1. SEPTEMBER 1-5, 2014 visit paymentweek.com
Home Depot
a Potential
Victim of Data
Breach
Security the Main Barrier to
Digital Wallet Usage, Study
Shows
ALSO INSIDE:
Credit Card
Industry
Steps Up
Payments
Security
Efforts

2. 2
F E A T U R E D A R T I C L E S
Felix Shipkevich
FOUNDER
Kevin Xu
EDITOR
CONTENT STRATEGIST
Andrew Barnes
MANAGING DIRECTOR,
EMERGING PAYMENTS
Eric Wagner
CONTRIBUTING WRITER
Melanie Macinas
CONTRIBUTING WRITER
Daniel Cross
CONTRIBUTING WRITER
Ellen Red
CONTRIBUTING WRITER
David Easley
CONTRIBUTING WRITER
Jason Mongiello
DIRECTOR OF MARKETING
GRAPHIC DESIGNER
Corporate Office
65 Broadway
Suite 508
New York, NY 10006
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reserved. The content of this
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Week should be directed towards our
editor.
M A R K E T P L A C E
T E C H
E M E R G I N G P A Y M E N T S
DIGGING DEEPER WITH FIRST DATA VENTURES
Andrew sits down with Pete Donat, Head
of First Data Ventures to get some straight
talk. They talk about market challenges
unique to being a payments startup, leading
indicators for startup success, and the areas
that he sees as “hot.”
S P O T L I G H T A R T I C L E
4 - Mobile Payments Seen as Key Driver Behind Biometric
Authentication Adoption
3 - Rumor: Apple to Release iPhone Mobile Wallet
I N D U S T R Y V O I C E S
5 - iWatch Has the Time for Play or Pay
S E P T E M B E R 1 - 5 , 2 0 1 4
6 - Isis Wallet Rebrands to Softcard
7 - Security the Main Barrier to Digital Wallet Usage, Study Shows
8 - Home Depot a Potential Victim of Data Breach
9 - Cheapair.com Takes Digital Currencies to New Heights
12 - Clear2Pay Acquisition to Boost FIS Payments Business
13 - Global Payments’ Taiwan Office Adopts CashPro® Any2Any
Platform
10 - Millennials Will Drive Payment Card Growth Studies Show
11 - Credit Card Industry Steps Up Payments Security Efforts
14 - Digging Deeper with First Data Ventures: How a Payment
Processing King Measures Startup Success

3. T E C H
3
Rumor: Apple to Release iPhone
Mobile Wallet
By: Daniel Cross
A
pple has been working closely with Visa,
MasterCard, and American Express to design
a plastic-less payment system that allows
people to use their phones to make payments at
partner banks and retailers.
At least that’s the latest rumor from Cupertino,
where Apple is reportedly working on a new iPhone
and possibly iWatch that will be released to the
larger public on September 9th. In addition to new
gadgets, Apple may also offer a mobile payment
solution that may also introduce an NFC chip for
the first time.
Historically, Apple has resisted NFC, although it
has offered payment integration with apps and its
Passbook app.
Several years ago, Starbucks began offering a
payment solution using QR codes; more recently,
airlines have used the same codes with Passbook
to allow passengers to board planes without a
paper ticket.
Rumors are scant about exactly how Apple’s new
product would operate with existing payment
infrastructure. VeriFone has offered NFC-enabled
payment systems for years, and systems like
MasterCard PayPass have offered limited touch-
less payment availability in the past.
Possibly, the solution will forego NFC entirely and
offer payments through custom apps that must speak
securely to one another, much like peer payments
through existing payment provider PayPal work. If
Apple has already partnered with large retailers
like Wal-Mart and Target, such a solution could
target over $100 billion in transactions overnight.
An Apple payments solution could also integrate
with a marketing platform, allowing smaller
retailers to promote products while also offering
payments via an iPhone. Such a move could help
Apple dominate the small business retail market
much as the iTunes App Store has helped the
company dominate the indie app market.
MOBILE
Image credit: Simon Yeo

