Dorado Trend Watch Q3 2012

October 22-23, 2012

TrendWatch 2.0
Q3 2012
Payments System Industry
Synopsis

Notice: Materials contained in this document are drawn from several media sources and Dorado Industries is not responsible for their accuracy. Opinions expressed
herein are presented without warranty. Brand names are the trademarks of their respective service offerors.

Random Thoughts
Wow, What a Quarter!
Well, four months actually. Sorry for the delay. American Express begins to shed its 150 year old reputation
Wow, What an Industry! for member exclusivity in favor of a more inclusion persona.
So, who remembers back to the days when the only electronic Its Bluebird offering made joint with WalMart is sure to
payments conference was called “ATM/X” where “X” was a disrupt the prepaid card market.
number from 1 to 10? Back then (ATM/8 was held in 1985 at Bitcoin runs the risk of being viewed as irrelevant (for now) if
Opryland in Nashville) “retail delivery” and ATM were its “Black Friday” sales event scheduled for November 9th
synonymous terms. Hell, ATM ISOs didn’t exist, shared fizzles out. Bitcoin merchants will be offering discounts on
transactions barely moved the needle, and the biggest question gold, lower transaction fees, and free Pampero Rum in an
going into the show was which vendor (NCR, IBM, or effort to establish Bitcoin was a legitimate tender type.
Diebold) would have the biggest booth and best party. How PayPal/Discover forges what some are calling the “fifth
things have changed. In October 2012 alone there four network” in their alignment for network routing and merchant
commercially sponsored payments conferences and the acceptance. Discover is always looking for volume and
Chicago Fed held its 10th annual Payments Symposium. The PayPal is striving for acceptance in brick-and-mortar
logos on our front page note that three events were held on the locations. A match made in heaven.
same dates. Together, they drew nearly 4,000 industry Merchant Customer Exchange (MCX) is formed by nearly
vendors, participants and pundits. All this hoopla over an two dozen retailers. The idea of merchants collaborating isn’t
industry that got no respect for its first 30 years. Opryland? all that new – consider their efforts related to Durbin. What is
Wow, What a Bold Move! unique is that large and moderately large retailers, most
You have to hand it to the payments companies and other category killers in their respective verticals, are willing to put
industry players that really stepped it up a notch in Q3. For aside their differences and sort out this mobile payments thing.
example:
Finally, in the Not So Bold category, the higher-ups at Nacha
Starbucks took a $25 million flyer with Square and gave this
voted down the association’s effort to bring same-day ACH
$3.25 billion start-up the right to process all of its debit and
settlement into being. The UK, Mexico, Singapore, and the
credit card transactions while accepting Square Wallet as a
Netherlands can pull this off but 50 Nacha voting member FIs
tender type. Gutsy.
and regional associations can’t? Truly un-bold!
Dorado Industries
Until next time.
(310) 544-1316
655 Deep Valley Drive, Suite 125-P jmacallister@doradoindustries.com
2
Rolling Hills Estates, CA 90274 www.doradoindustries.com

Table of Contents

2012 Predictions 4
TrendWatch Scorecard/Summary 6
2012 Payments Industry Yields 7
Interesting Quarterly News That Got No Respect 8
Q3 M&A/Investor Activity 12
Useful Links for More Information 20
Back in the Day 21

