This week, Global Payments' announced their acquisition of Heartland Payment Systems for $4.3B. The Strawhecker Group (TSG) has since put together an analysis of the acquisition from the US merchant acquiring perspective. Additionally, a comparison to 22 other transactions that have occurred in the Payments Industry over the last 5 years is illustrated.
TSG Analysis of Global - Heartland Acquisition
TSG TED - The Evolved Acquirer
Starting this month, TSG is producing brief videos that may cover leading industry topics, educational pieces on various aspects of the industry, and much more.
Kurt Strawhecker, Managing Partner of TSG is kicking-off this initiative with a discussion on The Evolved Acquirer, which reviews how different a successful acquirer looks today than the average ISO from five years ago.
U.S. Holiday Spending Analysis
As Black Friday approaches, and the holiday shopping season officially kicks off, TSG and ETA have prepared an infographic to estimate the boost from holiday spending. In Q4 2015, TSG estimates a holiday spending boost of 4.7% compared to the baseline of January through September 2015. The data is sourced from TSG's data warehouse of over 3M card-accepting merchants in the U.S.
TSG's Big Data: Halloween Costume Spending
The Strawhecker Group (TSG) looked at 12 months of spending data for over 500 clothing rental stores across the U.S. to see how Halloween impacts their monthly sales.
The top chart shows that in 2014, Clothing Rental Stores had sales of $42,500 in the month of October, 215% higher than the other 11 months. However, the bottom chart displays that the average purchase size fell 50% to $55 in October, versus $111 the rest of the year due to heavy discounting and the increased competition during the busy Halloween season.
For many costume rental shops, the Halloween shopping season accounts for a nearly a third of profits. This year, expect the competition between these merchants to be more intense as early spending.
Square IPO Analysis
When Square was launched in 2009, the market was intrigued to see how their dongle-based solution, with an easy boarding process and simplified pricing strategy, would impact the U.S. merchant acquiring space. It was a revolutionary approach to card acceptance and has since inspired many competing solutions.
Now six years later with an IPO pending, TSG reviewed Square's S-1 Filing and prepared the subsequent snapshot of their merchant portfolio in the U.S. market. Please note that this report contains estimates that should be viewed as directional in nature that reflect a blended time period over the past 12 months.
Enhance Your Value and Marketability
The Strawhecker Group (TSG), has released a brief overview on items to review when looking to enhance the value and marketability of a portfolio or a business.
Whether buying or selling, seeking investment funding, or planning an exit strategy - it is important to realize strengths and expose opportunities.
TSG has assessed hundreds of valuations and/or business assessments in the past five years - ranging in value up to $2B.
TSG U.S. Spending Report
The Strawhecker Group (TSG) has released its U.S. Spending Report covering the first half of 2015. This report provides a comprehensive look at same-store sales and consumer spending behavior by merchant categories and geographic breakdowns.
Consumer spending retreated in Q2 2015 versus Q1, putting a dent in a more pronounced second-quarter upturn in spending and leaving some less upbeat about the economy. The subdued spending growth during the first half of the year has largely been due to lower year-over-year gas prices. Although consumer spending growth slowed on a sequential basis, the year-over-year growth in overall spending remained positive. On the other hand, retail spending growth reversed course in Q2 2015 and entered into negative growth territory.
Chip Card 101 - Educational EMV Infographics
In conjunction with ETA's Chip Card 101 event taking place on October 1st, TSG has prepared educational infographics to provide merchants and consumers the essential knowledge needed to understand the liability shift. Payment industry players may want to utilize these tools as a merchant talk track.
The first infographic reviews chip card basics - what they are, why we need them, and the benefits to merchants and consumers alike. Click to view the high-res version.
The second illustrates how an individual will pay with a chip card in three easy steps: insert, keep, and remove! Click to view the high-res version.
Payments Versus Sports: Perspective in Valuations
In recent years, payments companies have been some of the most valuable on Wall Street. Many of these companies have recently become publicly traded and are technology driven. For example, PayPal was founded in 1998, went public in July, and is already almost as valuable as the collective 32 NFL teams ($41 billion versus $45 billion, respectively). MasterCard and Visa went from membership organizations to publicly traded companies in 2006 and 2007, respectively; since that time, their value has increased drastically. While the members of the payments value chain might not get the press like sports teams do, they are what drives the economy, and the valuations reflect that.
EMV @ Restaurants: Not Often Black and White, But Gray
Last week's survey on EMV at restaurants yielded results from 27 payment providers that service restaurant merchants. Together, the respondents service over 170,000 restaurants.
"The card brands support tip add on for EMV cards in the same way that they do now with non EMV transactions. The authorization amount and the settlement amount (with tip added) can differ and will not be declined as long as all the other restaurant merchant processing rules are followed," according to the EMV Migration Forum and TSG.
As the statement above and the survey results show, tip add-on at restaurants with EMV is allowed by rule but sometimes constrained by technology. The sheer number of players in the payments value-chain makes EMV (and other ecosystem changes) very complicated in some scenarios, and as such, not often black and white, but gray.