4. 4
T E C H
4
G
oode Intelligence – a leading research
organization for the mobile security industry
– predicts that by the end of 2015, biometrics
will become mainstream on mobile devices.
Inits“MobileandWearableBiometricAuthentication:
Market Analysis and Forecasts 2014-2019,” Goode
Intelligence reports that mobile payment is one of
the key drivers behind the adoption of mobile and
wearable biometrics.
Biometrics is defined as “the automatic
identification of living individuals by using their
physiological and behavioral characteristics.”
The Goode Intelligence report revealed that
biometrics will replace passwords and PINs as these
two are not considered as secure and convenient
for mobile and wearable devices.
According to Goode Intelligence, by 2019, mobile
and wearable biometric technology users worldwide
will reach 5.5 billion.
In April 2014, fingerprint biometrics was introduced
for PayPal’s mobile app on the Samsung Galaxy S5
smartphone.
Goode Intelligence also predicted that Apple will
integrate biometrics into its iWatch smart watch
device in late 2014.
Alan Goode, author of the report and founder of
Goode Intelligence, said in a statement,“We believe
that smartphones and tablets will be the first wave
of consumer devices to be biometrically-enabled
and this will quickly be followed by wearable
technology.”
Thrive Analytics, meanwhile, in its “2014 Digital
Wallet Usage” study, reported that security concern
remains as the main barrier to digital wallet
adoption.
Jason Peaslee, Managing Partner of Thrive Analytics,
told Investorideas.com that mobile payments
security will be determined by the strength of the
authentication process.
The Managing Partner of Thrive Analytics said,
“Eventually, biometrics could play a huge role in
tying everything together.”
Mobile Payments Seen as Key Driver
Behind Biometric Authentication
Adoption
By: Ellen Red
MOBILE
Image credit: Kārlis Dambrāns

5. T E C H
5
A
pple’s long awaited unveiling of its signature
smartwatch is expected to wow audiences
around the world Tuesday, September 9th.
Industry analysts expect next week’s event to
feature a flurry of iDevices including the iWatch,
two new iPhones, and an iPad refresh.
Apple’s first iPhone jumpstarted the smartphone
craze, and its new iWatch may have the same
potential to make wearable technology the next
big thing for consumers.
It is now confirmed that the iWatch will also carry
NFC tech in a bid to enable payments on the
smartwatch. The inclusion of NFC matches the
iPhone 6, which will also be unveiled on the same
day.
Near-Field Communication is a short-range
frequency specially designated for use in the
burgeoning payments processing industry.
Tap-to-pay is a feature which is found in most
smartphones save for the previous iterations of the
iPhone, a hinderance to overall NFC adoption.
The leaked drawings of the iWatch show a
beautifully curved wristband that has stylish
appeal and wearable comfort written all over.
Apple plans to begin taking pre-orders for the new
iWatch, and it is expected that the smartwatch will
actually begin shipping to stores until early next
year.
The combination of wearable computers mixed
with mobile payment simplicity is a sure-fire sign
that time keeps slipping into the future.
iWatch Has the Time for Play
or Pay By: Eric Wagner MOBILE

6. 6
T E C H
6
I
sis Wallet, a mobile wallet and payments
initiative, which unfortunately share its name
with ISIS, the infamous militant group in the
Middle East, is rebranding.
With its rebranding first announced in July, Isis
Wallet will soon be known as Softcard. Expect the
mobile wallet app to be updated in the next few
weeks.
Isis Wallet, or rather Softcard, of course is the NFC-
based mobile payments play supported by major
wireless carriers that include T-Mobile, Verizon,
and AT&T.
Softcard promises a bold and simple visual
redesign.
According to Michael Abbott, CEO of Isis Wallet/
Softcard, “Our search for a new name has been
rooted in our founding vision: to use the power
of the mobile phone to help consumers find a
safer and better way to shop, pay and save. But we
also wanted a name and visual identity that had
the power, flexibility, and simplicity to define our
category.”
Isis Wallet Rebrands to
Softcard
By: Kevin Xu
MOBILE
“OUR SEARCH FOR A NEW
NAME HAS BEEN ROOTED
IN OUR FOUNDING VISION:
TO USE THE POWER OF THE
MOBILE PHONE TO HELP
CONSUMERS FIND A SAFER
AND BETTER WAY TO SHOP,
PAY AND SAVE.”