Dorado Industries (310) 544-1316
3

2012 Predictions

• Four new payments schemes designed to maximize mobile phone functionality while eliminating the need for
retailer check out lanes will proliferate – two will be launched by merchants, two from third parties.
Mar: More entrants in the QSR, fine dining and tavern sector. Waiting on the big box guys. Late add: Intuit acquires AisleBuyer, one of
the check out lane disrupters paying between $80 and $100 million.
Jun: JC Penney announces plans to eliminate its fixed site POS installations in favor of tablet and smartphone equipped roving
checkout personnel.
Sep: Nordstrom equips its stores with 6,000 mobile POS devices and downsizes its checkout register footprint. WalMart executive
pines for the future day when signature authentication disappears.
• CFPB or DOJ will put the buy-here, pay-here segment for automobiles and accessories out of business.
Mar: Looks like CFPB is using the shotgun approach - 10,000 notices to companies have been issued in the first six months of its
existence! Annual report was issued March 31, 2012. Worth a quick read at:
http://files.consumerfinance.gov/f/201204_cfpb_ConsumerResponseAnnualReport.pdf
Jun: Perhaps payday lending is getting all the attention since there are more of these lenders than the others. Then again, maybe
CFPB’s cup runneth over with credit card complaints posted by consumers.
Sep: Looks like California might lead the way toward BHPH regulation; two bills pending in Sacramento.
• At least one of the top ten FIs will be merged out.
Mar: Nothing yet but it’s still early.
Jun: Might want to fire up the popcorn popper, this one could take a while.
Sep: Looks like we’re going to whiff this one.
• Congress will turn its back on efforts to repeal Durbin and/or materially alter Dodd-Frank.
Mar: Looks like Congress won’t have to do anything despite certain GOP candidates claiming they intend to repeal Durbin.
Jun: Two words: “election year.” Might not happen until 2013, if then.
Sep: Post-debate poll numbers suggest that this prediction may fall flat leading to some corrective action in 2013. Late add: for sure!

4

2012 Predictions

• American Express will prevail in its suit with DOJ.
Mar: The longer the suit continues, the better this prediction looks.
Jun: Then again, the July 13, 2012 settlement with Visa/MasterCard could put things in a cocked hat.
Sep: Despite the outcome of the suit, the new “more inclusive” American Express is beginning to look interesting. Bluebird may change
a lot of things.
• By yearend, China UnionPay’s base of cardholders will be 120 percent of Visa’s.
Mar: Could happen. After all, who would have thought AMEX volume would have topped MasterCard’s in 2011?
Jun: WTO finds China out of compliance with reciprocity agreements, excluding other acquirers from operating there. Might change
things.
Sep: CUP continues to make its cards more accepted with a third-party processing agreement with Nets, Europe’s third largest
processor. RBR report: CUP issues one-half of all new cards in the world.
• Nokia’s partnership with Microsoft will save it from extinction.
Mar: Nokia’s still in the game and swinging for the fences. Microsoft is trying mightily to make the deal work.
Jun: Maybe not if Windows 8 flops. We should know soon after its release date in October. Yet, if the iPhone 5 comes out in
September, all bets are off for Nokia.
Sep: Nokia is selling its headquarters building for $250 million. Microsoft might not be able to pull this off.

5

TrendWatch Scorecard/Summary – Q2 2012

Industry Players To Watch
V/MA: Lots riding on the outcome of the merchant settlement.
Positive Isis: Third party reviews of initial Austin efforts not so hot. Expect on-the-
fly changes to software and enrollment procedures.
Mixed
MCX: Merchant mobile wallet goes less stealthy at Money2020. The Gap
Negative joins the party.
Bluebird: AMEX’s low-fee prepaid card designed for distribution through
High 1. New Payment Forms WalMart stores could be a market disrupter and very good for the card
issuer.
Low 2. ATM Restructuring Wright Express: Continues its torrid acquisition and diversification
strategies while changing its name to WEX. Mainstream payments play in
Med 3. POS Volume Trend the works?
Discover: “Think differently, act bravely” says Beth Horowitz, DFS EVP.
High 4. Legal/Regulatory Issues
High 5. New Venture Growth
Market & Industry Situation
Med 6. Earnings Announcements 1 – Money2020 and other shows were loaded with new ideas.
2 – Cardtronics takes down another competitor, Diebold and NCR getting
High 7. Industry Investments aggressive.
3 – Interlink volumes “bottoming out.” Really?
4 – CFPB hammers American Express hard.
5 – AMEX Bluebird and WalMart should start the fur flying again.
6 – Mixed messages again this quarter. Lower guidance from the prepaid
sector.
7 – Lots of M&A and VC/PE money this quarter.

