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TSG Press
Jun 2016

TSG in WSJ - ‘Brexit’ Leaves Europe’s Fintech Firms in the Lurch

Europe’s financial-technology upstarts are scrambling to figure out what the United Kingdom’s departure from the European Union and its digital payments rules means for their businesses.

“The U.K. will no longer be required to implement or follow any EU payments legislation, which could clearly impact the payments environment,” wrote analysts at The Strawhecker Group, a payments research firm.

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TSG Analysis
Jun 2016

Quick Take: What Does Brexit Mean for Payments?

Commentary by Mike Strawhecker & Jared Drieling

Now that the British public has voted to exit the European Union (EU), the UK will no longer be required to implement or follow any EU payments legislation which could clearly impact the payments environment. What will happen to the Single European Payments Area (SEPA)? Will the UK still follow the EU payment initiatives such as the Payment Service Directive (PSD2), interchange fee regulations (and the common interchange fee (MIF), money laundering rules or the Directive on Transparency and Comparability of Payment Account fees?

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Related: Brexit Vote Bashes U.S. Payments Companies; Long-Term Effects Unclear

TSG Press
Jun 2016

TSG in Transaction Trends

  • Managing EMV Expectations
    • October 1 wasn't a deadline; it was a starting point. We asked ISOs, acquirers, and other payments professionals for their views on the chip card implementation process to date. Read More

 

  • EMV: Where the Merchants Are
    • From the merchants' perspective, the EMV transition has been less than perfect. While the big and very small are handling the shift to chip cards, it's slow going for mid-sized merchants, according to retail groups. Here's why. Read More

TSG Press
Jun 2016

Now Available: Subscription/Recurring Market Analysis & Directory

TSG's new market analysis of independent software providers (ISVs) contains a detailed look on the subscription/recurring revenue industry. This includes a high-level analysis on the market, merchant acquiring performance metrics, and a directory of 34 ISVs.

Did you know that you should be penetrating this market?

  • There were more than twice as many card-accepting merchants within the Continuity/Subscription market (MCC 5968) in 2015 compared to 2014
  • Based on the Forbes Top 2000, an estimated 35% of the companies generate revenue via a subscription model

Learn more.

TSG Press
Jun 2016

TSG in Digital Transactions: Harbortouch Swaps Private-Equity Partners in Deal Valued at $500 Million-Plus

Analyst Jared Drieling, business-intelligence manager at The Strawhecker Group, an Omaha, Neb.-based payments consultancy, suggests Harbortouch could one day offer an expanded line of so-called smart POS terminals, which run on apps that include payments but also a wide range of other business-management functions.

“Smart terminals are a hot item for ISOs to go out and sell,” Drieling tells Digital Transactions News. “This [new investment] is an opportunity to grow and take market share away from the smart-terminal players in the market. It’s a window of opportunity for Harbortouch, which is why it’s seeing increased interest from investment companies. [For acquirers], it’s all about adding value-added relationships to create that sticky relationship. If you can provide a smart terminal with value-added services, that becomes pretty sticky [and attractive to investors].”

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TSG Press
May 2016

TSG in WSJ: More Chip-Card Headaches, This Time for Merchants

A few weeks ago, a woman used a counterfeit card to buy $400 worth of gift cards at a Harps grocery store—and then hit nine more stores in quick succession after the first attempt worked, sticking the regional grocer with a tab for $4,000 that previously would have been absorbed by the card-issuing bank.

“We’ve seen a significant uptick,” says Mike Thurow, vice president of store systems for Harps Food Stores, referring to counterfeit-card costs. The chain, which operates 80 stores in Arkansas, Oklahoma, Missouri and Kansas, aims to start processing chip transactions within the next couple of months.

Chargebacks among small and medium-size merchants rose 15% in the fourth quarter from a year earlier, according to a recent survey by The Strawhecker Group, a payments consulting firm. The industry believes the volume of chargebacks has likely risen since then, because the fourth quarter included only a few weeks under the new rules and it often takes a while for the costs to flow through to merchants.

