Payments Players In S.F.

Panoramic View Of Famous Golden Gate Bridge

Electronic Transactions Association (ETA), the global trade association for the payments industry, is holding its annual event here in San Francisco this week.

For many, the move from Las Vegas, the traditional location of the event, to S.F. represents a shift that emphasizes the growing role of technology, and in particular the impact of local FinTech startups such as Stripe and Square.

Below is a table of the Top 25 Companies in FinTech, ranked by employees in greater S.F. Bay area. Note how many are involved in payments (Visa, PayPal, Square, BlackHawk, Yapstone, Verifone, Stripe,, Taulia, Revel & Boku).

Top 25

Although ~ 5,000 people are in S.F. for this event, a small fraction of Dreamforce (annual Salesforce customer event), the key changes underway in payments landscape from Apple Pay to Samsung Pay give this event outsized importance.

The  San Francisco Business Journal even has a cover story on payments this week, reinforcing that fact, and calling out interesting startups like PayNearMe (a panelist at last week’s SF FinTech Meetup  run by PlanWise‘s Vincent Turner).

Payments Race

Although I’ve worked as a consultant with clients like MBNA (prior to its acquisition by Bank of America), launched co-branded cards and even worked on an ACH initiative, I am not a payments guru like Karen Webster of But  I follow FinTech and have a passion for innovation and the space, so will make a few observations.

First, legacy payments companies – and by this I refer to the broadest set of banks, merchant acquirers, aggregators/gateways, and payment networks – are not standing still, and should be watched just as carefully as startups.

Ben Horowitz, in talking about A16Z’s investment in TransferWise, said that “there’s not a lot of innovation coming from the banks.” Likewise, Foundation Capital predicted last week that banks will be disrupted by the new players in FinTech.


I admire TransferWise and am a huge fan of Stripe, having had the opportunity to sit down with its COO, Billy Alvarado, and see its CTO, Greg Brock, speak at several FinTech events – but feel that A16Z and Foundation Capital may be overstating the case.

The fact is that not all the value added is not coming solely from the startups. Just look at a less cool, big legacy player in payments: Heartland Payments Systems.

The stock has doubled in the last few years, as its executed well and managed its costs while revenue continues to grow:

Stock chart

I would look to startups for their ability to be super fast, be focused on great products and use the latest tech stack, but don’t forget about value created elsewhere, e.g. among big corporates.

Beyond value, I’d also say innovation is not the sole domain of venture-backed startups. They are important, but I think the differences between venture funding and private equity are starting to narrow.

In today’s Wall Street Journal, Andy Kessler argues “The Glory Days of Private Equity Are Over”. I disagree since companies like Betterment (see my recent interview with its co-founder) are receiving funding from both VC’s and private equity firms. Peter Christodoulo, a partner at Francisco Partners, sits on board of Betterment, Paylease and Paymetric.

first data

Or consider First Data. It went private in a deal led by KKR. While it may seem to be a cost-cutting driven deal, consider that in recent years it began sharing ownership with employee-partners (like a VC funded business). And in terms of innovation, First Data is expected to make major new announcement here at TRANSACT 15. (I don’t know its president, Guy Chiarello, but met him when I was hired into his organization at Morgan Stanley where he’s still widely admired an an innovator, not a cost-cutter).


Likewise, Vantiv, one of the major sponsors of TRANSACT 15, went private several years ago in a deal with Boston-based Advent International, and continues to win awards and do well in terms of market share.

So, I think it’s clear startups and corporate players, plus VC’s and private equity all can create value and innovation. I look forward to announcements here at TRANSACT 15 in San Francisco, and will be sharing details on Twitter.

Tuesday Recap: Money 20/20


Money 20/20 continued today, starting with a keynote by Ken Chenault, longtime CEO of American Express. What was interesting was both how much Ken embraced disruption, and versed he seemed in technology and  his views on prospects that many conference attendees would be seeking to take market share from American Express. Beyond noting he welcomes competition, he stressed that he was not at all afraid to cannibalize his own business in order to reinvent AMEX.

Chenault said he “could care less” if plastic eventually goes away – eliciting a strong response from the audience, and sees AMEX as poised to continue to succeed in today’s more digital world. He also said he was disappointed to see Dan Schulman leave American Express to run PayPal, but expressed confidence he had a deep bench on his management team.

Chenault was excited that American Express was part of launch of ApplePay, and dismissed a question asking whether Apple could eventually disintermediate them, saying he doubts Apple sees that as their core business and seemed fairly unconcerned about MCX and CurrentC. I think that both sentiments are correct, although it is early stages of the game.

Next up was Tom Taylor, VP of Amazon Payment Services, extremely compelling speaker, and lot of the session was dedicated to a case study of a UK retailer, AllSaints, that essentially does everything (design, make & sell its own clothes; design, build and operate all its stores and web site using its own people) except for its strong partnership with Amazon.

Another good session was on payments for affiliate networks, marketplaces and direct sellers. Bill Clerico, CEO of WePay made good points about how handling marketplaces are very different from traditional e-commerce, with the need to manage the risk of buyers and sellers.

Another session — wittily called Planet of the API’s: Making Banking & Payments Programmable — explored how API’s can change how consumers will interact with their banks. Zach Perret of Plaid spoke on how creating an ecosystem of bank API’s could lead to all kind of new end-to-end experiences with online services that would not necessarily come from your bank.

While Yodlee CEO Anil Arora said he doesn’t see the need for every bank to publish its own API’s — it’s just a technology he said, and doesn’t solve anything in itself (and of course, his company has built out integrations with over 10k financial institutions, a source of competitive advantage for Yodlee).  But Perret of Plaid took an alternative view, saying that Plaid expects to see at least 10,000 new start up’s / apps leveraging bank API’s over the next couple of years.