6

2012 Payments Industry YTD Yields
“The rich just keep getting richer” they say. Our basket of payments equities takes its lead from the
Dow and S&P indices which popped up a few points this quarter and generates an overall return of
20 percent for the year so far, Green Dot’s drubbing notwithstanding.

Industry Player 12/31/2011 9/28/2012 Price  Cap Value  YTD 2012 Yield

Alliance Data Systems $ 103.84 $ 141.95 $ 38.11 $ 2,267.5 36.7%
Cardtronics $ 27.06 $ 29.76 $ 2.70 $ 109.9 10.0%
Discover Financial Services $ 24.00 $ 39.73 $ 15.73 $ 7,564.6 65.5%
Euronet Worldwide $ 18.48 $ 18.79 $ 0.31 $ 15.6 1.7%
Fidelity National Information Services $ 26.59 $ 31.22 $ 4.63 $ 883.4 17.4%
First Data (Future Use)
Fiserv Inc. $ 58.74 $ 74.03 $ 15.29 $ 2,383.7 26.0%
Global Cash Access Holdings $ 4.45 $ 8.05 $ 3.60 $ 277.6 80.9%
Green Dot $ 31.22 $ 12.23 $ (18.99) $ (773.8) -60.8%
Heartland Payment Systems $ 24.36 $ 31.68 $ 7.32 $ 273.8 30.0%
Jack Henry & Associates $ 33.61 $ 37.85 $ 4.24 $ 355.7 12.6%
MasterCard Worldwide $ 372.82 $ 451.48 $ 78.66 $ 10,178.6 21.1%
NetSpend $ 8.11 $ 9.83 $ 1.72 $ 151.0 21.2%
Online Resources $ 2.42 $ 2.93 $ 0.51 $ 15.1 21.1%
TNS $ 17.72 $ 14.95 $ (2.77) $ (69.5) -15.6%
Total System Services $ 19.56 $ 23.70 $ 4.14 $ 817.2 21.2%
Visa $ 101.53 $ 134.28 $ 32.75 $ 27,703.2 32.3%

Sources: Company releases, Morningstar.com, Bloomberg.com
2012 YTD yield excludes dividends; based on 12/30/11 and 9/28/12 closing prices

7

Interesting News This Quarter
Subject Source/Date Substance
Bank of America ATM Marketplace • U.S. Patent Application 102429 assigned to Bank of America covers a “contactless automated
September teller machine.” Final approval is probably a few years away and what may come about as a
result is anyone’s guess. Yet, if mobile comes of age while the patent weenies are doing their
thing, we could come out the back side with ATMs that respond to NFC, RFID, or 2D technology
rather than magnetic stripe cards. What do FI deployers do in response? Better question, what do
ATM ISOs do? Might be a lot of new artificial reefs created as we transition to a new way of
initiating an ATM withdrawal and older devices are swapped out.
WalMart Reuters • WalMart takes a baby step in the direction forged by Nordstrom, that is one of reducing the
September friction associated with store checkout. Employees of the Rogers, Arkansas supercenter will test
iPhones equipped with an app that enables users to scan items and (ultimately) make payments
without the help of a cashier. Nordstrom has gone a step farther but equipping its stores with
6,000 sales associate mobile terminals to ease checkout congestion and noise.
Citibank ATM Marketplace • Vaunted ATM and deployer and former ATM manufacturer Citibank takes a page from Wells
September Fargo’s book and launches e-receipts at its ATMs. Users may opt for emailed receipts complete
with or without copies of deposited checks or decline a receipt altogether. Clearly a move to
reduce the cost of ATM operations through paper reduction, this step also gives Citibank another
opportunity to deliver marketing messages to its depositors.
Kuapay Mobile Payments • Kuapay, a southern California-based mobile wallet provider that raised $4.0 million in Q2 2012,
Today has already branched out to another geography. This time it’s NYC through a relationship with
August The Bean, a local independent chain of coffee and food shops and Little Pie Company (guess
what product it purveys). Working with The Bean allows Kuapay to do a straight-up comparison
with the Starbucks/Square lash-up. In addition to payments handling, the Kuapay app enables
store coupons, user offers and rewards. Kuapay claims to have the lowest acceptance cost for
merchants but declined to name the price.

