🕵️ It's Earnings Season - How Are Payments Companies Stacking Up?
Now that we have lapped into YoY earnings reports versus COVID’s depths, comparing performance can be interesting. For context, TSG prepared a grid to show Q2 2021 YoY payments volume change versus other public payments companies. In addition, we have shown the market average, which is calculated from TSG’s AIM platform. Check it out →
In this interview we sat down with TSG’s Senior Associate Cliff Gray to address areas of his expertise in payments and where he sees the industry heading.
Excerpt:You have extensive expertise in technology and security compliance. What are some of the common challenges that face financial institutions as it relates to hardware security when it comes to payment acceptance and processing? How do you help financial institutions achieve a safe and protected operation?
Cliff: The biggest challenges for financial institutions these days are related to the evolution of POS to Android and iOS platforms. While mobile platforms come with potent advantages (e.g., native, frictionless connectivity, massive development communities, etc.) there remain some important considerations. Typical mobile hardware cannot validate under Payment Transaction System (PTS) rules, so card-present functionality requires separate hardware like encrypting dongles and PIN pads. However, PIN-on-Glass should resolve some of this but that may still be years away.
Interchange models also need to evolve to meet today’s technology. For example, Google Pay and Apple Pay’s authentication is arguably far better than AVS, CVV, and EMV; yet many transactions still interchange at risky, expensive CNP rates. There are technical challenges to overcome, but industry risk and interchange modeling must catch up as well.
PayPal’s plan to morph itself into a “superapp” has been given a go for launch. According to PayPal CEO Dan Schulman, speaking to investors during this week’s second-quarter earnings call, the initial version of PayPal’s new consumer digital wallet app is now “code complete” and the company is preparing to slowly ramp up. Over the next several months, PayPal expects to be fully ramped up in the U.S., with new payment services, financial services, commerce and shopping tools arriving every quarter.
Visa Inc. continued to see a bounce-back in face-to-face spending amid the economic recovery while e-commerce transactions driven by the pandemic remained strong, the company said Tuesday. Visa’s payments volume increased 34%. The company said cross-border travel spending improved as vaccination rates rose, with cross-border volume increasing 47% and cross-border volume excluding transactions within Europe climbing 53%. Processed transactions rose 39%. “Visa delivered another strong quarter as many key economies are well into a reopening-driven recovery,” said Alfred Kelly Jr., chief executive of Visa, in a news release.
As they have for rival Visa Inc., transaction volumes are continuing to improve for Mastercard Inc. as world commerce stages its recovery from the impact of the pandemic. “The strong momentum we started the year with accelerated this quarter,” chief executive Michael Miebach said Thursday morning during a session with equity analysts to discuss the company’s second-quarter performance. The improvement comes as domestic spending recovers in many of Mastercard’s global markets and cross-border card-not-present volume remains strong, Miebach said.
Shopify is a global commerce company that provides tools to start, grow, market, and manage a retail business of any size. This objective was evident when Shopify reported stellar earnings for the second quarter of 2021. Total revenues were up 57% over last year to $1,119.4 million. Subscription Solutions revenues were up 70% over last year to $334.2 million. Merchant Solutions revenues were up +52% to $785.2 million. Net income for the second quarter was $879.1 million or $6.90 per fully diluted share. This compares to a net income of $36.0 million or $0.29 a fully diluted share in the prior year.
The COVID-19 pandemic has redefined how health care is delivered as well as how people pay for it. On the delivery side, patients and doctors offices have embraced telehealth appointments; on the financial side, patients have turned to contactless payment modalities and phone apps to handle their balances. Zotec Partners, a healthcare payment vendor, reports that the number of patients paying bills online rose nearly 200% from May 2020 to May 2021. The number of Zotec patients using time-of-service payments grew 55% in the same period.
Intuit is looking to crash into Square's core business with the launch of a handheld card reader for small businesses customers of QuickBooks. Intuit is rolling out the device in response to the mass market shift to contactless payments in the wake of the pandemic. The card reader enables users to speed up in-person sales, accept payments on the go and have transactions automatically reconciled in QuickBooks.
Rarely does a company from the Sacramento area make a big splash on the stock market. Wednesday was one of those days. PowerSchool Holdings Inc., a Folsom company that develops software for K-12 schools, completed its first public stock offering early Wednesday. The company raised $710.5 million as it debuted on the New York Stock Exchange under the ticker symbol “PWSC.” PowerSchool’s initial public offering, or IPO, was the largest in years for a company based in the Sacramento area — and a boon for the region’s small tech community.