There were a couple of other good sessions today: Turning the topic to lending and the changing world of credit, there was an good discussion of alternative credit markets, with a roundtable featuring Ken Lin, CEO of Credit Karma, Aaron Vermut, CEO of Prosper Marketplace, Mike Cagney CEO of SoFi and others.

Key take away is that these companies are all solving for different issues in the current credit marketplace, where some find it difficult to obtain credit, or overpay due to market inefficiencies. Most agreed peer-to-peer term is overused, and emphasized use of risk models, data, and fact they acquire customers in new and traditional (direct mail!) models, just with a different mix.

The last session of the day was a debate on ApplePay, featuring Jim McCarthy, Global Head of Innovation and Strategic Partnerships at Visa, and Jim Smith, EVP and Head of Digital & Direct Channels at Wells Fargo, among others.

Jack Stephenson, SVP of First Data, commented on the “reality distortion field” attributed to Steve Jobs, being a factor, on some level, in that he’s never seen anything as big and complex come together until this effort to work with Apple.

Jim Smith said his team had been looking “for some time” for the right model for mobile payments, and were excited to be involved in the launch of Apple Pay, which will bring together banks, card networks, merchants and the right security model.

But many said it’s still early in the game, and Google Wallet will continue to evolve, with some noting that partnerships with biometric firms and other changes leveling the playing field, while adding the media were “missing the point” with MCX vs. Apple Pay story, a view supported by the team at Paydiant, the Boston-based software platform behind MCX.

A fitting end to the recap for today’s events at Money 20/20 – an event that some said might as well be called ApplePay 20/20 – with the day’s chatter commenting on the fact that Money 20/20 had just been bought by a European company (no word on whether the payment would be made in Bitcoin).

Monday Recap: Money 20/20 in Las Vegas


The day started early at 8am with an outstanding session on FinTech – Venture Capital: Insider Perspectives, featuring Tom Stafford of DST, Dana Stalder of Matrix, Tricia Kemp of Oak HC/FT Partners, and Ravi Visawanthan of NEA.

Key take away was agreement no one really knows if we’re in a bubble for FinTech companies; the number of new entrants is truly staggering (well over 1,400 payments plays on Angelist for example) but while some are getting Series A from the likes of Matrix, and some continue to attract growth funding to delay their IPO, from the likes of DST or Oak, “frothy” is about as far as most would go in terms of describing the market.

Although not stated often enough, it seems one driver is the emergence of mobile commerce solutions – a decade after they were heralded during the dot com bust, when I was still working at Scient. Tom spoke with clarity how FinTech is going through a transformation like enterprise software providers saw with the cloud, which can now sell into SMB’s (acquiring them more like a consumer play might, i.e. without a salesperson) and at lesser cost, due to the rise of services like AWS.

But I think he went too far to say that larger Financial Services companies don’t do customer acquisition, service or loyalty right, and will be relegated to arcane asset-liability, risk management and back-office tasks in ten years (Wells Fargo, American Express and Capital One are excellent at what he thinks of the domain of start-up’s; user experience at Wells Fargo is top notch, for instance, and AMEX wrote the book on loyalty). But VC’s will have their inbuilt bias towards new startup’s…

For all the talk of Apple Pay, it still seems no one is covering Apple Pay as well as A16Z’s Benedict Evans.  I recommend checking out his late October post on his blog on Apple Pay (and listening to the podcast the day iPhone 6 was unveiled).

Stripe’s CTO Greg Brockman was terrific on payments and technology, and importance of continuous change. You can see why Stripe is at table, alongside much larger and more established companies, enabling mobile payments for Apple Pay.

I had a chat with with Arunan Sri, from Pivotal Labs, who talked about the importance of large companies learning to be more agile from both a business and development perspective, to become more like Stripe in continuously improving their products.

Key surprises — Ryan McInerney spoke convincingly on how Visa fits into the future, again by not resting on its laurels, but innovating around payment Security (giving a great example of how tokenization is more than just a buzz word and technology, it’s taking away the consumer’s fear around using their card for online purchases), and the need to be Intuitive (e.g. in today’s world, to move past old models, e.g. 7-10 days to get a new card, but issue cards in real time) and Instinctive (with Visa now creating a new digital payments platform that’s platform and device agnostic).

Kudos to Osama Bedier – clearly a crowd favorite – for a great talk on what he and Poynt are doing with their new product, which seeks to do for merchants what smart phones did for consumers. Beyond NFC, EMV, the Poynt team are offering up a cool device that merchants will want, consumers will love, and just keeps going with great partnerships and integrations with Vend for POS, Bigcommerce (e-commerce features, e.g. pick up in store) and Boom (traffic/conversion analytics).

Hill Ferguson from PayPal did a good job telling the crowd why he’s glad that the world is just now discovering payments are interesting after all, but key take-away was the 15-year vet of the firm sees us just as at the beginning of the FinTech change.

Next, a straight-forward talk on Citi’s Consumer Bank CEO, Jane Fraser who spoke on Citi’s shift to focus on urban markets, and leveraging its best practices gained in mobile-centric Asia.  Good article on strategy was published in today’s WSG.

A great day overall but went out with a whimper: a bit stilted interview with CEO of Western Union on how he feels about all the start up’s trying to eat his lunch, but most surprisingly a terrible presentation on “what is banking” by the Winklevoss brothers,  causing amusing tweets, e.g. “Winklevoss Brothers teaching 7,500 payments experts banking 101.”

Overall, though, Jonathan Weiner and team put together a top-notch day here at the Aria in Las Vegas.