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TSG Analysis
Sep 2016

Now Available: Attractive Vertical Analysis (AVA)

This report, utilizing data from TSG's proprietary data warehouse of over 3.5M merchants, lists 282 merchant types and includes key metrics on each of them including volume statistics, profitability, and attrition. Using the Profitability and Attrition Metrics, a score is assigned to each merchant type. This is the "attractiveness" of the merchant.

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TSG Press
Sep 2016

EMV Merchant Adoption Remains Sluggish a Year Later

The Strawhecker Group (TSG), a management consulting firm focused on the global payments industry, released survey results today that estimate 44 percent of U.S. card-accepting merchants have EMV terminals. TSG also found that less than a month away from the anniversary of the EMV liability shift, 29 percent of U.S. merchants are actually able to accept chip-based transactions.

TSG’s previous survey of payment processors and other payment providers completed in January estimated that over 50 percent would have an EMV terminal by this time, showing a slower pace of implementation than expected.

“EMV merchant adoption has slowed down a bit, at least comparatively speaking to our last EMV survey results in January 2016,” said Jared Drieling, Business Intelligence Manager at TSG. Approximately one-third of merchants have activated EMV systems (ability to accept chip on chip transactions) despite the larger base of U.S. merchants with EMV terminals in place. “EMV terminal vendor supply and delays in the terminal activation/certification process are the bottlenecks in the migration,” says TSG’s Drieling.

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TSG’s sample included 79 payment service providers that service more than 3.4 million merchants, or nearly half of the U.S. card-accepting market. In conjunction with this release, TSG has published an infographic to express the findings: http://bit.ly/EMV-Anniversary

TSG Press
Sep 2016

TSG in Transaction Trends - Changing the Public Perception of EMV

Just one year ago, many U.S. consumers were completely unfamiliar with the letters “EMV” or the term “chip card.” Today, most Americans know the words and likely have a chip card in their wallet or purse, accompanied by an opinion about the change. But, they may still not fully understand why the shift to EMV is an important advancement in securing the payments infrastructure.

Despite claims to the contrary, we’re exceeding most expectations in terms of EMV adoption. We expected the transition to take at least five years, which is the time it took European nations to get to 50 percent chip-transaction market penetration. Nearly three-quarters of Americans report they already have at least one chip card. According to preliminary results conducted by The Strawhecker Group (TSG), about half of all U.S. merchants now have an EMV terminal and a third of U.S. merchants are enabled and activated (in other words, accepting chip-on-chip transactions).

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TSG Press
Sep 2016

TSG in Digital Transactions - After Striking VeriFone, the U.S. EMV Revenue Bug Hits Ingenico

Jared Drieling, business intelligence manager at Omaha, Neb.-based merchant-acquiring consultancy The Strawhecker Group, says the stocks of both Ingenico and VeriFone started rising in anticipation of the card networks’ October 2015 U.S. point-of-sale EMV liability shift. But beyond EMV hardware sales, neither company has yet realized its full revenue potential in related services, he says, in part because of the certification delays, he says.

But beyond EMV, both companies, despite acquisitions and new services in the pipeline, still trail other acquiring-industry firms that are bringing software-based payment systems to merchants, systems that often use tablet computers coupled with specialized apps, he says. Examples include processor First Data Corp.s’ Clover line and new systems from Poynt Co., according to Drieling.

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TSG Press
Sep 2016

TSG in Digital Transactions: Why Payments M&A Won't Cool Off

The Strawhecker Group, an Omaha, Neb.-based payments-advisory firm, says it has performed “hundreds” of valuations in the past five years. Payments companies remain attractive to investors for multiple reasons. “Payments is [a] growth industry,” says Mike Strawhecker, principal at the firm.

“Payments feed off of organic economic growth and increased consumer usage,” Strawhecker says. He adds that the industry provides services beyond payments to merchants, and has a plethora of salespeople.

Another factor is the fragmentation of the industry, which could favor an investor with a rollup strategy, Strawhecker says.