Twitter this morning will launch a pilot in the U.S. aimed at testing the potential for e-commerce on its platform. The company is introducing a new “Shop Module” that offers brands, businesses and other retailers the ability to showcase their products to Twitter users directly on the business’ profile. Users will then be able to scroll through a carousel of product images in the module and tap through on a product they’re interested in purchasing. This opens up the business’s website inside the Twitter app itself, where the customer can learn more about the product in question and opt to make a purchase.
Shares of Robinhood fell about 5% during its Nasdaq debut, after pricing near the low end of its IPO range. The online brokerage started trading at $38 per share, the low end of its range, valuing the company at roughly $32 billion. After dropping as much as 10% to around $34, Robinhood’s market capitalization was about $29 billion. Trading for the first time under the ticker HOOD, the online brokerage hit the public markets it seeks to democratize for amateur investors.
Aligned with Klarna’s plans to expand its retailer support services and improve the overall shopping experience for consumers, the company said today that it has acquired Apprl, which is a software-as-a-service (SaaS) platform that allows content creators and merchants to create social shopping content. Apprl is designed for content creators and merchants “to work together frictionlessly to bring immersive and informative shoppable content to global consumers,” Klarna said in a statement.
BigCommerce, a leading Open SaaS ecommerce platform for fast-growing and established brands, announced it has acquired Feedonomics in an asset purchase transaction. As a full-service data feed management platform, Feedonomics helps mid-market and enterprise merchants succeed on hundreds of advertising channels and marketplaces by ingesting, unifying, enhancing, and syndicating product data, and then syncing the resulting order data back into existing systems to streamline operations.
Marqeta, the global modern card issuing platform, announced today that its modern card issuing platform will power the new virtual Google Pay balance card. The new virtual Google Pay balance card, powered by Marqeta, allows users to easily spend their Google Pay balance through a virtual card tokenized into a mobile wallet and used at accepting merchants. Previously, Google Pay balance users could use their balance for person-to-person payments, purchases on eligible Google-owned properties (e.g., the Play Store or YouTube), or they could transfer their funds to their bank account.
Small and medium enterprises (SMEs) contribute heavily to the economic success of many countries, particularly those in the developing world. They are the backbone of most economies: Globally, SMEs represent about 90% of existing businesses and create more than 50% of employment. In South Africa, these businesses contribute around one-third of the country’s GDP. Last year, the coronavirus pandemic threatened the existence of some of these SMEs, and its effects linger as owners worry about revenue, sales and cash flow.
Led by Facebook, social media platforms from Alphabet's YouTube to Snap Inc and Twitter are investing heavily in shopping features to drive revenue growth, a major theme that emerged during second-quarter results over the past week. The companies are vying for a piece of the so-called social commerce industry, which relies on users' ability to discover and buy products through social media apps and is expected to balloon to $50 billion from $36 billion in annual sales by 2023 in the United States according to research firm eMarketer.
May require account to read. Starbucks Corp. said higher labor and supply costs are likely to linger for months, adding that it is promoting higher-end beverages such as cold coffee and could lift prices in areas to help compensate. The Seattle-based company’s outlook came as it reported quarterly sales that outpaced pre-pandemic levels. The company projected higher profit ahead, despite rising costs and some continued restrictions on seating. For its fiscal third quarter ended in June, Starbucks reported $7.5 billion in sales, above analysts’ expectations.
Walmart, the largest private employer in the country, announced on Tuesday it will pay for college tuition and books at a group of schools for its part-time and full-time associates. The company issued a news release stating the move means approximately 1.5 million Walmart and Sam’s Club employees “can earn college degrees or learn trade skills without the burden of education debt.”
Major retailers have not yet announced updated policies but that could quickly change, Neil Saunders, managing director of GlobalData Retail, told USA TODAY. He said he expects retailers could reinstate mask requirements just as they removed them after the CDC advised in May. “The main issue with this will be one of compliance,” Saunders said Tuesday.