8

Interesting News This Quarter – Continued
PayPal/Discover Payments Source • PayPal and Discover have formed an arrangement whereby PayPal can receive POS payments over
September Discover’s rails. This network lash-up gives PayPal an entry way into Discover’s 7 million
relationships with U.S. retailers. PayPal’s 50 million accountholders would likely appeal to Discover as
well. PayPal’s huge international presence has got to be high on Discover’s rationale for cutting the
deal. One has to wonder what the deal does for Pulse, the Discover-owned PIN debit network that
could see its transactions routed to PayPal where they might be converted to ACH transactions for
settlement. Well, to make an omelet, you have to break a few eggs we suppose.
PreCash Payments Source • PreCash, a payments services player that caters to the unbanked segment, has launched a mobile wallet
September called FlipMoney. The service’s key focus is on getting cash into and out of the wallet in real time.
Users pay $1.00 and 1.0 percent to deposit payroll or government checks and $1.00 plus 3.0 percent for
others. PreCash relies on services provided by Chexar to take the risk out of immediate payment
services embedded in the FlipMoney wallet.
Fiserv PaymentsSource • Sensing that its bank and credit union clients need a competitive response to Square, PayPal and Intuit
September mobile merchant services plays, Fiserv will roll out its SpotPay reader. SpotPay is similar in operation
to the other offerings and includes benefits tied to the processor’s numerous other services. The
UChoose rewards program comes along too plus instant funds credit for checks scanned via Fiserv’s
remote deposit capture feature. The Accel/Exchange network rails will be used to insure faster funds
movement and settlement. There will be a consumer side application as well but as yet the underlying
system (i.e., POPMoney or Accel/Exchange) has not be decided.
Fidelity National Information PaymentsSource • FIS launches PayNet, a real-time transit portal for P2P, eCommerce, bill pay, mobile and international
(FIS) October funds transfer. PayNet leverages existing FIS network assets including NYCE to move the funds
directly from an accountholder’s relationship with a participating FI to the intended recipient. There’s a
30 minute “do over” provision included in the service to handle buyer’s remorse. The initial roll-out
phase in currently in motion while full deployment is expected in early 2013. Just think what
ClearXchange could become if it decided to offer the same service!

9


Research in Motion The Paypers • For the few of us left using RIM smartphones (and every Canadian ever born), there’s hope on the mobile
(RIM) October wallet front. Coming as no surprise really, EnStream, the joint venture between Canadian mobile carriers
Rogers, Bell and Telus has selected Research in Motion to enable smartphone payments through mobile
wallets. RIM will manage security credentials for SIM cards in BB devices as well as Android and Windows
phones. We’re waiting for the iPhone/AT&T holding period to lapse so we can join the big leagues, leaving
BB to our northern neighbors.
Dwolla Dwolla Blog • Dwolla, the “little engine that could” from Iowa may be getting closer to gaining full respect in the
September eCommerce sector. PayTap, an aggregator of payments and a payment option on Amazon’s site, now
incorporates Dwolla accounts as one of its settlement options. PayTap has a social aspect to it, allowing more
than a single buyer to share the expense of a purchase. The same service also enables single or shared bill
payments and the use of credit or debit cards for settlement. Dwolla might be worth a second look for
mCommerce and eCommerce players seeking a way to avoid traditional card network rails.
Dwolla TechCrunch • Dwolla’s back at it. The rogue payments network has partnered with mFoundry to launch MassPay, a
October payments tool for business customers looking for alternative remittance methods to check-writing and wire
transfers. MassPay is similar to PayPal’s business space offering except it supports 2,000 payments at once
versus 250 for PayPal and, of course, it’s far cheaper. Payments over $10.00 cost 25¢ and those below the
threshold are free. PayPal’s offering is currently priced at 2 percent per payment, capped at $1.00.
Admittedly, most of Dwolla’s MassPay users are start-up companies but we all have to start somewhere,
right?
Google/Discover Mobile Payments • What again? Hard on the heels of Discover’s blockbuster partnership with PayPal for use of its network and
Today introduction to its 7 million merchants, the fourth largest payment network leaks an upcoming announcement
October wherein Google’s wallet will take on card-like characteristics leading some pundits to refer to the offering as
“your mobile wallet in your leather wallet.” The jury’s still out on the when and where particulars but
Google’s chief wallet spokesperson, Osama Bedier, has a hard time not grinning from ear-to-ear when asked
about “Google Wallet 2.0.” Stay tuned.