7. T E C H
7
S
ecurity remains the main obstacle to digital
wallet adoption, this according to the 2014
Digital Wallet Usage study conducted by
Thrive Analytics.
Thrive Analytics is a digital marketing research
and customer engagement strategy consulting
firm, and their 2014 Digital Wallet Usage study
surveyed over 2,000 representatives of the U.S.
adult population.
The Thrive Analytics study revealed that while
80 percent of U.S. consumers are aware of digital
wallets, only less than one-third of American
consumers adopt the digital wallet technology.
The low adoption of mobile wallets is mainly due
to security concerns, the Thrive Analytics study
revealed.
Jason Peaslee, Managing Partner of Thrive Analytics,
said in a statement, “An overwhelming majority of
consumers acknowledge the presence of digital
wallets, however a minority have actually used
them despite fewer shoppers carrying cash today.”
Fifty percent of U.S. consumers, mostly on-the-go
females, carry less than $20 on a regular basis, the
study showed.
Sixty percent of digital wallet users though are
males, despite the fact that they carry more cash
than females.
The study further revealed that 18 to 29-year-
old females are more likely to use merchant
digital wallet apps for price shop (56 percent) and
discounts/coupons (72 percent) compared to men.
According to the study, men tend to use merchant
digital wallet apps for paying bills and searching
for products and contact information of retailers.
Gartner, Inc., a leading information technology
research and advisory company, reported that
starting in 2017, mobile security will become a
higher priority for consumers.
Security the Main Barrier to Digital
Wallet Usage, Study Shows
By: Ellen Red
SECURITY
Image credit: Sergio Uceda

8. 8
T E C H
8
H
ome Depot is warning customers about
a potential data breach that could affect
millions.
According to a statement posted on the company’s
website, Home Depot is working with law
enforcement authorities to investigate some
unusual activity that suggested a breach had taken
place.
The statement assures customers that, if a breach
is found, they will be offered identity protection
services free of charge, and that “the financial
institution that issued your card or Home Depot
are responsible for [fraudulent] charges should we
confirm a breach.”
While determining whether an attack indeed took
place, Home Depot apologizes and encourages its
customers to keep a close eye on their accounts.
Any suspicious activity should be reported to the
card issuers themselves. Customers will be notified
once a breach has been confirmed.
The fourth largest retailer in the U.S. is just
the latest victim in a series of high profile data
breaches – Target Corp., Neiman Marcus Group
Ltd., and P.F. Chang’s Bistro all having suffered
recent attacks. Target reported that it has so far
spent $146 million cleaning up the fallout from its
breach.
The news could reverse recent good results for the
retailer. Home Depot reported a nearly 6% increase
in sales over its last quarter. Home Depot stock
was trading down 1% from its market opening of
$91.11.
The attack occurs despite Home Depot’s concerted
efforts to curb credit card fraud. New EMV credit
card computer chip reading technology has been
installed on Home Depot’s card terminals, although
they have not yet been activated. The technology
may not have prevented the breach, however, as
most consumers are still using old magnetic stripe
cards.
Seth Ruden, Senior Fraud Consultant at ACI
Worldwide stated “Similar attacks on merchants
will likely continue until we remove the magnetic
stripe from being the primary mechanism of data
transfer in card-present transactions. This breach,
like the others before it,should serve to increase the
pressure to migrate to the EMV chip card standard
and help to reinforce the need that we have for
stepped-up security in payments, especially in the
US, where we currently lag behind our peers.”
Home Depot a Potential Victim of
Data Breach By: David Easley
SECURITY
Image credit: Mike Mozart