The average cost of a data breach has now reached over $4 million, hitting a record high during the COVID-19 pandemic. On Wednesday, IBM Security released its annual "Cost of a Data Breach" report, which estimates that in 2021, a typical data breach experienced by companies now costs $4.24 million per incident, with expenses incurred now 10% higher than in 2020 when 1,000 -- 100,000 records are involved. So-called "mega" breaches impacting top enterprise firms responsible for the exposure of between 50 million and 65 million records now also come with a higher price tag -- reaching an average of $401 million to resolve.
Markedly few details emerged initially from last week’s meeting of the President’s Working Group on Financial Markets over the “rapid growth of stablecoins” — digital tokens pegged to traditional currencies such as the dollar. Several days on, a handful of data points are taking shape. The meeting focused on blockchain token company Tether’s claims that it holds a significant amount of commercial paper — debt that companies issue to meet their short-term funding needs, Bloomberg reported Tuesday, citing anonymous sources.
President Biden just signed a national security directive aimed at boosting defenses against ransomware attacks and the hacking of critical infrastructure like energy, food, water and power systems. The directive sets performance standards for technology and systems used by private companies in those sectors — though it can't force those companies to comply. The memorandum follows a series of high-profile attacks on a major pipeline and the country's biggest meat supplier.
Fueled by vaccinations and government aid, the U.S. economy grew at a solid 6.5% annual rate last quarter in another sign that the nation has achieved a sustained recovery from the pandemic recession. The total size of the economy has now surpassed its pre-pandemic level. Thursday’s report from the Commerce Department estimated that the nation’s gross domestic product — its total output of goods and services — accelerated in the April-June quarter from an already robust 6.3% annual growth rate in the first quarter of the year.
The U.S. economy grew at a strong pace in the spring as the country emerged from the darkest days of the coronavirus pandemic. But GDP data is backward looking, and many analysts expect growth to have marked a peak. For the second half of the year, the pace of growth will inevitably slow down, even as it is likely to remain strong. The question is how much the economy could slow. Here are four factors that could determine the path forward
According to the Amex Trendex, a trend report from American Express, US consumers are spending their time and money gearing up for a return to in-person activities this fall. Parents are preparing for their kids to go back to school, and many working adults are getting ready to head back to the office. In the meantime, consumers are filling up their busy summer schedules with last-minute trips.
Applications for U.S. unemployment benefits fell in late July after hitting a two-month high in the prior week, suggesting the delta strain of the coronavirus hasn’t done much so far to harm the economy. Initial jobless claims declined by 24,000 to 400,000 in the week ended July 24, the government said Thursday. Economists polled by The Wall Street Journal had forecast 380,000 new claims.
Fiserv, Inc., a leading global provider of payments and financial services technology solutions, reported financial results for the second quarter of 2021. "We had a very strong quarter driven by both macroeconomic tailwinds and the execution of our business strategy focused on winning business with new and existing clients," said Frank Bisignano, President and Chief Executive Officer of Fiserv. "Our assets and continued innovation position us well to grow faster with financial institutions, fintechs and businesses of all sizes."
Spain’s Santander on Wednesday beat forecasts with a 35% rise in second-quarter underlying profit, which nearly returned to pre-pandemic levels on the back of fast economic recovery in its U.S. and UK markets. The euro zone’s second-biggest lender in terms of market value reported a net profit of 2.07 billion euros ($2.45 billion). The result topped the 1.76 billion euros forecast by analysts polled by Reuters and almost matched the 2.1 billion euros recorded in the second quarter in 2019, before the outbreak of the coronavirus pandemic.
Nuvei Corporation, the global payment technology partner of thriving brands, and Alipay, the world’s leading digital payment platform operated by Ant Group, announced a partnership that will connect Nuvei’s merchants with over 1.2 billion potential customers in the Asia Pacific region through the Alipay+ cross-border payment and merchant marketing solution. This includes access to a network of Asia’s leading local e-wallets. Beginning in early 2020, Alipay started offering its partners a cross-border payment and merchant marketing solution, making it easy for businesses to accept different payment methods and conduct cost-effective digital marketing campaigns.
As a growing number of financial services organizations choose FIS Modern Banking Platform to provide convenient, frictionless digital banking services to their customers, FIS® continues to add significant new components to its flagship cloud-native core banking platform. The new components, which include innovative retail lending and commercial onboarding as well as a growing ecosystem of third-party solutions, add to the advanced digital banking capabilities that are being deployed by a dozen leading banks including Fifth Third Bank and BMO Harris.