10


Bank of America Reuters • Bank of America has partnered with Paydiant for a second round of mobile wallet testing. The bank’s first
September go-round involved NFC; results of that test were not widely publicized. The latest pilot is based in Charlotte
and includes five merchants. Bank employees equipped with new iOS and Android devices store their card
information in a cloud while an on-board app reads QR codes printed on merchant receipts to initiate the
payment. Bank spokespeople explain that other technologies could be introduced to the mobile application
but provided no specifics. Seems a tad klugey from here but time will tell.
PayDragon PaymentsSource • PayDragon is a unit of Paperlinks, the creative folks who custom design QR codes for consumers and
September businesses. Earlier this year PayDragon launched its “Takeout” application for food trucks and small
restaurants. Device-loaded user payment information is accessed by email addressing. Consumers use
Takeout to pre-order and pay for food items and arrange a convenient time for pick-up. The company has
also launched “Checkout,” an app that permits scanning of published QR codes, product ordering, and
payment. The products ordered are delivered anywhere is Continental U.S. for free. Yet another market
disrupter.
Groupon PaymentsSource • Daily deal provider, Groupon quickly integrates its Breadcrumb acquisition made in May 2012 and uses that
technology (and help from recent ex-PayPal hires) to offer up another competitor in the merchant services
mosh pit. Readers provided by Infinite Peripherals enable participating Groupon retailers to accept the Big 4
payment cards at rates lower than generally available: 1.8 percent for swiped Visa, MasterCard and Discover
cards and 3.0 percent for AMEX. Keyed in transactions are slightly higher plus a 15¢ fee. Groupon keeps its
discount rates low by relying on its internal sales staff for merchant enrollment instead of ISOs. Sure to get
some trade association’s dander up.

11

M&A/Alliance Activity
Buyer/Investor Target Payments Emphasis Possible Strategy
Vantiv Litle &Co. eCommerce processor Vantiv (formerly Fifth Third Payments, formerly Midwest
Payment Systems) uses $361 million of its $500 million IPO
money to gain a toehold in the eCommerce processing world.
Litle & Co. posted 2011 revenues of $285 million and
supports the eCommerce activities of Overstock.com,
Ancestry.com, ShopNBC, and a host of others. No pay day
for VC or PE players since Tim Litle has bootstrapped the
whole show since 2001 with funds generated through the sale
of predecessor company to First USA.
Grotech Ventures Plink Online-to-offline loyalty Plink raises another $3.0 million in growth capital to expand
its presence in the QSR and casual dining restaurant sector.
Plink enables enrolled consumers to earn loyalty points when
eating at Arby’s, Burger King, Dunkin’ Donuts, Quiznos and
others. Plink points are redeemable on Facebook as well as
Amazon.com, The Gap, Home Depot, iTunes, Nike and
others. The company earlier had raised $633,000 in angel
investor funds from Matomy Media and Ahlborg
Acquisitions.
T-Venture LevelUp App-based merchant LevelUp is a SCVNGR merchant services offering that uses
services/loyalty smartphone technology (card enrollment via on-board camera
and QR code generation for transaction initiation) to enable
low/no cost merchant services processing. LevelUp floored
the industry last quarter by announcing a no interchange
policy and merchant fees based on revenues generated. T-
Venture adds $9.0 million to $12.0 million already committed
by others (reported in TW Q2 2012). Not bad for a company
with 200,000 active users and 3,000 merchants.
12