9. E M E R G I N G P A Y M E N T S
9
9
T
he first online travel agency to accept
Bitcoin, Cheapair.com has announced that
they are now accepting Litecoin and the
Internet meme-based Dogecoin.
Fans in the Altcoin arena are ecstatic, as the open-
source Dogecoin is the most transferred digital
currency in existence.
Flyers can now book flights, hotels, and rental cars
all using Bitcoin, Litecoin, and Dogecoin.
According the Cheapair.com CEO Jeff Klee, the
move was largely prompted by the tremendously
positive community response and lucrative results
since the inception of the Bitcoin acceptance.
“We’ve had some success with bitcoin, we’ve
gotten some new customers there – enthusiastic
customers. We’ve gotten a great response since
we began accepting [bitcoin], and we had some
requests for dogecoin and litecoin. We figured why
not?”
The company reported that they raked in over $1.5
million in bitcoin revenue since the inception of
the program, and they are expecting even better
results from the newer and more cultish Litecoin
and Dogecoin protocols.
The company has also chosen a new payments
processor in Gocoin for these altcoin transactions,
as they are more proficient than Coinbase with the
altcoin technology. The company will continue
its relationship with Coinbase as processor of all
Bitcoin transactions.
Now Bitcoin’s younger siblings get a chance to take
flight and travel the world with convenience.
Cheapair.com Takes
Digital Currencies to New Heights
By: Eric Wagner
DIGITAL CURRENCIES

10. 10
E M E R G I N G P A Y M E N T S
10
A
study conducted by the Princeton Survey
Research Associates International showed
that 51 percent of millennials prefer to use
debit or credit cards over cash when purchasing
items close to $5.
Millennials, also known as Generation Y, are those
born between the 1980s and 2000s.
The Princeton Survey Research Associates
International, in a study conducted for CreditCards.
com, surveyed a representative sample of 1,497
Americans in July 2014.
The study also revealed that those aged below
50 years old are more likely to use debit or credit
cards for a $5 purchase compared to 50-year-olds
and older.
The study showed that 46 percent of those below
50 years old prefer debit or credit cards; while only
21 percent of 50-year-olds and older prefer using
debit or credit cards.
The Princeton Survey Research Associates
International survey also showed that Americans
who attended or graduated from college are
considerably more comfortable than others with
using plastic for small buys.
The survey found out that Americans who have
children are more likely to use the cards for small
buys (41 percent) than Americans without children
(30 percent).
The person’s employment status also plays an
important part in card use. The survey showed that
cards are often used for small purchases by those
employed (76 percent) than those unemployed (23
percent).
In its Prepaid and Gift Cards in the U.S., 4th
Edition report, Packaged Facts (a division of
MarketResearch.com) reported that 18 to 34-year-
olds have an average of 2.3 prepaid cards in their
wallets, making them the key drivers behind the
prepaid card revenue surge.
Juniper Research, meanwhile, projected that the
usage of online bill payments by the millennials
will continue to rise in the next five years.
Millennials Will Drive Payment Card
Growth Studies Show
By: Ellen Red
Image credit: Sean MacEntee
CREDIT, DEBIT, & PREPAID

11. E M E R G I N G P A Y M E N T S
11
11
C
redit card industry players are boosting their
efforts to keep sensitive card information
out of merchant environments as reports of
data breaches and theft continue to rise, weakening
confidence in electronic payment systems.
Home Depot is the latest to have reported
a potential data breach on its system. Card
information from consumers who used cards at
P.F. Chang’s China Bistro and in grocery stores
operating as Albertsons, Acme and Jewel-Osco has
also been recently stolen.
Cases like these highlight the vulnerability of
merchant systems and also stress the need for
more security measures.
In a move to bolster electronic payments security,
Visa and MasterCard are introducing a new
technology called tokenization, wherein sensitive
customer information is replaced with a unique set
of numbers that confirms the cardholder’s identity.
The tokenization technology can be used online, in
brick-and-mortar stores using a smartphone, and
with apps that users load onto their smartphone.
As this technology masks sensitive consumer
information, hackers will not be able to steal any
vital details.
Another measure is the EMV chip card technology,
which has become the global standard for debit
and credit card payments. With this technology,
payment instruments come with embedded
processor chips to store and protect cardholder
information.
With these solutions, industry insiders hope
incidences of data breach and theft will be
diminished if not completely eliminated.
Credit Card Industry Steps Up
Payments Security Efforts
By: Melanie Macinas
CREDIT, DEBIT, & PREPAID