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TSG Press
May 2016

TSG in Digital Transactions: Wall Street Punishes Square Despite the Merchant Processor’s Transaction Growth

It in its earnings report, Square said the low sequential quarterly growth was “largely due to the delayed signing of two new investors, which was a result of more challenging credit market conditions.”

Square thus finds itself exposed to the vagaries of the credit markets while delving further in the highly competitive small-business loan industry. Big players in the business include American Express Co., PayPal Holdings Inc., CAN Capital Inc., On Deck Capital Inc. and Kabbage Inc. The newest entrant is Shopify Inc., an Ottawa, Ontario-based e-commerce platform and merchant processor.

But there are dozens more. Jared Drieling, business intelligence manager at The Strawhecker Group, an Omaha, Neb.-based merchant-acquiring consultancy, keeps a list the players in the merchant-lending niche.

“There are a good 25 that have loan volumes of $20 million or more a year,” Drieling tells Digital Transactions News, adding that there are more providers below that threshold.

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TSG Press
May 2016

TSG in Digital Transactions: Jumbo Acquirer Pricing Advantage Dissipating

Pricing advantages once held by super-large acquirers—those whose merchants process more than 3 million monthly credit and debit transactions—appear to have retreated, according to the Merchant Processing Pricing Benchmark Study recently issued by The Strawhecker Group.

These jumbo acquirers had, on average, the lowest amounts for their processing and authorization fees says Robert Schmitz, senior associate at the Omaha, Neb.-based payments consultancy. The Strawhecker report did not include the actual pricing averages for the jumbo or smaller groups of acquirers, defined as small for those with up to 250,000 in monthly transactions; medium, 250,001 to 1 million; and large, between 1,000,001 and 3 million.

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Check out the eReport.

TSG Press
May 2016

TSG in Yahoo! Finance - Those Chip Cards Have a Long Way to Go

Statistics cited by card companies paint an optimistic picture of chip adoption since the Oct. 1 “liability shift” that held merchants liable for counterfeit-card transactions if they hadn’t updated their terminals for EMV.

A recent Visa (V) infographic, for instance, boasts that with 265 million Visa chip cards in circulation, the U.S. leads every other country, and that the volume of chip payments soared to $18.4 billion in March.

Problem is, Visa’s total U.S. payment volume in the three months ending March 31 was $823 billion. Visa doesn’t break down that total on a shorter timeframe, but the math is bad for EMV (named after the “Europay, MasterCard and Visa” parents of this system) in any plausible division of it.

In the same way, boasts about how many U.S. stores take “EMV” cards, like last month’s report by MasterCard (MA) of chip-compatible locations increasing by 121% to 1.2 million, understate the work remaining. A mid-February survey by the Strawhecker Group, a payments-focused consulting firm, found that only 37% of U.S. merchant locations were ready for EMV.

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TSG Press
May 2016

Now Available - The U.S. Merchant Category Encyclopedia

Today, TSG is releasing another new eReport – The U.S. Merchant Category Encyclopedia! Focused on 37 major U.S. merchant categories, the report serves as a directory in understanding the dynamics of each category, the payments players that focus on each category, and an analysis on the attractiveness of the category from an industry and acquiring perspective.

The first half of the report is a briefing on the U.S. macroeconomic landscape which identifies key government economic indicators and the implications for merchants through 2016. This part of the report also provides a snapshot of the concentration makeup of the U.S. merchant landscape and breaks down U.S. merchant categories by region, industry type and merchant size.

The latter half of the report identifies 37 major U.S. merchant NAICS categories and provides detailed information on each category such as dollar volume growth, transaction growth, market share by payment tool, growth in establishments, sales per establishment, establishment concentration, by state, sales concentration by state, total industry sales estimate, producer price index, employment and a look at the top payments players that focus on that specific merchant category. Each category receives an industry attractiveness ranking and an acquiring attractiveness ranking.

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