M&A/Alliance Activity - Continued

Fontinalis Partners, QuickPay Parking lot payments app QuickPay, one of those “do we really need this?” payments applications,
Andreessen Horowitz, raises $3.5 million (guess we do) to finance expansion. The app enables
Advanced Technology consumers to locate and pay for parking at 100 locations across 12 cities
Ventures, angel in California, Colorado, and Nevada. Parking lot owners are required to
investors install a special gate at their entrances and exits to participate. A
competitor to Flash Valet (page 17) we suppose.
Lightspeed, FiveStars Merchant loyalty scheme Two-year old FiveStars raises $13.9 million in expansion money to
DCM, promote its card-based closed loop loyalty scheme. Store locations lean
toward eating, drinking, and smaller retailers. The system claims
compatibility with 90 percent of existing point of sales systems. This
tranche brings total funding to $16.0 million. Retailers establish their
own loyalty thresholds and rewards directly through the online app.
Cardtronics ATM Network ATM fleet Cardtronics, already the largest ATM deployer in the U.S., pays an
undisclosed amount for Minnesota-based ATM Network. Founded in
1996, ATM Network is a full-service ATM ISO with approximately
6,200 merchant own-and-load deployed units across a national footprint.
The acquisition increases Cardtronics’ fleet by 10 percent to over
61,000 devices. Can’t be many more good sized fleets left we guess.

TSYS Central Credit card processor TSYS and credit card processor Central Payment form a joint venture
Payment with TSYS have a 60 percent interest in the deal. CP was launched in
2006 by twin brothers Matthew and Zachary Hyman. Wait, this sounds
familiar. Is this the same TSYS that announced a JV with First National
Bank of Omaha on March 1, 2010 and bought out FNBO on January 4,
2011? Looks like the Hyman boys are about to take early retirement.
No matter, they’ve already started SpotOn, a retailer loyalty program to
soak up their spare time.
13

Global Payments Accelerated Payment Payments ISO Global Payments lays out $413 million to acquire APT.
Technologies Accelerated focuses on small to medium merchants in the health
care arena – dental, medical, pharmacy – as well as specialty
retailers, automotive and veterinary verticals. The acquisition
brings with it access to 700 resellers covering 30 different
vertical markets. Annual card volume for APT exceeds $8.0
billion.
Braintree Venmo Money remittance service Venmo operated in beta mode for two years, coming out in early
2012. Braintree pays $26.2 million to get into mobile P2P to
complement its credit card processing technology. Braintree
anticipates that the Venmo buy will enable it to migrate its
current stable of eCommerce customers (Fab.com, Airbnb, Uber,
LivingSocial and the Angry Bird games) to mCommerce quickly.
Venmo was funded initially by $1.2 million in seed money and
raised a silent Series A (how dumb are silent rounds, anyway?) in
August, 2011. In late news, Braintree closed a $35 million
funding round, doubling its capitalization.
Shortcut Ventures, SumUp Mobile merchant services Jack Dorsey’s U.S. launch of Square creates another market
B-to-V Partners, ripple, this time in Europe. SumUp is another device-based
Tengelmann
Ventures, others merchant services scheme similar to Square, PayPal Here,
Intuit’s GoPayment and others. The dongle attaches to Android
or iOS phones and tablets enabling micro- and smaller merchants
to accept mag stripe payments. Pricing is 275 b.p. on each Visa,
MasterCard or EuroPay transaction. Investors ponied up $20
million Series A capital to fund a full launch in four European
countries simultaneously. European transaction security rules
are tougher than in the U.S. so we can probably expect an
American end run sometime soon.
14