12. 12
M A R K E T P L A C E
12
F
lorida-based FIS, a leading provider of
banking and payments technology solutions
and a pioneer in consulting and outsourcing
solutions, will acquire Clear2Pay, a Brussels-based
payments technology firm that offers solutions
for secure, timely and streamlined payments
processing.
The move will provide FIS with global payments
capabilities through new payments managed
services and payments processing utilities, boosting
its abilities to provide differentiated enterprise
payments solution.
The payments domain is one of the fastest-growing
segments in the financial services industry and
a strategic growth and investment area for the
company, said Gary Norcross, president and chief
operating officer of FIS.
The acquisition shows the company’s commitment
to delivering assets and technologies that
encompass all customer channels, simplify payment
operations, reduce costs and provide a better
customer experience, he added.
Michel Akkermans, chief executive officer and
chairman of Clear2Pay, commented: “The payments
landscape continues to evolve to meet the next
generation of customer demands. We believe
the combination of these two companies will be
uniquely qualified to deliver true payment systems
convergence.”
With Clear2Pay’s Open Payment Framework (OPF),
financial institutions are able to improve their
internal payments processing efficiency and provide
clients with better and faster payment services. Its
client-base includes leading financial institutions
in Western Europe, Asia Pacific and the US.
Clear2Pay Acquisition
to Boost FIS Payments
Business
By: Melanie Macinas
INDUSTRY LEADERS

13. M A R K E T P L A C E
13
U
K-based online cash payment provider
Ukash has further expanded its partner
network with its recent collaboration with
Singapore-based payment service provider, Yuupay.
The partnership will allow merchants using the
YuuPay system in Europe, Australia, and Asia to
offer secure online transactions with Ukash.
It will also increase payment choice for customers
who shop and pay online without the need for a
credit card or a bank account.
Ukash is available for use across several sectors,
including shopping, games, gift cards, bingo and
poker. With this system, customers use cash to pay
securely and conveniently online by exchanging
coins and notes for a unique 19 digit code.
Consumers then use the code to make a transfer,
payment or buy online.
“The Ukash brand is already well established
with Asian and Australian consumers, so this
new partnership with YuuPay provides a great
opportunity for merchants to leverage the loyalty
around our service, offering customers flexibility
and security when they shop, play and pay online,”
says James Allum, Chief Commercial Officer at
Ukash.
Yoav Elgrichi, CEO of YuuPay, commented: “Ukash
offers the perfect fit for our customers as its
universal and inclusive payment method helps
consumers transact online safely and securely. Its
simplicity makes it easy for consumers who don’t
own a credit card or those who prefer to keep their
personal information private when making online
transactions.”
Global Payments’ Taiwan
Office Adopts CashPro®
Any2Any Platform
By: Melanie Macinas
GLOBAL & LOCAL

14. I N D U S T R Y V O I C E S
14
A
ndrew Barnes’ series, “Digging Deeper” is
based in Silicon Valley and focuses on key
startups and innovators, and how they are
disrupting digital payments and commerce.
If there were a king in the world of payments
processing, First Data would certainly be a
candidate for the crown. In 2013 it was the #1
processor for U.S. merchant acquirers and the #1
processor in international markets. It has 23,000
employees, 6 MM merchant locations, and 3,500
financial institutions as clients. 2013 revenues
were $10.8 billion on 59 billon transactions.
First Data, like all processors, is in a scramble to
stay relevant and profitable in an increasingly
commoditized business. So where else to drive
for innovation but Silicon Valley where in 2013
First Data launched its Ventures group, which is
investing in and partnering with innovators in
a number of areas, such as payments, marketing,
customer loyalty, security, mobile and solutions
that support the next generation of commerce.
Pete Donat is senior vice president of First Data
Ventures and helped open First Data’s Palo Alto
office in 2013.
“I have seen massive exaggeration of market size,
customer interest, and value creation – especially
in payments. That tends to be a turnoff. If you
haven’t assessed your market, you don’t know what
the customers think.
So what’s the going on here? Andrew sits down
with Pete Donat, Head of First Data Ventures to
get some straight talk. They talk about market
challenges unique to being a payments startup,
leading indicators for startup success, and the
areas that he sees as “hot.”

