ROI Payments will provide a comprehensive overview of the players in today’s payment landscape – ranging from banks to processors, card schemes to gateway platforms -- and HOW they fit together. Additionally, learn key industry terminology that can help you navigate payment projects or relationships. Think: What is a back-end network? What is the difference between an acquirer and an ISO? Questions will be fielded from participants throughout the webinar.

1. Brion Bonkowski
Managing Director
May 29, 2013
Boot Camp Week 1
Improve your Payment IQ
Names & Nomenclature in
the Modern Payments
Ecosystem

2.  Overview of Recent
Consolidation
 The Next 5 Years – Major
New Entrances
 Wrap-up / Q&A
 Introduction
 Who is Interested in Payments?
 Understanding the Landscape
 Ecosystem Players
 Schemes
 Issuers
 Acquirers
 Processors
 Technology Vendors
Agenda

3.  My Story – Moving into the Payment Space
 Who is ROI Payments?
 Why a Boot Camp Series?
Introduction

4.  Who?
 Roles including Finance, IT, Sales, Marketing, and Treasury are all involved in the payment
chain at some point
 It is rare when someone is specifically assigned to payments, as such many people find
themselves unprepared to navigate the payment ecosystem
 ROI Payment Webinars attract
 A cross section of industries, including state/local government, non-profit
organizations, eCommerce, SaaS and payment industry insiders
 Senior Finance folks (CFOs, controllers, etc), technology execs, operations managers and
sales/marketing team members
 Why?
 People become involved in payment projects and need a holistic overview of the industry
so that they can dive deep into their project, work, etc.
 Wikipedia and Google searches don’t provide a comprehensive understanding
 Result?
 Everybody can benefit from an increased “Payment IQ”
 Comprehensive understanding helps in today’s environment (rapidly evolving)
Who is Interested in Payments

5.  Useful to use a transaction flow to orient the ecosystem players
 For this example, we’ll use a Visa credit transaction
 Future boot camps will cover various transaction flows in detail
 3 and 4 party networks, closed loop systems, emerging networks, etc
 ROI categorizes vendors into 5 major categories:
 Schemes, Issuers, Acquirers, Processors & Technology Vendors
Understanding the Landscape

6. Typical Credit Transaction Parties
Customer
Cardholder Merchant
Technology
Issuer Acquirer
Interchange
Processor
Schemes

7. Ecosystem Players by Category

8.  Schemes set the rules and standards in a transaction
network, establish branding and spurring adoption
 Provide Customer (cardholder) and Business (merchant)
rules, regulations and pricing schemes
 There are commercially adopted schemes and, in certain
countries, regulatory promoted schemes
Schemes
Global Regional Emerging

9.  Issuers own the customer relationship (i.e. they issue plastic
and get cards into the wild)
 Issuers are a customer of the schemes (Visa/MC/etc)
 Issuers profit from debt, card holder fees and interchange
Issuers
#1 in US Volume #1 in US Market Share

10.  Acquirers own the merchant relationship and enable businesses to participate in the
payment network
 In the US, Acquirers typically work through channel partners, called ISOs or “Super
ISOs”, who act as their feet on the street selling and implementing solutions for
merchants.
 Acquirers take liability for merchant activity, including financial obligations, regulatory
requirements, security compliance and scheme rules & regulations
 They acquire the payment chain on behalf of merchant - which processor to use,
which technologies work with their networks, etc.
Acquirers
#1 in US Volume
#1 in US # of Merchants

11.  Processors handle the “muck” of transaction processing and are often called Backend Networks
 The industry has a small number of large processors, primarily because the economics support processors that can
operate at large scale
 They are technology focused banking networks performing back office functions such as:
 Authorization and settlement
 Funds transfer to the merchant
 Statement generation & interchange calculation
 Dispute management
 Equipment and software certification
 They generally own or have relationships with various front end networks (intermediates between merchant and issuing
bank to authorize cards)
Processors
48% US Marketshare

12.  Technology is the most complex and disparate part of today’s payment ecosystem
 The Technology Space is innovating very quickly -- ROI focuses most of its attention on this part of
the payment chain
 ROI includes everything from PSP’s to Payment Gateways to terminals in this bucket
 Technology is where merchants interact with the payment ecosystem
 Proxy transactions to front end networks
 Implement business rules (tax, fraud, notifications, rebills, verification, etc)
 Technology layer keeps merchants from having to interact directly from a technical standpoint
with processors unless scale warrants it
Technology Vendors

13.  ROI Payments classifies payment ecosystem into 5 categories:
Schemes, Issuers, Acquirers, Processors and Technology Vendors
 NOTE – The payment space is complex and multi-layered. Many vendors
play in several categories and/or resell or bundle each others’ services
 Prime example is First Data, who is the processor for most of the major
commercial banks in North America including Bank of America and Citi
 Today’s Webinar should be considered a starting point to
understanding the industry
 High level terms - ROI has assembled a glossary of terms relevant
to the payment ecosystem that will help you understand
statements, create RFP’s, and negotiate contracts. If you would
like a copy of the ROI glossary, please let us know.
Ecosystem Recap

14. What’s Next?

15.  Recent acquisitions show change in the ecosystem
 Visa acquires CyberSource (2011)
 Acquisition positions Visa in the Technology Space with a leading
enterprise payment platform and SMB gateway
 Vantiv acquires Litle (2013)
 Acquisition moves Vantiv from processing into online retail solutions with
expertise in rebilling, tokenization, and reconciliation (2013)
 Ingenico acquires Ogone
 Acquisition provides global payment gateway to the hardware
manufacturer (2013)
 Groupon acquired FeeFighters (2013)- demonstrates companies
outside of the ecosystem are vying for entry into the market.
 Lesson learned?
 Many processors are building technology portfolios to increase
solution set and stay relevant
 ROI predicts more acquisitions and consolidation in 2013/14
M&A Activity Shows Industry Change

16.  Mobile and Internet commerce are causing change and
introducing new competitors and technologies to
payments
 Major new players will enter the payment stream in the
coming years, such as
 Mobile / telecom carriers (ATT, Verizon, etc)
 Technology companies (Apple, Microsoft, Google)
 New payment methods are gaining traction (Bitcoin)
 Regulatory and competitive forces may change the face
of the payment chain as we know it today
Missing Logos – Upcoming Entrances

17. Contact Information:
Brion Bonkowski
brion@roipayments.com
212.812.4177 x: 2134
Questions & Contact Info