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TSG Press
Sep 2016

Now Available: Tablet POS (Smart Terminal) Competitive Snapshot

This new eReport serves as a guide to understanding the evolution of the tablet POS market along with the pros and cons associated with a proprietary versus an open system. More importantly, the report provides an analysis on the competitive landscape with a focus on tablet POS offerings by the top acquirers, tablet POS strength by industry and tablet POS strength by feature.

The competitive section identifies 14 top tablet POS players and provides an overview of their customer focus, pricing, associated card processors, cloud-based features along with their associated strengths and weaknesses.

The report can act as a strategic tool at higher levels within your organization to understand the dynamics of each player to assist in partnership planning or for M&A workouts. The report can also be leveraged to educate front-line personnel such as sales teams to enable them to position their tablet solutions more effectively in the market versus the competition.

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TSG Press
Aug 2016

TSG in CNBC: Gas Stations Fight Hackers - But They're Going to Have to Pay for It

Gas stations and convenience stores are some of the last U.S. retailers to make the upgrade to the EMV card platform (some ATMs also have until Oct. 1, 2017, to make the technology switch). Because many hackers have been disrupted by retailers, they have increasingly targeted convenience stores and ATMs lacking the security measures, experts said.

"From a criminal perspective, that window of opportunity is shrinking," said Jared Drieling, business intelligence manager at payment data analysis firm The Strawhecker Group. "There's going to be a rush to get those updated."

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TSG Press
Aug 2016

Now Available: U.S. Merchant Acquiring: Pricing & Attrition Focus

This highly valuable report answers the most pressing questions that surface in the merchant acquiring community.

The report offers expert insight and exclusive data (nearly 25 charts/figures) on several key areas of the acquiring space including:

  • Industry attrition with a focus on the SMB segment
  • Expected future margins for ISOs and acquirers
  • Competition and customer acquisition costs
  • The identification of what merchants are seeking in a payments processor
  • A look at the ISO competitive landscape
  • Analysis on the future interchange fees

All segments have been further sliced and diced by merchant tier size, industry vertical and sales model to provide an unparalleled look into these pressing questions. Data provided is derived from TSG's proprietary data warehouse, which holds over 7 years of data on over 3.5M card-accepting merchants.

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TSG Analysis
Aug 2016

TSG Exclusive Interview with CardConnect's CEO, Jeff Shanahan

On July 29th, 2016, CardConnect announced the completed merger with Fintech Acquisition Corp. CardConnect is an innovative and growing payment technology company, providing payment solutions to more than 65,000 large enterprises and small to medium sized businesses. In 2015, CardConnect had $21 billion in annual processing volume with 256 million processed transactions. With the closing of the deal, CardConnect became a wholly-owned subsidiary of FinTech Acquisition Corp., and FinTech has been renamed CardConnect Corp. With that said, the CardConnect common stock started trading on August 1, 2016 on the NASDAQ under the symbol “CCN”.

Recently, several members of The Strawhecker Group (including TSG’s co-founder Kurt Strawhecker, Senior Associate Ray Sobczyk and Business Intelligence Manager Jared Drieling) sat down with CardConnect CEO Jeff Shanahan to understand how going public will impact CardConnect and what payment opportunities the company will put on its sights going forward. After all, one of the main reasons fast-growing companies go public is to fund further expansion.

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TSG Press
Aug 2016

TSG in NYT: Confused by Chip Credit Cards? Get in Line

There is reason to hope.

About 75 percent of credit cards are chip-enabled. If all businesses upgraded their terminals — which they are not required to do by law — at least the confusion over whether to swipe or insert would be settled.

So far, about one-quarter of the nation’s merchants have made the transition, said Jason Oxman, chief executive of Electronic Transactions Association, a trade group for companies that deal with payment products and services.

But while many of them have the terminals, they are waiting to get them certified for use, said Jared Drieling, the business intelligence manager for the Strawhecker Group, a consulting company for the industry.

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