15. I N D U S T R Y V O I C E S
15
Hi Peter, great to talk with you today. And by the
way, these new First Data Ventures digs in Palo Alto
are quite nice… thanks for the tour. Ok, lots to talk
about, lots going on. Let’s jump in. To start things
off, can you tell me what “venture” means to First
Data Ventures?
Pete Donat: Great to see you and talk with you again
Andrew. It’s always good to talk shop and yes, lots
going on. To your question, to us a venture can be
a new or an existing enterprise. First Data’s intent
behind this Ventures group is to connect the scale,
capabilities, and assets of First Data across the
millions of merchants and thousands of financial
institutions with whom we work. The goal is to
bring those assets and capabilities together with
the innovation and disruption that the Silicon
Valley entrepreneurial community brings.
Is it an acquisition strategy? A partner funding
strategy? What’s your charter?
We’re here to find the disruptive partners. We have
the ability to do acquisitions and we have the ability
to do commercial partnerships. I’d say it’s a whole
range of corporate structures and investments that
we could do with any of these partners. That said,
my team will focus on equity investment-based
work. We want to use a number of different levers
to get access to deal flow, to create awareness.
Using investment dollars is one of those that make
a lot of sense.
If a company is aligned with our business strategies,
for instance growing Clover, that’s helpful. If it’s
aligned with certain product gaps, features, or
functions that we may not have considered, or that
our customers would value, an investment could
help accelerate their growth and integration. Those
are examples of things we think about as we look
at the disruptive partners who are out here.
Clover was one of your early fintech acquisitions.
How did that take shape?
I met the cofounders, Leonard and Mark Schulze, 2
years ago at Finovate. First Data took a look at it and
said, “Gee, there’s something cool going on here.”
As Todd McGuire and our Corporate Development
team started to evaluate it, all of the possibilities
got exciting – the hardware play, the platform play,
and the ability to be an app marketplace of the
future. We felt that really complemented our desire
to transform First Data to be more innovative and
collaborative.
Are startups banging down your door to get noticed?
It’s a great question. We’ll connect with a couple
hundred startups this year. We will have found
them, or they will have found us. I’m not sure the
ratio of reach-outs versus somebody reaching out
to us.
As a company, we want to make sure that First
Data has access to the best and most innovative
deals that would be relevant for us – that we’re
aware of them, we’ve seen them, and we’ve talked
to them. We want to figure out if there’s a way for
our companies to work together.
I think we’ve gotten much better visibility, but we
still aren’t where we want to be. First Data Ventures
is relatively unknown. As a corporate venture arm,
we want to grow our brand, grow awareness, and do
more deals and investments. Ultimately, we’re out
to prove out that we’re a great partner.

16. I N D U S T R Y V O I C E S
16
To date, I think the companies who are working with
us, such as LocalVox or Gyft, would say that we are
a great partner. That really helps our visibility and
ensures that more and more entrepreneurs want to
find a way to connect with First Data.
Are you getting calls from the venture guys saying,
“Hey look, you’ve got to talk to my portfolio
company”?
We do get the inbound happening weekly. Somebody
at Matrix Partners or Andreesen Horowitz or another
venture firm saying, “Take a look, I’m brokering
an intro on a startup that’s in our portfolio.” That
happens a lot, I would like it to happen more.
Is the quality of the introduction better than
trawling out in the open ocean?
The companies who have top tier venture backing
have clearly been through some screening to
help establish some validity to the business. They
wouldn’t have invested if they didn’t think there
was something there. Many venture capitalists want
to prove that they’re adding value to their portfolio
companies. Finding a way to introduce them to us
is helpful to them.
I think those introductions matter. We’ve found
some very interesting companies through those
types of introductions. That said, as a relatively
new voice in town, I’d still like to have a broader
ecosystem awareness of First Data Ventures than
we have today.
Are your term sheets pretty competitive? Would
you say you’re more or less aggressive than other
corporate venture groups?
I don’t know, but I’ll say we’re different. There’s
a benefit of partnering with First Data that goes
beyond the capital that gets put into the deal. We
could put money in, $1 million, $2 million, whatever
that amount is, at a rate anybody else can. Whether
we’re competitive or not, it’s hard to say. I think the
difference for us, and usually the types of things
we’re negotiating, is around something beyond the
money that makes us a different play.
Usually that means huge benefits for the
entrepreneur who wants to work with us. Those
benefits are the ability to access the thousands
of people who are out there selling our solutions,
the merchant base, the processing power, the
99.999% uptime that we have. It’s really hard for an
entrepreneur to try and sell something to a banker,
to a merchant, unless you’ve got somebody like
First Data who is really behind you and supportive
– someone who can help you work through the
regulatory and compliance headaches of executing
payments and commerce at massive scale.
Okay, so I’m a startup and I’ve got a solution. I
need to bring to you something that’s going to be
scalable, but I also have to build something that is
unique and distinguishable. What do you say to a
startup about how to serve both masters?
In some ways, what you’re getting to is the synergy
First Data is trying to create with the Ventures
unit. It’s taking the innovation and creativity of
the startups and partnering with all the assets
we have. The merchants. The sales force. The
bank relationships. The processing power. The
knowledge of how to get to a restaurant channel
versus a petrol channel versus a small business

