs,” Oglesby says.

The market for mobile point-of-sale (mPOS) systems is mostly small businesses, though Oglesby notes, “The trend seems to be that mPOS providers are developing more features and moving up-market.”

Credit Cards Canada, July 17, 2014

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