In E-Linx
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ISSUE NO. 66– May 2019

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Facebook is planning to launch a new crypto currency for users to buy goods online

Facebook is planning to launch a new crypto currency for users to buy goods online.Over the last year it has been recruiting banks, payment companies and merchants to accept and facilitate the new Facebook coin. The new crypto-currency would facilitate private  payment transactions on Facebook platforms and potentially allow Facebook users to earn crypto-currency as a reward for viewing ads.

CardLinx Insight

Facebook’s latest pivot from being an advertising platform to a payments/commerce platform will be difficult to achieve. Even with over 1.5 billion daily users, scale alone is not a recipe for success in payments. Larger companies, like Apple, have found limited success in payments as a result of the sophisticated competition from  incumbents like MasterCard, First Data and FIS. These companies are among the most  innovative companies in the world, but their ability to provide security, reliability and trust at very large scale are often underappreciated. Facebook realizes the challenges and has adopted a partnering approach rather than “go it alone”.

However, Facebook’s biggest challenge may be that it lacks the consumer trust so crucial to any payments system. Facebook’s limited  security capabilities and spotty fraud detection track record make it a rich target for on-line hackers and criminals. A recent Krebs On Security analysis led to the takedown of 74 cybercrime groups operating openly on Facebook with more than 385,000 members. At this early stage, it may be that Facebook crypto-coin is a solution searching for a consumer problem that does not exist.

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Bank of America May Bring Payments In House Following Moves by Chase

News reports emerged  that Bank of America is considering dissolving its payment processing joint venture called Bank of America Merchant Services. For well over a decade, Bank of America has outsourced merchant credit card payment processing to this joint venture. But following recent moves by Chase to bring its payment business in-house, Bank of America may be planning a “U-turn”. No final decision has been made and the successful joint venture could well survive and be renewed.

CardLinx Insight

Banks with big card-issuing operations, particularly Chase and Bank of America, are now seeing the value of having the in-house ability to offer rewards and incentives to customers through tie-ins between the merchant  payment processing and card issuing sides of the business. The data from a  consumer’s card spending can be used to target offers for the merchants served by the merchant processing side of the business.

Bank of America has long been a leader in cash back rewards through its Bank Amerideals card-linked offer program. However, Bank of America has primarily relied on Cardlytics, its CLO technology provider, to deliver and originate offers  from merchants. By bringing merchant payment processing in-house, Bank of America may believe that it will be better able to source offers from merchants and deliver better value to both consumers and merchants.

Chase, the largest bank in the US followed a similar strategy several years ago when it dissolved its merchant payment processing joint venture and brought that business in house. That move has played out well for Chase. Their payments business is now considered a crown jewel of their banking franchise.

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Global Payments Announces Acquisition of Total Systems

The number 8 ranked US merchant payments processor, Global Payments, today announced it would acquire Total Systems, the number 10 US ranked payments processor. The deal follows an accelerating wave of mergers and acquisitions in the payments sector. In the last twelve months, CardLinx members First Data and Fiserv announced a merger, followed by CardLinx member FIS and Worldpay.

CardLinx Insight
The announcement by Global Payments and Total Systems was expected by many in the industry. With its larger competitors having announced deals that will drive significant scale, efficiencies and broad payment services portfolios, Global Payments had little choice but to bulk up or be left behind. Payments has always been an industry that requires scale. The minimum hurdle for scale has been lifted higher by recent acquisitions.

For the card-linked and online to offline industry, these combinations mean that consumer and transaction data will be easier to tap from a smaller group of larger companies. These larger payment platforms will increasingly offer new and innovative value added payment services including new data and loyalty servicesthat go beyond simply executing basic payment card transactions.

MEMBER UPDATES

We welcome Travelsify to The CardLinx Association!

The company is based in both Luxembourg and New York. By analyzing more than 400 million traveler and expert reviews, Travelsify has extracted key Hotel DNA™ and Restaurant DNA™ descriptors that matter to hotel and restaurant guests: cozy, spacious, stylish, lively, great views, foodie, vintage, design, nightlife, luxury, etc. This allows travel brands to shift to these trustworthy, relevant and humanistic descriptors instead of offering amenity-check-box search. Hotels and restaurants can better match what guests are seeking and enable a richer customer experience. Learn more at www.travelsify.com.

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