17. I N D U S T R Y V O I C E S
17
channel. We can bring that knowledge to bear for
startups
If it was as easy as pushing F9 they would have done
it themselves. By partnering with us, we have the
ability to take what they have, help them refine it,
figure a way to productize it, work on the messaging,
then distribute through a lot of different channels
that can get up there very effectively.
When you look to areas for your investment dollars,
where do you see opportunities for disruption, and
for profits? What are the juicy parts in the payments
system?
I’ll tell you two things. One, we’ve got some themes
that we’re pursuing. Two, we also don’t know
enough. Part of the reason we have this office, and
why I’m in this role is to make sure we’re paying
attention to things that we didn’t see coming.
We’re a bit of a listening post, making sure we’re
aware of the innovation. I love meeting with the
startups that make me go, “Wow, I never thought of
disrupting or connecting the dots in the payments
industry with this, and this, and this, in the way you
just talked about.”
There are a couple themes that we tend to think
are hot from a First Data Ventures perspective. One
of those is utilizing our information and analytics
to find ways of proving that the action turned into
a result. Our information and analytics products
are very good at saying how’s your spending, where
are your customers coming from – great insights
around your business.
Can we do something that pairs with that? Those
are the kind of great solutions that we see as truly
disruptive.
For you and your SMB clients, are your efforts about
finding new technology to disrupt, or finding ways
to drive better adoption?
In some ways, I’m not sure. Some of the solutions
we look at have pretty unique technological
innovations. I don’t know whether we’ll invest in
or partner with some of these. I’m seeing some
unique innovations in the sensors, beacons and
other types of categories that might link with our
analytics product. That would be really cool. Those
would be, in my view, technologically cutting edge.
Other things, maybe they were technologically
cutting edge five, ten years ago – but never took off.
Today they are a packaging of that older technology,
but with some better blocking and tackling - and
some really good user interfaces. We’ve seen a
number of companies like that. It doesn’t have to
be that cutting edge. It just has to work really well
for somebody, a small business owner who wants
to spend the vast majority of his or her time not
worrying about payments and commerce. They want
to spend their time growing their business.
Can you tell me a little bit about your story and
how it ties into your work with startups in a venture
capacity?
I got into the space and spent seven years at
MasterCard. During that time, I’ve seen success
and failure in innovation. Some of the things we
pursued at MasterCard were very successful, some
were horrific failures. I also spent five years at Visa
International and Visa, Inc. in strategy, planning
and other roles.
At First Data, I spent a couple years in business
development, e-commerce, and co-heading our
Durbin SWAT team around regulatory reform issues.