The United Center, home of the Chicago Bulls and the Chicago Blackhawks, has partnered with Shift4 Payments, the leader in integrated payment processing solutions, to deliver the latest commerce technologies to its arena. Shift4 will power all payments at the United Center for concessions, premium, suites, & retail, integrating its VenueNext point-of-sale technology to streamline the entire event experience for fans throughout the venue as well as the Bulls, Blackhawks and United Center apps.
The OLB Group, Inc., a provider of cloud-based omnicommerce and payment acceptance solutions for small- and mid-sized merchants, announced it has signed a non-binding letter of intent (LOI) to acquire a portfolio of CBD and other merchants that will utilize the company’s SecurePay Payment Gateway to process payments. The group of merchants to be acquired have reported annual transaction volume of greater than $300 million.
Riskified Ltd. (“Riskified”), a fraud management platform enabling frictionless eCommerce, today announced the pricing of its initial public offering of 17,500,000 Class A ordinary shares at a public offering price of $21.00 per Class A ordinary share. The offering consists of 17,300,000 Class A ordinary shares offered by Riskified and 200,000 Class A ordinary shares to be sold by one of Riskified’s existing shareholders. Riskified will not receive any proceeds from the sale of the shares by the selling shareholder.
Women's Network in Electronic Transactions (Wnet), the premier non-profit organization serving professional women in the payments and fintech industries, announced today that registration is open for the 2021 Wnet Leadership Summit, sponsored by Wnet Visionary Sponsor JPMorgan Chase and Wnet Pinnacle Sponsors FIS, Fiserv and Global Payments. The two-day event and anniversary celebration will be held at the Grand Hyatt Atlanta Hotel in Buckhead from November 3 through November 4.
Accela, the leading provider of SaaS solutions for government, announced that DeLand, Florida, and Yuba City, California have implemented a new digital permitting system integration with Forte Payment Systems - a CSG company, powered by Accela technology. As a result, these jurisdictions are able to utilize a best-in-breed, integrated solution for online and in-office transactions, resulting in increased transparency, improved user experience for citizens and staff, and more efficient use of resources.
Paysafe, a leading specialized payments platform, has partnered with Parx Interactive, the Bensalem, Pennsylvania-based gaming company owned by Greenwood Gaming and Entertainment, Inc. The first phase of a multi-state partnership sees the Parx Interactive-powered Play Gun Lake online casino and sportsbook for Michigan plug into Paysafe for access to all its traditional and alternative payment solutions.
Robust growth continued for the modern ACH Network in the second quarter of 2021. Payment volume climbed 9.9%, with particularly strong growth in business-to-business (B2B) payments. The ACH Network processed 7.3 billion payments in the second quarter, 655 million more than the same time in 2020. The value of those payments was $18.4 trillion, an increase of 24.6% from a year earlier. B2B payments increased 28.7%, to 1.3 billion payments.
Worldline, the European leader in the payments and transactional services industry and number 4 worldwide, today announced it has partnered with Porter Airlines to offer popular digital wallets, namely WeChat Pay and PayPal, for bookings through the airline’s website. Porter is using Worldline’s TravelHub solution, which gives travel companies global end-to-end payment processing capabilities and regional access to markets across Asia, Europe, Latin America, and North America. The solution includes WeChat Pay, a built-in mobile wallet from WeChat, China’s most popular messaging app.
Datacap Systems Inc., leading hardware and processor-agnostic omnichannel payments provider, bolsters omnichannel gateway offering with new integration options for POS partners. Available in stand-alone and semi-integrated configurations, DC Direct allows Datacap cloud-based POS partners to process EMV credit/debit contact/contactless, prepaid, EBT and FSA transactions without additional Datacap hardware or software.
BHMI, a leading provider of payments software and creator of the Concourse Financial Software Suite®, announced that Cuscal Limited, Australia’s leading independent provider of payment solutions, will be utilizing BHMI’s Concourse solution to support the needs and requirements for Australia’s New Payments Platform (NPP) upcoming PayTo initiative, which provides customers with enhanced visibility and control over their payment options.
Sound Payments, a technology company in the petroleum and payments industries, welcomed Mike White as its Vice President of Sales for the Petroleum Channel. Mike will lead and grow a team of professionals that will support solutions for the petroleum industry, including Sound Easy Pump. He has extensive experience in the POS and payments industry and has had success at every level.
