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The EMV Migration Forum has estimated that there were approximately 120 million chip cards in the U.S. market as of the end of 2014, with 600 million estimated to be issued by the end of 2015. Industry sources have also estimated that as many as 50 percent of merchant terminals may be enabled for EMV chip card acceptance by the end of 2015.
Emerging Trends and Opportunities in the Payment Processing Industry
The payment processing industry will continue to adopt new technologies, develop new products and services, evolve new business models and experience new market entrants and changes in the regulatory environment. In the near-term, as merchants and financial institutions seek services that help them enhance their own offerings to consumers, including acceptance and issuance of Europay-MasterCard- Visa (EMV) chip-based cards, other security and fraud management services, information services, and support for omni-commerce environments, we believe that payment processors may seek to develop
additional capabilities and expand across the payment processing value chain to meet these demands and capture additional data and provide additional value per transaction. To facilitate this expansion and deliver more robust service offerings, we believe that payment processors will need to develop greater control over and integration of their technology platforms, to enable them to deliver and differentiate their offerings from other providers.
We believe that emerging, alternative electronic payment technologies will be adopted by merchants and other businesses. As a result, non-financial institution enterprises, such as mobile payment providers, internet, retail and social media companies, could become more active participants in the development of these alternative electronic payment technologies and facilitate the convergence of retail, online, mobile and social commerce applications, representing an attractive growth opportunity for the industry. We believe that payment processors that have an integrated business, provide solutions across the payment processing value chain and utilize broad distribution capabilities will be best positioned to provide processing services for emerging alternative electronic payment technologies and to successfully partner with new market entrants.
Our Solution & Value PropositionEDIT
An EMV compliant payment processing platform,
A broad set of certified devices that gives acquirers and merchants the greatest flexibility with a
complete lab certification capability for manufacturers & payment software developers.
An EMV switch (proprietary) with connectivity to MasterCard Integrated Processing Solutions and
VisaNet Access Points to the Visa backbone network allowing processing and settlement; and
Value added solutions that can be deployed throughout the merchant channels to fulfill any
integrated needs that they have.
Integrating China Union Pay Card network.
We generate revenues through charging clients licensing fees, device and application certifications, transaction fees, processing fees and gateway (eCommerce fees) and also partnership vendors, which range based on the service delivered (EMV Host, Gateway, Proprietary Software), nature of business (SMB or Enterprise) and volume of business (# of transactions).
Overview and HistoryEDIT
The way we pay is undergoing an unprecedented shift. We’re moving away from paper-based cash and checks, toward plastic and other digital methods. Global non-cash transactions reached 366 billion in 2013, up 10% over 2012, driven in large part by intense growth in developing markets. Electronic payments offer consumers plenty of benefits, including convenience and security, fueling even wider adoption.
Meanwhile, data breaches have become increasingly prevalent across the retail industry. The impact has been devastating. The average data breach is costing retailers approximately $3.8 million. To address this challenge, in an effort designed to protect data and systems, the payment industry is driving a shift to adoption of the Europay, MasterCard and Visa (EMV) standard.
What is EMV?
EMV is based on strong cryptography (both symmetric and asymmetric) and elaborate key management; a fundamental EMV principle is to digitally sign payment data to ensure transaction integrity. As opposed to magnetic stripe technology, a chip is extremely difficult to crack. Card authentication and PIN verification are performed automatically and objectively by the chip. An important aspect of EMV is its use of dynamic data. Each transaction carries a unique ‘stamp’ which prevents the transaction data from being fraudulently reused, even if it is stolen from a merchant’s or processor’s database. EMV’s dynamic feature basically says, “If you can’t prevent data from being stolen, make the stolen data useless because dynamic data is only useful for the sole transaction it characterizes, nothing more.”
There are an estimated 1.24 billion payment cards and 15.4 million POS terminals currently in use, most of them in other countries. Making global financial transactions work across many cards and devices are smart chips embedded within new EMV-compliant credit and debit cards. These chips are interfacing with the various POS terminals possible.