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I think the reason I’m in the chair I am now relates
to the experience of knowing how the payments
industry works, knowing what’s likely to lead to
success or failure, knowing how to work across the
First Data ecosystem.
As First Data Ventures, I need to make sure I’ve
secured business unit support for something that
we want to do as an investment. In our LocalVox
investment, we’ve worked very closely with key
business unit executives and product managers.
Krish Mantripragada, who heads up the analytics
team, and I were tied at the hip in terms of moving
this forward. Joe Plumeri – Senior Advisor to the
CEO - and, Guy Chiarello, the President of First
Data, were involved in approving the deal and how
it is going to integrate with our sales force.
You referenced your time at MasterCard your feel
for what drives success and failures. Can you
deconstruct that and give me your thoughts on the
leading indicators for success?
It’s a complicated question. How do we evaluate
companies and whether they’re likely to be
successful for us? We do a little scorecard that we
use as we assess companies. Some of those criteria
are going to be things you would expect to see.
Are they addressing a big market? Do they have a
fit with what First Data would be doing? Do they
align with the business strategy that we would be
pursuing? Then we’ll assess other things Is their
team great? Is their product good? Is it unique?
The answer to those tend to vary a lot, vertical by
vertical. Our assessment of a new payment network
solution would be one way, versus how we assess a
security solution. Those dynamics tend to be very,
very different.
There are a couple things that tend to be turn-ons
and turn-offs when we look at companies.
Can you talk more about the start-up turn-ons and
turn-offs?
Companies that are entering into the payment
space and the ecosystem must have thought
through, realistically, the value proposition. We’re
talking about some complicated chicken and egg
issues of dealing with a two-sided market.
I have seen massive exaggeration of market size,
customer interest, and value creation – especially
in the payment space. That tends to be a turnoff. If
you haven’t assessed your market, you don’t know
what the customers think.
I often refer to my eight rules of payments. In
payments, getting one or two things right is not
enough – you need to address all eight of these
criteria. For example, can you get to a critical mass
of consumers? Can you get to a critical mass of
merchants? Can you manage fraud? Can you deal
with disputes and things when they go wrong?
These and a few other rules. If you don’t deal with
all of them, usually you’re doomed to failure. The
good news is that First Data’s capabilities can often
help a startup address some gaps it may have in
achieving commercial success.
Payments isn’t a swing for the fence and hope you
get there type of industry.There is plenty of blocking
and tackling, from regulatory to compliance and all
along the stack. It’s a mix of swashbuckling and
diligence to get all the Ps and the Qs handled isn’t
it?

19. I N D U S T R Y V O I C E S
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I like it. Can I quote you on that? Swashbuckling
and diligence. There’s a GE phrase that goes back a
decade or two that was “loose — tight”. Can you be
really creative at some stage and then rigorously
assess what you’ve creatively innovated? I think
you need to have a bit of both. All swashbuckling
and no diligence, that is problematic. But if you
don’t have any swashbuckling, then it’s not that
exciting either. It has to be both in our minds.
I think that sums things up, swashbuckle and
diligence, the mojo of payments and commerce
startups. It has been great to get your view
of venture’s role in payments and commerce
disruption. Thanks for talking shop with me.
As always, great to talk with you as well Andrew.
About First Data Ventures
First Data Ventures is responsible for leading First Data’s efforts to harness inno-
vation by partnering with small innovative companies who can leverage First Da-
ta’s processing assets and unmatched distribution to drive solutions that delight
customers and materially grow long-term revenue.
Pete Donat, Head of First Data Ventures
In addition to his role as Head of First Data Ventures, Pete is also responsible for
network business development, responses to major regulatory events (e.g. Durbin
I & II), managing several of the company’s non-traditional partnerships.. From
2004-09 he was VP of Enterprise Planning & Corporate Strategy at Visa. From
1997-2004 he held a variety of senior management roles at MasterCard. Prior to
MasterCard he was a management consultant at Marakon Associates. He has an
MBA from Wharton, a Masters in International Economics and American Foreign
Policy from Johns Hopkins SAIS, and a BA from Dartmouth.
Andrew Barnes, Managing Director, Emerging Payments
Barnes is a self-confessed payments “geek” and entrepreneur working in Silicon
Valley. He leverages his business development track record and network in start-
ups, retail, and FI’s to solve tough revenue problems in digital payments and mo-
bile commerce. Barnes has held executive positions internationally with Sprint,
Global One, and 2Roam Mobile. He founded the National NNN Investment Group,
and is an Advisor to the Electronic Transactions Association (ETA). Barnes has an
MBA from WASEDA in Tokyo and a BA from Penn State. He launched the widely
sourced Digging Deeper series and can be reached at @AndrewinSV and Linkedin.

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