Founders Fund Angel, Wallaby Digital wallet WF has developed Wallaby Card, a cloud-based wallet designed to
WI Harper Group, Financial allow consumers to load multiple cards and to optimize card
SLP Ventures, selection to gain full advantage of differing card rewards and other
Lion Wells Capital, benefits. Selections are made based on transaction type, limited time
Others offers, and other key factors. Investors laid out $1.1 million to get
things moving. One small glitch in the consumer adoption equation:
a $50 annual fee. Oh-oh.
Wright Express UNIK Brazilian payroll cards and Wright Express, now known as WEX, Inc., continues to pursue
Fleet One US fleet fuel operator diversification and concentration strategies on a global basis. It pays
$21.9 million to acquire a 51 percent interest in UNIK, a Brazilian
payroll card processor and two days later gobbled up Fleet One, a
privately held fuel card provider in the U.S. WEX paid private
investors $369 million for Fleet’s $56 million in annual revenues,
210,000 active cards, and 60,0000 acceptance sites. Seems steep.
Investors like us Blackhawk Gift card distribution Safeway Inc. announces plans to IPO a minority stake in
Network Blackhawk, the grocery chain’s gift card distribution chain with
Holdings presence in the U.S., Canada, Europe, Mexico and Australia.
Claiming the asset is under-valued inside Safeway, it is hoped that
the unit’s $100 million in annual EBITDA will generate an over-
valued asset – cash – for the supermarket. Safeway shares post the
announcement rose 3.7 percent. Good plan, maybe.
Acculynk PayLeap eCommerce payments Acculynk takes a down-market step by acquiring PayLeap, an
gateway eCommerce payments gateway with 4,000 small and medium retail
customers. In so doing, Acculynk Direct has been formed as a new
division. Acculynk enables PIN-based Internet payments using a
unique encryption scheme and has traditionally concentrated on
larger retailers.
15


Citi Ventures, Square Mobile merchant services Old news but it warrants repeating that the latest round of
Rizvi Traverse $200 million in funding gives Square an imputed valuation of
Management, $3.25 billion. Estimated annual spend on Square equipped
Starbucks Coffee phones and tablets now exceeds $8.0 billion. Starbucks put
up $25 million, or roughly 100 million lattes.
Thomvest Ventures, Kabbage Online merchant lending Kabbage, one of those “no respect” companies, makes cash
UPS Strategic advances to online merchants who retail products through
Enterprise Fund, Mohr eBay and Amazon. The investors added $30 million to
Davidow Ventures, Kabbage’s already hefty $26 million in earlier rounds.
Bluerun Ventures Company plans call for more growth in international markets
and retailers with physical presence. Advances range in size
from $500 to $50,000. Underwriting involves data mining
using UPS shipping data, potential recipient’s QuickBooks
information, and the level of merchant activity on Facebook
and Twitter. Guess Quick Ratio and Debt/Worth analyses are
a thing of the past when lending to online merchants.
VantagePoint Capital edo Interactive Card based rewards Returning investors add $15 million in capital raising this
Partners, Tennessee- and Illinois-based processor of card-based
Baird Venture Partners rewards and promotions to $54.3 million. edo currently has
140 bank partners representing more the 150 million
cardholders. Promotions include offers and redemptions at
Nordstrom, Target, Subway, and Home Depot. Proceeds will
be used to help the company move down-market into the
small and medium business market.