In addition to cards and POS terminal infrastructure, another key driver of EMV migration are mobile payments and PADs. Mobile technology is being adopted by both consumers and retailers at an unprecedented rate. Businesses are accepting mobile payments at innovative point-of-sale terminals,
hand-held devices and tablet PCs. PAD devices are being enabled to take real-time payments, and are being built EMV-enabled. MPOS solutions will not be delivered without EMV.
Adoption of the EuroPay, MasterCard and Visa (EMV) standard is a major milestone for financial companies (banks and credit unions), credit card issuers as well as global enterprise and telecom acquirers.
While most banks and financial institutions recognize the importance of migrating to the EMV standard and smart (or chip) cards is a high priority, it hasn’t translated into mature EMV markets and adoption in several major markets globally, most notably in the U.S. and Asia.
Many banks remain at the planning stage with budget concerns being a key concern to executing a migration plan. In addition to budget issues, other challenges include lack of information, lack of technical skills, lack of suitable products and implementation and testing.
In the U.S. implementation of EMV-compliant cards and devices represents a major expense:
Adoption of the EMV standard has been greater on a global basis than in the U.S. and Asia6, which have just begun the process. In the U.S., making pressure to comply greater, in October 2015, the Payment Networks’ Liability Shift associated with EuroPay, MasterCard and Visa (EMV) is due to take effect.
The cost and consequences of missing the liability shift deadline:
Costs directly associated with higher incidences of fraud. The unique data provided by the EMV chip makes it nearly impossible for fraudsters to produce counterfeit cards. In fact, fraud related to counterfeit cards has been virtually eliminated in countries where EMV has been adopted.
Merchants waiting to adopt EMV, or not adopting it at all could face significant financial loss as a result of security breaches and resulting fees that they would be required to pay, in addition to potential loss of business.
Loss of consumer traffic. Consumers are frustrating with the growing number and scope of breaches. Customers are well aware that chip-card technology has been implemented in other counties with much success, and expectations need to be met to maintain repeat business and revenue.
Background, CT Payment Partnership & Our Solution
In response to the global demand for EMV compliance, we recognized the opportunity to implement an EMV Host with a full-suite of EMV certified devices and applications in a platform and technology agnostic environment as a solution for banks and telecom acquirers. Regardless of the market, the challenges these companies face is the same: how to deploy technology capable of supporting mobile transactions while meeting the requirements of the evolving Payments Industry, and related regulations imposed (such as EMV) including eCommerce with 3D Secure protocols.
We identified CT Payment, Canada’s largest independent payment processor & Interac Debit network acquirer member7 with more than $15 billion in processing annually8 and 50,000 deployed EMV terminals of which 20% is from eCommerce processing portfolio9, as a key strategic partner that would enable us to address this challenge. Historically, its primary focus had been in focusing on ISO’s & Merchant business in Canada’s domestic market.
In January 2015 we entered into a strategic partnership with CT-Payment, Inc. enabling us to provide EMV payment transaction processing and dynamic currency conversion (“DCC”) for multi-currency processing into key growth markets internationally. In addition, we agreed to implement a hosted DCC solution in North America10, through a partnership with Vieway International11 of China, to accelerate the business process and provide EMV solutions to bank and telco customers in North America and Asia.
Together, we expanded CT Payment’s Canadian EMV Switch and eCommerce platform, exporting the technology to datacenters in Asia, emulating the MasterCard Internet Gateway Service Platform to expand its market segment from domestic retail and corporate clients to banks and telco clients worldwide.
Together with CT Payment, we have created a powerful, cloud-based EMV Host platform to banks, telecoms and enterprise customers, which further serves as a distribution channel for additional proprietary software solutions and services in our portfolio which our customers can offer to merchant customer accounts.
Products and ServicesEDIT
By creating a fully-integrated technology agnostic platform, with the broadest offering of certified terminals in the market we enhance the value proposition for our clients to merchants.
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VelocityMWallet enables payments anywhere, from any computer or smartphone with value-added features including paperless coupons and electronic receipt storage.
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Consumers can create wish-lists, populate their Genorocity wallets with data filtered for participating merchants and offers that match, participate in loyalty programs and share promotions on social networks.
Using iBeacon technology, merchants on the Genorocity platform can push coupons, incentives and loyalty programs to consumers based on geo-location.