All GLG News Analyses Filed Under: Transaction & Payment Processing

Plucky Revolution Money takes on payment giants

June 11, 2008

Analysis by: GLG Expert Contributor

Analysis of:New Brand Pitches Security, Transfer Link | www.americanbanker.com

Revolution Money vies to win share away from the card payment network and money transfer establishment. It intends to compete as an open network, with lower base merchant acceptance fees, merchant-sponsored pos cardholder incentives, better fraud prophylactics and a money transfer feature. Reasonable as far as it goes. Nonetheless Revolution Money faces a daunting challenge and its $50 million in funding isn’t even table stakes.

Art GillisPresidentComputer Based Solutions, Inc.

HP and EDS - Is it a Win-Win? I Predict a Lose-Lose

June 6, 2008

Analysis of:HP to Acquire EDS for $13.9 Billion | www.hp.com

My experience with EDS goes back to 1962, not because it was day one for EDS, but instead, to tell you how bad I am at predicting success stories.  What I’m good at is predicting failures. 

Richard BialekChief Executive Officer Bialek Group

MasterCard Clouds on the Horizon?

June 4, 2008

Analysis of:MasterCard "buy," target price raised | www.newratings.com

The near-term prospects for MasterCard are positive, despite a weak US economy. MasterCard is riding a trend of payment transactions moving from cash and check to card and electronic media. The challenge to MasterCard comes from potentially disruptive regulatory and technology forces that MasterCard must acknowledge and address.

J.P.Morgan Chase In House Processing From First Data

June 3, 2008

Analysis by: GLG Expert Contributor

Analysis of:JP Morgan Chase to bring payment systems back in house | www.cio.co.uk

J.P. Morgan Chase must be in a position to have a well thought out continuity of business plan in the event of a worse case scenario given the statement published, i.e., "First Data would strive to make sure there was no disruption to its payment processing services." This could tarnish the reputation of J.P. Morgan Chase and First Data should there be such a significant event. Transitions from one service provider to another requires detailed accountability for each project team assigned, identification of key responsibilities and failure penalties for unsatisfactory results. In addition, the fixed, variable and transition/opportunity costs associated with a service being taken back again and previously cost justified to be outsource, must be thoroughly reexamined.  The performance measurements and financial impacts should be dimensioned and measured prior to and during the transition.

Completing the Payment Transaction Circle

June 2, 2008

Analysis by: GLG Expert Contributor

Analysis of:JP Morgan Chase to bring payment systems back in house | www.cio.co.uk

The announcement that JPMorganChase is bringing their merchant network in-house underlines the increased value of owning both the issuer and merchant side of a payment transaction.  As the spread between issuer income and merchant expense becomes narrower, strategies like those announced by Chase this week and previously, by Bank of America, mean that these giants will have the control and muscle to come out ahead when the smoke clears in the payments market.

Selander bullish on MasterCard earnings growth, but regulatory threat looms large

June 2, 2008

Analysis by: GLG Expert Contributor

Analysis of:MasterCard "buy," target price raised | www.newratings.com

There’s little not to like in MasterCard’s evolving top and bottom line growth story, a story they could well – indeed should, beat, if! they can contain regulatory threats

JP Morgan Chase and First Data Divorce, Who Wins and Who Looses

June 2, 2008

Analysis by: GLG Expert Contributor

Analysis of:JP Morgan Chase to bring payment systems back in house | www.cio.co.uk

Chase Paymentech to become the leading brand after JP Morgan Chase divorces from First Data.

JP Morgan Chase has restructured extensively since Gordon Smith has taken over and this is another indicator of how he believes the new JPMC will compete by maintaining more control over its destiny, innovation, and data.

First Data is the big looser in this relationship even with 49% of the assets the customers knows the brand Chase Paymentech versus First Data and will likely stay with Chase.

MasterCard’s earnings growth acceleration credible if it can curb regulation

June 2, 2008

Analysis by: GLG Expert Contributor

Analysis of:MasterCard on fire, again | dailybriefing.blogs.fortune.cnn.com

MasterCard’s  revamped top and bottom line growth forecasts are eminently achievable, assuming it can contain or better yet roll back regulatory restrictions.

Senators Durbin, Kohl, Specter and Snowe fish for basis to regulate interchange

June 2, 2008

Analysis by: GLG Expert Contributor

Analysis of:A Senate Letter Ratchets up the Heat on Networks over Interchange | www.digitaltransactions.net

The card payment networks have been gradually stepping up their game as commercial enterprises and the markets have come to recognize the global payment networks’ immense intrinsic operating leverage, pricing power, growth prospects, and defensibility, and therefore value.  However neither MasterCard nor Visa has yet found an effective strategy to contain, much less to roll back, existential regulatory threats to their business.  If they do not, their enterprise value will be imperiled.

Eufiserv stake reinforces First Data’s position as Europe’s leading payment processor

May 27, 2008

Analysis by: GLG Expert Contributor

Analysis of:First Data in Europe Processing Alliance | www.americanbanker.com

The acquisition of 50% of Eufiserv’s processor reminds that notwithstanding LBO distractions, First Data remains the most consequential payment processor and leading consolidator in Europe, and a potential threat to MasterCard’s and Visa EU’s processing businesses. First Data’s challenge is to simultaneously stay at the front of the pack and make its portfolio of European payment processing assets cohere.

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