16


Trellis Partners, Flash Valet Parking service and payments Austin-based Flash Valet raises $1.25 million to expand its
Austin Ventures, cloud-based software service that enables users to notify
G51 Capital, parking valets when their car is needed and provides payment
186K Ventures options. Obviously, it’s a mobile app but comes with a valet-
side version to track time and attendance and other essential
valet business analytics like joyriding and pilfering .
Altos Ventures, Billeo Online payments Venerable online payments operator Billeo raises $4.2 million
ATA Ventures, with room for another $2.0 million in Series C funding.
Pacifica Fund, Billeo works both sides of the payments street with its
Claremont Creek ZipThru Buy and ZipThru Pay applications. Founded in
Ventures 2006, Billeo continues to expand its presence through
relationships with 40 banks, 1,500 merchants, and 1.5 million
consumers. At this rate, Billeo will soon become a candidate
for a liquidity event.
Digital River LML Payment Card not present processor Digital River pays $102.8 million to snag LML, a leader in
Systems eCommerce payments processing. The combined entity
handles $20 billion in annual transaction volume generated by
tens of thousands of companies. Naturally, the announcement
drew potential litigation from a law firm inquiring about the
LML Board’s efforts to shop the deal. Let’s see, LMLP
closed at $1.87 the previous trading day and Digital River is
paying $3.45. Seems like the DR Board is the one that bears
scrutiny.

17

Matrix Partners, Fuze Network Cash-based online payments Founded in 2009 in Salt Lake City, Fuze has raised $5.0
Ribbit Capital million in funding from various sources. The company offers
its Swipe2Pay services to users wishing to pay credit card and
other bills with cash by swiping the Swipe2Pay card at special
terminals. 100,000 retail locations and numerous banks
participate; $25 million in transactions per month run through
the system. A companion product, BillPay Card, identifies
cash-paying users at the point of sale and enables payment of
recurring bills (utility, ISP services, etc.) at participating
merchant locations in cash.
SignaPay Equity POS ISO Two payments ISOs merge with SignaPay, a Dallas-based
Commerce LP firm, coming out on top. The combined entity handles 14,000
merchants and $2.0 billion in annual sales. These intra-sector
mergers just keeping happening.
Investors like us WorldPay Payments processor Advent International and Bain Capital announced intentions
to sell the U.S. operations of WorldPay. AI and BC paid £2.0
billion for 80 percent of WorldPay from Royal Bank of
Scotland in 2010. The two PE firms hope to generate $1.0
billion in proceeds from the sale of the Atlanta operation.
The non-U.S. portion of WorldPay will be retained, for now.
ES Ventures, Ubiquity Global Prepaid BPO Former executives from TxVia – recently purchased by
Pritzker/Vlock Services Google – form a business process outsourcing firm targeting
the GPR programs found within the prepaid card industry.
Investors funded $4.0 million in initial capital. The company
has operations in El Salvador and the Philippines and plans to
open a European office next year. Initial Ubiquity customers
will likely be drawn from TxVia legacy clients.
18


MasterCard Truaxis Loyalty rewards Back when it was known as BillShrink, Truaxis helped users
save money by offering ways to reduce household bills.
Today, the company helps banks and retailers deliver
household-customized offers to their customers. MasterCard
has acquired Truaxis to integrate its features into its network
to deliver real time offers and post-offer analytics. It is
thought that these features will promote brand loyalty on the
banking side and stepped-up sales for merchants. Sounds
right.

19

Useful Links for More Information
We threw a lot of new names out again this quarter. Here’s a list of links for you to
learn more.

Company Role Link
Kuapay Mobile Wallet www.kuapay.com

PreCash Unbanked financial services www.precash.com

PayDragon Restaurant ordering and payments www.paydragon.com

Plink Online loyalty www.plink.com

QuickPay Parking lot search and payments www.quickpay.com

FiveStars Merchant-based loyalty www.fivestars.com

Braintree eCommerce processor www.braintree.com

Wallaby Financial Smart mobile wallet www.walla.by

Fuze Network Alternative payments network www.fuzenetwork.com

20

Back in the day!

Perhaps you forgot (or didn’t
know) that IBM once made
ATMs. Yep, right up until Diebold
and IBM formed InterBold in
1991. These are pictures of
IBM’s first two ATM models.
BTW, the photo on the left was
taken in 1972. First reader to
email the model number for each
unit to us wins a Dorado
Industries polo shirt second
place gets a T-shirt.

Good luck!

21

Dorado Trend Watch Q3 2012

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